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SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, DC 20549



FORM 40-F



(Check One)



|o |  | Registration statement pursuant to Section 12 of the Securities Exchange
Act of 1934
|- |  | ------------------------------------------------------------------------------------

or



|o |  | Annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934
|- |  | ---------------------------------------------------------------------------------------



For the fiscal year ended August 31, 2002

Commission file number 333-7582



Shaw Communications Inc.

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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:

|                                                                  |  |                        
|----------------------------------------------------------------- |  | -----------------------
|                                                                  |  | Name of Each Exchange  
|Title of Each Class                                               |  | On Which Registered    
|                                                                  |  |                        
|8.45% Canadian Originated Preferred Securities (Series A COPrS) |  | New York Stock Exchange
|                                                                  |  |                        
|Class B Non-Voting Participating Shares                           |  | 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)

(Title of Class)

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

8.54% Series B Capital Securities8.25% Senior Notes due 20107.25% Senior Notes due 20117.20% Senior Notes due 2011(Title of Class)

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

|                         |  |                                     
|------------------------ |  | ------------------------------------
|oAnnual Information Form |  | xAudited 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  11,373,972Class B Non-Voting Participating Shares  220,473,552

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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 file number assigned to the registrant in
connection with such rule.

|          |  |    
|--------- |  | ---
|Yes
o 82- |  | Nox

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 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.

|     |  |    
|---- |  | ---
|Yesx |  | Noo



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(SHAW LOGO)

SHAW COMMUNICATIONS INC.

ANNUAL REPORT 2002





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TABLE OF CONTENTS



|                                                                    |                                                     |  |  |  |  |  |  | 
|------------------------------------------------------------------- | --------------------------------------------------- |  |  |  |  |  |  | 
|                                                                    | REPORT TO SHAREHOLDERS                             
|                                                                    | MANAGEMENTS DISCUSSION AND ANALYSIS               
|                                                                    | MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING
|AUDITORS REPORT                                                   
|                                                                    | Financial Statements                               
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                         
|                                                                    | Inventories                                        
|Five Years in Review                                               
|Cable and Internet Statistics                                      
|Shareholder Information                                            
|Corporate Information                                              
|SHAW COMMUNICATIONS INC. CERTIFICATE OF THE CHIEF EXECUTIVE OFFICER
|SHAW COMMUNICATIONS INC. CERTIFICATE OF THE CHIEF FINANCIAL OFFICER



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Shaw Communications Inc.

ANNUAL REPORT 2002
August 31, 2002

In our ongoing efforts to contain costs, Shaw Communications Inc. no longer
publishes a formal annual report. This document contains the Report to
Shareholders, Management Discussion and Analysis and its Financial Statements
for fiscal 2002.

|                                                    |  |      |    | 
|--------------------------------------------------- |  | ---- | -- | 
|CONTENTS                                            |  | Page
|Report to Shareholders                              |  |      | 2  | 
|Managements Discussion and Analysis                |  |      | 4  | 
|Managements Responsibility for Financial Reporting |  |      | 32 | 
|Auditors Report                                    |  |      | 33 | 
|Financial Statements                                |  |      | 34 | 
|Notes to the Consolidated Financial Statements      |  |      | 37 | 
|Five Years in Review                                |  |      | 80 | 
|Cable and Internet Statistics                       |  |      | 81 | 
|Shareholder Information                             |  |      | 82 | 
|Corporate Information                               |  |      | 83 | 

The Annual General Meeting of Shareholders will be held on December 4, 2002
at 11:00 am at the Hyatt Regency Hotel, 700 Centre Street SE, Calgary,
Alberta.

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Shaw Communications Inc.

REPORT TO SHAREHOLDERS
August 31, 2002

Shaw Communications Inc. (Shaw) has faced a challenging year in the face of a
dramatically changing business environment. Our past achievements have built
the foundation for success in meeting the new demands of this changed
environment. We now have approximately 2.9 million video and 770,000 Internet
customers. Further, we built and enhanced the quality, depth and capacity of
our plant and network infrastructure. The plant is now fully digital, 98% is
two-way capable, 50% is 750 digital, the other 50% is 550 digital and our node
size accommodates an average of approximately 1,100 homes. As well, we
developed our own Internet distribution network and data center. Moreover, we
raised sufficient financing to provide us with access to approximately $1
billion of available credit facilities. The foundation of a solid customer
base, high quality plant and high liquidity has paved the way to meet our
primary goal of obtaining and growing free cash flow.

Operations
Fiscal 2002 was a watershed in Shaws history, reflective of the changing focus
in our industry. Previously, our key business metrics were subscriber growth
and operating income before amortization. Historically, we have been extremely
successful in ramping up the number of Internet, digital and direct-to-home
(DTH) customers to commercially robust levels. Today, our stakeholders now
demand strong growth in free cash flow. With the build-up of our strong
customer base, we can now focus on the task at hand. As announced in our
second quarter, our two key areas of focus are improving operating income
before amortization and effectively managing capital expenditures. Our focus
has generated results. Since we implemented the change, over the last six
months of the year, we improved free cash flow by $324 million for the cable,
Internet and Big Pipe division (the Cable division). Of this amount, $59
million or a 21% improvement was generated through operating income before
amortization. The remainder of the increase of approximately $265 million was
generated through capital expenditure reductions. In the fourth quarter we
achieved breakeven free cash flow even with the inclusion of a one-time $15
million expenditure on our second Internet data center. Based on present
conditions, our goal is to increase free cash flow in the Cable division to
$105 million in 2003 compared to a free cash flow deficit of $349 million this
year. To meet our goal, our principal targets are to grow operating income
before amortization from $609 million this year to $710 million in 2003 and to
reduce capital expenditures from $683 million this year to $335 million in
2003. We define free cash flow as operating income before amortization less:
interest, entitlements on equity instruments, cash taxes, capital expenditures
and equipment subsidies.

Our focus is becoming evident in DTH (Star Choice) and satellite services (the
Satellite division) as well. For the first time in its history, Star Choice
achieved positive operating income before amortization on a quarterly basis in
the third quarter of this year. This is a major turning point considering Star
Choices previous operating losses of $58 million and $72 million in fiscal
2001 and 2000 respectively. For fiscal 2003, we anticipate that Star Choice
will generate positive operating income before amortization of $60 million. We
expect the Satellite division to achieve free cash flow on a run-rate basis in
fiscal 2004.

How have we done this? First, we grew our customer base in both Internet and
DTH and introduced new products and services in cable. Second, we increased
prices of DTH, cable and Internet. Third, we restructured our operations which
resulted in a reduction of employment levels by approximately 800 employees and
contractors. Fourth, we introduced a number of top-to-bottom cost reduction
programs that ranged from cell phones to travel. And finally, we implemented a
capital expenditure committee, which includes the CEO and President. The
committee prioritizes capital expenditures and ensures that our capital is
scaled to meet our customer growth and to enhance the quality of our
infrastructure. We have implemented these changes without compromise to our
number one concern  quality customer service.

Strong financial position
In the immediate term, Shaw has access to approximately $1 billion of available
credit facilities. Adding to our liquidity is the potential sale of our US cable systems for anticipated proceeds
of approximately $300 million.

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Shaw Communications Inc.

REPORT TO SHAREHOLDERS
August 31, 2002

The financial outlook for the next five years is very positive as we believe we
can generate in excess of $1 billion in free cash flow from operations on a
consolidated basis. This outlook is based on a conservative growth assumption
in the Cable division of 5% per year for operating income before amortization
for the years 2004  2007 and average capital expenditures of approximately
$285 million per year for the years 2003  2007. The outlook Satellite
division is based on operating income before amortization growing 300% from
2003  2007 and subscriber growth of 430,000 (an average of 86,000/year) over
the same period. Based on the foregoing and the existing Shaw credit
facilities, we should not have to access the debt capital market during the
next five years.

Future growth
Growth in profitability and free cash flow can come in many forms;
acquisitions, subscriber growth, price increases, sale of new services and
reduction of costs. Although our subscriber growth slowed in the last half of
fiscal 2002, our start to fiscal 2003 indicates promising results. The changes
in our promotional programs and the Back-to-School campaign have generated
growth in September of 17,000 Internet and 6,000 basic cable customers. With
respect to price increases, Star Choice implemented a $3 price increase
September 1, 2002 for most of its customers. Effective October 2002, all of
our Class 1 cable systems will be rate deregulated, and in January 2003, we
will increase basic rates by an average of $2 per month which will impact
approximately 300,000 customers. These customers have not had a price increase
in five years and on average pay $3 per month less than customers using
competitive services. In respect of new services, in September 2002, Shaw
launched Video-On-Demand (VOD) in Calgary. Shaw will be looking for bundling
opportunities with VOD, Internet and digital services to provide further
incentive to customers to stay and grow with Shaw. Finally, with respect to
reduction of costs, we are still in pencil sharpening mode and have continued
to implement numerous cost-cutting initiatives. For example, effective
September 2002, Shaw revamped its vehicle lease and auto allowance program for
employees which will generate annualized savings of over $1 million.

We believe that our strategy of achieving growth in free cash flow will deliver
value to all our stakeholders. We have confidence in our primary asset, the
quality people that embody the Shaw culture.

|                                 |  |                                          
|-------------------------------- |  | -----------------------------------------
|[Signed]
JR Shaw
Executive Chair |  | [Signed]
Jim Shaw
Chief Executive Officer

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Shaw Communications Inc.

MANAGEMENTS DISCUSSION AND ANALYSIS
August 31, 2002

Certain 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
unrounded amounts.

Sarbanes-Oxley Act
As required by Section 302(a) of the Sarbanes-Oxley Act of 2002 (the Act),
Shaws CEO and CFO will be certifying Shaws annual report. As part of such
certification, the CEO and CFO must certify that they are responsible for
establishing and maintaining disclosure controls to ensure material information
with respect to Shaw and its subsidiaries is made known to them and that they
have evaluated the effectiveness of Shaws disclosure controls and procedures
as of a date within 90 days prior to filing Shaws annual report. Disclosure
controls and procedures ensure that information required to be disclosed by
Shaw in its annual report is recorded, processed, summarized and reported,
within the time periods required. Shaw has adopted or formalized such
controls and procedures as it believes are necessary and consistent with its
business and internal management and supervisory practices, including the
constitution of a disclosure committee composed of members of senior
management. Based upon its most recently completed evaluation, Shaw is
satisfied that its disclosure controls and procedures are effective to ensure
full and timely public disclosure.

Outline
Managements Discussion and Analysis is presented in five sections as follows:

The first section is entitled I. Introduction to our Business and discusses
critical accounting policies, transactions with related and other parties, new
accounting standards, changes in accounting presentation and known events,
trends, risks and uncertainties. The second section, entitled II. Results of
Operations, analyzes the results of operations, first on a consolidated basis
and then for each of our business segments. For the purposes of this
discussion, the operations of Shaw Communications Inc. (Shaw or the
Company) and the financial results relating to its operations have been
reported in three segments: (i) Cable which refers to Shaws cable television
services, Shaws Internet access service and national fiber backbone for
broadband Internet services; (ii) DTH (Star Choice) which refers to Shaws
direct-to-home (DTH) satellite services primarily provided to residential
customers; and (iii) Satellite services which refers to Shaws satellite
uplink, satellite relay distribution undertakings (SRDU) and other satellite
services provided to business customers. The third section, entitled III.
Financial Position addresses the changes in the financial condition of the
balance sheet compared to the prior year. The fourth section is entitled IV.
Consolidated Cash Flow Analysis and the final section is entitled V.
Liquidity and Capital Resources.

I. INTRODUCTION TO OUR BUSINESS

Critical Accounting Policies
An understanding of our accounting policies is necessary for a complete
analysis of our results, financial position, liquidity and trends. We focus
your attention to the following critical accounting policies:

Revenue recognition
Revenue is considered earned as the performance of the work is accomplished,
provided that at the time of performance, ultimate collection is reasonably
assured. Such performance is regarded as having been achieved when reasonable
assurance exists regarding the measurement of the consideration that will be
derived from

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MANAGEMENTS DISCUSSION AND ANALYSIS

rendering the service. Revenue from cable, Internet and satellite 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. The recognition of revenue is
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 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 DTH receiving equipment and subscription for service are considered one
transaction to generate future revenue. Therefore, the sale of 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.

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 Plant, Property 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 installing it at the location
and in the condition necessary for its intended use. Costs would include
installation costs including 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.                                                                                                                                                                                                                                                                    
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|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 digital.                                                                                   
|  
|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 a capital
asset (e.g. wiring, dishes, filters, software, etc.) which enhance the
service potential of our distribution system through the ability to
charge future service revenues. Costs associated with service calls,
collection, disconnects and reconnects that do not involve the
installation of a capital asset are expensed.

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MANAGEMENTS DISCUSSION AND ANALYSIS

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. More so, the level of capitalization fluctuates depending on the
proportion of internal labour versus external contractors that is used on
construction. For example, beginning in fiscal 2002, we directly employed unit
based employees (UBEs) that were involved in customer installations, ongoing
plant upgrades and a portion of new builds. The use of UBEs increases the
quality and efficiency of the work performed. In previous years, this work was
performed by third party contractors.

The percentage of direct labour capitalized in many cases is determined by the
nature of employment in a specific department. For example, all of the labour
and direct overhead of the construction department is capitalized by the very
nature of the activity performed by that department. 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.

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 and amortizes costs to launch new services and to position Shaw in
new markets that have been acquired over the estimated period of benefit of two
years. 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 adopt the new services after the
trial periods. Our experience indicates that it takes approximately two years
for the adoption of new services to reach maturity level. Therefore, we match
the costs of the launch of the new services to the adoption 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. This activity 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. Although
each customer signs a service agreement, the term is not specified.
Accordingly, 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.

The amortization of equipment subsidies and deferred marketing costs is
included in the amortization line of the Statement of Income (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 CDN  US GAAP difference on deferred equipment
subsidies and marketing costs in Note 21 to the Consolidated Financial
Statements.

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MANAGEMENTS DISCUSSION AND ANALYSIS

Asset impairment
All long-lived assets, including broadcast licences and goodwill, investments
in unconsolidated entities and capital assets are evaluated for impairment. We
compare the recovery of broadcast licences and goodwill and capital assets
against 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 best
information available. 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.

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 impairment of these assets.

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 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 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 further recognition of a liability.

Equity instruments
We have the ability to satisfy interest and redemption obligations on various
financial instruments through the issuance of Class B Shares. As the
satisfaction of the obligations by cash versus equity is subject to 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 CDN-US GAAP difference on equity
instruments in Note 21 to the Consolidated Financial Statements.

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 CDN-US GAAP differences.

Transactions with Related and Other Parties
Refer to Note 18 to the Consolidated Financial Statements for information on
related party transactions.

New Accounting StandardsAdoption of new policies in the current year
During the first quarter, Shaw adopted the recommendations of the
CICA with
respect to Goodwill and Other Intangible Assets. Under the new standard,
goodwill and identifiable intangibles with indefinite useful lives are no
longer amortized but are subject to an annual review for impairment. Reviews
conducted March 1, 2002 and August 31, 2002, which assessed amounts allocated
to broadcast licences and goodwill, concluded that no provisions for impairment
were necessary. Accordingly, no amortization has been recorded this year on
these intangibles. If this change were applied to the prior years results,
the net loss for the year ended August 31, 2001 would have decreased by $52 million to
$95 million and the net income for the year ended August 31, 2000 would have
increased by $20 million to $153 million.

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MANAGEMENTS DISCUSSION AND ANALYSIS

Adoption of new policies in fiscal 2003
We will be adopting recent Canadian accounting pronouncements in fiscal 2003.
These are fully described in Note 1 to the Consolidated Financial Statements.

Changes in accounting presentation
This year, the Company retroactively changed the income statement
classification of the discounts given to dealers who distribute DTH receiving
equipment to be consistent with other practices throughout the Company. Prior
to 2002, discounts were reported in expense and equipment revenue was recorded
on a gross basis. The discount is now netted against revenue. As a result,
DTH revenue and expenses have decreased by $25.6 million, $35.0 million and
$11.0 million for 2002, 2001 and 2000 respectively.

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                                                   

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
over-the-air local and regional broadcast television signals, and either
currently compete or may in the future compete with other distributors of
television signals to homes for a fee, 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.

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 licenced
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 million Canadian households. In
addition, grey and black market DTH providers (i.e. providers of U.S.-based
digital DTH programming services obtained in Canada without authorization from
the CRTC) 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 licences 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
licences 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.

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MANAGEMENTS DISCUSSION AND ANALYSIS

In recent years, the CRTC has also licenced a number of competitive cable
television undertakings to operate within the authorized service areas of
incumbent cable licencees. One of these competitive undertakings, Novus
Entertainment, operates within one of Shaws licenced service areas in
Vancouver. Another competitive undertaking, Suite Systems Inc., has been
licenced to operate within a number of Shaws licenced service areas in western
Canada, including Calgary and Edmonton, but recently requested that the CRTC
revoke its licence, as it no longer intends to commence operations.

Since 1998, telephone companies have been eligible to hold full scale
broadcasting distribution licences from the CRTC. To date, four telephone
companies, Alliant Telecom Inc., Télébec, Manitoba Tel and SaskTel, operating
in the provinces of New Brunswick and Nova Scotia, Québec, Manitoba and
Saskatchewan, respectively, have been granted broadcasting distribution
licences by the CRTC. Telus Corporation has also recently applied to the CRTC
for a broadcasting licence to serve parts of Alberta and British Columbia.

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. Almost all of Shaws cable systems are concentrated in major urban
markets having favourable demographics and growth potential, 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). As at December 31, 2000 according
to reports from the CRTC, approximately 60% of all Internet subscribers in
Canada used low-speed dial-up access services, while the other 40% used
high-speed services.

High-speed Internet access services are principally provided through cable
modem and DSL (Digital Subscriber Line) 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
currently provided by cable companies only, although 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 the rate of
ISP access at $21.25 per end-user per month 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 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.

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

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MANAGEMENTS DISCUSSION AND ANALYSIS

downloading and interactive gaming), in particular, will lead to continued,
strong growth rates for high-speed Internet services such as Shaw High-Speed
Internet. Longer term, Shaw anticipates that a projected proliferation of
Internet devices, including smaller and less expensive personal computers,
digital television sets and other Internet appliances, may accelerate demand
for, and increase the value of, high-speed Internet services, benefiting Shaw
and other broadband providers.

DTH

The Star Choice DTH business faces much the same competitive environment as
cable television companies. Competitors include Bell ExpressVu (the only other
licenced 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 licence from the CRTC in 1999. At present,
Cancom and Bell ExpressVu are the only licenced 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 U.S. 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
(IP transit
of data and video, Internet connectivity and services, and Internet
applications infrastructure) 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.

Interest rates, foreign exchange and market value risks
Shaw manages its exposure to floating interest rates and U.S. 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, Cancom and Big
Pipe as more fully described in Note 9 to the
Consolidated Financial Statements.                                                                                            
| |  | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | 2. | Various Canadian and U.S. 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.

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MANAGEMENTS DISCUSSION AND ANALYSIS



| |  | 3. | Equity instruments issued in Canadian and U.S.
dollars with original terms of 25-99 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
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, 2002 Shaw had swapped out $177 million of its $680
million Canadian floating-rate bank indebtedness by means of a Canadian
interest rate swap transaction entered into with a major Canadian
chartered bank. The interest rate was fixed at 8.89%.



| |                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As at August 31, 2002, approximately 83% 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, however are subject to the
foreign exchange fluctuations described below.



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) | Foreign exchange: As the Company has grown to become Canadas largest
broadband service provider, it has accessed the U.S. capital markets for
a portion of its financings. Because 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 U.S.$ denominated debt. In view of this, the
Companys policy with respect to U.S. 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, 2002
approximately 82% of the maturities were hedged. The Company
utilizes cross-currency interest rate transactions, where
appropriate, to hedge its exposures on U.S.$ denominated bank and
debenture indebtedness.  
|
| |     | There is also an exchange risk present with respect to the U.S.$
denominated COPrS included in equity instruments which require
quarterly interest payments and potential redemption in U.S.
dollars. However, because of the long period of time until
mandatory redemption (30 and 99 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
U.S.$ purchase contract with a major Canadian bank whereby it buys
U.S. dollars at a fixed rate on the quarterly interest payment
dates to make these payments. The current agreement enables Shaw
to purchase U.S. 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 has a significant portfolio of shares of publicly
traded Canadian and U.S. corporations. The value of these investments is
subject to market risk. In order to protect against future stock market
volatility, Shaw regularly monetizes some of these investments through
open market sales of these investments or issuance of equity investments
such as exchangeable debentures and zero coupon loans. These equity
instruments result in proceeds to Shaw based upon current trading values
of the related security, and upon maturity, are repayable by tendering
the marketable security upon which the debentures were issued, the
issuance of Shaw Class B Shares, or cash. As at August 31, 2002
approximately 67% of the carrying value of publicly traded investments or
88% of the market value of publicly traded investments as outlined in
Note 5 to the Consolidated Financial Statements, have been monetized
through the use of these equity instruments. Since we have the option of
settling these equity instruments by delivery of the underlying
investment, the respective foreign exchange risk and market risk on the
equity instruments and the underlying investments are eliminated.

11



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MANAGEMENTS DISCUSSION AND ANALYSIS

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

|     |  |                 |      |           |  |           |      |           |  |  |     |  |  |   |       | 
|---- |  | --------------- | ---- | --------- |  | --------- | ---- | --------- |  |  | --- |  |  | - | ----- | 
|     |  | Change in       |      | Change in |  | Change in |      | Impact on
|     |  | Cdn $ vs.       |      | principal |  | interest  |      | loss per 
|     |  | U.S.$           |      | amount    |  | expense   |      | share(1) 
|     |  |                 |      |           |  |           |      |          
|     |  | ($millions Cdn)
|Debt |  | $               | 0.01 |           |  |           | 2.0  |           |  |  | 0.2 |  |  | $ | 0.002 | 
|     |  | $               | 0.03 |           |  |           | 6.2  |           |  |  | 0.7 |  |  | $ | 0.006 | 
|     |  | $               | 0.05 |           |  |           | 10.4 |           |  |  | 1.1 |  |  | $ | 0.008 | 
|     |  |                 |      |           |  |           |      |           |  |  |     |  |  |   |       | 

|                   |       |                 |          |           |  |             |      |              |  |  |      |  |  |  |     | 
|------------------ | ----- | --------------- | -------- | --------- |  | ----------- | ---- | ------------ |  |  | ---- |  |  |  | --- | 
|                   |       | Change in       |          | Change in |  | Change in   |      | Impact on   
|                   |       | Cdn $ vs.       |          | principal |  | entitlement |      | earnings per
|Equity Instruments | U.S.$ | 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/A | 
|SHELS              |       | $               | 0.01     |           |  |             | 1.2  |              |  |  | 0.03 |  |  |  |    | 
|                   |       | $               | 0.03     |           |  |             | 3.6  |              |  |  | 0.08 |  |  |  |    | 
|                   |       | $               | 0.05     |           |  |             | 6.0  |              |  |  | 0.13 |  |  |  |    | 
|Zero 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 40%. Includes interest impact and
dividend entitlement impact and the amortization of the change in
principal amounts that would be amortized over the remaining life of the
unhedged debt.                                                                                              
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Under Canadian GAAP, equity instruments are classified as equity and
are measured using historical values and are not affected by foreign
exchange rate changes. Under U.S. GAAP, equity instruments are
classified as debt, and are therefore affected by foreign exchange rate
changes as outlined in the table above.

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, 2002, 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. To the extent specific litigation matters have been publicly
disclosed by the Company in prior reports to shareholders, management of the
Company continues to view contingent losses thereunder to be unlikely.

Uninsured risks of loss
Telesat (Canada) (Telesat), the sole provider of satellite facilities in
Canada, has publicly disclosed in the notes to its financial statements for the
period ended June 30, 2002 the following:

In August 2001, Boeing Satellite Systems (Boeing), the manufacturer of the
Anik F1 satellite, advised Telesat of a gradual decrease in available power
on-board the satellite. Telesats view was that the anomaly would over time
require that some of Anik F1s transponders be turned off and advised its
insurers of this fact. On July 19, 2002, Boeing advised Telesat that the
amount of available power could decline beyond levels previously expected.
Boeing is investigating the cause of the power loss but, at this time,
cannot accurately quantify the eventual extent of the degradation. If the
situation does not change, at current observed rates of power degradation,
certain core services on the satellite could be affected starting in mid 2005.

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However, Telesat will immediately begin the planning required to take the
appropriate action through backup or other arrangements to provide its
customers with continuous service. Telesat has insurance in place to cover
such occurrences and intends to file a claim at the appropriate time. Although
management believes that any claim it makes in connection with the power
anomaly will be resolved successfully, there can be no assurances on the
ultimate timing, amount or success of the settlement of such claim.

Based on the above, we do not anticipate any incremental cost to the Company
or disruption to our DTH and satellite service customers.

We have also been in discussions with Telesat and Industry Canada regarding 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, at a power
level that would cause significant interference to Star Choice. The launch, if
it proceeds, would contravene current satellite coordination agreements between
Telesat and Satmex, and Canada and Mexico. The Canadian government and Telesat
are directly opposed to the launch of the satellite and are taking all possible
action to ensure that Satmex does not operate the satellite in a manner that
interferes with Star Choices services. We have been advised by Industry
Canada that the matter should be resolved consistent with current satellite
coordination agreements and we do not anticipate any disruption to Star
Choices services.

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 the 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, we will only be restored as additional capacity becomes available,
unless backup stand-by systems can be arranged. Restoration of our satellite
service on a U.S. satellite may require repositioning or re-pointing of
consumersreceiving dishes. The 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 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 and in some geographic areas is not
available. 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.

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MANAGEMENTS DISCUSSION AND ANALYSIS

II. RESULTS OF OPERATIONS

OVERVIEW OF FISCAL 2002 CONSOLIDATED RESULTS

|                                      |                                                                                   |           |   |           |      |      |   |           |      |  |   |         |      | 
|------------------------------------- | --------------------------------------------------------------------------------- | --------- | - | --------- | ---- | ---- | - | --------- | ---- |  | - | ------- | ---- | 
|                                      |                                                                                   |           |   | 2002      |      | 2001 |   | 2000     
|                                      |                                                                                   |           |   |           |      |      |   |          
|($000s Cdn except per share amounts) |                                                                                   |           |   |           |      |      |   |           |      |  |   |        
|Operations:                           |                                                                                   |           |   |           |      |      |   |           |      |  |   |        
|                                      | Revenue                                                                           |           |   | 1,888,560 |      |      |   | 1,536,953 |      |  |   | 960,000 |     
|                                      | Operating income before amortization                                              |           |   | 632,673   |      |      |   | 460,340   |      |  |   | 397,663 |     
|                                      | Operating margin                                                                  |           |   | 33.5      | %    |      |   | 30.0      | %    |  |   | 41.4    | %   
|                                      | Cash flow from operations                                                         |           |   | 332,109   |      |      |   | 210,514   |      |  |   | 237,789 |     
|                                      | Reported net income (loss)                                                        |           |   | (288,292  | )    |      |   | (147,421  | )    |  |   | 133,604 |     
|Per
share data(1):                    |                                                                                   |           |   |           |      |      |   |           |      |  |   |        
|                                      | Cash flow per share  basic                                                       |           | $ | 1.25      |      |      | $ | 0.77      |      |  | $ | 1.08    |     
|                                      |                                                                                   |  diluted |   | $         | 1.23 |      |   | $         | 0.77 |  |   | $       | 1.08 | 
|                                      | Earnings (loss) per share  basic
and diluted                                     |           | $ | (1.43     | )    |      | $ | (0.85     | )    |  | $ | 0.53    |     
|                                      | Weighted average number of
participating shares
outstanding during period (000s) |           |   | 231,820   |      |      |   | 221,079   |      |  |   | 188,927 |     
|                                      |                                                                                   |           |   |           |      |      |   |           |      |  |   |        



---

|(1) |  | After deducting after-tax entitlements on equity instruments of $42,331 or
$0.18 per share [2001  $40,123 or $0.18 per share; 2000  $33,071 or $0.18 per
share] for the year.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Highlights
As set forth in its second quarter report to shareholders, the Company aligned
its resources to pursue the primary objective of achieving strong growth in a
sustainable free cash flow environment. Comparing the February quarter to the
August quarter or over a six month period, the cable, Internet and Big Pipe
division (the Cable division), which represents over 70% of Shaws revenue,
grew operating income before amortization by 24% and reversed negative cash
flow of $185 million to achieve breakeven cash flow. The Cable division is now
on track to achieving an anticipated $105 million of free cash flow in fiscal
2003.

Over the same period, DTH and satellite services (the Satellite division)
grew operating income before amortization by 205% and reduced its cash flow
deficit from $62 million to $39 million. We believe the division will achieve
a cash flow positive run rate in fiscal 2004.

In the immediate term, Shaw has access to approximately $1 billion of available
credit facilities. Adding to our liquidity is the potential sale of our US
cable systems for proceeds of approximately $300 million. The outlook for the
next five years is very positive as we believe we can generate in excess of $1
billion of free cash flow from operations on a consolidated basis. This
outlook is based on conservative growth assumptions in the Cable division of 5%
per year for operating income before amortization for the years 2004  2007 and
average capital expenditures of $285 million per year for the same period. The
outlook for the Satellite division is based on operating income before
amortization growing 300% from 2003  2007 and subscriber average growth of
435,000 (an average of 86,000 per year) over the same period. Based on the
above and the existing Shaw credit facilities, we believe we will not have to
access the debt capital market during the next five years. Although we
anticipate that actual results over the next five years will exceed the above
assumptions, this outlook clearly illustrates the potential for value creation
for all of our stakeholders.

Shaw has a high quality infrastructure, a large and growing customer base and a
strong management team totally focused on growing free cash flow. Shaw
believes that it has achieved a turning point in pursuing its primary objective
of growing free cash flow and that the outlook is very positive.

14



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MANAGEMENTS DISCUSSION AND ANALYSIS

Revenue and operating expenses

|                                     |  |      |       |      |  |      |       |   |  |   |      |   |  |        |      |      |  |  |       |  
|------------------------------------ |  | ---- | ----- | ---- |  | ---- | ----- | - |  | - | ---- | - |  | ------ | ---- | ---- |  |  | ----- | -
|                                     |  |      |       |      |  |      |       |   |  |   |      |   |  | Change
|                                     |  |      |       |      |  |      |       |   |  |   |      |   |  |       
|                                     |  |      |       |      |  |      |       |   |  |   |      |   |  | 2002   |      | 2001
|                                     |  | 2002 |       | 2001 |  | 2000 |       | % |  | %
|                                     |  |      |       |      |  |      |       |   |  |  
|(In $millions Cdn)                   |  |      |       |      |  |      |       |   |  |   |      |   |  |        |      |      |  |  |       |  
|Revenue                              |  |      | 1,889 |      |  |      | 1,537 |   |  |   | 960  |   |  |        | 22.9 |      |  |  | 60.0  |  
|Operating income before amortization |  |      | 633   |      |  |      | 460   |   |  |   | 398  |   |  |        | 37.4 |      |  |  | 15.8  |  
|Operating margin                     |  |      | 33.5  | %    |  |      | 30.0  | % |  |   | 41.4 | % |  |        | 3.5  |      |  |  | (11.4 | )
|                                     |  |      |       |      |  |      |       |   |  |   |      |   |  |        |      |      |  |  |       |  

In 2002, comparable revenue increased 23%. 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 this
year. Operating income before amortization surpassed revenue growth with a
37% increase and an operating margin improvement of 3.5%. The increase
reflects 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 reflects the cost savings arising from
the restructuring of the cable and Internet division, the elimination of the
Excite@Home royalty fee in December 2001 and the net lift from the prior years
inclusion of a one-time incentive payment for all staff totalling $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. As of August 31, 2002, Shaw has paid $4.1 million
of severance costs related to the restructuring provision.

In 2001, comparable revenue increased by 60%. This increase was due to the
outstanding customer gains combined with the inclusion of the acquisition of
Moffat, the exchange of cable systems with Rogers and the consolidation of
Cancom (including Star Choice). Operating income before amortization increased
by 16%. This increase lagged behind revenue as it included the losses of Star
Choice for twelve months compared to two months in 2000 and also included a
one-time incentive payment for all staff totalling $9 million. Star Choice
experienced operating losses up until the second quarter of 2002 as it was in
the early stage of deployment and growth of the Star Choice DTH business.

Fixed charges

|                                     |                               |  |      |     |      |  |      |     |   |  |     |     |  |  |        |        |      |  |       |      
|------------------------------------ | ----------------------------- |  | ---- | --- | ---- |  | ---- | --- | - |  | --- | --- |  |  | ------ | ------ | ---- |  | ----- | -----
|                                     |                               |  |      |     |      |  |      |     |   |  |     |     |  |  | Change
|                                     |                               |  |      |     |      |  |      |     |   |  |     |     |  |  |       
|                                     |                               |  |      |     |      |  |      |     |   |  |     |     |  |  | 2002   |        | 2001
|                                     |                               |  | 2002 |     | 2001 |  | 2000 |     | % |  | %  
|                                     |                               |  |      |     |      |  |      |     |   |  |    
|(In $millions Cdn)                   |                               |  |      |     |      |  |      |     |   |  |     |     |  |  |        |        |      |  |       |      
|Amortization
                       |                               |  |      |     |      |  |      |     |   |  |     |     |  |  |        |        |      |  |       |      
|                                     | Property, plant and equipment |  |      | 409 |      |  |      | 288 |   |  |     | 178 |  |  |        | 42.0   |      |  |       | 61.9 
|                                     | Deferred charges              |  |      | 180 |      |  |      | 117 |   |  |     | 27  |  |  |        | 53.8   |      |  |       | 336.5
|                                     | Intangibles                   |  |      |    |      |  |      | 71  |   |  |     | 29  |  |  |        | (100.0 | )    |  |       | 141.5
|                                     |                               |  |      |     |      |  |      |     |   |  |     |     |  |  |        |        |      |  |       |      
|                                     |                               |  | 589  |     |      |  | 476  |     |   |  | 234 |     |  |  | 23.7   |        |      |  | 103.4 |      
|Amortization of deferred IRU revenue |                               |  | (12  | )   |      |  | (5   | )   |   |  | (3  | )   |  |  | 134.9  |        |      |  | 62.4  |      
|Interest                             |                               |  | 267  |     |      |  | 207  |     |   |  | 121 |     |  |  | 29.2   |        |      |  | 71.0  |      
|                                     |                               |  |      |     |      |  |      |     |   |  |     |     |  |  |        |        |      |  |       |      

In 2002, comparable 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 2001, comparable amounts
increased by 62% as a result of the aforementioned reasons, plus the full-year
consolidation of Cancom.

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MANAGEMENTS DISCUSSION AND ANALYSIS

In 2002, comparable amortization of deferred charges increased 54% primarily
due to the higher amortization of equipment subsidies which resulted from
higher growth of digital and DTH subscribers in recent years. In 2001, the same
charges increased over three times principally due to the inclusion of a full
year consolidation of Cancom and its associated deferred equipment subsidies.

As a result of adopting the new accounting policy for goodwill and intangibles
discussed previously, no amortization was recorded on intangibles in 2002. In
2001, the comparable amortization of intangibles more than doubled due to the
Moffat acquisition, the Rogers exchange and the Cancom acquisition.

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 GTG roup 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 the
30-year period. In 2002, comparable amortization increased by 135% over last
year due to the full year inclusion of amortization of the Moffat IRU and due
to the first-time amortization of the future build component of the Shaw IRU
that was completed this year. In 2000, the amortization was only $3 million as
it included only a one-half year inclusion of amortization of the Shaw IRU and
did not include any amortization of the Moffat IRU.

In 2002, comparable interest expense increased by 29% due to increased
borrowing required to finance the Moffat acquisition, the Rogers exchange and
capital expenditures. In 2001, comparable interest increased by 71% due to the
foregoing reasons and due to the consolidation of Cancom results for the full
year.

Investment activity gains and losses

|                                                             |  |      |      |      |  |      |      |      |  |      |     |  |  |                      |      |   |  |  |      |  
|------------------------------------------------------------ |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | --- |  |  | -------------------- | ---- | - |  |  | ---- | -
|                                                             |  |      |      |      |  |      |      |      |  |      |     |  |  | Increase            
|                                                             |  |      |      |      |  |      |      |      |  |      |     |  |  | (decrease) in income
|                                                             |  |      |      |      |  |      |      |      |  |      |     |  |  |                     
|                                                             |  | 2002 |      | 2001 |  | 2000 |      | 2002 |  | 2001
|                                                             |  |      |      |      |  |      |      |      |  |     
|(In $millions Cdn)                                           |  |      |      |      |  |      |      |      |  |      |     |  |  |                      |      |   |  |  |      |  
|Gain (loss) on sale of investments                           |  |      | 2    |      |  |      | (107 | )    |  |      | 143 |  |  |                      | 109  |   |  |  | (250 | )
|Write-down of investments                                    |  |      | (330 | )    |  |      | (163 | )    |  |      |    |  |  |                      | (167 | ) |  |  | (163 | )
|Gain on redemption of SHELS                                  |  |      | 218  |      |  |      |     |      |  |      |    |  |  |                      | 218  |   |  |  |     |  
|Dilution gain (loss) on issuance of stock by
equity investee |  |      | (1   | )    |  |      | 5    |      |  |      | 33  |  |  |                      | (6   | ) |  |  | (28  | )
|                                                             |  |      |      |      |  |      |      |      |  |      |     |  |  |                      |      |   |  |  |      |  

Gain (loss) on sale of investments
In 2002, the gain on sale of $2 million primarily relates to the sale of
approximately 673,000 Terayon Communications Systems (Terayon) shares. In
2001, the loss on sale of $107 million was due to a loss on the sale of
360networks of $138 million less net gains of $21 million on the sale of other
investments. In 2000, the gain of $143 million reflected the sale of a number
of investments in companies such as At Home Corporation (At Home), Cogeco
Cable Inc., OpenTV Inc., CTV Inc., Terayon and Liberate Technologies.

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

In June of 2002, GT announced that it was unlikely to meet certain of its bank
covenants and would seek court protection from its creditors. As a result,
Shaw wrote-down its investment in GT by $269 million during the third quarter of 2002. In fiscal 2000, Shaw acquired 1,100,000
Subordinate Voting shares of Cogeco Cable Inc. (Cogeco) for $46.3 million for
long-term strategic business purposes. Shaw determined that the decline in the
market value of the shares of Cogeco represented an impairment that is other
than temporary. The shares have been written down by $33.6 million to the
August 31, 2002 market value. In fiscal 2000,

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MANAGEMENTS DISCUSSION AND ANALYSIS

Shaw acquired the 1,372,000 common shares of Liberty Digital Inc. (Liberty
Digital) and a review of that investment at August 31, 2001 resulted in a
write-down of the investment to its then current market value of $8.5 million.
Effective March 14, 2002 Liberty Media Corporation (Liberty Media) completed
the purchase of Liberty Digital and the 1,372,000 shares of Liberty Digital
were exchanged for 343,000 shares of Liberty Media. Further review of Liberty
Media indicated that the further decline in market value of the shares
represented an impairment that is other than temporary and the investment has
been written down by $4.0 million to the August 31, 2002 market value. Shaw
wrote-down its private companies portfolio by $23.9 million to the portfolios
estimated net realizable value. The prior years write-down of $163.5 million
was primarily due to the aforementioned write-down of Liberty Media of $103
million, TippingPoint Technologies Inc. for $21 million, other public companies
of $6 million and private companies of $33 million.

Gain on redemption of SHELS
The 2002 write-downs were partially offset by a gain of $218 million recorded
in the third quarter as a result of the At Home shares being surrendered to
settle the SHELS I and SHELS II equity linked debentures. The settlement of
the SHELS will improve annual cash flow by approximately $6.2 million
(before-tax) with the elimination of annual dividend entitlement payments.

Dilution gain/(loss) on issuance of stock by investee
The dilution gain and loss arose due to issuances of equity by GT subsequent to
Shaws investment. These issuances changed Shaws percentage ownership in GT
to approximately 23.2% at May 31, 2002, 23.3% at August 31, 2001, and 23.7% at
August 31, 2000 from a previous percentage ownership of 30.7% and resulted in
the respective dilution gain/(loss) outlined in the above table.

Other non-operating income and
expenses

|                                 |  |      |    |      |  |      |    |      |  |      |     |   |  |                      |     |   |  |  |     |  
|-------------------------------- |  | ---- | -- | ---- |  | ---- | -- | ---- |  | ---- | --- | - |  | -------------------- | --- | - |  |  | --- | -
|                                 |  |      |    |      |  |      |    |      |  |      |     |   |  | Increase            
|                                 |  |      |    |      |  |      |    |      |  |      |     |   |  | (decrease) in income
|                                 |  |      |    |      |  |      |    |      |  |      |     |   |  |                     
|                                 |  | 2002 |    | 2001 |  | 2000 |    | 2002 |  | 2001
|                                 |  |      |    |      |  |      |    |      |  |     
|(In $millions Cdn)               |  |      |    |      |  |      |    |      |  |      |     |   |  |                      |     |   |  |  |     |  
|Gain on sale of cable systems    |  |      |   |      |  |      | 67 |      |  |      |    |   |  |                      | (67 | ) |  |  | 67  |  
|Loss on sale of satellite assets |  |      | (1 | )    |  |      |   |      |  |      |    |   |  |                      | (1  | ) |  |  |    |  
|Gain on sale of FiberLink assets |  |      |   |      |  |      |   |      |  |      | 88  |   |  |                      |    |   |  |  | (88 | )
|Debt restructuring costs         |  |      |   |      |  |      | (9 | )    |  |      | (98 | ) |  |                      | 9   |   |  |  | 89  |  
|Other revenue (expense)          |  |      | 6  |      |  |      | (1 | )    |  |      | 4   |   |  |                      | 7   |   |  |  | (5  | )
|                                 |  |      |    |      |  |      |    |      |  |      |     |   |  |                      |     |   |  |  |     |  

On May 31, 2002 Shaw sold its uplink and SRDU business in the Caribbean for $1
million resulting in a loss of $1.3 million. On August 31, 2001 the Company
sold its interest in its Nova Scotia cable systems for $210 million which
resulted in the pre-tax gain of $67 million. The gain on sale of FiberLink
assets in 2000 reflects the February 2000 sale of the FiberLink business to GT.

In November 2000, the Company incurred $9 million of debt restructuring charges
in respect of the repayment of the Fundy 11% senior secured second priority
notes. The restructuring costs will be more than offset by interest savings of
approximately $20 million over the five years following the repayment of the
notes. In 2000, the restructuring costs of $98 million were in respect of the
Companys redemption of its previously outstanding private placement
debentures.

Income taxes
The income tax provision for 2001 included a $250 million future income tax
recovery as a result of income tax rate reductions. In consequence of adopting
the tax liability method of accounting last 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 release of draft legislation causing a large reduction in the
Companys net future tax liability position in 2001.

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MANAGEMENTS DISCUSSION AND ANALYSIS

Equity loss on investees

|                   |  |      |     |      |  |      |     |      |  |      |     |   |  |                      |    |  |  |  |     |  
|------------------ |  | ---- | --- | ---- |  | ---- | --- | ---- |  | ---- | --- | - |  | -------------------- | -- |  |  |  | --- | -
|                   |  |      |     |      |  |      |     |      |  |      |     |   |  | Increase            
|                   |  |      |     |      |  |      |     |      |  |      |     |   |  | (decrease) in income
|                   |  |      |     |      |  |      |     |      |  |      |     |   |  |                     
|                   |  | 2002 |     | 2001 |  | 2000 |     | 2002 |  | 2001
|                   |  |      |     |      |  |      |     |      |  |     
|(In $millions Cdn) |  |      |     |      |  |      |     |      |  |      |     |   |  |                      |    |  |  |  |     |  
|Total              |  |      | (53 | )    |  |      | (71 | )    |  |      | (31 | ) |  |                      | 18 |  |  |  | (40 | )
|                   |  |      |     |      |  |      |     |      |  |      |     |   |  |                      |    |  |  |  |     |  

As a result of the write-down of GTin the third quarter of 2002, Shaw will not
be recording further equity losses or income on GT until GT generates
sufficient income to recover its losses incurred from May 31, 2002 onwards.
Consequently, the equity losses on investees have decreased over last year. In
2000, the comparable equity losses were lower, as GT was acquired midway
through the year in February 2000. The Biography Channel (Canada), TechTV
Canada and MSNBC Canada 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 these companies.

Investment in Burrard Landing Partnership
Shaw, in conjunction with Westbank Projects Corporation and Ledcor Industries,
formed the Burrard Landing Lot 2 Holding Partnership (Partnership) to build a
unique mixed-use structure, with office/retail space and live/work space in
Coal Harbour, Vancouver. When construction is complete in approximately two
years, 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 will be financed primarily through the
Partnerships own credit facilities of $118.5 million plus equity from the
partners of approximately $26 million. Shaws direct investment will total
approximately $10 million and its guarantee with respect to the debt is $18.2
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. A review of the project in September indicates
that the project should be very successful as sales are very robust and ahead
of plan while costs are in line with the business plan.

As of August 2002, Shaws investment in the Partnership is $6.9 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 building is still in construction, all costs of
construction, 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.

Reported net income (loss)

|                                                                                 |  |      |         |      |  |      |         |   |  |   |         |  |  |        |       |      |  |  |        |  
|-------------------------------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- |  |  | ------ | ----- | ---- |  |  | ------ | -
|                                                                                 |  |      |         |      |  |      |         |   |  |   |         |  |  | Change
|                                                                                 |  |      |         |      |  |      |         |   |  |   |         |  |  |       
|                                                                                 |  |      |         |      |  |      |         |   |  |   |         |  |  | 2002   |       | 2001
|                                                                                 |  | 2002 |         | 2001 |  | 2000 |         | % |  | %
|                                                                                 |  |      |         |      |  |      |         |   |  |  
|(In $millions Cdn)                                                               |  |      |         |      |  |      |         |   |  |   |         |  |  |        |       |      |  |  |        |  
|Reported net income (loss)                                                       |  |      | (288    | )    |  |      | (147    | ) |  |   | 134     |  |  |        | (95.6 | )    |  |  | (210.3 | )
|Earnings
(loss) per share  basic(1)                                             |  |      | ($1.43  | )    |  |      | ($0.85  | ) |  | $ | 0.53    |  |  |        | (68.2 | )    |  |  | (260.4 | )
|Weighted average number of
participating share outstanding
during period (000s) |  |      | 231,820 |      |  |      | 221,079 |   |  |   | 188,927 |  |  |        | 4.9   | %    |  |  | 17.0   |  
|                                                                                 |  |      |         |      |  |      |         |   |  |   |         |  |  |        |       |      |  |  |        |  



---

|(1) |  | After deducting after-tax entitlements on equity instruments of $42,331 or
$0.18 per share [2001  $40,123 or $0.18 per share; 2000  $33,071 or $0.18
per share] for the year.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In 2002, the comparable reported net loss increased by 96% primarily due to an
income tax recovery of $250 million recorded last year as a result of income
tax rate reductions. The increase in loss per share of 68% was less than the
96% 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 shares issued on the Moffat and Cancom acquisitions in 2001.

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MANAGEMENTS DISCUSSION AND ANALYSIS

In 2001, the reported net loss was $147 million compared to the 2000 reported
net income of $134 million, or a $281 million decrease. The reduction of
comparable reported net income in 2001, is primarily due to the inclusion of a
full year losses of Star Choice in 2001 and the net investment activity losses
of $270 million in 2001 compared to net investment activity gains of $143
million in 2000. These reductions were offset by the $250 million income tax
recovery reported in 2001. The higher relative percentage decline of 260% in
earnings (loss) per share reflects the fact that the weighted average shares
only increased by 17% in comparison to the larger percentage increase in the
loss.

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

Segmented reporting
This year we combined the segmented reporting for cable, Internet and Big Pipe
(Cable). We believe it is more appropriate to combine the segmented
reporting for cable, Internet and Big Pipe for the following reasons. Internet
is similar to other services, such as pay-per-view, pay TV and tiers, which
make use of a common network infrastructure. All of these services for the
most part share the same physical infrastructure, sales and marketing
organization and support staff. The bundling of cable and Internet services has
become pervasive and serves as a competitive offering against both satellite
and Internet competitors. Likewise, Big Pipe operates our Internet
infrastructure which it shares with cable and Internet. As such, allocation of
costs and bundled discounts between segments has become increasingly complex
and costly. The investor and analyst community already combines these segments
in determining the value of the enterprise. Cable companies in the U.S.
already combine these segments for reporting purposes. In addition, our
competitors have, to varying degrees, combined these operations with other
non-related operations in their enterprise, thus making a meaningful comparison
difficult.

CABLE

Free Cash Flow
As announced in the second quarter report to shareholders we aligned our
resources to pursue the primary objective of achieving strong growth in a
sustainable free cash flow environment. We define free cash flow as operating
income before amortization less: interest, entitlements on equity instruments,
cash taxes, capital expenditures and equipment subsidies. In comparing the
February quarter to the August quarter or over a six month period, the Cable
division, which represents over 70% of Shaws business, grew operating income
before amortization by 24% and reversed negative cash flow of $185 million to
achieve breakeven cash flow. This progress to date bolsters our confidence
going forward in achieving free cash flow of $105 million in fiscal 2003. In
this regard, we have targeted an increase in Cable operating income before
amortization from $609 million in 2002 to $710 million in 2003 through growth
of revenue via new service offerings, increased bundling of services,
subscriber growth and rate increases. In addition, operating income before
amortizaton is expected to increase with continued cost reduction programs
which include such things as restricted travel, cell phone use and a revised
auto lease program. Finally, due to the substantial completion of the upgrade
of our capital infrastructure, we plan to reduce capital expenditures and
equipment subsidies in 2003 as follows:

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MANAGEMENTS DISCUSSION AND ANALYSIS

CABLE

CAPITAL EXPENDITURES AND EQUIPMENT SUBSIDIES

|                                                   |                          |  |             |     |              |  |     |     | 
|-------------------------------------------------- | ------------------------ |  | ----------- | --- | ------------ |  | --- | --- | 
|                                                   |                          |  | Actual 2002 |     | Planned 2003
|                                                   |                          |  |             |     |             
|(In $millions Cdn)                                 |                          |  |             |     |              |  |     |    
|Capital expenditures and equipment subsidies:      |                          |  |             |     |              |  |     |    
|                                                   | New housing development  |  |             | 66  |              |  |     | 58  | 
|                                                   | Success based            |  |             | 164 |              |  |     | 53  | 
|                                                   | Upgrades and enhancement |  |             | 295 |              |  |     | 138 | 
|                                                   | Replacement              |  |             | 59  |              |  |     | 57  | 
|                                                   | Buildings/Other          |  |             | 99  |              |  |     | 29  | 
|                                                   |                          |  |             |     |              |  |     |    
|Total capital expenditures and equipment subsidies |                          |  | 683         |     |              |  | 335 |    
|                                                   |                          |  |             |     |              |  |     |    

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. Our 2003 guidance is based on
our estimate of new homes passed for next year and is in line with our
experience in 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Success based capital includes capital and equipment
subsidies related to the acquisition of new customers including installation of
modems, digital cable terminals (DCTs), filters and commercial drops for Big
Pipe customers. Our estimate for 2003 for success based capital is lower than
in 2002, due to lower projections of customer growth, significantly less
subsidies on DCTs than in 2002 and less customer turnover on cable modems due
to the elimination of certain marketing programs.                                                                                                                                                                                                                                                                                             
|   
|(3) |  | Upgrades and enhancement
capital includes upgrades to the plant from 550 digital to 750 digital, build
up of fiber backbone to avoid cost of leased circuit networks and decrease in
Internet node size. Our anticipated costs for upgrade and replacement are
approximately half of 2002 actual costs as we have completed significant
upgrades to our system to accommodate future growth. For example, our plant is
fully digital, 98% two-way capable, 50% is 750 digital (soon to be 60%), 50% is
550 digital and average node sizes accommodate approximately 1,100 homes plus
we have two Internet Data Centers with capacity to accommodate 100% of our
basic customers of approximately 2,000,000. In addition, we have no further
commitments in respect of fiber purchases from 360networks.
|   
|(4) |  | Replacement
capital includes normal replacement of aged assets such as drops, vehicles and
other equipment. Our projection for 2003 is in line with actual expenditures
incurred in 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(5) |  | In 2003, buildings and other expenditures will decrease
as a major portion of our upgrades and building projects have been completed
this year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

FINANCIAL HIGHLIGHTS

|                                           |  |      |           |      |  |      |           |   |  |   |         |   |  |        |      |      |  |  |      |  
|------------------------------------------ |  | ---- | --------- | ---- |  | ---- | --------- | - |  | - | ------- | - |  | ------ | ---- | ---- |  |  | ---- | -
|                                           |  |      |           |      |  |      |           |   |  |   |         |   |  | Change
|                                           |  |      |           |      |  |      |           |   |  |   |         |   |  |       
|                                           |  |      |           |      |  |      |           |   |  |   |         |   |  | 2002   |      | 2001
|                                           |  | 2002 |           | 2001 |  | 2000 |           | % |  | %
|                                           |  |      |           |      |  |      |           |   |  |  
|($000s Cdn)                                |  |      |           |      |  |      |           |   |  |   |         |   |  |        |      |      |  |  |      |  
|Revenue (third party)                      |  |      | 1,367,563 |      |  |      | 1,120,244 |   |  |   | 880,702 |   |  |        | 22.1 |      |  |  | 27.2 |  
|Operating income before amortization       |  |      | 608,916   |      |  |      | 470,700   |   |  |   | 391,874 |   |  |        | 29.4 |      |  |  | 20.1 |  
|Operating margin                           |  |      | 44.5      | %    |  |      | 42.0      | % |  |   | 44.5    | % |  |        | 2.5  |      |  |  | (2.5 | )
|Capital expenditures (including corporate) |  |      | 630,879   |      |  |      | 693,484   |   |  |   | 559,751 |   |  |        |      |      |  |  |      |  
|DCT and modem subsidies                    |  |      | 52,446    |      |  |      | 58,277    |   |  |   | 7,700   |   |  |        |      |      |  |  |      |  
|                                           |  |      |           |      |  |      |           |   |  |   |         |   |  |        |      |      |  |  |      |  

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MANAGEMENTS DISCUSSION AND ANALYSIS

2002 vs. 2001
Comparable revenue increased 22%. Approximately 65% of this growth was due to
organic growth through 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. Customer gains for the year included
174,303 Internet subscribers, 72 Big Pipe customers and increased digital
deployment of 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 is 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 March 1, 2001 last year. Therefore the results for the
Moffat systems are included for a full year in 2002 versus six months last
year. This year also includes three months of results from the acquisition in
June 2002 of Viewers Choice, which operates a pay-per-view video service in
Western Canada. The Rogers exchange, which included a net gain of 22,000
subscribers, occurred in November 2000, therefore this year we have two
additional months of results from the net exchange. Offsetting these increases
was the sale of the Access systems effective August 31, 2001, which served
approximately 71,000 basic subscribers.

As a result of price increases and due to cost cutting measures introduced in
the third quarter of this year, operating income before amortization outpaced
revenue growth with a 29% increase. 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 phones, 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.

Effective October 2002, all our class 1 systems will be rate deregulated. As
outlined above, effective May 2002, we implemented a $3 per month price
increase across all packages and bundles. This price increase affected
approximately 90% of our Canadian customer base. Approximately 300,000 basic
only customers have not seen any significant price increases in the past 5
years. The average basic rate is approximately $18 per month compared to a DTH
satellite equivalent basic rate of $21 per month. Accordingly, effective
January 2003, we will increase prices by an average of $2 per month for these
customers.

Effective June 2002, Shaw introduced the modem purchase promotion. For a
limited time, new and existing customers may purchase the cable modem for
$59.95 including professional installation. The subsidy on the modem purchase
is being accounted for in the same manner as the subsidies on DCTs.

The combined decrease of $68 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 is complete. In addition, last
years higher expenditures were related to the incremental addition of
subscribers in 2001, (70,000 in both Internet and digital), the completion of
the Internet Data Center (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 this years expenditures 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 light
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.

Launch of Video-on-demand (VOD)
In September 2002, Shaw launched its Video-on-Demand (VOD) service for
Internet and digital customers in Calgary. In conjunction with the launch,
Shaw recently announced a long-term agreement with Alliance

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MANAGEMENTS DISCUSSION AND ANALYSIS

Atlantis to provide movies for the new VOD service. Alliance Atlantis will
supply Shaw with a line-up of current releases as well as older titles from its
catalogue of films. The VOD service will enable 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 should be 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 these are requirements in order to
receive the service.

2001 vs. 2000
The growth in revenue of 27% for the year is attributable to the following
factors:



|a) |  | The acquisition of Moffat effective March 1, 2001 which included
approximately 312,000 basic subscribers, located primarily in Alberta and
Manitoba, and 71,000 basic subscribers in Texas and Florida.
This accounted for approximately $113 million of the increase in revenue.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|b) |  | Approximately $47 million of the growth resulted from the Rogers cable
system exchange, which includes organic growth in the Vancouver cable systems.                                                                                                                            
|  
|c) |  | On January 1, 2001 the basic monthly rate increased $0.08 in most systems
and Tier I monthly rates increased by $0.75 which resulted in approximately $9
million additional revenue for the year.                                                                                
|  
|d) |  | An increase in pay-per-view revenue
of approximately $4 million as a result of the tremendous growth in digital
cable.                                                                                                                                                           
|  
|e) |  | In 2001, Big Pipe reported its first time third-party revenues of
approximately $11 million.                                                                                                                                                                                     
|  
|f) |  | The remaining increase is from overall growth in
basic, extended tier, pay TV and Internet.                                                                                                                                                                                      

Operating income before amortization lagged behind revenue growth with a 20%
increase. This reflects inherited costs of the acquired Moffat and Rogers cable
system acquisitions. For example, the Moffat cable systems had operating
margins of approximately 40% prior to Shaws control. Further, copyright fees,
which are calculated in reference to cable system licence class, increased by
$1 per subscriber per year. On the Rogers exchange, Shaw received a higher
ratio of Class 1 cable systems licences, which are subject to higher copyright
fees than Class 2 (lower fees) and Class 3 (exempt from fees) cable system
licences. In addition, 2001 was the first year of Big Pipe operations, which
incurred operating losses of approximately $6.4 which caused a 1% decrease in
the operating margin over 2000. These increased costs were offset by the
reduction of signal delivery, agreement and franchise charges, which reflect
the full year elimination of Cancom uplink fees in 2001 compared to only two
months in 2000.

The combined increase of $184 million in capital expenditures and equipment
subsidies reflects the increased expenditures in 2001 due to the higher
subscriber additions in digital and Internet, the acquisition of Moffat and the
net Rogers exchange, the significant upgrade to digital and two-way plant, the
addition of the first IDC and Big Pipes purchase of the southern route from
360networks. The southern route includes 6,400 kilometers or 77,000 strand
kilometers of fiber on routes between Vancouver, Calgary, Winnipeg, Toronto and
Buffalo, and Seattle to Sacramento.

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MANAGEMENTS DISCUSSION AND ANALYSIS

SUBSCRIBER STATISTICS

|                            |                                       |                                       |         |           |           |      |         |           |           |        |         |           |           |        |         |         |         |      |       |      |      |   |         |       |         |   |       |     |      |  
|--------------------------- | ------------------------------------- | ------------------------------------- | ------- | --------- | --------- | ---- | ------- | --------- | --------- | ------ | ------- | --------- | --------- | ------ | ------- | ------- | ------- | ---- | ----- | ---- | ---- | - | ------- | ----- | ------- | - | ----- | --- | ---- | -
|                            |                                       |                                       |         |           |           |      |         |           |           |        |         |           |           |        |         | 2002    |         | 2001
|                            |                                       |                                       |         |           |           |      |         |           |           |        |         |          
|                            |                                       |                                       |         | 2002      |           | 2001 |         | 2000(1)   |           | Change |         | %         |           | Change |         | %      
|                            |                                       |                                       |         |           |           |      |         |           |           |        |         |           |           |        |         |        
|CABLE:                      |                                       |                                       |         |           |           |      |         |           |           |        |         |           |           |        |         |         |         |      |       |      |      |   |         |       |         |   |       |    
|Basic service:              |                                       |                                       |         |           |           |      |         |           |           |        |         |           |           |        |         |         |         |      |       |      |      |   |         |       |         |   |       |    
|                            | Actual                                |                                       |         | 2,105,113 |           |      |         | 2,135,125 |           |        |         | 2,130,250 |           |        |         | (30,012 | )       |      |       | (1.4 | )    |   |         | 4,875 |         |   |       | 0.2 |     
|                            | Penetration as a % of homes passed(2) |                                       |         | 68.5      | %         |      |         | 71.4      | %         |        |         | 72.0      | %         |        |         |         |         |      |       |      |      |   |         |       |         |   |       |     |     
|                            | Full Cable Service:                   |                                       |         |           |           |      |         |           |           |        |         |           |           |        |         |         |         |      |       |      |      |   |         |       |         |   |       |     |     
|                            |                                       | Tier I                                |         |           | 1,708,736 |      |         |           | 1,737,653 |        |         |           | 1,759,395 |        |         |         | (28,917 | )    |       |      | (1.7 | ) |         |       | (21,742 | ) |       |     | (1.2 | )
|                            |                                       | Penetration as % of basic             |         |           | 81.2      | %    |         |           | 81.4      | %      |         |           | 82.6      | %      |         |         |         |      |       |      |      |   |         |       |         |   |       |     |      |  
|                            |                                       | Tier II                               |         |           | 1,617,031 |      |         |           | 1,624,823 |        |         |           | 1,625,357 |        |         |         | (7,792  | )    |       |      | (0.5 | ) |         |       | (534    | ) |       |     |     |  
|                            |                                       | Penetration as % of basic             |         |           | 76.8      | %    |         |           | 76.1      | %      |         |           | 76.3      | %      |         |         |         |      |       |      |      |   |         |       |         |   |       |     |      |  
|                            |                                       | Tier III                              |         |           | 1,402,346 |      |         |           | 1,356,251 |        |         |           | 1,309,843 |        |         |         | 46,095  |      |       |      | 3.4  |   |         |       | 46,408  |   |       |     | 3.5  |  
|                            |                                       | Penetration as a % of basic(3)        |         |           | 66.6      | %    |         |           | 63.5      | %      |         |           | 61.5      | %      |         |         |         |      |       |      |      |   |         |       |         |   |       |     |      |  
|Pay TV subscribers          |                                       |                                       | 454,426 |           |           |      | 339,940 |           |           |        | 180,985 |           |           |        | 114,486 |         |         |      | 33.7  |      |      |   | 158,955 |       |         |   | 87.8  |    
|Digital deployment (DCTs) |                                       |                                       | 495,604 |           |           |      | 362,916 |           |           |        | 159,452 |           |           |        | 132,688 |         |         |      | 36.6  |      |      |   | 203,464 |       |         |   | 127.6 |    
|INTERNET:                   |                                       |                                       |         |           |           |      |         |           |           |        |         |           |           |        |         |         |         |      |       |      |      |   |         |       |         |   |       |    
|                            |                                       | Connected and scheduled installations |         |           | 770,348   |      |         |           | 596,045   |        |         |           | 348,473   |        |         |         | 174,303 |      |       |      | 29.2 |   |         |       | 247,572 |   |       |     | 71.0 |  
|                            |                                       | Penetration as % of basic             |         |           | 36.6      | %    |         |           | 27.9      | %      |         |           | 16.4      | %      |         |         |         |      |       |      |      |   |         |       |         |   |       |     |      |  
|BIG PIPE:                   |                                       |                                       |         |           |           |      |         |           |           |        |         |           |           |        |         |         |         |      |       |      |      |   |         |       |         |   |       |    
|External Customers          |                                       |                                       | 113     |           |           |      | 41      |           |           |        | 25      |           |           |        | 72      |         |         |      | 175.6 |      |      |   | 16      |       |         |   | 64.0  |    
|                            |                                       |                                       |         |           |           |      |         |           |           |        |         |           |           |        |         |         |         |      |       |      |      |   |         |       |         |   |       |    



---

|(1) |  | August 31, 2000 Cable and Internet statistics restated for comparative
purposes to adjust subscribers as if the exchange of Shaws New Brunswick and
Ontario cable systems for Rogers Vancouver cable systems, the acquisition of
the Moffat cable systems and the sale of Access cable systems had occurred on
August 31, 2000.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | A post conversion audit of systems acquired and disposed of during the
last two years resulted in the restatement of the homes passed count for
fiscal 2001. This count directly impacts basic customer penetration measured
against homes passed.                                                                               
|   
|(3) |  | In systems where Tier III available.                                                                                                                                                                                                                                                                                             

The decline in basic cable subscribers in the current year of 30,012 compared
to the prior year increase of 4,875 is attributable to increased competition
and the price increase implemented on May 1, 2002. The decline in basic cable
subscribers stabilized in August 2002, and Shaw has gained 6,000 subscribers in
September 2002 which equals our gains of September of last year. The August
and September results are more typical of historical results in the cable
industry.

In 2002, Tier I and Tier II subscribers decreased due to the decrease in basic
cable subscribers whereas Tier III subscribers increased by 46,095. The trend
in 2002 is that those customers who stay with us are upgrading Tiers as a
result of switching to digital. In 2001, despite the increase in basic cable
subscribers, Tier I subscribers decreased by 21,742 as a result of non-digital
customers downgrading services or switching Tiers. Also in 2001, Tier III
subscribers increased by 46,408 due to increased digital deployment. Digital
terminal deployment slowed from 203,464 in the prior year to 132,688 because of
the elimination of free promotional offers.
Correspondingly, Pay TV growth
slowed from 158,955 in 2001 to 114,486 in 2002.

Internet subscriber growth was 174,303 compared to 247,572 last year. The
decrease was due to the $3 price increase and intense competition from
incumbent telephone companies. We regained traction in August of this year with
almost 75% of the growth in the fourth quarter occurring in that month. The
momentum continued in September with the addition of approximately 17,000
Internet subscribers.

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MANAGEMENTS DISCUSSION AND ANALYSIS

SATELLITE  (DTH and Satellite Services)

Free cash flow
For the Satellite division, we define free cash flow as operating income before
amortization less: interest, cash taxes, capital expenditures and equipment
subsidies. Free cash flow for the Satellite division is trending positively.
The Satellite division was cash flow negative in the $214 million range for
fiscal 2002 versus $316 million for fiscal 2001. Our goals are to reduce
negative cash flow by $100 million or to $114 million in 2003 and to achieve a
cash flow positive run rate in fiscal 2004. We plan to achieve our goal in
2003 by increasing Satellite operating income before amortization from $28
million in 2002 to $98 million in 2003 through growth of revenue via subscriber
growth and rate increases. Further, we plan to reduce capital expenditures and
equipment subsidies in 2003 as follows:

SATELLITE

CAPITAL EXPENDITURES AND EQUIPMENT SUBSIDIES

|                                              |               |  |             |     |              |  |     |     | 
|--------------------------------------------- | ------------- |  | ----------- | --- | ------------ |  | --- | --- | 
|                                              |               |  | Actual 2002 |     | Planned 2003
|                                              |               |  |             |     |             
|(In $millions Cdn)                            |               |  |             |     |              |  |     |    
|Capital expenditures and equipment subsidies: |               |  |             |     |              |  |     |    
|                                              | Success based |  |             | 134 |              |  |     | 120 | 
|                                              | Transponders  |  |             | 14  |              |  |     |    | 
|                                              | Other         |  |             | 22  |              |  |     | 8   | 
|                                              |               |  |             |     |              |  |     |    
|                                              |               |  | 170         |     |              |  | 128 |    
|                                              |               |  |             |     |              |  |     |    

Success based capital includes the capital cost of satellite dishes and
equipment subsidies related to the acquisition of customers. There are no
commitments for transponder purchases in fiscal 2003.

DTH  (StarChoice)

FINANCIAL HIGHLIGHTS

|                                   |  |      |         |      |  |         |         |    |  |   |         |    |  |        |      |      |  |  |      | 
|---------------------------------- |  | ---- | ------- | ---- |  | ------- | ------- | -- |  | - | ------- | -- |  | ------ | ---- | ---- |  |  | ---- | 
|                                   |  |      |         |      |  |         |         |    |  |   |         |    |  | Change
|                                   |  |      |         |      |  |         |         |    |  |   |         |    |  |       
|                                   |  |      |         |      |  |         |         |    |  |   |         |    |  | 2002   |      | 2001
|                                   |  | 2002 |         | 2001 |  | 2000(1) |         | %  |  | %
|                                   |  |      |         |      |  |         |         |    |  |  
|(In $000s Cdn)                     |  |      |         |      |  |         |         |    |  |   |         |    |  |        |      |      |  |  |      | 
|Revenue (third party)              |  |      | 415,551 |      |  |         | 307,988 |    |  |   | 218,044 |    |  |        | 34.9 |      |  |  | 41.3 | 
|Operating loss before amortization |  |      | (14,103 | )    |  |         | (58,512 | )  |  |   | (72,266 | )  |  |        | 75.9 |      |  |  | 19.0 | 
|Operating margin                   |  |      | (3.4    | %)   |  |         | (19.0   | %) |  |   | (33.1   | %) |  |        | 15.6 |      |  |  | 14.1 | 
|Capital expenditures               |  |      | 80,558  |      |  |         | 41,709  |    |  |   | 2,554   |    |  |        |      |      |  |  |      | 
|DTH subsidies                      |  |      | 69,208  |      |  |         | 107,215 |    |  |   | 105,609 |    |  |        |      |      |  |  |      | 
|                                   |  |      |         |      |  |         |         |    |  |   |         |    |  |        |      |      |  |  |      | 



---

|(1) |  | Only two months of the results of DTH were consolidated in Shaws 2000
fiscal year. The 2000 results of DTH as reported by Cancom are provided for
comparative purposes only and have been adjusted to reflect the
reclassification of dealer discounts from revenue and expense.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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MANAGEMENTS DISCUSSION AND ANALYSIS

CUSTOMER STATISTICS

|                        |  |      |         |      |  |      |         |   |  |  |         |  
|----------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  |  | ------- | -
|Star Choice customers   |  | 2002 |         | 2001 |  | 2000
|                        |  |      |         |      |  |     
|Beginning of year       |  |      | 628,806 |      |  |      | 445,000 |   |  |  | 241,000 |  
|Additions               |  |      | 153,793 |      |  |      | 183,806 |   |  |  | 204,000 |  
|Adjustments             |  |      | (22,575 | )    |  |      |        |   |  |  |        |  
|                        |  |      |         |      |  |      |         |   |  |  |         |  
|End of year             |  |      | 760,024 |      |  |      | 628,806 |   |  |  | 445,000 |  
|                        |  |      |         |      |  |      |         |   |  |  |         |  
|% increase in additions |  |      | 24.5    | %    |  |      | 41.3    | % |  |  | 84.6    | %
|                        |  |      |         |      |  |      |         |   |  |  |         |  

On April 12, 2002, the CRTC modified structural separation licence conditions
so as to allow Star Choice and Shaw to integrate accounting and other
administrative functions subject to the establishment of procedures to protect
confidential information. As a result, during the fourth quarter, Star Choice
converted to the same billing system used by Shaw. The conversion will provide
cost benefits and more importantly, improved customer care and service
capabilities while at the same time respecting confidentiality procedures. It
became evident 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. These difficulties will be resolved during the
first quarter of fiscal 2003 with training and the addition of more customer
service representatives. The higher rate of growth in the prior years reflects
the higher growth of a start-up business that was establishing its customer
base.

2002 vs. 2001
In the third quarter of this year, 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 35% 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. Next year, revenue should increase as effective
September 1, 2002 Star Choice raised its monthly rates by $3 on most its
packages. The operating loss before amortization decreased by 76% due to the
price increases and increased economies of scale.

Effective September 2001, Star Choice introduced the Simple Satellite plan. It
is a new, unique consumer offer designed to make it easier for customers to
adopt satellite television. Under the program, Star Choice pays for and
retains ownership of the satellite dish. Simple Satellite customers enjoy free
basic installation by professional installers with lifetime maintenance on the
dish and all outside components. In addition, if a customer moves, Star Choice
will install a new dish at their new home at no cost. As a result, capital
expenditures increased and DTH equipment subsidies decreased over last year.
On a combined basis, the capital expenditures and DTH subsidies for 2002 were
$149.8 million compared to $148.9 million in the prior year.

2001 vs. 2000
Revenue increased over 41% for the year, principally due to the increase in
subscribers. The operating loss for the year decreased 19% from 2000 as the
Star Choice focused on cost reductions and benefited from increased economies
of scale.

Capital expenditures for 2001 increased over 2000 principally due to the $36
million cost to install new elliptical satellite dishes in Quebec. As a result
of the conversion to Anik F1, elliptical dishes were required in Quebec to
receive French programming signals. Star Choice has retained ownership to the
dishes.

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MANAGEMENTS DISCUSSION AND ANALYSIS

Satellite Services

FINANCIAL HIGHLIGHTS

|                                     |  |      |         |      |  |         |         |   |  |   |         |   |  |        |       |      |  |  |       |  
|------------------------------------ |  | ---- | ------- | ---- |  | ------- | ------- | - |  | - | ------- | - |  | ------ | ----- | ---- |  |  | ----- | -
|                                     |  |      |         |      |  |         |         |   |  |   |         |   |  | Change
|                                     |  |      |         |      |  |         |         |   |  |   |         |   |  |       
|                                     |  |      |         |      |  |         |         |   |  |   |         |   |  | 2002   |       | 2001
|                                     |  | 2002 |         | 2001 |  | 2000(1) |         | % |  | %
|                                     |  |      |         |      |  |         |         |   |  |  
|(In $000s Cdn)                       |  |      |         |      |  |         |         |   |  |   |         |   |  |        |       |      |  |  |       |  
|Revenue (third party)                |  |      | 105,446 |      |  |         | 108,721 |   |  |   | 123,557 |   |  |        | (3.0  | )    |  |  | (12.0 | )
|Operating income before amortization |  |      | 42,460  |      |  |         | 48,152  |   |  |   | 34,442  |   |  |        | (11.8 | )    |  |  | 39.8  |  
|Operating margin                     |  |      | 40.3    | %    |  |         | 44.3    | % |  |   | 27.9    | % |  |        | (4.0  | )    |  |  | 16.4  |  
|Capital expenditures                 |  |      | 20,576  |      |  |         | 111,747 |   |  |   | 28,369  |   |  |        |       |      |  |  |       |  
|                                     |  |      |         |      |  |         |         |   |  |   |         |   |  |        |       |      |  |  |       |  



---

|(1) |  | Only two months of the results of Satellite services were consolidated
in Shaws August 2000 quarter. The 2000 results reflect those reported by
Cancom and have been adjusted to reflect the elimination of uplink fees that
would have been recorded if Cancom was consolidated with Shaw.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2002 vs. 2001
Satellite services met or exceeded its year-end targets for revenue and
operating income before amortization of $105 million and $41 million
respectively with actual respective results of $105 million and $42 million.
Comparative revenue decreased 3% primarily due to last 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 the uplink and SRDU business in the Caribbean was sold for approximately
$1 million. Annual sales and operating income before amortization related to
these assets are approximately U.S. $2 million and U.S. $0.3 million annually.

Capital expenditures decreased over last year due to last years expenditures
on Anik F1 and deposits on Anik F2 transponders of approximately $82.5 million.
Current year expenditures include a further $14 million deposit on the Anik F2
transponders.

2001 vs. 2000
The decline in revenue was mainly attributable to the introduction of a new
tier rate structure for all Canadian SRDU customers on September 1, 2000. In
exchange for the new rate structure, Cancom was able to secure in excess of 85%
of its customer base to long-term contracts averaging approximately five years.
Most of the remaining 15% are covered by existing contracts.

Despite the decline in revenue in 2001, the Satellite services division
increased its operating income before amortization by 40% for the year as a
result of operating efficiencies and restructuring undertaken throughout the
year. Capital expenditures during the year increased over the prior year as a
result of the purchase of transponders on Anik F1 and deposits on transponders
on Anik F2.

III.  FINANCIAL POSITION

Overview
Total assets at August 31, 2002 were $8.5 billion compared to $8.8 billion at
August 31, 2001. The following discussion describes the significant changes in
the balance sheet since August 31, 2001.

Current assetsdecreased by $76 million principally due to the sale of the
CKY and WTN assets in the first quarter which reduced assets held for sale by
$89.5 million. This was offset by an increase in inventory of $18 million due
to the slowdown in Internet and DCT activations.

Investmentsdecreased by $417 million. Investments at equity decreased by $328
million primarily due to the write-down of GT of $268.9 million plus the equity
losses recorded on GT. Investments at cost and other assets decreased by $89
million principally due to the write-down of investments of $61.5 million and
the removal of $34 million on the surrender of At Home shares on the settlement
of the SHELS I and II.

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MANAGEMENTS DISCUSSION AND ANALYSIS

Shaws investment portfolio as at August 31, 2002 includes:

|                                               |  |              |            |              |  |            |           |         |  |          |            |        |  |  |        | 
|---------------------------------------------- |  | ------------ | ---------- | ------------ |  | ---------- | --------- | ------- |  | -------- | ---------- | ------ |  |  | ------ | 
|                                               |  |              |            |              |  | Restricted |           |         |  |          |            | Market
|                                               |  | Unrestricted |            | shares       |  |            |           |         |  | value(2)
|Investment(1)                                  |  | shares       |            | and warrants |  | Total      |           | ($000s)
|                                               |  |              |            |              |  |            |           |        
|GT Group Telecom                               |  |              | 32,246,217 |              |  |            |           |         |  |          | 32,246,217 |        |  |  | 967    | 
|Liberty Media                                  |  |              | 343,000    |              |  |            |           |         |  |          | 343,000    |        |  |  | 4,469  | 
|Canadian
Hydro(3)                              |  |              | 2,450,000  |              |  |            | 6,196,580 |         |  |          | 8,646,580  |        |  |  | 12,216 | 
|Cogeco Cable Inc.                              |  |              | 1,100,000  |              |  |            |           |         |  |          | 1,100,000  |        |  |  | 12,650 | 
|Other non-public companies  at carrying
value |  |              |            |              |  |            |           |         |  |          | 15,735    
|                                               |  |              |            |              |  |            |           |         |  |          |            |        |  |  |        | 
|                                               |  |              |            |              |  |            |           |         |  |          |            |        |  |  | 46,037 | 
|                                               |  |              |            |              |  |            |           |         |  |          |            |        |  |  |        | 



---

|(1) |  | The above table excludes shares pledged as collateral on equity
instruments.              
|--- |  | ------------------------------------------------------------------------------------------
|   
|(2) |  | Unless otherwise noted, the market value is based
on closing prices as of August 30, 2002.
|   
|(3) |  | The market
value shown is net of the warrant exercise price.                              

This year, the Company monetized 5,326,827 shares of Terayon with an original
cost of $46 million for net proceeds of $90 million through the issue of equity
linked debentures. A summary of the investments that have been monetized by
equity linked debentures and similar instruments are as follows:

|                   |  |                    |  |                   |    |               |     |                       |    |                |    |                 |    |                    |     | 
|------------------ |  | ------------------ |  | ----------------- | -- | ------------- | --- | --------------------- | -- | -------------- | -- | --------------- | -- | ------------------ | --- | 
|                   |  |                    |  |                   |    |               |     |                       |    |                |    |                 |    | Future gain before
|                   |  |                    |  |                   |    |               |     |                       |    | Carrying value |    | taxes if equity
|Equity             |  | Underlying         |  | Carrying value of |    | of underlying |     | instrument settled by
|instrument         |  | investment         |  | equity instrument |    | investment    |     | investment           
|                   |  |                    |  |                   |    |               |     |                      
|(In $millions Cdn) |  |                    |  |                   |    |               |     |                       |    |                |    |                 |    |                    |     | 
|SHELS III          |  | 452,506 Liberate   |  |                   | 50 |               |     |                       | 5  |                |    |                 | 45 |                   
|SHELS IV           |  | 1,000,000 Liberate |  |                   | 43 |               |     |                       | 11 |                |    |                 | 32 |                   
|SHELS V            |  | 5,326,827 Terayon  |  |                   | 90 |               |     |                       | 46 |                |    |                 | 44 |                   
|Zero Coupon Loan   |  | 732,237 Motorola   |  |                   | 34 |               |     |                       | 9  |                |    |                 | 25 |                   
|                   |  |                    |  |                   |    |               |     |                       |    |                |    |                 |    |                    |     | 
|                   |  |                    |  |                   |    |               | 217 |                       |    |                | 71 |                 |    |                    | 146 | 
|                   |  |                    |  |                   |    |               |     |                       |    |                |    |                 |    |                    |     | 

Property, plant and equipmentincreased by $270 million as current year
capital expenditures were in excess of amortization expense.

Deferred chargesdecreased by $44 million primarily due to Star Choice
retaining ownership of satellite dishes on new installations which decreased
unamortized equipment subsidies by $33 million. The remaining decrease is due
to amortization recorded on pre-operating costs, financing and other costs.
All DTH pre-operating costs are now fully amortized.

Intangiblesdecreased by $15 million due to a $72 million reduction caused by
the future income tax effect of reclassifying $146 million from broadcast
licence to goodwill. This was offset by a $57 million increase primarily
related to the acquisition of the Viewers Choice broadcast licence in June
2002.

Current liabilities
Accounts payable and accrued liabilities decreased by $55 million primarily due
to this years payment of significant capital expenditure accruals at August
31, 2001. Unearned subscriber revenue increased by $16 million due to growth
in service revenue.

27



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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS

Long-term debtincreased by $459 million to finance capital expenditures and
equipment subsidies.

Total U.S. dollar denominated long-term debt is as follows:

|                                              |  |      |           |      |  |  |         | 
|--------------------------------------------- |  | ---- | --------- | ---- |  |  | ------- | 
|                                              |  | 2002 |           | 2001
|                                              |  |      |           |     
|(U.S. $000s)                                  |  |      |           |      |  |  |         | 
|Shaw 8.25% Senior notes due 2010              |  |      | 440,000   |      |  |  | 440,000 | 
|Shaw 7.25% Senior notes due 2011              |  |      | 225,000   |      |  |  | 225,000 | 
|Shaw 7.20% Senior notes due 2011              |  |      | 300,000   |      |  |  |        | 
|Star Choice 13% Senior secured notes due 2005 |  |      | 150,000   |      |  |  | 150,000 | 
|Bank loans                                    |  |      | 57,233    |      |  |  | 57,233  | 
|                                              |  |      |           |      |  |  |         | 
|                                              |  |      | 1,172,233 |      |  |  | 872,233 | 
|                                              |  |      |           |      |  |  |         | 

Concurrently with the issuance of the U.S. $300 million 7.20% senior notes,
Shaw entered into a cross-currency interest rate agreement on the principal
amount of the notes at an exchange rate of $1.5895 Canadian. In addition, this
agreement provides the U.S. funds for the semi-annual interest payments based
upon an interest rate of 7.61% on the Canadian dollar equivalent of the
debenture principal amount.

Deferred credits and future income taxes
Deferred credits decreased by $17 million principally due to amortization of
prepaid IRU rental revenue. Future income taxes decreased by $190 million
principally due to the current years future income tax recovery of $121
million plus adjustments resulting from the adoption of the new accounting
rules relating to Goodwill and Other Intangible Assets.

Share capitaldecreased by $164 million due to settlement of the SHELS I and
SHELS II equity linked debentures of $256 million by delivery of the At Home
shares which offset the issuance of SHELS V equity linked debentures for $90
million.

IV. CONSOLIDATED CASH FLOW ANALYSIS

Operating Activities

|                                                                      |  |      |     |      |  |      |     |            |  |   |     |            |  |          |     |      |  |  |       |          |  |  |     |   |  |  |       |  
|--------------------------------------------------------------------- |  | ---- | --- | ---- |  | ---- | --- | ---------- |  | - | --- | ---------- |  | -------- | --- | ---- |  |  | ----- | -------- |  |  | --- | - |  |  | ----- | -
|                                                                      |  |      |     |      |  |      |     |            |  |   |     |            |  | 2002     |     | 2001
|                                                                      |  |      |     |      |  |      |     |            |  |   |     |            |  |          |     |     
|                                                                      |  |      |     |      |  |      |     |            |  |   |     |            |  | Increase |     |      |  |  |       | Increase |  |  |     |  
|                                                                      |  | 2002 |     | 2001 |  | 2000 |     | (decrease) |  | % |     | (decrease) |  | %       
|                                                                      |  |      |     |      |  |      |     |            |  |   |    
|($millions Cdn)                                                       |  |      |     |      |  |      |     |            |  |   |     |            |  |          |     |      |  |  |       |          |  |  |     |   |  |  |       |  
|Cash flow from operations                                             |  |      | 332 |      |  |      | 211 |            |  |   | 238 |            |  |          | 121 |      |  |  | 57.8  |          |  |  | (27 | ) |  |  | (11.5 | )
|Net change in non-cash working
capital balances related to
operations |  |      | 3   |      |  |      | 79  |            |  |   | 15  |            |  |          | (76 | )    |  |  | (95.8 | )        |  |  | 64  |   |  |  | 419.8 |  
|                                                                      |  |      |     |      |  |      |     |            |  |   |     |            |  |          |     |      |  |  |       |          |  |  |     |   |  |  |       |  
|                                                                      |  |      | 335 |      |  |      | 290 |            |  |   | 253 |            |  |          | 45  |      |  |  | 15.7  |          |  |  | 37  |   |  |  | 14.6  |  
|                                                                      |  |      |     |      |  |      |     |            |  |   |     |            |  |          |     |      |  |  |       |          |  |  |     |   |  |  |       |  

In 2002, cash flow from operations increased mainly as a result of the strong
growth in profitability in the cable, Internet and Star Choice divisions. In
2001, cash flow from operations decreased due to the full years consolidation
of the losses of Star Choice in 2001 compared to two months in 2000. Cash
flow from working capital increased or decreased primarily due to timing of
accounts payable and accrued liabilities payments.

28



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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS

Investing Activities

|                                                     |  |      |      |      |  |      |        |      |  |      |      |   |  |                         |     |  |  |  |      |  
|---------------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ------ | ---- |  | ---- | ---- | - |  | ----------------------- | --- |  |  |  | ---- | -
|                                                     |  |      |      |      |  |      |        |      |  |      |      |   |  | Annual increase        
|                                                     |  |      |      |      |  |      |        |      |  |      |      |   |  | (decrease) in cash flow
|                                                     |  |      |      |      |  |      |        |      |  |      |      |   |  |                        
|                                                     |  | 2002 |      | 2001 |  | 2000 |        | 2002 |  | 2001
|                                                     |  |      |      |      |  |      |        |      |  |     
|(In $millions Cdn)                                   |  |      |      |      |  |      |        |      |  |      |      |   |  |                         |     |  |  |  |      |  
|Cash flow (used in) provided by
investing activities |  |      | (826 | )    |  |      | (1,242 | )    |  |      | (971 | ) |  |                         | 416 |  |  |  | (271 | )
|                                                     |  |      |      |      |  |      |        |      |  |      |      |   |  |                         |     |  |  |  |      |  

The cash outlay required for investing activities was $416 million lower in
2002 than 2001 primarily due to the acquisition of Moffat and the Rogers
exchange in 2001. In 2001, the cash outlay required for investing activities
was higher than 2000 for the same reasons plus the additional investment in
capital assets.

Financing Activities

|                                           |  |      |     |      |  |      |     |      |  |      |     |  |  |                         |      |   |  |  |     | 
|------------------------------------------ |  | ---- | --- | ---- |  | ---- | --- | ---- |  | ---- | --- |  |  | ----------------------- | ---- | - |  |  | --- | 
|                                           |  |      |     |      |  |      |     |      |  |      |     |  |  | Annual increase        
|                                           |  |      |     |      |  |      |     |      |  |      |     |  |  | (decrease) in cash flow
|                                           |  |      |     |      |  |      |     |      |  |      |     |  |  |                        
|                                           |  | 2002 |     | 2001 |  | 2000 |     | 2002 |  | 2001
|                                           |  |      |     |      |  |      |     |      |  |     
|(In $millions Cdn)                         |  |      |     |      |  |      |     |      |  |      |     |  |  |                         |      |   |  |  |     | 
|Cash flow provided by
financing activities |  |      | 490 |      |  |      | 952 |      |  |      | 699 |  |  |                         | (462 | ) |  |  | 253 | 
|                                           |  |      |     |      |  |      |     |      |  |      |     |  |  |                         |      |   |  |  |     | 

In 2002, the issuance of US $300 million notes (net proceeds of approximately
CDN $468 million) and issuance of the SHELS V of $90 million provided most of
the cash from financing activities. The remaining financing was provided by
Shaw and Cancom credit facilities. Cash used in financing activities included
the payment of dividends plus payments to terminate interest rate swaps
inherited on the Moffat acquisition as discussed below.

As a result of the debt and equity instrument issuances in 2002 and repayment
of the bank debt, the $210 million interest rate swaps inherited on the Moffat
acquisition were no longer hedged against bank loans. Therefore, effective
March 2002, Shaw terminated the swaps at a cost of $9.4 million. No gain or
loss was recognized on the termination of the swaps as Shaw provided for these
costs as part of the acquisition of Moffat. To date, Shaw has realized savings
of $4 million in interest expense as a result of the cancellation of these
swaps.

In 2001, cash from financing activities of $952 million was provided by various
debt and equity instrument issuances as follows: Shaws issuance of 7.2% senior
notes for $300 million, 7.25% U.S. $225 million senior notes (CDN $349
million), 8.875% COPrS of $150 million and SHELS IV of approximately $43
million; Cancoms issuance of a $250 million structured note; and the addition
of Big Pipes credit facility of $50 million. Shaw and Cancoms existing
credit facilities provided the remaining financing. The cash used in financing
activities include the repayment of the U.S. $91.9 million Fundy senior secured
second priority notes, the Moffat acquired debt of approximately $247 million
and approximately $39 million on bank loans of subsidiaries that were sold. It
also includes payment of dividends plus payments to early terminate the Fundy
notes.

In 2000, cash provided from financing activities of $699 million was provided
by Shaws issuance of 7.05% CDN $275 million senior notes, 8.25% U.S. $440
million senior notes (CDN $648 million), plus the issuance of SHELS I, II, III
and the Zero Coupon loan for net proceeds of $340 million. The cash used in
financing activities included repayments under Shaws revolving credit
facility, the early redemption of senior debentures of approximately $645 million plus associated early
termination costs of $91 million and the payment of dividends.

29



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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS

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 nonstrategic
assets. First, we have turned a significant corner towards our goal to becoming
free cash flow by achieving cash flow breakeven for our Cable division in the
fourth quarter of this year and anticipate $105 million of free cash flow for
this division in fiscal 2003. Further, we believe our Satellite division,
including satellite services and DTH, will be cash flow positive in fiscal
2004. As we continue to focus on our goal of growing free cash flow, cash flow
from operations will become an increasing source of liquidity.

Second, Shaw has access to approximately $1 billion of available credit
facilities based on existing bank covenants and will have access to these
facilities for the foreseeable future. In December 2001, Shaw issued U.S. $300
million of 7.20% senior unsecured notes. The net proceeds from the offering
were used to reduce amounts outstanding on our revolving credit facility and
for general corporate purposes. The notes were issued under Shaws previously
filed shelf registration statement for up to C$800 million of debt and equity
securities.

Finally, with respect to sale of non-strategic assets to increase liquidity,
during the year Shaw received net proceeds of $89.5 million on the sale of the
assets of CKY and WTN. In addition, Shaw monetized 5.3 million shares of
Terayon Communications through the issuance Series VSHELS for U.S. $57.6
million. Shaw also intends to sell its U.S. cable assets with approximately
71,000 subscribers for anticipated proceeds in excess of $300 million.

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 borrowings of Cancom, Star
Choice (a subsidiary of Cancom) and Big Pipe are secured by the assets of the
respective entities within each group. Burrard Landing Lot 2 Holdings
Partnership (the Partnership), of which Shaw has a 38% interest, has its own
facilities of which $47.8 million is severally guaranteed by the partners of
the Partnership, with Shaws portion being $18.3 million. There are
restrictions in the various credit facilities that would prevent Cancom, Star
Choice or Big Pipe 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 and the
guarantees of the Videon subsidiaries.

There are however mechanisms within the borrowings of Cancom that may affect
Shaw as more fully described in Note 9 to the Consolidated Financial
Statements. Under the Cancom $350 million credit facility, if by December 31,
2003, Cancom has not repaid the Star Choice Senior secured notes and raised
additional proceeds of $50 million, Shaw has agreed to subscribe for additional
shares of Cancom for not less than $50 million. The subscription proceeds must
be applied to permanently reduce Cancoms $350 million credit facility. In
addition, Shaw entered into a support arrangement in respect of the Cancom
Structured Note and entered into a liquidity agreement in respect of the $40
million Subordinated Credit Facility of Cancom. Under both of these
agreements, Shaw may be required, in the event of continuing default to produce
cash to directly or indirectly (through further injection of equity into
Cancom) settle the obligation of the debt. Under both agreements, Shaw has the
option to satisfy the obligation by cash or by issuance of sufficient Class B
Shares of the Company.

If Shaw were required to settle the debt of Cancom under the above-described
scenarios using Shaws existing credit facilities, based on our current
business plans, we would still have sufficient funds with our current credit
facilities and future operating cash flows to cover our obligations over the
next five years. We have recently approached the banks for Cancom with the view
to re-negotiating the terms of the existing facility. It is still very early in
the process, however we will provide updates in the normal course.

With existing and anticipated strong growth in cash flow from operations,
access to approximately $1 billion of available credit facilities and planned
sale of its U.S. cable assets, Shaw is well-positioned to finance its growth
and at the same time improve its debt to cash flow ratios.

30



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MANAGEMENTS DISCUSSION AND ANALYSIS

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.

31



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##### Table of Contents



Shaw Communications Inc.




MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING
August 31, 2002

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 the majority of 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 re-appointment 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]Jim Shaw
Chief Executive Officer |  | [Signed]Ron Rogers
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, 2002 and 2001 and the consolidated statements of income (loss)
and retained earnings (deficit) and cash flows for each of the years in the
three year period ended August 31, 2002. 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, 2002
and 2001 and the results of its operations and its cash flows for each of the
years in the three year period ended August 31, 2002 in accordance with
Canadian generally accepted accounting principles.

As discussed in note 1 to the consolidated financial statements, in 2002 the
Company changed its method of accounting for Goodwill and Other Intangible
Assets.

|                                 |  |                                                      
|-------------------------------- |  | -----------------------------------------------------
|Calgary, Canada
October 11, 2002 |  | (SIGNATURE)
Chartered Accountants
(Ernst & Young LLP)

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##### Table of Contents






Shaw Communications Inc.

CONSOLIDATED BALANCE SHEETS

As at August 31

|                                                    |  |      |           |      |  |  |           | 
|--------------------------------------------------- |  | ---- | --------- | ---- |  |  | --------- | 
|                                                    |  | 2002 |           | 2001
|(thousands of Canadian dollars)                     |  | $    |           | $   
|                                                    |  |      |           |     
|ASSETS[note 9]                                      |  |      |           |      |  |  |           | 
|Current                                             |  |      |           |      |  |  |           | 
|Accounts receivable [note 3]                        |  |      | 187,505   |      |  |  | 189,612   | 
|Income taxes recoverable                            |  |      |          |      |  |  | 6,267     | 
|Inventories [note 4]                                |  |      | 128,811   |      |  |  | 110,375   | 
|Prepaids and other                                  |  |      | 28,177    |      |  |  | 24,669    | 
|Assets held for sale [note 2]                       |  |      |          |      |  |  | 89,500    | 
|                                                    |  |      |           |      |  |  |           | 
|                                                    |  |      | 344,493   |      |  |  | 420,423   | 
|Investments and other assets [notes 5 and 11]       |  |      | 133,602   |      |  |  | 550,707   | 
|Property, plant and equipment [note 6]              |  |      | 2,777,697 |      |  |  | 2,507,923 | 
|Deferred charges [note 7]                           |  |      | 234,088   |      |  |  | 277,780   | 
|Intangibles
[notes 1 and 8]                        |  |      |           |      |  |  |           | 
|Broadcast licenses                                  |  |      | 4,877,256 |      |  |  | 5,038,123 | 
|Goodwill                                            |  |      | 145,865   |      |  |  |          | 
|                                                    |  |      |           |      |  |  |           | 
|                                                    |  |      | 8,513,001 |      |  |  | 8,794,956 | 
|                                                    |  |      |           |      |  |  |           | 
|LIABILITIES AND SHAREHOLDERSEQUITY                 |  |      |           |      |  |  |           | 
|Current                                             |  |      |           |      |  |  |           | 
|Bank indebtedness [note 9]                          |  |      | 2,303     |      |  |  | 1,789     | 
|Accounts payable and accrued liabilities [note 13]  |  |      | 511,106   |      |  |  | 565,961   | 
|Income taxes payable                                |  |      | 10,631    |      |  |  |          | 
|Unearned revenue                                    |  |      | 88,226    |      |  |  | 72,593    | 
|                                                    |  |      |           |      |  |  |           | 
|                                                    |  |      | 612,266   |      |  |  | 640,343   | 
|Long-term debt [note 9]                             |  |      | 3,469,637 |      |  |  | 3,010,348 | 
|Deferred credits [note 10]                          |  |      | 634,735   |      |  |  | 651,425   | 
|Future income taxes [note 14]                       |  |      | 1,006,845 |      |  |  | 1,196,933 | 
|                                                    |  |      |           |      |  |  |           | 
|                                                    |  |      | 5,723,483 |      |  |  | 5,499,049 | 
|                                                    |  |      |           |      |  |  |           | 
|Commitments and contingencies[notes 2, 5, 9 and 16] |  |      |           |      |  |  |           | 
|Shareholders equity                                |  |      |           |      |  |  |           | 
|Share
capital [note 11]                            |  |      |           |      |  |  |           | 
|Class A Shares                                      |  |      | 2,493     |      |  |  | 2,499     | 
|Class B Shares                                      |  |      | 2,107,367 |      |  |  | 2,106,569 | 
|Equity instruments                                  |  |      | 908,472   |      |  |  | 1,073,678 | 
|Retained earnings (deficit)                         |  |      | (230,327  | )    |  |  | 111,830   | 
|Cumulative translation adjustment [note 12]         |  |      | 1,513     |      |  |  | 1,331     | 
|                                                    |  |      |           |      |  |  |           | 
|                                                    |  |      | 2,789,518 |      |  |  | 3,295,907 | 
|                                                    |  |      |           |      |  |  |           | 
|                                                    |  |      | 8,513,001 |      |  |  | 8,794,956 | 
|                                                    |  |      |           |      |  |  |           | 

See accompanying notes

On behalf of the Board:

|                          |  |                              
|------------------------- |  | -----------------------------
|[Signed]
JR Shaw
Director |  | [Signed]
Jim Dinning
Director

34



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Shaw Communications Inc.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)
AND RETAINED EARNINGS (DEFICIT)

Years ended August 31

|                                                                             |  |      |           |      |  |      |           |   |  |   |         |  
|---------------------------------------------------------------------------- |  | ---- | --------- | ---- |  | ---- | --------- | - |  | - | ------- | -
|(thousands of Canadian dollars                                               |  | 2002 |           | 2001 |  | 2000
|except per share amounts)                                                    |  | $    |           | $    |  | $   
|                                                                             |  |      |           |      |  |     
|Revenue[note 15]                                                             |  |      | 1,888,560 |      |  |      | 1,536,953 |   |  |   | 960,000 |  
|Operating, general and administrative expenses                               |  |      | 1,255,887 |      |  |      | 1,076,613 |   |  |   | 562,337 |  
|                                                                             |  |      |           |      |  |      |           |   |  |   |         |  
|Operating income before amortization[note 15]                                |  |      | 632,673   |      |  |      | 460,340   |   |  |   | 397,663 |  
|Amortization [notes 6, 7, 8 and 10]                                          |  |      | 589,389   |      |  |      | 476,294   |   |  |   | 234,212 |  
|Amortization of deferred IRU revenue [notes 2 and 10]                        |  |      | (11,517   | )    |  |      | (4,902    | ) |  |   | (3,018  | )
|                                                                             |  |      |           |      |  |      |           |   |  |   |         |  
|Operating income (loss)                                                      |  |      | 54,801    |      |  |      | (11,052   | ) |  |   | 166,469 |  
|Interest [notes 9 and 13]                                                    |  |      | 267,323   |      |  |      | 206,935   |   |  |   | 120,991 |  
|                                                                             |  |      |           |      |  |      |           |   |  |   |         |  
|                                                                             |  |      | (212,522  | )    |  |      | (217,987  | ) |  |   | 45,478  |  
|Gain (loss) on sale of investments [note 5]                                  |  |      | 2,321     |      |  |      | (106,716  | ) |  |   | 143,248 |  
|Write-down of investments [note 5]                                           |  |      | (330,466  | )    |  |      | (163,454  | ) |  |   |        |  
|Gain on redemption of SHELS [note 5]                                         |  |      | 218,327   |      |  |      |          |   |  |   |        |  
|Dilution gain (loss) on issuance of stock by equity investee [note 2]        |  |      | (571      | )    |  |      | 4,525     |   |  |   | 33,245  |  
|Gain on sale of cable systems [note 2]                                       |  |      |          |      |  |      | 66,595    |   |  |   |        |  
|Loss on sale of satellite assets [note 2]                                    |  |      | (1,281    | )    |  |      |          |   |  |   |        |  
|Gain on sale of FiberLink assets [note 2]                                    |  |      |          |      |  |      |          |   |  |   | 87,984  |  
|Debt restructuring costs [note 9]                                            |  |      |          |      |  |      | (8,590    | ) |  |   | (97,968 | )
|Other revenue (expense)                                                      |  |      | 6,048     |      |  |      | (665      | ) |  |   | 4,256   |  
|                                                                             |  |      |           |      |  |      |           |   |  |   |         |  
|Income (loss) before income taxes                                            |  |      | (318,144  | )    |  |      | (426,292  | ) |  |   | 216,243 |  
|Income tax expense (recovery) [note 14]                                      |  |      | (83,339   | )    |  |      | (349,428  | ) |  |   | 55,464  |  
|                                                                             |  |      |           |      |  |      |           |   |  |   |         |  
|Income (loss) before the following                                           |  |      | (234,805  | )    |  |      | (76,864   | ) |  |   | 160,779 |  
|Equity loss on investees [note 5]                                            |  |      | (53,487   | )    |  |      | (71,282   | ) |  |   | (30,661 | )
|Non-controlling interest                                                     |  |      |          |      |  |      | 725       |   |  |   | 3,486   |  
|                                                                             |  |      |           |      |  |      |           |   |  |   |         |  
|Reported net income (loss)                                                   |  |      | (288,292  | )    |  |      | (147,421  | ) |  |   | 133,604 |  
|Retained earnings, beginning of year                                         |  |      | 111,830   |      |  |      | 310,250   |   |  |   | 265,215 |  
|                                                                             |  |      |           |      |  |      |           |   |  |   |         |  
|                                                                             |  |      | (176,462  | )    |  |      | 162,829   |   |  |   | 398,819 |  
|Reduction on separation of media business [note 11]                          |  |      |          |      |  |      |          |   |  |   | (29,414 | )
|Reduction on Class B Shares purchased for cancellation                       |  |      |          |      |  |      |          |   |  |   | (12,171 | )
|Dividends
                                                                  |  |      |           |      |  |      |           |   |  |   |         |  
|Class A and Class B Shares                                                   |  |      | (11,534   | )    |  |      | (10,876   | ) |  |   | (8,505  | )
|Equity instruments (net of income taxes)                                     |  |      | (42,331   | )    |  |      | (40,123   | ) |  |   | (38,479 | )
|                                                                             |  |      |           |      |  |      |           |   |  |   |         |  
|Retained earnings (deficit), end of year                                     |  |      | (230,327  | )    |  |      | 111,830   |   |  |   | 310,250 |  
|                                                                             |  |      |           |      |  |      |           |   |  |   |         |  
|Reported net income (loss)                                                   |  |      | (288,292  | )    |  |      | (147,421  | ) |  |   | 133,604 |  
|Add back: Broadcast licenses and goodwill
amortization net of taxes [note 1] |  |      |          |      |  |      | 51,889    |   |  |   | 19,501  |  
|                                                                             |  |      |           |      |  |      |           |   |  |   |         |  
|Adjusted net income (loss)                                                   |  |      | (288,292  | )    |  |      | (95,532   | ) |  |   | 153,105 |  
|                                                                             |  |      |           |      |  |      |           |   |  |   |         |  
|Earnings (loss) per share[note 11]                                           |  |      |           |      |  |      |           |   |  |   |         |  
|Reported
net income (loss)                                                  |  |      |           |      |  |      |           |   |  |   |         |  
|Basic                                                                        |  |      | ($1.43    | )    |  |      | ($0.85    | ) |  | $ | 0.53    |  
|Diluted                                                                      |  |      | ($1.43    | )    |  |      | ($0.85    | ) |  | $ | 0.53    |  
|                                                                             |  |      |           |      |  |      |           |   |  |   |         |  
|Adjusted
net income (loss)                                                  |  |      |           |      |  |      |           |   |  |   |         |  
|Basic                                                                        |  |      | ($1.43    | )    |  |      | ($0.61    | ) |  | $ | 0.64    |  
|Diluted                                                                      |  |      | ($1.43    | )    |  |      | ($0.61    | ) |  | $ | 0.64    |  
|                                                                             |  |      |           |      |  |      |           |   |  |   |         |  

See accompanying notes

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Shaw Communications Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended August 31

|                                                                      |  |      |           |      |  |      |            |   |  |   |            |  
|--------------------------------------------------------------------- |  | ---- | --------- | ---- |  | ---- | ---------- | - |  | - | ---------- | -
|(thousands of Canadian dollars                                        |  | 2002 |           | 2001 |  | 2000
|except per share amounts)                                             |  | $    |           | $    |  | $   
|                                                                      |  |      |           |      |  |     
|OPERATING ACTIVITIES[note 20]                                         |  |      |           |      |  |      |            |   |  |   |            |  
|Cash flow from operations                                             |  |      | 332,109   |      |  |      | 210,514    |   |  |   | 237,789    |  
|Net change in non-cash working capital balances
related to operations |  |      | 3,303     |      |  |      | 79,470     |   |  |   | 15,290     |  
|                                                                      |  |      |           |      |  |      |            |   |  |   |            |  
|                                                                      |  |      | 335,412   |      |  |      | 289,984    |   |  |   | 253,079    |  
|                                                                      |  |      |           |      |  |      |            |   |  |   |            |  
|INVESTING ACTIVITIES                                                  |  |      |           |      |  |      |            |   |  |   |            |  
|Additions to property, plant and equipment                            |  |      | (743,568  | )    |  |      | (828,727   | ) |  |   | (556,406   | )
|Additions to equipment subsidies                                      |  |      | (121,654  | )    |  |      | (165,492   | ) |  |   | (28,540    | )
|Net reduction (addition) to inventories [note 1]                      |  |      | 15,397    |      |  |      | (36,798    | ) |  |   | (19,488    | )
|Cable and MDU business acquisitions [note 2]                          |  |      | (40,454   | )    |  |      | (555,977   | ) |  |   | (145,222   | )
|Cancom acquisition [note 2]                                           |  |      |          |      |  |      | (6,148     | ) |  |   | (135,913   | )
|Costs on sale of satellite assets                                     |  |      | (631      | )    |  |      |           |   |  |   |           |  
|Proceeds received on assets held for sale [note 2]                    |  |      | 89,500    |      |  |      | 150,000    |   |  |   |           |  
|Proceeds on sale of cable systems [note 2]                            |  |      |          |      |  |      | 193,288    |   |  |   |           |  
|Proceeds on sale of FiberLink assets [note 2]                         |  |      |          |      |  |      |           |   |  |   | 53,653     |  
|Proceeds on sale of investments and other assets                      |  |      | 18,489    |      |  |      | 170,428    |   |  |   | 667,530    |  
|Costs on redemption of SHELS                                          |  |      | (3,134    | )    |  |      |           |   |  |   |           |  
|Acquisition of investments                                            |  |      | (28,158   | )    |  |      | (138,534   | ) |  |   | (788,880   | )
|Additions to deferred charges                                         |  |      | (11,345   | )    |  |      | (24,407    | ) |  |   | (17,445    | )
|                                                                      |  |      |           |      |  |      |            |   |  |   |            |  
|                                                                      |  |      | (825,558  | )    |  |      | (1,242,367 | ) |  |   | (970,711   | )
|                                                                      |  |      |           |      |  |      |            |   |  |   |            |  
|FINANCING ACTIVITIES                                                  |  |      |           |      |  |      |            |   |  |   |            |  
|Increase (decrease) in bank indebtedness                              |  |      | 514       |      |  |      | (25,214    | ) |  |   | (4,704     | )
|Proceeds on pre-payment of IRU [note 2]                               |  |      |          |      |  |      |           |   |  |   | 283,091    |  
|Payment to terminate interest rate swaps                              |  |      | (9,400    | )    |  |      |           |   |  |   |           |  
|Debt restructuring costs [note 9]                                     |  |      |          |      |  |      | (8,590     | ) |  |   | (90,606    | )
|Increase in long-term debt                                            |  |      | 1,049,520 |      |  |      | 2,377,238  |   |  |   | 2,231,082  |  
|Long-term debt repayments                                             |  |      | (588,644  | )    |  |      | (1,535,353 | ) |  |   | (2,007,389 | )
|Issue of equity instruments, net of after-tax expenses                |  |      | 90,481    |      |  |      | 189,928    |   |  |   | 339,887    |  
|Issue of Class B Shares, net of after-tax expenses                    |  |      | 792       |      |  |      | 4,547      |   |  |   | (976       | )
|Purchase of Class B Shares for cancellation                           |  |      |          |      |  |      |           |   |  |   | (13,847    | )
|Dividends
paid                                                       |  |      |           |      |  |      |            |   |  |   |            |  
|Class A and Class B Shares                                            |  |      | (11,534   | )    |  |      | (10,876    | ) |  |   | (8,505     | )
|Equity Instruments, net of current taxes                              |  |      | (41,618   | )    |  |      | (39,413    | ) |  |   | (29,411    | )
|                                                                      |  |      |           |      |  |      |            |   |  |   |            |  
|                                                                      |  |      | 490,111   |      |  |      | 952,267    |   |  |   | 698,622    |  
|                                                                      |  |      |           |      |  |      |            |   |  |   |            |  
|Effect of currency translation on cash balances and cash flows        |  |      | 35        |      |  |      | 116        |   |  |   |           |  
|Decrease in cash                                                      |  |      |          |      |  |      |           |   |  |   | (19,010    | )
|Decrease in cash attributable to media business                       |  |      |          |      |  |      |           |   |  |   | (261       | )
|Increase in cash attributable to paging business                      |  |      |          |      |  |      |           |   |  |   | 19,271     |  
|Cash, beginning of the year                                           |  |      |          |      |  |      |           |   |  |   |           |  
|                                                                      |  |      |           |      |  |      |            |   |  |   |            |  
|Cash, end of the year                                                 |  |      |          |      |  |      |           |   |  |   |           |  
|                                                                      |  |      |           |      |  |      |            |   |  |   |            |  
|Cash flow from operations per share[note 11]                          |  |      |           |      |  |      |            |   |  |   |            |  
|Basic                                                                 |  | $    | 1.25      |      |  | $    | 0.77       |   |  | $ | 1.08       |  
|Diluted                                                               |  | $    | 1.23      |      |  | $    | 0.77       |   |  | $ | 1.08       |  
|                                                                      |  |      |           |      |  |      |            |   |  |   |            |  

See accompanying notes

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Shaw Communications Inc.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[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 business is providing
cable television services, high-speed Internet access and Internet
infrastructure services (Cable); DTH (Star Choice) satellite services and
satellite distribution services (Satellite); and until February 16, 2000,
when Shaw FiberLink operations were sold to GT Group Telecom Inc., fiber optic
data, video, voice and Internet telecommunications. The Company also has
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
U.S. 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 proportionate share of the assets and
liabilities of its 38.3% interest in the Burrard Landing Lot 2 Holdings
Partnership.

Acquisitions subject to CRTC approval are 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 Cancom until June 30, 2000 (at
which time Cancom became a subsidiary of the Company), GT Group Telecom Inc.
(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 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. Other investments are recorded at
cost and written down only when there is evidence that a decline in value that
is other than temporary has occurred.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

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 are expensed as incurred.

The sale of Direct-To-Home (DTH) receiving equipment is recognized when
subscriber service is activated.

Satellite services and telecommunications revenue is recognized in the period
in which the services are rendered to customers.

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 2002,
2001 and 2000 were $51,276, $54,155 and $24,646, respectively.

In 2002, the Company retroactively changed the income statement classification
of the discounts given to dealers who distribute DTH receiving equipment to be
consistent with other practices throughout the Company. Discounts are now
netted against revenue. Previously, these discounts were included in expense.
As a result, revenue and expenses have decreased by $25,600, $35,000 and
$11,000 for 2002, 2001 and 2000, 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 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 will be received on
sales of subscriber equipment.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

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. Recoverability is measured by a comparison of the carrying amount
of an asset to future undiscounted net cash flows expected to be generated by
the asset.

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 long-term debt; (iv) DTH
pre-operating costs; and (v) equipment subsidies.

The deferred pre-operating costs incurred prior to October 1997 include the
costs of positioning the Companys subsidiary, Star Choice, for entry into the
DTH digital satellite business. These costs were deferred until commercial
operations commenced and are now fully amortized.

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, plus the direct selling costs in respect of DCT equipment. These
subsidies are deferred and amortized on a straight-line basis over a two-year
period.

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.

39



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

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. During
the year, the Company tested the amounts allocated to broadcast licenses and
goodwill for impairment and concluded that no provisions for impairment were
required. This change in accounting resulted in a reduction in amortization
expense of $83,104 for 2002.

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 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.

Equity instruments

The Company has the ability to satisfy interest and redemption obligations on
various financial instruments through the issuance of Class B Shares.
Accordingly, these instruments are included in shareholders equity and any
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

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

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.

Exchange gains or losses on translating long-term debt are included in deferred
credits or deferred charges and, except for hedged debt, are amortized on a
straight-line basis over the remaining life of the debt.
Other exchange gains and losses are included in net income (loss) for the year.

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. 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
U.S. 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 market 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 Income (Loss).

Stock-based compensation

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; accordingly, no compensation expense is recorded on the grant of
options under this plan. Any consideration paid by employees on the exercise
of stock options is credited to share capital.

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

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

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 and the DTH market could result in
an impairment of such assets.

The Company has tested the amounts allocated to broadcast licences 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) Foreign currency translation

Commencing September 1, 2002, the Company will be retroactively adopting the
new Canadian standard for foreign currency translation which is consistent with
U.S. standards and will eliminate 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 will require exchange gains and
losses be included in net income in the period they are incurred. Upon
adoption of this standard September 1, 2002, deferred unamortized foreign
exchange losses net of gains amounting to $2,526 (net of taxes) will be
eliminated and charged against the opening retained earnings as at September 1,
2000. As prior years will be restated upon adoption, the Companys net loss
for 2002 and 2001 will increase (decrease) by ($7,633) (($0.03) per share) and
$15,517 ($0.07 per share) respectively.

(ii) Stock-based compensation and other stock-based payments

Commencing September 1, 2002, the Company will be adopting 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) 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, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

2. BUSINESS ACQUISITIONS AND DIVESTITURES

Cable and MDU business acquisitions

|                                          |  |      |        |         |  |          |       |          |  |       |        | 
|----------------------------------------- |  | ---- | ------ | ------- |  | -------- | ----- | -------- |  | ----- | ------ | 
|                                          |  | 2002
|                                          |  |     
|                                          |  |      |        |         |  |          |       |          |  | Total
|                                          |  |      |        |         |  | Accounts |       | purchase
|                                          |  | Cash |        | payable |  | price   
|                                          |  | $    |        | $       |  | $       
|                                          |  |      |        |         |  |         
|(i) Cable systems in Canada               |  |      | 4,336  |         |  |          | 150   |          |  |       | 4,486  | 
|(ii) Cable systems in U.S                 |  |      | 3,608  |         |  |          | 354   |          |  |       | 3,962  | 
|(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    | 
|(vii) Other cable systems |  |          |        |      |  |            | 1,346   |             |  |          |        |          |  |       | 1,344  |  |  |  | 2,690     | 
|                          |  |          |         |      |  |            |         |             |  |          |         |          |  |       |        |  |  |  |           | 
|                          |  |          | 765,238 |      |  |            | 555,977 |             |  |          | 105,799 |          |  |       | 30,849 |  |  |  | 1,457,863 | 
|                          |  |          |         |      |  |            |         |             |  |          |         |          |  |       |        |  |  |  |           | 

|                        |  |          |         |      |  |           |         |             |  |             |         |  |  |  |         | 
|----------------------- |  | -------- | ------- | ---- |  | --------- | ------- | ----------- |  | ----------- | ------- |  |  |  | ------- | 
|                        |  | 2000    
|                        |  |         
|                        |  |          |         |      |  |           |         |             |  | Application |         |  |  | 
|                        |  | Issue of |         |      |  |           |         | of deposits |  | Total      
|                        |  | Class B  |         |      |  |           |         | and assets  |  | purchase   
|                        |  | Shares   |         | Cash |  | in escrow |         | price      
|                        |  | $        |         | $    |  | $         |         | $          
|                        |  |          |         |      |  |           |         |            
|(viii) Access           |  |          |        |      |  |           | 3,074   |             |  |             | 123,726 |  |  |  | 126,800 | 
|(ix) Fundy              |  |          | 151,515 |      |  |           | 131,928 |             |  |             | 192     |  |  |  | 283,635 | 
|(x) Other cable systems |  |          |        |      |  |           | 10,220  |             |  |             |        |  |  |  | 10,220  | 
|                        |  |          |         |      |  |           |         |             |  |             |         |  |  |  |         | 
|                        |  |          | 151,515 |      |  |           | 145,222 |             |  |             | 123,918 |  |  |  | 420,655 | 
|                        |  |          |         |      |  |           |         |             |  |             |         |  |  |  |         | 

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[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:

|                                                         |  |      |        |      |  |      |           |  |  |  |         | 
|-------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | --------- |  |  |  | ------- | 
|                                                         |  | 2002 |        | 2001 |  | 2000
|                                                         |  | $    |        | $    |  | $   
|                                                         |  |      |        |      |  |     
|Identifiable net assets acquired at assigned fair values |  |      |        |      |  |      |           |  |  |  |         | 
|Assets held for sale                                     |  |      |       |      |  |      | 239,500   |  |  |  |        | 
|Investments and other assets                             |  |      |       |      |  |      | 7         |  |  |  | 38,065  | 
|Property, plant and equipment                            |  |      | 964    |      |  |      | 353,500   |  |  |  | 114,189 | 
|Deferred charges                                         |  |      |       |      |  |      | 4,634     |  |  |  |        | 
|Broadcast licenses  DTH                                 |  |      |       |      |  |      | 9,886     |  |  |  |        | 
|Broadcast licenses  cable                               |  |      | 57,309 |      |  |      | 1,760,672 |  |  |  | 736,314 | 
|                                                         |  |      |        |      |  |      |           |  |  |  |         | 
|                                                         |  |      | 58,273 |      |  |      | 2,368,199 |  |  |  | 888,568 | 
|                                                         |  |      |        |      |  |      |           |  |  |  |         | 
|Working capital deficiency                               |  |      | 603    |      |  |      | 29,506    |  |  |  | 19,020  | 
|Long-term debt                                           |  |      | 644    |      |  |      | 372,000   |  |  |  | 209,273 | 
|IRU agreements                                           |  |      |       |      |  |      | 96,800    |  |  |  |        | 
|Future income taxes                                      |  |      | 12,068 |      |  |      | 394,821   |  |  |  | 232,652 | 
|Deferred credits                                         |  |      |       |      |  |      | 17,209    |  |  |  | 5,500   | 
|Non-controlling interest                                 |  |      |       |      |  |      |          |  |  |  | 1,468   | 
|                                                         |  |      |        |      |  |      |           |  |  |  |         | 
|                                                         |  |      | 13,315 |      |  |      | 910,336   |  |  |  | 467,913 | 
|                                                         |  |      |        |      |  |      |           |  |  |  |         | 
|Purchase price                                           |  |      | 44,958 |      |  |      | 1,457,863 |  |  |  | 420,655 | 
|                                                         |  |      |        |      |  |      |           |  |  |  |         | 



|(i)   |  | 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.        
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     
|(ii)  |  | The Company purchased 1,045 subscribers in Florida further to its
commitment in note (vii) below.
Approximately 2,246 subscribers for U.S.$5,319 are remaining in respect
of this commitment at August 31, 2002.
|     
|(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;               
|
| | (c) | WTN, a nationally distributed specialty television network; and                                                                                                                 
|
| | (d) | CKY-TV (CKY), a CTV television network affiliate in Manitoba.                                                                                                                 

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]



|       |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|      
|(vii)  |  | The Company has a commitment to purchase by May 31, 2003, a number of
subscribers in Florida.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|      
|(viii) |  | Effective September 1, 1999, the Company acquired a 75% interest in
Access Communications Inc.
(Access) and a 100% interest in Access Cable Television
Bedford/Sackville Limited. Access also owned a 45% interest in Halifax
Cablevision Limited. The three companies operated cable television
systems, served approximately 142,000 subscribers primarily in Nova
Scotia, and were acquired from a director of the Company.                                                                                                                                                                                                                                                                                             
|      
|(ix)   |  | Effective November 1, 1999, the Company acquired all the shares of Fundy
Communications Inc.
(Fundy), which operated cable systems serving approximately 186,000
subscribers in New Brunswick.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|      
|(x)    |  | Effective June 30, 2000, the Company purchased the cable television system
serving approximately 3,700 subscribers in Squamish, British Columbia.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

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.

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. There are outstanding warrants which were issued as
part of the Star Choice Senior secured notes which if exercised could result in
potential dilution of 1% in the Companys ownership of Cancom. A summary of the net assets acquired
at assigned fair values and the

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

consideration given for the 5.7% and 94.3% interests in Cancom is summarized as
follows:

|                                                         |  |      |         |      |  |  |           | 
|-------------------------------------------------------- |  | ---- | ------- | ---- |  |  | --------- | 
|                                                         |  | 2001 |         | 2000
|                                                         |  | $    |         | $   
|                                                         |  |      |         |     
|Identifiable net assets acquired at assigned fair values |  |      |         |      |  |  |           | 
|Investments and other assets                             |  |      |        |      |  |  | 15,339    | 
|Property, plant and equipment                            |  |      |        |      |  |  | 81,943    | 
|Deferred charges                                         |  |      |        |      |  |  | 103,724   | 
|Broadcast licenses                                       |  |      | 111,260 |      |  |  | 1,114,228 | 
|                                                         |  |      |         |      |  |  |           | 
|                                                         |  |      | 111,260 |      |  |  | 1,315,234 | 
|                                                         |  |      |         |      |  |  |           | 
|Working capital deficiency                               |  |      |        |      |  |  | 18,413    | 
|Long-term debt assumed                                   |  |      |        |      |  |  | 246,089   | 
|Deferred credits                                         |  |      |        |      |  |  | 15,451    | 
|Future income tax liability                              |  |      | 30,720  |      |  |  | 247,029   | 
|Non-controlling interest                                 |  |      | (12,691 | )    |  |  | 19,855    | 
|                                                         |  |      |         |      |  |  |           | 
|                                                         |  |      | 18,029  |      |  |  | 546,837   | 
|                                                         |  |      |         |      |  |  |           | 
|Purchase price                                           |  |      | 93,231  |      |  |  | 768,397   | 
|                                                         |  |      |         |      |  |  |           | 

Consideration:

|                                         |  |      |        |      |  |  |         |  
|---------------------------------------- |  | ---- | ------ | ---- |  |  | ------- | -
|                                         |  | 2001 |        | 2000
|                                         |  | $    |        | $   
|                                         |  |      |        |     
|Cash                                     |  |      | 6,148  |      |  |  | 135,913 |  
|Class B Shares                           |  |      | 87,083 |      |  |  | 534,788 |  
|Amounts included in accounts payable     |  |      |       |      |  |  | 26,720  |  
|Cancom investment at August 31, 1999     |  |      |       |      |  |  | 63,823  |  
|Equity in Cancom losses to June 30, 2000 |  |      |       |      |  |  | (19,500 | )
|Costs of WIC investment                  |  |      |       |      |  |  | 26,653  |  
|                                         |  |      |        |      |  |  |         |  
|                                         |  |      | 93,231 |      |  |  | 768,397 |  
|                                         |  |      |        |      |  |  |         |  

Divestitures



|(i)   |  | Effective May 31, 2002, the Company sold its uplink and SRDU business in
the Caribbean for $1,113.                                                                                                                                                                                                                                                                                                                                                                                             
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     
|(ii)  |  | 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 Cablevision Limited) 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.                                                      
|     
|(iii) |  | Effective February 16, 2000, the business of Shaw FiberLink was sold to
GT Group Telecom Inc. (GT). Under the agreement, the Company granted GT an IRU in certain
specifically identified existing fibers in the fiber optic cable networks
of the Company for 60 years and sold to GT the remaining property and
assets used in connection with its FiberLink business. In addition, the
Company granted GTan IRU in additional fiber kilometers to be built over
the next three years at an

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]



|     |  | estimated capital cost of $65,000. The Company received net proceeds of
$732,200, consisting of $332,200 in cash, net of disposal costs of
$27,808, and $400,000 representing the value of 29,096,097 GT shares, an
approximate 31% interest. A pre-tax gain of $87,984 was recognized on the
sale of the FiberLink business to the extent of the interest sold, and a
prepayment on the IRU totalling $525,223 was recorded which is being
amortized into income over the term of the IRU.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(iv) |  | During the year, GT issued equity which reduced the Companys equity
interest from 23.28% to 23.22% (2001  23.65% to 23.28%; 2000  31% to 23.65%)
and resulted in a dilution gain (loss) of $(571) (2001  $4,525; 2000 -
$33,245) for the year.                                                                                                                                                                                                                                         

3. ACCOUNTS RECEIVABLE

|                                                    |  |      |         |      |  |  |         |  
|--------------------------------------------------- |  | ---- | ------- | ---- |  |  | ------- | -
|                                                    |  | 2002 |         | 2001
|                                                    |  | $    |         | $   
|                                                    |  |      |         |     
|Subscriber and trade receivables                    |  |      | 165,316 |      |  |  | 152,824 |  
|Officers and employees                              |  |      | 173     |      |  |  | 322     |  
|Due from related parties [note 18]                  |  |      | 5,627   |      |  |  | 7,318   |  
|Promissory notes                                    |  |      | 5,000   |      |  |  | 16,341  |  
|Miscellaneous receivables including commodity taxes |  |      | 30,729  |      |  |  | 32,020  |  
|                                                    |  |      |         |      |  |  |         |  
|                                                    |  |      | 206,845 |      |  |  | 208,825 |  
|Less allowance for doubtful accounts                |  |      | (19,340 | )    |  |  | (19,213 | )
|                                                    |  |      |         |      |  |  |         |  
|                                                    |  |      | 187,505 |      |  |  | 189,612 |  
|                                                    |  |      |         |      |  |  |         |  

Included in operating, general and administrative expenses is a provision for
doubtful accounts of $26,727 (2001  $19,625; 2000  $10,843).

The promissory notes bear interest at bank prime rate plus 0.5% and are due on
February 28, 2003.

4. INVENTORIES

|                     |  |      |         |      |  |  |         | 
|-------------------- |  | ---- | ------- | ---- |  |  | ------- | 
|                     |  | 2002 |         | 2001
|                     |  | $    |         | $   
|                     |  |      |         |     
|Subscriber equipment |  |      | 124,515 |      |  |  | 98,654  | 
|Other                |  |      | 4,296   |      |  |  | 11,721  | 
|                     |  |      |         |      |  |  |         | 
|                     |  |      | 128,811 |      |  |  | 110,375 | 
|                     |  |      |         |      |  |  |         | 

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

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

5. INVESTMENTS AND OTHER ASSETS

|                                                                                           |  |      |         |      |  |  |         | 
|------------------------------------------------------------------------------------------ |  | ---- | ------- | ---- |  |  | ------- | 
|                                                                                           |  | 2002 |         | 2001
|                                                                                           |  | $    |         | $   
|                                                                                           |  |      |         |     
|Investments, at cost net of write-downs:                                                   |  |      |         |      |  |  |         | 
|Liberty
Media Corporation (Liberty) (market value  $4,469;
2001  $8,511)               |  |      | 4,469   |      |  |  | 8,511   | 
|Motorola,
Inc. (Motorola) (market value  $33,858; 2001  $33,858)                       |  |      | 8,925   |      |  |  | 8,925   | 
|TippingPoint Technologies Inc. (market value  2001  $1,067)                              |  |      |        |      |  |  | 1,067   | 
|At Home Corporation (At Home) (market value  2001  $255,687)                           |  |      |        |      |  |  | 34,227  | 
|Terayon Communication Systems (Terayon) (market value  $90,481;
2001  $38,801)         |  |      | 45,872  |      |  |  | 51,669  | 
|Liberate Technologies (Liberate) (market value  $93,068;
2001  $93,068)                |  |      | 16,043  |      |  |  | 16,043  | 
|Canadian Hydro Developers, Inc. (Canadian Hydro) (market value  $12,216;
2001  $5,869) |  |      | 17,036  |      |  |  | 8,737   | 
|Cogeco Cable Inc. (Cogeco) (market value  $12,650; 2001  $29,645)                      |  |      | 12,650  |      |  |  | 46,255  | 
|Investments in private technology companies                                                |  |      | 15,735  |      |  |  | 33,576  | 
|Investments at equity:                                                                     |  |      |         |      |  |  |         | 
|GT
Group Telecom Inc. (GT) (market value  $967; 2001  $140,271)                        |  |      |        |      |  |  | 331,235 | 
|Investments in specialty channel networks                                                  |  |      | 2,918   |      |  |  |        | 
|Other assets:                                                                              |  |      |         |      |  |  |         | 
|Employee home relocation mortgages and loans                                               |  |      | 8,161   |      |  |  | 2,911   | 
|Other                                                                                      |  |      | 1,793   |      |  |  | 7,551   | 
|                                                                                           |  |      |         |      |  |  |         | 
|                                                                                           |  |      | 133,602 |      |  |  | 550,707 | 
|                                                                                           |  |      |         |      |  |  |         | 

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

The market values indicated in the above table for the shares of Liberate and
Terayon reflect the amounts that would be recorded by the Company as proceeds
of disposition if the Company surrendered such shares as payment on the
outstanding SHELS at the amounts recorded as proceeds when the SHELS were
issued.

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.

At Home

On May 31, 2002, the Company redeemed the Series I and Series II SHELS by
delivering the underlying security of 4,361,186 At Home shares resulting in a
gain of $218,327.

Terayon

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

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[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:

|          |                                      |  |                             |           |      |  |           |           | 
|--------- | ------------------------------------ |  | --------------------------- | --------- | ---- |  | --------- | --------- | 
|          |                                      |  | 2002                        |           | 2001
|          |                                      |  |                             |           |     
|          |                                      |  | (number of shares/warrants)
|Shares:   |                                      |  |                             |           |      |  |           |          
|          | Free trading                         |  |                             | 2,450,000 |      |  |           | 1,500,000 | 
|          | Subject to hold periods              |  |                             | 4,096,580 |      |  |           | 1,265,000 | 
|Warrants: |                                      |  |                             |           |      |  |           |          
|          | Vested  exercise price of $2.00     |  |                             |          |      |  |           | 631,580   | 
|          | Vested  exercise price of $3.27     |  |                             | 1,000,000 |      |  |           | 500,000   | 
|          | Vested  exercise price of $2.35     |  |                             | 1,100,000 |      |  |           |          | 
|          | Non-vested  exercise price of $3.27 |  |                             |          |      |  |           | 500,000   | 
|          |                                      |  |                             |           |      |  |           |          
|          |                                      |  | 8,646,580                   |           |      |  | 4,396,580 |          
|          |                                      |  |                             |           |      |  |           |          

Investments at cost, write-downs

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

|                       |  |      |        |      |  |  |         | 
|---------------------- |  | ---- | ------ | ---- |  |  | ------- | 
|                       |  | 2002 |        | 2001
|                       |  | $    |        | $   
|                       |  |      |        |     
|Liberty                |  |      | 4,042  |      |  |  | 103,268 | 
|TippingPoint           |  |      |       |      |  |  | 21,180  | 
|Cogeco                 |  |      | 33,605 |      |  |  |        | 
|Other public companies |  |      | 173    |      |  |  | 6,203   | 
|Private companies      |  |      | 23,718 |      |  |  | 32,803  | 
|                       |  |      |        |      |  |  |         | 
|                       |  |      | 61,538 |      |  |  | 163,454 | 
|                       |  |      |        |      |  |  |         | 

Investments at equity

In June 2001, the Company acquired an additional
3,000,000 Class A Voting Shares
of GT, representing approximately 40.1% of the outstanding voting shares of GT.
The Companys equity interest in GT at August 31, 2002 is 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.

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

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

Equity income (loss) on investees consists of the following:

|                           |  |      |         |      |  |      |         |   |  |  |         |  
|-------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  |  | ------- | -
|                           |  | 2002 |         | 2001 |  | 2000
|                           |  | $    |         | $    |  | $   
|                           |  |      |         |      |  |     
|GT                         |  |      | (51,300 | )    |  |      | (70,730 | ) |  |  | (10,655 | )
|Specialty channel networks |  |      | (1,862  | )    |  |      |        |   |  |  |        |  
|Cancom (to June 30, 2000)  |  |      |        |      |  |      |        |   |  |  | (19,500 | )
|Halifax                    |  |      |        |      |  |      |        |   |  |  | 10      |  
|Other                      |  |      | (325    | )    |  |      | (552    | ) |  |  | (516    | )
|                           |  |      |         |      |  |      |         |   |  |  |         |  
|                           |  |      | (53,487 | )    |  |      | (71,282 | ) |  |  | (30,661 | )
|                           |  |      |         |      |  |      |         |   |  |  |         |  

6. PROPERTY, PLANT AND EQUIPMENT

|                                                                              |  |      |           |              |  |             |           |              |  |  |           |             |  |  |         | 
|----------------------------------------------------------------------------- |  | ---- | --------- | ------------ |  | ----------- | --------- | ------------ |  |  | --------- | ----------- |  |  | ------- | 
|                                                                              |  | 2002 |           | 2001        
|                                                                              |  |      |           |             
|                                                                              |  |      |           |              |  | Accumulated |           |              |  |  |           | Accumulated
|                                                                              |  | Cost |           | amortization |  | Cost        |           | amortization
|                                                                              |  | $    |           | $            |  | $           |           | $           
|                                                                              |  |      |           |              |  |             |           |             
|Cable and telecommunications
distribution system                              |  |      | 2,730,898 |              |  |             | 796,106   |              |  |  | 2,323,156 |             |  |  | 599,073 | 
|Digital cable terminals and modems                                            |  |      | 545,539   |              |  |             | 243,621   |              |  |  | 477,944   |             |  |  | 152,808 | 
|Decoders                                                                      |  |      | 43,715    |              |  |             | 13,373    |              |  |  | 40,923    |             |  |  | 3,231   | 
|Satellite audio, video and data
network equipment and
DTH receiving equipment |  |      | 251,358   |              |  |             | 32,498    |              |  |  | 165,336   |             |  |  | 5,960   | 
|Buildings                                                                     |  |      | 227,969   |              |  |             | 40,123    |              |  |  | 173,146   |             |  |  | 33,259  | 
|Data processing                                                               |  |      | 89,264    |              |  |             | 49,205    |              |  |  | 69,198    |             |  |  | 32,034  | 
|Other assets                                                                  |  |      | 154,073   |              |  |             | 127,522   |              |  |  | 137,190   |             |  |  | 89,742  | 
|                                                                              |  |      |           |              |  |             |           |              |  |  |           |             |  |  |         | 
|                                                                              |  |      | 4,042,816 |              |  |             | 1,302,448 |              |  |  | 3,386,893 |             |  |  | 916,107 | 
|Land                                                                          |  |      | 37,329    |              |  |             |          |              |  |  | 37,137    |             |  |  |        | 
|                                                                              |  |      |           |              |  |             |           |              |  |  |           |             |  |  |         | 
|                                                                              |  |      | 4,080,145 |              |  |             | 1,302,448 |              |  |  | 3,424,030 |             |  |  | 916,107 | 
|                                                                              |  |      |           |              |  |             |           |              |  |  |           |             |  |  |         | 
|Net book value                                                                |  |      | 2,777,697 |              |  |             |           |              |  |  | 2,507,923 |             |  |  |         | 
|                                                                              |  |      |           |              |  |             |           |              |  |  |           |             |  |  |         | 

Amortization provided in the accounts on property, plant and equipment for 2002
amounted to $409,335 (2001  $288,164; 2000  $177,963).

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 $61,698 (2001  $42,669; 2000  $17,053).

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

7. DEFERRED CHARGES

|                                                      |  |      |         |              |  |             |         |              |  |  |         |             |  |  |         | 
|----------------------------------------------------- |  | ---- | ------- | ------------ |  | ----------- | ------- | ------------ |  |  | ------- | ----------- |  |  | ------- | 
|                                                      |  | 2002 |         | 2001        
|                                                      |  |      |         |             
|                                                      |  |      |         |              |  | Accumulated |         |              |  |  |         | Accumulated
|                                                      |  | Cost |         | amortization |  | Cost        |         | amortization
|                                                      |  | $    |         | $            |  | $           |         | $           
|                                                      |  |      |         |              |  |             |         |             
|Financing costs and credit
facility arrangement fees  |  |      | 63,093  |              |  |             | 27,848  |              |  |  | 56,774  |             |  |  | 19,274  | 
|Marketing costs to launch new services                |  |      | 14,977  |              |  |             | 9,508   |              |  |  | 10,309  |             |  |  | 3,177   | 
|Foreign exchange losses on
translating long-term debt |  |      | 64,970  |              |  |             | 7,546   |              |  |  | 59,792  |             |  |  | 3,293   | 
|DTH pre-operating costs                               |  |      | 8,320   |              |  |             | 8,320   |              |  |  | 8,320   |             |  |  | 2,756   | 
|Equipment subsidies                                   |  |      | 401,019 |              |  |             | 266,493 |              |  |  | 281,217 |             |  |  | 113,341 | 
|Other                                                 |  |      | 6,482   |              |  |             | 5,058   |              |  |  | 6,825   |             |  |  | 3,616   | 
|                                                      |  |      |         |              |  |             |         |              |  |  |         |             |  |  |         | 
|                                                      |  |      | 558,861 |              |  |             | 324,773 |              |  |  | 423,237 |             |  |  | 145,457 | 
|                                                      |  |      |         |              |  |             |         |              |  |  |         |             |  |  |         | 
|Net book value                                        |  |      | 234,088 |              |  | 277,780     |        
|                                                      |  |      |         |              |  |             |        

Amortization provided in the accounts on deferred charges for 2002 amounted to
$180,249 (2001  $117,516; 2000  $27,803).

8. INTANGIBLES

|                   |                            |  |                 |           |      |  |           |           | 
|------------------ | -------------------------- |  | --------------- | --------- | ---- |  | --------- | --------- | 
|                   |                            |  | Carrying amount
|                   |                            |  |                
|                   |                            |  | 2002            |           | 2001
|                   |                            |  | $               |           | $   
|                   |                            |  |                 |           |     
|Broadcast licenses |                            |  |                 |           |      |  |           |          
|                   | Cable systems              |  |                 | 3,894,124 |      |  |           | 3,836,814 | 
|                   | DTH and satellite services |  |                 | 983,132   |      |  |           | 1,201,309 | 
|                   |                            |  |                 |           |      |  |           |           | 
|                   |                            |  | 4,877,256       |           |      |  | 5,038,123 |          
|Goodwill           |                            |  | 145,865         |           |      |  |          |          
|                   |                            |  |                 |           |      |  |           |           | 
|Net book value     |                            |  | 5,023,121       |           |      |  | 5,038,123 |          
|                   |                            |  |                 |           |      |  |           |           | 

Commencing September 1, 2001, broadcast licenses and goodwill are no longer
amortized (see note 1) and are presented at their carrying amounts. As at
August 31, 2001, cable system and Satellite broadcast licenses were recorded at
cost of $3,996,528 and $1,237,915 respectively, less accumulated amortization
of $159,714 and $36,606 respectively. Amortization provided in the accounts on
broadcast licenses amounted to $71,081 and $29,435 in 2001 and 2000,
respectively.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

9. LONG-TERM DEBT

|                                                                               |                                     |          |                |         |      |         |           |         |  |        |           |         | 
|------------------------------------------------------------------------------ | ----------------------------------- | -------- | -------------- | ------- | ---- | ------- | --------- | ------- |  | ------ | --------- | ------- | 
|                                                                               |                                     |          | Effective      |         |      |         |           |         |  |        |          
|                                                                               |                                     |          | interest rates |         | 2002 |         | 2001     
|                                                                               |                                     |          | %              |         | $    |         | $        
|                                                                               |                                     |          |                |         |      |         |          
|Corporate                                                                      |                                     |          |                |         |      |         |           |         |  |        |           |        
|Bank loans                                                                     | Fixed and variable                  |          |                | 425,106 |      |         |           | 612,646 | 
|Senior notes-                                                                  |                                     |          |                |         |      |         |           |         |  |        |           |        
|                                                                               | Due April 11, 2005                  |          |                | 7.05    |      |         |           | 275,000 |  |        |           | 275,000 | 
|                                                                               | Due October 17, 2007                |          |                | 7.40    |      |         |           | 300,000 |  |        |           | 300,000 | 
|                                                                               | U.S. $440,000 due April 11, 2010    |          |                | 7.88    |      |         |           | 685,872 |  |        |           | 682,352 | 
|                                                                               | U.S. $225,000 due April 6, 2011     |          |                | 7.68    |      |         |           | 350,729 |  |        |           | 348,930 | 
|                                                                               | U.S. $300,000 due December 15, 2011 |          |                | 7.61    |      |         |           | 467,640 |  |        |           |        | 
|                                                                               |                                     |          |                |         |      |         |           |         |  |        |           |        
|                                                                               |                                     |          |                |         |      |         | 2,504,347 |         |  |        | 2,218,928 |        
|                                                                               |                                     |          |                |         |      |         |           |         |  |        |           |        
|Cancom                                                                         |                                     |          |                |         |      |         |           |         |  |        |           |        
|Bank loans                                                                     |                                     | Variable |                |         |      | 253,800 |           |         |  | 88,800 |          
|Subordinated credit facility                                                   |                                     | Variable |                |         |      | 40,000  |           |         |  | 40,000 |          
|Structured Note, due December 15, 2003                                         |                                     |          | 7.00           |         |      |         | 250,000   |         |  |        | 250,000   |        
|                                                                               |                                     |          |                |         |      |         |           |         |  |        |           |        
|                                                                               |                                     |          |                |         |      |         | 543,800   |         |  |        | 378,800   |        
|                                                                               |                                     |          |                |         |      |         |           |         |  |        |           |        
|Star Choice                                                                    |                                     |          |                |         |      |         |           |         |  |        |           |        
|U.S.$150,000 Senior secured notes                                              |                                     |          | 13.00          |         |      |         | 233,820   |         |  |        | 232,620   |        
|                                                                               |                                     |          |                |         |      |         |           |         |  |        |           |        
|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  |           |         |  | 50,000 |          
|Burrard Landing Lot 2 Holdings Partnership                                     |                                     | Variable |                |         |      | 7,670   |           |         |  |       |          
|                                                                               |                                     |          |                |         |      |         |           |         |  |        |           |        
|                                                                               |                                     |          |                |         |      |         | 187,670   |         |  |        | 180,000   |        
|                                                                               |                                     |          |                |         |      |         |           |         |  |        |           |        
|Total consolidated debt                                                        |                                     |          |                |         |      |         | 3,469,637 |         |  |        | 3,010,348 |        
|Less current portion                                                           |                                     |          |                |         |      |         |          |         |  |        |          |        
|                                                                               |                                     |          |                |         |      |         |           |         |  |        |           |        
|                                                                               |                                     |          |                |         |      |         | 3,469,637 |         |  |        | 3,010,348 |        
|                                                                               |                                     |          |                |         |      |         |           |         |  |        |           |        

Interest on long-term debt included in interest expense amounted to $266,596
(2001  $211,294; 2000  $128,932).

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.

A syndicate of banks has provided the Company with an unsecured credit
facility, which at August 31, 2002 amounted to $1,425,105, $1,200,000 of which
is revolving on a reducing basis commencing in fiscal 2004 until repaid by
April 30, 2007. As at August 31, 2002, $991,256 (net of committed letters of
credit of $8,744) of

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

the $1,200,000 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 U.S.
dollars. At August 31, 2002, the U.S. portion of the bank loans was U.S.
$57,233 ($89,215 Canadian).

At August 31, 2002, interest rates on $177,000 of Canadian dollar borrowings
were fixed by means of an interest rate swap at 8.89%. 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%. Interest rates on the
balance of the bank loans fluctuate with Canadian bankersacceptance and U.S.
libor rates and averaged 4.0% for the year (2001  7.4%; 2000  7.5%).

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 on the U.S. $ Senior notes. The
table below outlines the U.S. $ principal, the interest coupon rate, the
effective interest rate on the Canadian $ equivalent of the U.S. debt as a
result of the agreements, and the exchange rate applicable to the principal
portion of the debt (Exchange rate):

|               |  |             |       |               |  |               |       |  |  |  |         | 
|-------------- |  | ----------- | ----- | ------------- |  | ------------- | ----- |  |  |  | ------- | 
|U.S. Senior    |  |             |       |               |  | Effective     |       |  |  | 
|note principal |  | Coupon rate |       | interest rate |  | Exchange rate
|               |  |             |       |               |  |              
|$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s banking facilities include a $15,000 demand operating line of credit
and a seven-year $350,000 revolving reducing term credit facility. Funds are
available in Canadian dollars or the U.S. dollar equivalent. Interest rates on
the operating line fluctuate with Canadian prime rate and U.S. base rates.
Interest rates on the $350,000 facility fluctuate with Canadian
bankersacceptance and prime rates and U.S. libor and base rates. Interest
rates on these facilities averaged 6.62% for the year (2001 
8.87%; 2000  10.14%).

Under the $350,000 facility, if by December 31, 2003, Cancom has not repaid the
Star Choice Senior secured notes and raised additional proceeds of $50,000,
Shaw has agreed to subscribe for additional shares of Cancom for not less than
$50,000. In such event, the $350,000 facility is revolving on a reducing basis
commencing in fiscal 2004 until repaid by February 28, 2007, otherwise until
repaid by July 31, 2007.

53



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

The operating line and $350,000 facility are collateralized by a first ranking
fixed and floating charge and security interest in all assets and undertakings
of Cancom and substantially all of Cancoms subsidiaries, excluding Star Choice
and its subsidiaries.

Subordinated credit facility

Cancom has a $40,000 standby Subordinated credit facility due May 2, 2004. The
effective interest rate on this facility was 7.99% for the year (2001
 9.29%;
2000  9.76%). The facility is unsecured and bears interest at rates based
upon bankersacceptances.

In conjunction with the establishment of the Cancom Bank loans, Cancom and the
lender entered into an Interlender Priorities Agreement with respect to the
Subordinated credit facility whereby repayment has been subordinated to the
repayment of the Cancom Bank loans. The Company has entered into a liquidity
agreement on the Subordinated credit facility whereby in the event of
continuing default on the facility, the lender may cause the Company to satisfy
the obligations under the facility. The Company has the option to satisfy the
obligation by cash or sufficient Class B Shares of the Company.

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
Shares of the Company, the note from the holders at an amount equal to the
principal plus accrued interest.

Star Choice

Senior secured notes

Star Choice has issued Senior secured notes which are due December 15, 2005 and
are redeemable at the option of Star Choice at 106.5% of the issue price of
U.S. $150,000 on or after December 15, 2002, 103.25% of the issue price on or
after December 15, 2003 or at 100% of the issue price on or after December 15,
2004. Interest is payable semi-annually. The notes are collateralized by all
of the assets of Star Choice with the exception of the assets of a subsidiary,
Direct Choice TV Inc.

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-

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

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.

Big Pipe Ventures, L.P.

Big Pipe Ventures, L.P., a wholly-owned subsidiary, entered into a credit
agreement with a United States subsidiary of a major Canadian Chartered Bank
providing for a $50,000 non-revolving term facility, which was fully drawn at
August 31, 2002. The facility, which is non-recourse to the parent company,
is collateralized by a general security agreement and a pledge of all of the
shares of Big Pipe (NS) Company. The facility bears interest based on the
Canadian prime rate which averaged 4.29% for the year (2001  8%). The
facility is repayable in two instalments of $1,250 each on January 15 and July
15, 2005, one instalment of $5,000 on January 15, 2006 and the remaining
balance due on July 15, 2006. Subsequent to August 31, 2002, the Company
arranged to retire this facility by drawing on the corporate long-term bank
loan facility.

Burrard Landing Lot 2 Holdings Partnership

The Company has a 38.3% interest in the Burrard Landing Lot 2 Holdings
Partnership (the Partnership). The Partnership, which will build and own the
Shaw Tower project in Vancouver, B.C., has a $20,000 bank loan to purchase
land. The Partnership also has a $118,500 construction loan, which may be
drawn down pursuant to repaying the $20,000 bank loan plus certain other
conditions. The $20,000 loan is repayable the earlier of the draw down under
the construction loan and December 1, 2002. The construction loan is repayable
no later than December 31, 2005 (if extended). Interest rates on the loans
fluctuate with Canadian bankers acceptance and prime rates. The loans are
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 loans are severally guaranteed by the Company
and other two partners in the Partnership in the amount of $47,800. The
Companys portion of the debt guarantee is $18,300. The bank loan to purchase
land has been classified as long-term as it will be repaid by drawing down on
the construction loan.

Debenture redemptions

In 2001, the Company called for redemption of the U.S. $91,916 11% senior
secured priority notes and in 2000 called for redemption of all outstanding
debentures incurring costs in connection with the early redemptions as follows:

|                                                |  |      |       |      |  |  |         |  
|----------------------------------------------- |  | ---- | ----- | ---- |  |  | ------- | -
|                                                |  | 2001 |       | 2000
|                                                |  | $    |       | $   
|                                                |  |      |       |     
|Restructuring fees                              |  |      | 8,590 |      |  |  | 90,606  |  
|Realization of deferred foreign exchange losses |  |      |      |      |  |  | 27,707  |  
|Write-off of deferred financing costs           |  |      |      |      |  |  | 4,102   |  
|Write-off of deferred bond warrant proceeds     |  |      |      |      |  |  | (24,447 | )
|                                                |  |      |       |      |  |  |         |  
|                                                |  |      | 8,590 |      |  |  | 97,968  |  
|                                                |  |      |       |      |  |  |         |  

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, 2002.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

Long-term debt repayments

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

|           |  |   |           | 
|---------- |  | - | --------- | 
|           |  | $
|           |  |  
|2003       |  |   |          | 
|2004       |  |   | 312,511   | 
|2005       |  |   | 412,734   | 
|2006       |  |   | 437,597   | 
|2007       |  |   | 372,553   | 
|Thereafter |  |   | 1,934,242 | 
|           |  |   |           | 
|           |  |   | 3,469,637 | 
|           |  |   |           | 

10. DEFERRED CREDITS

|                                                       |  |      |         |              |  |             |        |              |  |  |         |             |  |  |        | 
|------------------------------------------------------ |  | ---- | ------- | ------------ |  | ----------- | ------ | ------------ |  |  | ------- | ----------- |  |  | ------ | 
|                                                       |  | 2002 |         | 2001        
|                                                       |  |      |         |             
|                                                       |  |      |         |              |  | Accumulated |        |              |  |  |         | Accumulated
|                                                       |  | Cost |         | amortization |  | Cost        |        | amortization
|                                                       |  | $    |         | $            |  | $           |        | $           
|                                                       |  |      |         |              |  |             |        |             
|IRU agreements                                         |  |      | 622,023 |              |  |             | 19,437 |              |  |  | 622,023 |             |  |  | 7,920  | 
|Fair value adjustments on
debt assumed on acquisitions |  |      | 21,535  |              |  |             | 7,180  |              |  |  | 30,660  |             |  |  | 3,917  | 
|Foreign exchange gains on
translating long-term debt   |  |      | 16,265  |              |  |             | 471    |              |  |  | 8,855   |             |  |  | 276    | 
|Deposit on future fiber purchase                       |  |      | 2,000   |              |  |             |       |              |  |  | 2,000   |             |  |  |       | 
|                                                       |  |      |         |              |  |             |        |              |  |  |         |             |  |  |        | 
|                                                       |  |      | 661,823 |              |  |             | 27,088 |              |  |  | 663,538 |             |  |  | 12,113 | 
|                                                       |  |      |         |              |  |             |        |              |  |  |         |             |  |  |        | 
|Net book value                                         |  |      | 634,735 |              |  | 651,425     |       
|                                                       |  |      |         |              |  |             |       

IRU agreements are in place for periods between 30 and 60 years and are being
amortized into income over the agreement periods. Amortization in respect of
the IRU agreements for 2002 amounted to $11,517 (2001  $4,902; 2000  $3,018);
amortization in respect of fair value adjustments on debt amounted to $4,151
(2001  $4,359; 2000  $7,941) and was offset against interest expense; and
amortization provided in the accounts on foreign exchange gains for 2002
amounted to $195 (2001  $467; 2000  $989) and is netted against the
amortization charge.

56



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[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 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.

Effective September 1, 1999, the authorized share capital of the Company was
amended to eliminate the par value on Class B Shares.

|                     |             |  |  |  |             |  |  |                                                      |  |      |           |      |  |  |           | 
|-------------------- | ----------- |  |  |  | ----------- |  |  | ---------------------------------------------------- |  | ---- | --------- | ---- |  |  | --------- | 
|                     |             |  |  |  |             |  |  |                                                      |  | 2002 |           | 2001
|                     |             |  |  |  |             |  |  |                                                      |  | $    |           | $   
|                     |             |  |  |  |             |  |  |                                                      |  |      |           |     
|Number of securities |             |  |  |  |             |  |  |                                                      |  |     
|                     |             |  |  |  |             |  |  |                                                      |  |     
|                     | 2002        |  |  |  | 2001        | 
|                     |             |  |  |  |             | 
|                     | 11,373,972  |  |  |  | 11,403,972  |  |  | Class A
Shares                                       |  |      | 2,493     |      |  |  | 2,499     | 
|                     | 220,473,552 |  |  |  | 220,368,357 |  |  | Class B Shares                                       |  |      | 2,107,367 |      |  |  | 2,106,569 | 
|                     |             |  |  |  |             |  |  |                                                      |  |      |           |      |  |  |           | 
|                     | 231,847,524 |  |  |  | 231,772,329 |  |  |                                                      |  |      | 2,109,860 |      |  |  | 2,109,068 | 
|                     |             |  |  |  |             |  |  |                                                      |  |      |           |      |  |  |           | 
|                     |             |  |  |  |             |  |  | EQUITY INSTRUMENTS
COPrS-                            |  |      |           |      |  |  |           | 
|                     | 5,700,000   |  |  |  | 5,700,000   |  |  | 8.45% Series A U.S. $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 U.S. $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-                                               |  |      |           |      |  |  |           | 
|                     |            |  |  |  | 137,693     |  |  | Series I  U.S. $137,693                             |  |      |          |      |  |  | 199,342   | 
|                     |            |  |  |  | 39,053      |  |  | Series II  U.S. $39,053                             |  |      |          |      |  |  | 56,345    | 
|                     | 33,923      |  |  |  | 33,923      |  |  | Series III  U.S. $33,923                            |  |      | 50,342    |      |  |  | 50,342    | 
|                     | 28,853      |  |  |  | 28,853      |  |  | Series IV
 U.S. $28,853                             |  |      | 42,726    |      |  |  | 42,726    | 
|                     | 57,583      |  |  |  |            |  |  | Series V
 U.S. $57,583                              |  |      | 90,481    |      |  |  |          | 
|                     |             |  |  |  |             |  |  | Zero Coupon Loan U.S. $22,835                        |  |      | 33,858    |      |  |  | 33,858    | 
|                     |             |  |  |  |             |  |  |                                                      |  |      |           |      |  |  |           | 
|                     |             |  |  |  |             |  |  |                                                      |  |      | 908,472   |      |  |  | 1,073,678 | 
|                     |             |  |  |  |             |  |  |                                                      |  |      |           |      |  |  |           | 
|                     |             |  |  |  |             |  |  |                                                      |  |      | 3,018,332 |      |  |  | 3,182,746 | 
|                     |             |  |  |  |             |  |  |                                                      |  |      |           |      |  |  |           | 

57



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

Class A and Class B Shares

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

Changes in Class A and Class B Share capital in 2002, 2001 and 2000 are as
follows:

|                                            |  |                |            |                |  |             |       |   |  |   |             |   |  |  |           |   |  |  |           |  
|------------------------------------------- |  | -------------- | ---------- | -------------- |  | ----------- | ----- | - |  | - | ----------- | - |  |  | --------- | - |  |  | --------- | -
|                                            |  |                |            |                |  |             |       |   |  |   |             |   |  |  |           |   |  | 
|                                            |  | Class A Shares |            | Class B Shares |  | Contributed
|                                            |  |                |            |                |  | surplus    
|                                            |  | Number         |            | $              |  | Number      |       | $ |  | $
|                                            |  |                |            |                |  |             |       |   |  |  
|August 31, 1999                             |  |                | 11,446,072 |                |  |             | 2,916 |   |  |   | 168,161,498 |   |  |  | 1,403     |   |  |  | 1,004,625 |  
|Elimination of par value on
Class B Shares  |  |                |           |                |  |             |      |   |  |   |            |   |  |  | 656,521   |   |  |  | (656,521  | )
|Reduction on separation of
media business   |  |                |           |                |  |             | (407  | ) |  |   |            |   |  |  | (91,884   | ) |  |  | (348,104  | )
|Class A Share conversions                   |  |                | (26,100    | )              |  |             | (6    | ) |  |   | 26,100      |   |  |  | 6         |   |  |  |          |  
|Stock option plan issuances                 |  |                |           |                |  |             |      |   |  |   | 2,795,176   |   |  |  |          |   |  |  |          |  
|Purchase of Class B Shares
for cancellation |  |                |           |                |  |             |      |   |  |   | (397,400    | ) |  |  | (1,676    | ) |  |  |          |  
|Issued in respect of:                       |  |                |            |                |  |             |       |   |  |   |             |   |  |  |           |   |  |  |           |  
|Cable system acquisitions                   |  |                |           |                |  |             |      |   |  |   | 7,401,796   |   |  |  | 151,515   |   |  |  |          |  
|Cancom acquisition                          |  |                |           |                |  |             |      |   |  |   | 16,217,749  |   |  |  | 534,788   |   |  |  |          |  
|Share issue costs                           |  |                |           |                |  |             |      |   |  |   |            |   |  |  | (976      | ) |  |  |          |  
|                                            |  |                |            |                |  |             |       |   |  |   |             |   |  |  |           |   |  |  |           |  
|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 |   |  |  |          |  
|                                            |  |                |            |                |  |             |       |   |  |   |             |   |  |  |           |   |  |  |           |  

Effective September 1, 1999, the Companys shareholders approved an arrangement
to divide the Company into two separate public corporations, Shaw
Communications Inc. and Corus Entertainment Inc. The separation and concurrent
changes to the Companys shareholder equity accounts resulted in the following
increases (decreases) in shareholdersequity:

|                                                                                            |  |   |            |  
|------------------------------------------------------------------------------------------- |  | - | ---------- | -
|                                                                                            |  | $
|                                                                                            |  |  
|Reduction in Class A Shares                                                                 |  |   | (407       | )
|Reduction in Class B Shares                                                                 |  |   | (91,884    | )
|Allocation of contributed surplus to Class B Shares on elimination of par value designation |  |   | 656,521    |  
|Reduction in contributed surplus                                                            |  |   | (1,004,625 | )
|Reduction in retained earnings                                                              |  |   | (29,414    | )
|                                                                                            |  |   |            |  
|                                                                                            |  |   | (469,809   | )
|                                                                                            |  |   |            |  

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

Equity instruments

COPrS

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 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 Shares by the trustee.

The COPrS are redeemable, at the Companys option, in whole or in part, at any
time after 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 Shares.

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

SHELS

Each series of the SHELS are in denominations of U.S. $1,000 and are due 25
years following the date of issuance. The SHELS are collateralized by the
underlying security indicated opposite such series below and are exchangeable
at the holders option at any time, excluding the maturity date, into the
underlying security at the Conversion Rate indicated. In lieu of delivering the
underlying security, the Company may make cash payment equal to the fair market
value of the underlying security at that time. The Company may satisfy its
obligation to pay the applicable redemption price or the principal amount of
the SHELS plus accrued interest through the issuance of Class B Shares.

Interest is payable on the SHELS at a rate equal to the dividend rate of the
underlying security plus a varying percentage (Incremental Interest Rate)
depending on whether the underlying security is subject to trading
restrictions. In 2002, all of the underlying securities were free trading.
After certain dates, the Company may redeem not less than that number of SHELS
equal to one-third of such SHELS outstanding as of the date of issuance. The
redemption may be satisfied by delivering the number shares of the underlying
security based on the applicable conversion rate for each U.S.$1,000 principal
amount plus accrued and unpaid interest, or by a cash payment that approximates
the fair market value of the underlying security at the time of redemption plus
accrued and unpaid interest thereon to the date of such redemption.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

A summary of the terms of each series of the SHELS outstanding is as follows:

|                               |  |                                                |  |             |       |             |  |            |       |  |  |                   
|------------------------------ |  | ---------------------------------------------- |  | ----------- | ----- | ----------- |  | ---------- | ----- |  |  | ------------------
|                               |  |                                                |  | Conversion  |       | Incremental |  |           
|                               |  |                                                |  | Rate per    |       | Interest    |  | Redeemable
|Series                         |  | Underlying security                            |  | U.S. $1,000 |       | Rate        |  | after     
|                               |  |                                                |  |             |       |             |  |           
|SHELS III, due
May 31, 2025    |  | 452,506 common shares
of Liberate Technologies |  |             | 13.34 |             |  |            | 2.25% |  |  | May 31, 2004      
|                               |  |                                                |  |             |       |             |  |            |       |  |  |                   
|SHELS IV, due
October 6, 2025  |  | 1,000,000 shares of
Liberate Technologies      |  |             | 34.66 |             |  |            | 2.25% |  |  | October 6, 2004   
|                               |  |                                                |  |             |       |             |  |            |       |  |  |                   
|SHELS V, due
November 29, 2026 |  | 5,326,827 shares of
Terayon                    |  |             | 92.51 |             |  |            | 2.00% |  |  | November 29,
2001*

     If the Company
redeems the SHELS V prior to May 29, 2003, the Company must
also pay additional interest that would have accrued to the holders following
the date of redemption to May 29, 2003.

During the year, the SHELS Series I and II having underlying security of
3,250,656 and 1,110,530 At Home common shares respectively 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 $218,327.

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 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
U.S.$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 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 Shares at the date of grant. The maximum
number of Class B Shares issuable under this plan and the warrant plan
described below may not exceed 16,000,000.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

The changes in options in 2002, 2001 and 2000 are as follows:

|                                 |  |        |            |      |  |          |       |   |  |        |            |          |  |  |       |  |  |          |           |  |  |  |       | 
|-------------------------------- |  | ------ | ---------- | ---- |  | -------- | ----- | - |  | ------ | ---------- | -------- |  |  | ----- |  |  | -------- | --------- |  |  |  | ----- | 
|                                 |  | 2002   |            | 2001 |  | 2000    
|                                 |  |        |            |      |  |         
|                                 |  |        |            |      |  | Weighted |       |   |  |        |            | Weighted |  |  |       |  |  | Weighted
|                                 |  |        |            |      |  | average  |       |   |  |        |            | average  |  |  |       |  |  | average 
|                                 |  |        |            |      |  | exercise |       |   |  |        |            | exercise |  |  |       |  |  | exercise
|                                 |  |        |            |      |  | price    |       |   |  |        |            | price    |  |  |       |  |  | price   
|                                 |  | Shares |            | $    |  | Shares   |       | $ |  | Shares |            | $       
|                                 |  |        |            |      |  |          |       |   |  |        |            |         
|Outstanding at beginning of year |  |        | 7,640,500  |      |  |          | 32.57 |   |  |        | 5,450,000  |          |  |  | 32.49 |  |  |          |          |  |  |  |      | 
|Granted                          |  |        | 2,116,750  |      |  |          | 32.64 |   |  |        | 3,510,000  |          |  |  | 32.73 |  |  |          | 5,450,000 |  |  |  | 32.49 | 
|Exercised                        |  |        | (11,750    | )    |  |          | 32.63 |   |  |        | (16,000    | )        |  |  | 32.62 |  |  |          |          |  |  |  |      | 
|Forfeited                        |  |        | (1,442,500 | )    |  |          | 32.67 |   |  |        | (1,303,500 | )        |  |  | 32.66 |  |  |          |          |  |  |  |      | 
|                                 |  |        |            |      |  |          |       |   |  |        |            |          |  |  |       |  |  |          |           |  |  |  |       | 
|Outstanding at end of year       |  |        | 8,303,000  |      |  |          | 32.58 |   |  |        | 7,640,500  |          |  |  | 32.57 |  |  |          | 5,450,000 |  |  |  | 32.49 | 
|                                 |  |        |            |      |  |          |       |   |  |        |            |          |  |  |       |  |  |          |           |  |  |  |       | 

The following table summarizes information about the options outstanding at
August 31, 2002:

|                |  |                     |           |                     |  |          |      |                |  |          |       |  |  |  |           |  |  |   |       | 
|--------------- |  | ------------------- | --------- | ------------------- |  | -------- | ---- | -------------- |  | -------- | ----- |  |  |  | --------- |  |  | - | ----- | 
|                |  | 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 |  | 2002                |           | contractual life    |  | price    |      | 2002           |  | price   
|                |  |                     |           |                     |  |          |      |                |  |         
|$29.70 - $34.08 |  |                     | 8,303,000 |                     |  |          | 8.29 |                |  | $        | 32.58 |  |  |  | 2,715,500 |  |  | $ | 32.53 | 

Under a previous stock option plan, options were granted to senior officers and
employees to acquire Class B Shares. The number of shares issued under the
plan varied depending upon the growth in market value of the shares. In
connection with the separation of the Companys media business on September 1,
1999, all vesting rights under the stock option plan were accelerated and
2,795,176 Class B Shares were issued on that date on a cashless 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 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, 2002 there were 88,002 Cancom options outstanding with exercise
prices between $6.13 and $23.25 and a weighted average price of $12.50. The
weighted average remaining contractual life of the Cancom options is 3.9 years.
At August 31, 2002, 67,499 Cancom options were exercisable into 60,749 Class B
Shares of the Company at a weighted average price of $12.92 per Class B Share.

Warrants

Prior to the Companys acquisition and consolidation of Cancom effective July
1, 2000, Cancom and Star Choice had established a distributor and dealer
warrant plan to grant Cancom warrants to acquire Cancom shares at a price of
$22.50 per Cancom common share. The Company provided for this obligation
(using $25 per equivalent Shaw Class B Share) in assigning fair values to the
assets and liabilities in the purchase equation

61



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

on consolidation based on the market price of the Shaw Class B 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, 2002, 88,314 warrants have vested.

Dividends

The holders of Class B Shares are entitled to receive during each dividend
period, in priority to the payment of dividends on the Class A Shares, an
additional dividend at a rate of $0.005 per share per annum. This additional
dividend is subject to proportionate adjustment in the event of future
consolidations or subdivisions of shares and in the event of any issue of
shares by way of stock dividend. After payment or setting aside for payment of
the additional non-cumulative dividends on the Class B Shares, holders of Class
A Shares and Class B Shares participate equally, share for share, as to all
subsequent dividends declared.

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).

Earnings (loss) and cash flow per share

The Company uses the treasury 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 Shares at the
average market price during the period.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

Earnings (loss) and cash flow per share calculations are as follows:

|                                                                                                |  |      |             |      |  |      |             |   |  |  |             |  
|----------------------------------------------------------------------------------------------- |  | ---- | ----------- | ---- |  | ---- | ----------- | - |  |  | ----------- | -
|                                                                                                |  | 2002 |             | 2001 |  | 2000
|                                                                                                |  | $    |             | $    |  | $   
|                                                                                                |  |      |             |      |  |     
|Basic  reported net income (loss)                                                              |  |      |             |      |  |      |             |   |  |  |             |  
|Reported net income (loss)                                                                      |  |      | (288,292    | )    |  |      | (147,421    | ) |  |  | 133,604     |  
|Equity entitlements, net of tax                                                                 |  |      | (42,331     | )    |  |      | (40,123     | ) |  |  | (33,071     | )
|                                                                                                |  |      |             |      |  |      |             |   |  |  |             |  
|                                                                                                |  |      | (330,623    | )    |  |      | (187,544    | ) |  |  | 100,533     |  
|                                                                                                |  |      |             |      |  |      |             |   |  |  |             |  
|Earnings (loss) per share on reported net income (loss)                                         |  |      | (1.43       | )    |  |      | (0.85       | ) |  |  | 0.53        |  
|                                                                                                |  |      |             |      |  |      |             |   |  |  |             |  
|Basic  adjusted net income (loss)                                                              |  |      |             |      |  |      |             |   |  |  |             |  
|Adjusted net income (loss)                                                                      |  |      | (288,292    | )    |  |      | (95,532     | ) |  |  | 153,105     |  
|Equity entitlements, net of tax                                                                 |  |      | (42,331     | )    |  |      | (40,123     | ) |  |  | (33,071     | )
|                                                                                                |  |      |             |      |  |      |             |   |  |  |             |  
|                                                                                                |  |      | (330,623    | )    |  |      | (135,655    | ) |  |  | 120,034     |  
|                                                                                                |  |      |             |      |  |      |             |   |  |  |             |  
|Earnings (loss) per share on adjusted net income (loss)                                         |  |      | (1.43       | )    |  |      | (0.61       | ) |  |  | 0.64        |  
|                                                                                                |  |      |             |      |  |      |             |   |  |  |             |  
|Cash flow per share                                                                             |  |      |             |      |  |      |             |   |  |  |             |  
|Cash flow from operations                                                                       |  |      | 332,109     |      |  |      | 210,514     |   |  |  | 237,789     |  
|Equity entitlements, net of tax                                                                 |  |      | (42,331     | )    |  |      | (40,123     | ) |  |  | (33,071     | )
|                                                                                                |  |      |             |      |  |      |             |   |  |  |             |  
|                                                                                                |  |      | 289,778     |      |  |      | 170,391     |   |  |  | 204,718     |  
|                                                                                                |  |      |             |      |  |      |             |   |  |  |             |  
|Cash flow per share                                                                             |  |      |             |      |  |      |             |   |  |  |             |  
|Basic                                                                                           |  |      | 1.25        |      |  |      | 0.77        |   |  |  | 1.08        |  
|Diluted                                                                                         |  |      | 1.23        |      |  |      | 0.77        |   |  |  | 1.08        |  
|                                                                                                |  |      |             |      |  |      |             |   |  |  |             |  
|Weighted
average number of Class A and Class B
Shares used as denominator in above calculations |  |      | 231,820,000 |      |  |      | 221,079,000 |   |  |  | 188,927,000 |  
|                                                                                                |  |      |             |      |  |      |             |   |  |  |             |  

The diluted cash flow per share is calculated by adding back the dividends net
of tax on the equity entitlements and by adding to the weighted average number
of Class A and Class B Shares outstanding during the year, the number of shares
that would be issued (2002  38,522,307; 2001  32,077,753;
2000  29,422,223)
to settle the principal element of the equity instruments based on the opening
market prices on the Class B Shares.

Options to purchase 8,382,202 (2001
 7,806,788; 2000  5,647,819) Class B
Shares were outstanding under the Companys stock option plan and the Cancom
option plan at August 31, 2002, warrants to issue 262,807 Class B Shares (2001
 985,637) were outstanding at August 31, 2002, and the Company has the right
to issue Class B Shares in satisfaction of its redemption obligations on equity
instruments included in share capital. These potentially dilutive securities
have not been included in calculating diluted earnings (loss) per share for the
current or prior year, as they do not have a dilutive impact on earnings.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]



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

|                                               |  |      |       |      |  |  |       | 
|---------------------------------------------- |  | ---- | ----- | ---- |  |  | ----- | 
|                                               |  | 2002 |       | 2001
|                                               |  | $    |       | $   
|                                               |  |      |       |     
|Balance, beginning of year                     |  |      | 1,331 |      |  |  | 21    | 
|Current years deferred translation adjustment |  |      | 182   |      |  |  | 1,310 | 
|                                               |  |      |       |      |  |  |       | 
|Balance, end of year                           |  |      | 1,513 |      |  |  | 1,331 | 
|                                               |  |      |       |      |  |  |       | 



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

|                          |  |      |         |      |  |  |         | 
|------------------------- |  | ---- | ------- | ---- |  |  | ------- | 
|                          |  | 2002 |         | 2001
|                          |  | $    |         | $   
|                          |  |      |         |     
|Trade                     |  |      | 58,812  |      |  |  | 153,693 | 
|Vendor financing facility |  |      | 40,000  |      |  |  | 40,000  | 
|Accrued liabilities       |  |      | 179,527 |      |  |  | 216,186 | 
|Accrued network fees      |  |      | 112,169 |      |  |  | 56,510  | 
|Interest and dividends    |  |      | 93,245  |      |  |  | 78,038  | 
|Due to related parties    |  |      | 1,599   |      |  |  | 4,180   | 
|Other                     |  |      | 25,754  |      |  |  | 17,354  | 
|                          |  |      |         |      |  |  |         | 
|                          |  |      | 511,106 |      |  |  | 565,961 | 
|                          |  |      |         |      |  |  |         | 

Interest on the vendor financing facility included in interest expense amounted
to $4,878 (2001  $nil; 2000  $nil). The available amount under the vendor
facility is $40,000 and was fully drawn at August 31, 2002. The facility bears
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.



|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:

|                                |  |      |           |      |  |  |           | 
|------------------------------- |  | ---- | --------- | ---- |  |  | --------- | 
|                                |  | 2002 |           | 2001
|                                |  | $    |           | $   
|                                |  |      |           |     
|Future income tax liabilities:  |  |      |           |      |  |  |           | 
|Property, plant and equipment   |  |      | 221,872   |      |  |  | 177,725   | 
|Broadcast licenses              |  |      | 1,210,084 |      |  |  | 1,266,176 | 
|Deferred charges                |  |      | 18,289    |      |  |  | 43,837    | 
|Partnership income              |  |      | 161,291   |      |  |  | 61,771    | 
|                                |  |      |           |      |  |  |           | 
|                                |  |      | 1,611,536 |      |  |  | 1,549,509 | 
|                                |  |      |           |      |  |  |           | 
|Future income tax assets:       |  |      |           |      |  |  |           | 
|Non-capital loss carryforwards  |  |      | 560,280   |      |  |  | 326,574   | 
|Investments                     |  |      | 44,411    |      |  |  | 26,002    | 
|                                |  |      |           |      |  |  |           | 
|                                |  |      | 604,691   |      |  |  | 352,576   | 
|                                |  |      |           |      |  |  |           | 
|Net future income tax liability |  |      | 1,006,845 |      |  |  | 1,196,933 | 
|                                |  |      |           |      |  |  |           | 

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

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

|                                                        |                                                                                                       |  |          |      |        |      |          |      |          |   |        |   |        
|------------------------------------------------------- | ----------------------------------------------------------------------------------------------------- |  | -------- | ---- | ------ | ---- | -------- | ---- | -------- | - | ------ | - | -------
|                                                        |                                                                                                       |  |          | 2002 |        | 2001 |          | 2000
|                                                        |                                                                                                       |  |          | $    |        | $    |          | $   
|                                                        |                                                                                                       |  |          |      |        |      |          |     
|Current statutory income tax rate                       |                                                                                                       |  | 40       | %    |        |      | 43       | %    |          |   | 45     | %
|Income tax expense (benefit) at current statutory rates |                                                                                                       |  | (127,258 | )    |        |      | (183,306 | )    |          |   | 97,417 |  
|Increase (decrease) in taxes resulting from:            |                                                                                                       |  |          |      |        |      |          |      |          |   |        |  
|                                                        | Effect of future tax rate reductions                                                                  |  |          |      |       |      |          |      | (250,227 | ) |        |   |       
|                                                        | Large corporations tax                                                                                |  |          |      | 7,945  |      |          |      | 7,456    |   |        |   | 4,139  
|                                                        | Non-taxable portion of (gains) losses on
sale/write-down of assets and investments                    |  |          |      | 19,139 |      |          |      | 35,727   |   |        |   | (38,283
|                                                        | Amortization on amounts assigned to assets on
business combinations not deductible for tax purposes   |  |          |      |       |      |          |      | 5,188    |   |        |   | 2,783  
|                                                        | Originating temporary differences recorded at
future tax rates expected to be in effect
when realized |  |          |      | 16,805 |      |          |      | 34,291   |   |        |   |       
|                                                        | Other (2000 includes non-taxable debenture warrant proceeds)                                          |  |          |      | 30     |      |          |      | 1,443    |   |        |   | (10,592
|                                                        |                                                                                                       |  |          |      |        |      |          |      |          |   |        |   |        
|Income tax expense (benefit)                            |                                                                                                       |  | (83,339  | )    |        |      | (349,428 | )    |          |   | 55,464 |  
|                                                        |                                                                                                       |  |          |      |        |      |          |      |          |   |        |   |        

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

|                                                                                                 |  |      |          |      |  |      |          |   |  |  |        | 
|------------------------------------------------------------------------------------------------ |  | ---- | -------- | ---- |  | ---- | -------- | - |  |  | ------ | 
|                                                                                                 |  | 2002 |          | 2001 |  | 2000
|                                                                                                 |  | $    |          | $    |  | $   
|                                                                                                 |  |      |          |      |  |     
|Current tax expense                                                                              |  |      | 37,324   |      |  |      | 38,379   |   |  |  | 34,415 | 
|Future income tax expense (benefit) related to
origination and reversal of temporary differences |  |      | (120,663 | )    |  |      | (137,580 | ) |  |  | 21,049 | 
|Future income tax recovery resulting from rate changes                                           |  |      |         |      |  |      | (250,227 | ) |  |  |       | 
|                                                                                                 |  |      |          |      |  |      |          |   |  |  |        | 
|Income tax expense (benefit)                                                                     |  |      | (83,339  | )    |  |      | (349,428 | ) |  |  | 55,464 | 
|                                                                                                 |  |      |          |      |  |      |          |   |  |  |        | 

65



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[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); and until February 16, 2000,
when the Shaw FiberLink operations were sold to GT Group Telecom Inc., fiber
optic data, video, voice and Internet telecommunications (FiberLink). All of
these operating segments are located in Canada except for two small cable
television systems acquired in the Moffat acquisition that are located in the
United States.

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 amortization charges.

|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |   |  |  |           |  
|---------------------------------------------------------------------- |  | ----- | --------- | --- |  | --------- | --------- | ----- |  | --------- | ------- | - |  |  | --------- | - |  |  | --------- | -
|                                                                       |  | 2002 
|                                                                       |  |      
|                                                                       |  |       |           |     |  | Satellite |           |       |  |          
|                                                                       |  |       |           |     |  |           |           |       |  |          
|                                                                       |  |       |           |     |  |           |           |       |  | Satellite |         |   |  |  |           |   |  | 
|                                                                       |  | Cable |           | DTH |  | services  |           | Total |  | Total    
|                                                                       |  | $     |           | $   |  | $         |           | $     |  | $        
|                                                                       |  |       |           |     |  |           |           |       |  |          
|Revenue
 total                                                        |  |       | 1,369,379 |     |  |           | 416,981   |       |  |           | 119,774 |   |  |  | 536,755   |   |  |  | 1,906,134 |  
|Inter segment                                                          |  |       | (1,816    | )   |  |           | (1,430    | )     |  |           | (14,328 | ) |  |  | (15,758   | ) |  |  | (17,574   | )
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |   |  |  |           |  
|                                                                       |  |       | 1,367,563 |     |  |           | 415,551   |       |  |           | 105,446 |   |  |  | 520,997   |   |  |  | 1,888,560 |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |   |  |  |           |  
|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 (loss) before amortization                            |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |   |  |  | 632,673   |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |   |  |  |           |  
|Operating income (loss) as %
of external revenue                       |  |       | 44.5      | %   |  |           | (3.4%     | )     |  |           | 40.3    | % |  |  | 5.4       | % |  |  | 33.5      | %
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |   |  |  |           |  
|Segment assets                                                         |  |       | 6,520,696 |     |  |           | 1,001,974 |       |  |           | 637,371 |   |  |  | 1,639,345 |   |  |  | 8,160,041 |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |   |  |  |           |  
|Corporate assets including equity investees                            |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |   |  |  | 352,960   |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |   |  |  |           |  
|Total assets                                                           |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |   |  |  | 8,513,001 |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |   |  |  |           |  
|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   |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |   |  |  |           |  

66



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  
|---------------------------------------------------------------------- |  | ----- | --------- | --- |  | --------- | --------- | ----- |  | --------- | ------- | - |  |  | --------- | -- |  |  | --------- | -
|                                                                       |  | 2001 
|                                                                       |  |      
|                                                                       |  |       |           |     |  | Satellite |           |       |  |          
|                                                                       |  |       |           |     |  |           |           |       |  |          
|                                                                       |  |       |           |     |  |           |           |       |  | Satellite |         |   |  |  |           |    |  | 
|                                                                       |  | Cable |           | DTH |  | services  |           | Total |  | Total    
|                                                                       |  | $     |           | $   |  | $         |           | $     |  | $        
|                                                                       |  |       |           |     |  |           |           |       |  |          
|Revenue  total                                                        |  |       | 1,120,975 |     |  |           | 307,988   |       |  |           | 123,684 |   |  |  | 431,672   |    |  |  | 1,552,647 |  
|Inter segment                                                          |  |       | (731      | )   |  |           |          |       |  |           | (14,963 | ) |  |  | (14,963   | )  |  |  | (15,694   | )
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  
|                                                                       |  |       | 1,120,244 |     |  |           | 307,988   |       |  |           | 108,721 |   |  |  | 416,709   |    |  |  | 1,536,953 |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  
|Operating income (loss) before amortization                            |  |       | 470,700   |     |  |           | (58,512   | )     |  |           | 48,152  |   |  |  | (10,360   | )  |  |  | 460,340   |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  
|Operating income (loss) as % of
external revenue                       |  |       | 42.0      | %   |  |           | (19.0     | %)    |  |           | 44.3    | % |  |  | (2.5      | %) |  |  | 30.0      | %
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  
|Segment assets                                                         |  |       | 6,258,871 |     |  |           | 1,154,821 |       |  |           | 558,809 |   |  |  | 1,713,630 |    |  |  | 7,972,501 |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  
|Corporate assets including equity investees                            |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  | 822,455   |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  
|Total assets                                                           |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  | 8,794,956 |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  
|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 |  
|                                                                       |  |       |           |     |  |           |           |       |  |           |         |   |  |  |           |    |  |  |           |  

|                                                                       |  |       |           |     |  |           |         |       |  |           |         |       |  |  |           |    |  |  |        |   |  |  |           |  
|---------------------------------------------------------------------- |  | ----- | --------- | --- |  | --------- | ------- | ----- |  | --------- | ------- | ----- |  |  | --------- | -- |  |  | ------ | - |  |  | --------- | -
|                                                                       |  | 2000 
|                                                                       |  |      
|                                                                       |  |       |           |     |  | Satellite |         |       |  |           |         |       |  | 
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |       |  | 
|                                                                       |  |       |           |     |  |           |         |       |  | Satellite |         |       |  |  |           |    |  |  |        |   |  | 
|                                                                       |  | Cable |           | DTH |  | services  |         | Total |  | FiberLink |         | Total
|                                                                       |  | $     |           | $   |  | $         |         | $     |  | $         |         | $    
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |      
|Revenue  total                                                        |  |       | 880,702   |     |  |           | 38,418  |       |  |           | 22,458  |       |  |  | 60,876    |    |  |  | 26,528 |   |  |  | 968,106   |  
|Inter segment                                                          |  |       |          |     |  |           |        |       |  |           | (2,334  | )     |  |  | (2,334    | )  |  |  | (5,772 | ) |  |  | (8,106    | )
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |       |  |  |           |    |  |  |        |   |  |  |           |  
|                                                                       |  |       | 880,702   |     |  |           | 38,418  |       |  |           | 20,124  |       |  |  | 58,542    |    |  |  | 20,756 |   |  |  | 960,000   |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |       |  |  |           |    |  |  |        |   |  |  |           |  
|Operating income (loss)
before amortization                            |  |       | 391,874   |     |  |           | (5,970  | )     |  |           | 4,438   |       |  |  | (1,532    | )  |  |  | 7,321  |   |  |  | 397,663   |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |       |  |  |           |    |  |  |        |   |  |  |           |  
|Operating income (loss)
as % of external revenue                       |  |       | 44.5      | %   |  |           | (15.5   | )%    |  |           | 22.1    | %     |  |  | (2.6      | %) |  |  | 35.3   | % |  |  | 41.4      | %
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |       |  |  |           |    |  |  |        |   |  |  |           |  
|Segment assets                                                         |  |       | 3,730,360 |     |  |           | 862,289 |       |  |           | 395,325 |       |  |  | 1,257,614 |    |  |  | 80,090 |   |  |  | 5,068,064 |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |       |  |  |           |    |  |  |        |   |  |  |           |  
|Corporate assets including
equity investees                            |  |       |           |     |  |           |         |       |  |           |         |       |  |  |           |    |  |  |        |   |  |  | 1,333,919 |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |       |  |  |           |    |  |  |        |   |  |  |           |  
|Total assets                                                           |  |       |           |     |  |           |         |       |  |           |         |       |  |  |           |    |  |  |        |   |  |  | 6,401,983 |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |       |  |  |           |    |  |  |        |   |  |  |           |  
|Capital expenditures by segment
 accrual basis                        |  |       | 527,702   |     |  |           | 982     |       |  |           | 19,638  |       |  |  | 20,620    |    |  |  | 18,575 |   |  |  | 566,897   |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |       |  |  |           |    |  |  |        |   |  |  |           |  
|Corporate expenditures                                                 |  |       |           |     |  |           |         |       |  |           |         |       |  |  |           |    |  |  |        |   |  |  | 32,049    |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |       |  |  |           |    |  |  |        |   |  |  |           |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |       |  |  |           |    |  |  |        |   |  |  | 598,946   |  
|Working capital change                                                 |  |       |           |     |  |           |         |       |  |           |         |       |  |  |           |    |  |  |        |   |  |  | (42,540   | )
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |       |  |  |           |    |  |  |        |   |  |  |           |  
|Capital expenditures cash flow                                         |  |       |           |     |  |           |         |       |  |           |         |       |  |  |           |    |  |  |        |   |  |  | 556,406   |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |       |  |  |           |    |  |  |        |   |  |  |           |  
|Equipment subsidies                                                    |  |       | 7,700     |     |  |           | 20,840  |       |  |           |        |       |  |  | 20,840    |    |  |  |        |   |  |  | 28,540    |  
|Total capital expenditures on an
accrual basis and equipment subsidies |  |       | 567,451   |     |  |           | 21,822  |       |  |           | 19,638  |       |  |  | 41,460    |    |  |  | 18,575 |   |  |  | 627,486   |  
|                                                                       |  |       |           |     |  |           |         |       |  |           |         |       |  |  |           |    |  |  |        |   |  |  |           |  

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[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 on Cancoms $350,000 credit facility (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 late 2003 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 in 2004.
Under the Ku-band 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:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

|           |  |   |         | 
|---------- |  | - | ------- | 
|           |  | $
|           |  |  
|2003       |  |   | 106,800 | 
|2004       |  |   | 90,350  | 
|2005       |  |   | 86,919  | 
|2006       |  |   | 83,861  | 
|2007       |  |   | 80,351  | 
|Thereafter |  |   | 527,161 | 
|           |  |   |         | 
|           |  |   | 975,442 | 
|           |  |   |         | 

Transponder maintenance expenses of $35,029 and $18,489 in 2002 and 2001
respectively and rental expenses of $84,052, $82,653 and $35,266 in 2002, 2001
and 2000 respectively, have been included in the operating, general and
administrative expenses line of the Consolidated Statements of Income (Loss).

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.



|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 registered retirement savings plans.
Pension costs charged to income (loss) for 2002, 2001 and 2000 were $5,931,
$4,367 and $2,458, respectively. Costs have increased due to significant
acquisitions made in 2001 and late 2000 (see note 2), Company growth and as a
result of former contractors becoming employees in the latter part of 2001.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

Effective September 1, 2002, the Company has established a new non-contributory
defined benefit pension plan for certain of its senior executives. The plan
will be unfunded and not guaranteed by the Company. On commencement of the
plan, the projected benefit obligation for past service obligations is $30,543.
No amounts have been recognized in the accounts this year in respect of the
plan as the plan commenced September 1, 2002.



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

Corus Entertainment Inc. (Corus)

The Company and Corus are subject to common voting control. During the year,
network fees of $98,211 (2001  $77,314; 2000  $12,235) and advertising fees
of $1,245 (2001  $1,746; 2000  $1,444) 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 $761 (2001  $3,416; 2000  $3,412),
administrative services to Corus at a cost of $573 (2001  $1,166; 2000 
$1,685) and uplink of television signals to Corus for $5,233 (2001  $3,185;
2000  $530). 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.

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

During the year, 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).

GT Group Telecom Inc. (GT)

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 $4,803 (2001  $3,650), and provided GT with Internet services for
$6,456 (2001  $5,174). During the year, leased circuit charges of $3,696
(2001  $3,510) were paid to GT.

In 2001 and 2000, transition costs were incurred by the Company and GT. The
Company paid GT $5,121 and $2,703 for 2001 and 2000, respectively, 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 and $670 for 2001 and 2000, respectively, for support during
development of its information and processing systems.

In addition, the Company paid GT $2,573 (2001  $2,998) 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.

Other

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

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

the year, the Company paid network fees of $1,182 and provided uplink
television signals for $730, in respect of these speciality channels.

The Company has a policy of supporting employee and officer relocations by
granting non-interest bearing loans for a period of five years collaterized 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. At August 31, 2002, the total amount outstanding on
all such loans was $8,161 (2001  $2,911).

During the year, 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. A 10 year non-interest bearing 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 August 31, 2001, the Company sold to Bragg Communications Inc., a
company controlled by a former director of the Company, its interest in certain
cablesystems located in Atlantic Canada (see note 2). These companies had been
acquired effective September 1, 1999 from another director.



|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 U.S. 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.
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]



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

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

|                                                                |  |          |           |            |  |          |           |            |  |  |           |  |  |  |           |  
|--------------------------------------------------------------- |  | -------- | --------- | ---------- |  | -------- | --------- | ---------- |  |  | --------- |  |  |  | --------- | -
|                                                                |  | 2002     |           | 2001      
|                                                                |  |          |           |           
|                                                                |  | Carrying |           | Estimated  |  | Carrying |           | Estimated 
|                                                                |  | amount   |           | fair value |  | amount   |           | fair value
|                                                                |  | $        |           | $          |  | $        |           | $         
|                                                                |  |          |           |            |  |          |           |           
|Long-term debt                                                  |  |          | 3,469,637 |            |  |          | 3,190,657 |            |  |  | 3,010,348 |  |  |  | 3,120,644 |  
|Derivative
financial instruments 
Interest exchange agreements |  |          |          |            |  |          | 29,093    |            |  |  |          |  |  |  | 37,811    |  
|Cross-currency interest rate exchange
agreements                |  |          |          |            |  |          | (123,226  | )          |  |  |          |  |  |  | (61,544   | )
|U.S. currency purchase and purchase
option contracts            |  |          |          |            |  |          | (15,963   | )          |  |  |          |  |  |  | (20,442   | )
|                                                                |  |          |           |            |  |          |           |            |  |  |           |  |  |  |           |  
|                                                                |  |          | 3,469,637 |            |  |          | 3,080,561 |            |  |  | 3,010,348 |  |  |  | 3,076,469 |  
|                                                                |  |          |           |            |  |          |           |            |  |  |           |  |  |  |           |  

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 $3.3 billion at August 31, 2002 (2000  $3.2 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 U.S. currency contracts arise from the ability of counterparties
to meet the terms of the contracts. In the event of nonperformance 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 9% of consolidated accounts receivable as at August
31, 2002 (2001  5%).

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]



|20. |  | STATEMENTS OF CASH FLOWS
|--- |  | ------------------------

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



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

|                           |                                                     |  |          |          |      |  |          |          |   |  |         |          |  
|-------------------------- | --------------------------------------------------- |  | -------- | -------- | ---- |  | -------- | -------- | - |  | ------- | -------- | -
|                           |                                                     |  | 2002     |          | 2001 |  | 2000    
|                           |                                                     |  | $        |          | $    |  | $       
|                           |                                                     |  |          |          |      |  |         
|Reported net income (loss) |                                                     |  | (288,292 | )        |      |  | (147,421 | )        |   |  | 133,604 |         
|Non-cash items:            |                                                     |  |          |          |      |  |          |          |   |  |         |         
|                           | Amortization                                        |  |          | 589,389  |      |  |          | 476,294  |   |  |         | 234,212  |  
|                           | Amortization of deferred IRU revenue                |  |          | (11,517  | )    |  |          | (4,902   | ) |  |         | (3,018   | )
|                           | Future income tax provision (recovery)              |  |          | (120,663 | )    |  |          | (387,807 | ) |  |         | 21,049   |  
|                           | Gain on sale of FiberLink assets                    |  |          |         |      |  |          |         |   |  |         | (87,984  | )
|                           | Write-down of investments                           |  |          | 330,466  |      |  |          | 163,454  |   |  |         |         |  
|                           | Gain on redemption of SHELS                         |  |          | (218,327 | )    |  |          |         |   |  |         |         |  
|                           | Loss (gain) on sale of investments                  |  |          | (2,321   | )    |  |          | 106,716  |   |  |         | (143,248 | )
|                           | Gain on sale of cable systems                       |  |          |         |      |  |          | (66,595  | ) |  |         |         |  
|                           | Loss on sale of satellite assets                    |  |          | 1,281    |      |  |          |         |   |  |         |         |  
|                           | Loss (gain) on issuance of stock by equity investee |  |          | 571      |      |  |          | (4,525   | ) |  |         | (33,245  | )
|                           | Equity loss on investees                            |  |          | 53,487   |      |  |          | 71,282   |   |  |         | 30,661   |  
|                           | Non-controlling interest                            |  |          |         |      |  |          | (725     | ) |  |         | (3,486   | )
|                           | Debt restructuring costs                            |  |          |         |      |  |          | 8,590    |   |  |         | 97,968   |  
|                           | Other                                               |  |          | (1,965   | )    |  |          | (3,847   | ) |  |         | (8,724   | )
|                           |                                                     |  |          |          |      |  |          |          |   |  |         |          |  
|Cash flow from operations  |                                                     |  | 332,109  |          |      |  | 210,514  |          |   |  | 237,789 |         
|                           |                                                     |  |          |          |      |  |          |          |   |  |         |          |  



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

|                                         |  |      |         |      |  |      |         |   |  |  |        |  
|---------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  |  | ------ | -
|                                         |  | 2002 |         | 2001 |  | 2000
|                                         |  | $    |         | $    |  | $   
|                                         |  |      |         |      |  |     
|Accounts receivable                      |  |      | 11,084  |      |  |      | (69,779 | ) |  |  | 9,880  |  
|Prepaids and other                       |  |      | (3,434  | )    |  |      | (9,536  | ) |  |  | 9,568  |  
|Accounts payable and accrued liabilities |  |      | (38,682 | )    |  |      | 141,389 |   |  |  | 2,731  |  
|Income taxes payable/recoverable         |  |      | 18,737  |      |  |      | 320     |   |  |  | (9,517 | )
|Unearned revenue                         |  |      | 15,598  |      |  |      | 17,076  |   |  |  | 2,628  |  
|                                         |  |      |         |      |  |      |         |   |  |  |        |  
|                                         |  |      | 3,303   |      |  |      | 79,470  |   |  |  | 15,290 |  
|                                         |  |      |         |      |  |      |         |   |  |  |        |  

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[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:
|----- |  | -------------------------------------------------------------------------------------------------

|             |  |      |         |      |  |      |         |  |  |  |         | 
|------------ |  | ---- | ------- | ---- |  | ---- | ------- |  |  |  | ------- | 
|             |  | 2002 |         | 2001 |  | 2000
|             |  | $    |         | $    |  | $   
|             |  |      |         |      |  |     
|Interest     |  |      | 257,609 |      |  |      | 183,416 |  |  |  | 122,505 | 
|Income taxes |  |      | (10,443 | )    |  |      | 4,761   |  |  |  | 6,618   | 
|             |  |      |         |      |  |     



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

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

|                                              |  |      |   |      |  |      |         |  |  |  |         | 
|--------------------------------------------- |  | ---- | - | ---- |  | ---- | ------- |  |  |  | ------- | 
|                                              |  | 2002 |   | 2001 |  | 2000
|                                              |  | $    |   | $    |  | $   
|                                              |  |      |   |      |  |     
|Common shares issued on acquisitions [note 2] |  |      |  |      |  |      | 852,321 |  |  |  | 686,303 | 
|GT shares received on divestiture [note 2]    |  |      |  |      |  |      |        |  |  |  | 367,207 | 
|                                              |  |      |   |      |  |     

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[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 (U.S. GAAP).

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

|                                                                                      |                                                                              |  |          |          |      |  |          |          |   |  |         |         |  
|------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------- |  | -------- | -------- | ---- |  | -------- | -------- | - |  | ------- | ------- | -
|                                                                                      |                                                                              |  | 2002     |          | 2001 |  | 2000    
|                                                                                      |                                                                              |  | $        |          | $    |  | $       
|                                                                                      |                                                                              |  |          |          |      |  |         
|Reported net income (loss) using Canadian GAAP                                        |                                                                              |  | (288,292 | )        |      |  | (147,421 | )        |   |  | 133,604 |        
|                                                                                      | Add (deduct) adjustments for:                                                |  |          |          |      |  |          |          |   |  |         |         |  
|                                                                                      | Amortization of intangible assets(1)(5)(6)                                   |  |          |         |      |  |          | (39,099  | ) |  |         | (33,962 | )
|                                                                                      | Deferred charges(2)                                                          |  |          | 39,652   |      |  |          | (69,031  | ) |  |         | (12,995 | )
|                                                                                      | Foreign exchange gains (losses)(3)                                           |  |          | (288     | )    |  |          | (67,094  | ) |  |         | 24,733  |  
|                                                                                      | Equity in loss of investees(4)                                               |  |          | (19,901  | )    |  |          | (7,963   | ) |  |         | (22,299 | )
|                                                                                      | Gain on sale of cable systems(6)                                             |  |          |         |      |  |          | 3,339    |   |  |         |        |  
|                                                                                      | Entitlement payments on equity instruments(8)                                |  |          | (70,551  | )    |  |          | (70,394  | ) |  |         | (59,490 | )
|                                                                                      | Debt restructuring costs(9)                                                  |  |          |         |      |  |          | 8,590    |   |  |         | 70,261  |  
|                                                                                      | Adjustment to write-down of GT Group Telecom Inc.(11)                        |  |          | 28,374   |      |  |          |         |   |  |         |        |  
|                                                                                      | Income tax effect of adjustments                                             |  |          | 13,199   |      |  |          | 78,575   |   |  |         | (6,454  | )
|                                                                                      | Effect of future income tax rate reductions on differences                   |  |          |         |      |  |          | 29,701   |   |  |         |        |  
|                                                                                      |                                                                              |  |          |          |      |  |          |          |   |  |         |        
|Income (loss) using U.S. GAAP before extraordinary item                               |                                                                              |  | (297,807 | )        |      |  | (280,797 | )        |   |  | 93,398  |        
|Extraordinary item                                                                    |                                                                              |  |          |          |      |  |          |          |   |  |         |        
|                                                                                      | Debt restructuring costs, net of tax(9)                                      |  |          |         |      |  |          | (5,498   | ) |  |         | (27,105 | )
|                                                                                      |                                                                              |  |          |          |      |  |          |          |   |  |         |        
|Net income (loss) using U.S. GAAP                                                     |                                                                              |  | (297,807 | )        |      |  | (286,295 | )        |   |  | 66,293  |        
|                                                                                      |                                                                              |  |          |          |      |  |          |          |   |  |         |        
|Unrealized foreign exchange gain on translation of self-sustaining foreign operations |                                                                              |  | 1,241    |          |      |  |         |          |   |  |        |        
|Unrealized gains on available-for-sale securities, net of tax(7)                      |                                                                              |  |          |          |      |  |          |          |   |  |         |        
|                                                                                      | Unrealized holding gains (losses) arising during the year                    |  |          | 59,406   |      |  |          | (351,019 | ) |  |         | 445,387 |  
|                                                                                      | Less: reclassification adjustments for losses (gains)
included in net income |  |          | (180,425 | )    |  |          | (76,282  | ) |  |         | (97,472 | )
|                                                                                      |                                                                              |  |          |          |      |  |          |          |   |  |         |        
|                                                                                      |                                                                              |  | (119,778 | )        |      |  | (427,301 | )        |   |  | 347,915 |        
|Cumulative effect of accounting change(10)                                            |                                                                              |  |         |          |      |  | (27,376  | )        |   |  |        |        
|Adjustment to fair value of derivatives(10)                                           |                                                                              |  | 53,293   |          |      |  | 66,726   |          |   |  |        |        
|Effect of future income tax rate reductions on differences                            |                                                                              |  |         |          |      |  | 128,625  |          |   |  |        |        
|                                                                                      |                                                                              |  |          |          |      |  |          |          |   |  |         |        
|                                                                                      |                                                                              |  | (66,485  | )        |      |  | (259,326 | )        |   |  | 347,915 |        
|                                                                                      |                                                                              |  |          |          |      |  |          |          |   |  |         |        
|Comprehensive income (loss) using U.S. GAAP                                           |                                                                              |  | (364,292 | )        |      |  | (545,621 | )        |   |  | 414,208 |        
|                                                                                      |                                                                              |  |          |          |      |  |          |          |   |  |         |        
|Earnings
(loss) per share  basic and diluted                                         |                                                                              |  |          |          |      |  |          |          |   |  |         |        
|                                                                                      | Income (loss) per share using U.S. GAAP before
extraordinary item            |  |          | (1.28    | )    |  |          | (1.27    | ) |  |         | 0.49    |  
|                                                                                      | Extraordinary item                                                           |  |          |         |      |  |          | (0.03    | ) |  |         | (0.14   | )
|                                                                                      | Net income (loss) per share using U.S. GAAP                                  |  |          | (1.28    | )    |  |          | (1.30    | ) |  |         | 0.35    |  
|                                                                                      | Comprehensive income (loss) per share using U.S. GAAP                        |  |          | (1.57    | )    |  |          | (2.47    | ) |  |         | 2.19    |  
|                                                                                      |                                                                              |  |          |          |      |  |          |          |   |  |         |        

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

Balance sheet items using U.S. GAAP

|                                     |  |          |           |      |  |          |           |      |  |      |           |  |  |  |           | 
|------------------------------------ |  | -------- | --------- | ---- |  | -------- | --------- | ---- |  | ---- | --------- |  |  |  | --------- | 
|                                     |  |          |           | 2002 |  |          |           |      |  | 2001 |           |  |  | 
|                                     |  |          |           |     
|                                     |  | Canadian |           | U.S. |  | Canadian |           | U.S.
|                                     |  | GAAP     |           | GAAP |  | GAAP     |           | GAAP
|                                     |  |          |           |      |  |          |           |     
|                                     |  | $        |           | $    |  | $        |           | $   
|Investments
and other assets(7) (10) |  |          | 133,602   |      |  |          | 390,327   |      |  |      | 550,707   |  |  |  | 899,730   | 
|Deferred charges(2) (3)              |  |          | 234,088   |      |  |          | 59,532    |      |  |      | 277,780   |  |  |  | 67,470    | 
|Broadcast licenses(1) (5) (6)        |  |          | 4,877,256 |      |  |          | 4,852,022 |      |  |      | 5,038,123 |  |  |  | 5,012,889 | 
|Deferred credits(3)                  |  |          | 634,735   |      |  |          | 618,941   |      |  |      | 651,425   |  |  |  | 642,846   | 
|Future income taxes                  |  |          | 1,006,845 |      |  |          | 1,007,559 |      |  |      | 1,196,933 |  |  |  | 1,195,867 | 
|Long-term debt(8) (10)               |  |          | 3,469,637 |      |  |          | 4,433,869 |      |  |      | 3,010,348 |  |  |  | 4,155,713 | 
|Shareholders equity                 |  |          | 2,789,518 |      |  |          | 1,897,301 |      |  |      | 3,295,907 |  |  |  | 2,273,666 | 

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

|                                            |  |      |           |      |  |  |            |  
|------------------------------------------- |  | ---- | --------- | ---- |  |  | ---------- | -
|                                            |  | 2002 |           | 2001
|                                            |  |      |           |     
|                                            |  | $    |           | $   
|Shareholders equity using Canadian GAAP    |  |      | 2,789,518 |      |  |  | 3,295,907  |  
|Amortization of intangible assets(1)        |  |      | (123,542  | )    |  |  | (123,542   | )
|Deferred charges(2)                         |  |      | (30,308   | )    |  |  | (55,546    | )
|Foreign exchange gains (losses)(3)          |  |      | (33,408   | )    |  |  | (39,294    | )
|Equity in loss of investees(4)              |  |      | (61,110   | )    |  |  | (44,791    | )
|Gain on sale of subsidiary(5)               |  |      | 13,822    |      |  |  | 13,822     |  
|Gain on sale of cable television systems(6) |  |      | 47,501    |      |  |  | 47,501     |  
|Equity instruments(8)                       |  |      | (942,848  | )    |  |  | (1,118,467 | )
|Write-down of GT Group Telecom Inc.(11)     |  |      | 23,267    |      |  |  |           |  
|Accumulated other comprehensive income      |  |      | 215,922   |      |  |  | 298,076    |  
|Cumulative translation adjustment           |  |      | (1,513    | )    |  |  |           |  
|                                            |  |      |           |      |  |  |            |  
|Shareholders equity using U.S. GAAP        |  |      | 1,897,301 |      |  |  | 2,273,666  |  
|                                            |  |      |           |      |  |  |            |  

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

|                                                                                      |  |      |         |      |  |  |         | 
|------------------------------------------------------------------------------------- |  | ---- | ------- | ---- |  |  | ------- | 
|                                                                                      |  | 2002 |         | 2001
|                                                                                      |  |      |         |     
|                                                                                      |  | $    |         | $   
|Unrealized foreign exchange gain on translation of self-sustaining
foreign operations |  |      | 1,241   |      |  |  |        | 
|Unrealized gains on investments(7)                                                    |  |      | 122,038 |      |  |  | 258,726 | 
|Fair value of derivatives(10)                                                         |  |      | 92,643  |      |  |  | 39,350  | 
|                                                                                      |  |      |         |      |  |  |         | 
|                                                                                      |  |      | 215,922 |      |  |  | 298,076 | 
|                                                                                      |  |      |         |      |  |  |         | 

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

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 U.S. GAAP, these intangibles are 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 U.S. GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(2) |  | Deferred charges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    |  | Marketing costs to launch new services, first-year start-up and
pre-operating costs and equipment subsidies are deferred and amortized
under Canadian GAAP. Under U.S. GAAP, these costs are expensed as
incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(3) |  | Foreign exchange gains (losses)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    |  | Foreign exchange gains (losses) on translation of unhedged long-term debt
are amortized on a straight-line basis over the remaining life of the
debt under Canadian GAAP. U.S. GAAP requires all gains and losses to be
included in income or expenses when incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(4) |  | Equity in loss of investees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | The earnings of investees determined under Canadian GAAP have been
adjusted to reflect U.S. GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    |  | Under Canadian GAAP, the investment in Star Choice was accounted for
using the cost method of accounting until CRTC approval was received for
its acquisition. When the Company received CRTC approval, the amount in
the accounts under the cost method became the basis for the purchase
price allocation and equity accounting commenced. Under U.S. 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 U.S. 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.

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]



|(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
U.S. GAAP as a result of item (1) adjustments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | Under Canadian GAAP, no gain was recorded in 1995 on an exchange of cable
television systems with Rogers Communications Inc. on the basis that this
was an exchange of similar productive assets. Under U.S. 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 U.S. 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.
|   
|    |  | 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 U.S. GAAP,
these instruments would be classified as debt and interest thereon
recorded as interest expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(9) |  | Extraordinary item                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    |  | Under U.S. GAAP, debt restructuring costs in 2001 and 2000 were treated
as extraordinary items, whereas for Canadian GAAP such costs are not. The
debt restructuring costs incurred in 2000 are reduced by the write-off of
deferred foreign exchange losses amounting to $27,707, which are expensed
under U.S. GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                           

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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]



|(10) |  | Derivative instruments and hedging activities                                                                                                                                                                                                                                                                                                                                                                        
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | Under U.S. 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 U.S. GAAP commenced September 1, 2000.
The transition adjustments resulting from adoption have been recognized
in other comprehensive income (shareholders equity) as a cumulative
effect of an accounting change.                                                                                                                                                                 
|    
|(11) |  | Write-down of GT Group Telecom Inc. has been adjusted due to a lower
investment carrying value under U.S. GAAP.                                                                                                                                                                                                                                                                                                      

(b)   Consolidated Statements of Cash Flows

Under U.S. GAAP, cash flow from continuing operations per share cannot be
reported in the statement.

(c)   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
U.S. GAAP purposes. Pro forma disclosures of income (loss) and 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.

|                                       |  |             |  |  |          |      |  |      |          |      |  |  |        |  |  | 
|-------------------------------------- |  | ----------- |  |  | -------- | ---- |  | ---- | -------- | ---- |  |  | ------ |  |  | 
|                                       |  |             |  |  |          | 2002 |  | 2001 |          | 2000
|                                       |  |             |  |  |          |      |  |      |          |     
|                                       |  |             |  |  |          | $    |  | $    |          | $   
|Net income (loss), U.S. GAAP           |  | As reported |  |  | (297,807 | )    |  |      | (286,295 | )    |  |  | 66,293 | 
|                                       |  | Pro forma   |  |  | (318,009 | )    |  |      | (300,996 | )    |  |  | 62,671 | 
|Net income (loss) per share, U.S. GAAP |  | As reported |  |  | (1.28    | )    |  |      | (1.30    | )    |  |  | 0.35   | 
|                                       |  | Pro forma   |  |  | (1.37    | )    |  |      | (1.36    | )    |  |  | 0.33   | 

78



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Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2002, 2001 and 2000
[all amounts in thousands of Canadian dollars except per share amounts]

The fair value of common share options granted in
2002 was $19,963 (2001 
$20,532; 2000  $46,929). 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:

|                        |  |         |      |         |  |         |      |   |  |  |      |  
|----------------------- |  | ------- | ---- | ------- |  | ------- | ---- | - |  |  | ---- | -
|                        |  | 2002    |      | 2001    |  | 2000   
|                        |  |         |      |         |  |        
|Dividend yield          |  |         | 0.22 | %       |  |         | 0.17 | % |  |  | 0.17 | %
|Risk-free interest rate |  |         | 2.75 | %       |  |         | 5.25 | % |  |  | 5.30 | %
|Expected life           |  | 4 years |      | 4 years |  | 4 years
|Expected volatility     |  |         | 44   | %       |  |         | 25   | % |  |  | 56   | %

(d)   Recent accounting pronouncements

In August 2001, the FASB issued Statement No. 144 Accounting for the
Impairment or Disposal of Long-Lived Assets, which addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
Statement No. 144 is effective for the Companys 2003 fiscal year and is not
expected to have a material impact on the Companys financial position.

22.   COMPARATIVE
CONSOLIDATED FINANCIAL STATEMENTS

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

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Shaw Communications Inc.




FIVE YEARS IN REVIEW
August 31, 2002

|                                                      |  |      |           |      |  |      |           |         |  |         |           |   |  |  |           |   |  |  |           |  
|----------------------------------------------------- |  | ---- | --------- | ---- |  | ---- | --------- | ------- |  | ------- | --------- | - |  |  | --------- | - |  |  | --------- | -
|                                                      |  | 2002 |           | 2001 |  | 2000 |           | 1999(1) |  | 1998(1)
|                                                      |  |      |           |      |  |      |           |         |  |        
|Revenue                                               |  |      |           |      |  |      |           |         |  |         |           |   |  |  |           |   |  |  |           |  
|Cable                                                 |  |      | 1,367,563 |      |  |      | 1,120,244 |         |  |         | 880,702   |   |  |  | 677,821   |   |  |  | 597,694   |  
|DTH(2) (3)                                            |  |      | 415,551   |      |  |      | 307,988   |         |  |         | 38,418    |   |  |  |          |   |  |  |          |  
|Satellite(2)                                          |  |      | 105,446   |      |  |      | 108,721   |         |  |         | 20,124    |   |  |  |          |   |  |  | 6,361     |  
|FiberLink                                             |  |      |          |      |  |      |          |         |  |         | 20,756    |   |  |  | 31,591    |   |  |  | 19,748    |  
|                                                      |  |      |           |      |  |      |           |         |  |         |           |   |  |  |           |   |  |  |           |  
|                                                      |  |      | 1,888,560 |      |  |      | 1,563,953 |         |  |         | 960,000   |   |  |  | 709,412   |   |  |  | 623,803   |  
|                                                      |  |      |           |      |  |      |           |         |  |         |           |   |  |  |           |   |  |  |           |  
|Operating income (loss) before
amortization(4)        |  |      |           |      |  |      |           |         |  |         |           |   |  |  |           |   |  |  |           |  
|Cable                                                 |  |      | 608,916   |      |  |      | 470,700   |         |  |         | 391,874   |   |  |  | 298,262   |   |  |  | 268,540   |  
|DTH(2)                                                |  |      | (14,103   | )    |  |      | (58,512   | )       |  |         | (5,970    | ) |  |  |          |   |  |  |          |  
|Satellite(2)                                          |  |      | 42,460    |      |  |      | 48,152    |         |  |         | 4,438     |   |  |  |          |   |  |  | (4,069    | )
|FiberLink                                             |  |      |          |      |  |      |          |         |  |         | 7,321     |   |  |  | 11,611    |   |  |  | 4,864     |  
|Corporate restructuring                               |  |      | (4,600    | )    |  |      |          |         |  |         |          |   |  |  |          |   |  |  |          |  
|                                                      |  |      |           |      |  |      |           |         |  |         |           |   |  |  |           |   |  |  |           |  
|                                                      |  |      | 632,673   |      |  |      | 460,340   |         |  |         | 397,663   |   |  |  | 309,873   |   |  |  | 269,335   |  
|                                                      |  |      |           |      |  |      |           |         |  |         |           |   |  |  |           |   |  |  |           |  
|Income (loss) before discontinued operations          |  |      | (288,292  | )    |  |      | (147,421  | )       |  |         | 133,604   |   |  |  | 46,550    |   |  |  | 19,644    |  
|Discontinued paging operations                        |  |      |          |      |  |      |          |         |  |         |          |   |  |  | (456      | ) |  |  | (1,432    | )
|Separation of media division                          |  |      |          |      |  |      |          |         |  |         |          |   |  |  | (301      | ) |  |  | (4,687    | )
|                                                      |  |      |           |      |  |      |           |         |  |         |           |   |  |  |           |   |  |  |           |  
|Reported net income (loss)                            |  |      | (288,292  | )    |  |      | (147,421  | )       |  |         | 133,604   |   |  |  | 45,793    |   |  |  | 13,525    |  
|                                                      |  |      |           |      |  |      |           |         |  |         |           |   |  |  |           |   |  |  |           |  
|Reported earnings (loss) per share  basic            |  |      |           |      |  |      |           |         |  |         |           |   |  |  |           |   |  |  |           |  
|Reported net income (loss) from continuing
operations |  |      | (1.43     | )    |  |      | (0.85     | )       |  |         | 0.53      |   |  |  | 0.12      |   |  |  | 0.04      |  
|Discontinued and separated operations                 |  |      |          |      |  |      |          |         |  |         |          |   |  |  |          |   |  |  | (0.04     | )
|                                                      |  |      |           |      |  |      |           |         |  |         |           |   |  |  |           |   |  |  |           |  
|Reported net income (loss)                            |  |      | (1.43     | )    |  |      | (0.85     | )       |  |         | 0.53      |   |  |  | 0.12      |   |  |  |          |  
|                                                      |  |      |           |      |  |      |           |         |  |         |           |   |  |  |           |   |  |  |           |  
|Cash flow from operations                             |  |      | 332,109   |      |  |      | 210,514   |         |  |         | 237,789   |   |  |  | 207,894   |   |  |  | 147,853   |  
|Cash flow per share  basic                           |  |      | 1.25      |      |  |      | 0.77      |         |  |         | 1.08      |   |  |  | 1.08      |   |  |  | 0.91      |  
|                                                      |  |      |           |      |  |      |           |         |  |         |           |   |  |  |           |   |  |  |           |  
|Balance sheet                                         |  |      |           |      |  |      |           |         |  |         |           |   |  |  |           |   |  |  |           |  
|Total assets                                          |  |      | 8,513,001 |      |  |      | 8,794,956 |         |  |         | 6,401,983 |   |  |  | 3,734,395 |   |  |  | 3,256,453 |  
|Long-term debt                                        |  |      | 3,469,637 |      |  |      | 3,010,348 |         |  |         | 1,777,654 |   |  |  | 1,410,659 |   |  |  | 1,402,478 |  
|                                                      |  |      |           |      |  |      |           |         |  |         |           |   |  |  |           |   |  |  |           |  
|Cash dividends declared per share                     |  |      |           |      |  |      |           |         |  |         |           |   |  |  |           |   |  |  |           |  
|Class A                                               |  |      | 0.045     |      |  |      | 0.045     |         |  |         | 0.040     |   |  |  | 0.035     |   |  |  | 0.035     |  
|Class B                                               |  |      | 0.050     |      |  |      | 0.050     |         |  |         | 0.045     |   |  |  | 0.040     |   |  |  | 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 years of 1998 and 1999 have not been restated and reflect the
deferral method of tax allocation.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | 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.                                                                                                                                                                                                                       
|   
|(3) |  | Prior year revenue has been restated to net dealer discounts against
revenue. Previously these discounts were included in expense (see Note 1 to
the Consolidated Financial Statements).                                                                                                                                                                                                                                
|   
|(4) |  | Operating income (loss) before amortization represents net income from
continuing operations before deducting interest expense, income taxes,
amortization and unusual items.                                                                                                                                                                                                                                           

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Shaw Communications Inc.




CABLE AND INTERNET STATISTICS
August 31, 2002

|                                                                    |  |             |           |             |  |            |         |             |  |  |         |  |  |  |         | 
|------------------------------------------------------------------- |  | ----------- | --------- | ----------- |  | ---------- | ------- | ----------- |  |  | ------- |  |  |  | ------- | 
|                                                                    |  | Basic       |           | Internet    |  | Digital    |         | Digital    
|Region                                                              |  | subscribers |           | subscribers |  | deployment |         | subscribers
|                                                                    |  |             |           |             |  |            |         |            
|Vancouver Island including Victoria/
Duncan/Nanaimo and area        |  |             | 221,260   |             |  |            | 95,517  |             |  |  | 43,258  |  |  |  | 39,316  | 
|Vancouver/Kamloops/Chilliwack/
Kelowna/Penticton/Vernon and area    |  |             | 812,570   |             |  |            | 298,985 |             |  |  | 212,336 |  |  |  | 192,257 | 
|Calgary/Red Deer/Edmonton/Hinton/
Fort McMurray/Lethbridge and area |  |             | 621,203   |             |  |            | 261,091 |             |  |  | 142,360 |  |  |  | 139,725 | 
|Saskatoon/Prince Albert/Moose Jaw/
Swift Current                    |  |             | 78,038    |             |  |            | 27,633  |             |  |  | 17,749  |  |  |  | 16,395  | 
|Winnipeg/Thunder Bay/
Sault St. Marie and area                      |  |             | 300,033   |             |  |            | 77,103  |             |  |  | 54,460  |  |  |  | 48,497  | 
|Texas and Florida                                                   |  |             | 72,009    |             |  |            | 10,019  |             |  |  | 25,441  |  |  |  | 18,236  | 
|                                                                    |  |             |           |             |  |            |         |             |  |  |         |  |  |  |         | 
|Total cable systems                                                 |  |             | 2,105,113 |             |  |            | 770,348 |             |  |  | 495,604 |  |  |  | 454,426 | 
|                                                                    |  |             |           |             |  |            |         |             |  |  |         |  |  |  |         | 

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Shaw Communications Inc.




SHAREHOLDER INFORMATION
August 31, 2002

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, 2002, the Company
had 11,373,972 Class A Shares and 220,473,552 Class B Shares outstanding. The
Class A Shares are listed on the TSX Venture Stock Exchange under the symbol
SJR.A. The Class B 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 Shares on The Toronto Stock Exchange

|                                     |  |            |       |  |  |           |       |        |  |   |       |  |  |       |             | 
|------------------------------------ |  | ---------- | ----- |  |  | --------- | ----- | ------ |  | - | ----- |  |  | ----- | ----------- | 
|                                     |  |            |       |  |  |           |       |        |  |   |       |  |  | Total
|Quarter                              |  | High Close |       |  |  | Low Close |       | Volume
|                                     |  |            |       |  |  |           |       |       
|September 1, 2001 to August 31, 2002 |  |            |       |  |  |           |       |        |  |   |       |  |  |       |             | 
|First                                |  | $          | 32.89 |  |  |           |       |        |  | $ | 27.50 |  |  |       | 34,326,256  | 
|Second                               |  | $          | 34.67 |  |  |           |       |        |  | $ | 28.15 |  |  |       | 24,278,540  | 
|Third                                |  | $          | 31.70 |  |  |           |       |        |  | $ | 24.63 |  |  |       | 27,116,524  | 
|Fourth                               |  | $          | 25.00 |  |  |           |       |        |  | $ | 12.99 |  |  |       | 53,645,660  | 
|                                     |  |            |       |  |  |           |       |        |  |   |       |  |  |       |             | 
|Closing price, August 31, 2002       |  |            |       |  |  | $         | 15.00 |        |  |   |       |  |  |       | 139,366,980 | 
|                                     |  |            |       |  |  |           |       |        |  |   |       |  |  |       |             | 

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 Cost Base (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.

Dividend Policy
The current annual dividend rates are $0.045 per Class A Share and $0.05 per
Class B Share. Dividends are subject to review by the Board of Directors on
an annual basis.

Quarterly Information

|                                     |  |            |           |               |  |            |         |              |  |           |          |           |  |           |       |   |  |  |         |  |  |  |      | 
|------------------------------------ |  | ---------- | --------- | ------------- |  | ---------- | ------- | ------------ |  | --------- | -------- | --------- |  | --------- | ----- | - |  |  | ------- |  |  |  | ---- | 
|                                     |  |            |           |               |  |            |         |              |  |           |          |           |  | Reported  |       |   |  |  |         |  |  | 
|                                     |  |            |           |               |  | Operating  |         | Reported     |  | earnings  |          |           |  |           |       |   |  | 
|                                     |  | Operating  |           | income before |  | net income |         | (loss)       |  |           |          |           |  | Cash flow
|Quarter                              |  | revenue(1) |           | amortization  |  | (loss)     |         | per share(2) |  | Cash flow |          | per share
|                                     |  |            |           |               |  |            |         |              |  |           |          |          
|($000s Cdn except per share amounts) |  |            |           |               |  |            |         |              |  |           |          |           |  |           |       |   |  |  |         |  |  |  |      | 
|2002                                 |  |            |           |               |  |            |         |              |  |           |          |           |  |           |       |   |  |  |         |  |  |  |      | 
|Fourth                               |  |            | 494,610   |               |  |            | 185,215 |              |  |           | (70,647  | )         |  |           | (0.35 | ) |  |  | 107,258 |  |  |  | 0.42 | 
|Third                                |  |            | 489,605   |               |  |            | 171,757 |              |  |           | (90,909  | )         |  |           | (0.44 | ) |  |  | 98,559  |  |  |  | 0.38 | 
|Second                               |  |            | 465,732   |               |  |            | 139,593 |              |  |           | (74,366  | )         |  |           | (0.36 | ) |  |  | 63,007  |  |  |  | 0.23 | 
|First                                |  |            | 438,613   |               |  |            | 136,108 |              |  |           | (52,370  | )         |  |           | (0.28 | ) |  |  | 63,285  |  |  |  | 0.22 | 
|                                     |  |            |           |               |  |            |         |              |  |           |          |           |  |           |       |   |  |  |         |  |  |  |      | 
|Total                                |  |            | 1,888,560 |               |  |            | 632,673 |              |  |           | (288,292 | )         |  |           | (1.43 | ) |  |  | 332,109 |  |  |  | 1.25 | 
|                                     |  |            |           |               |  |            |         |              |  |           |          |           |  |           |       |   |  |  |         |  |  |  |      | 
|2001                                 |  |            |           |               |  |            |         |              |  |           |          |           |  |           |       |   |  |  |         |  |  |  |      | 
|Fourth                               |  |            | 428,075   |               |  |            | 125,023 |              |  |           | (294,758 | )         |  |           | (1.32 | ) |  |  | 47,383  |  |  |  | 0.16 | 
|Third                                |  |            | 423,745   |               |  |            | 136,095 |              |  |           | (8,741   | )         |  |           | (0.08 | ) |  |  | 62,098  |  |  |  | 0.22 | 
|Second                               |  |            | 346,091   |               |  |            | 104,238 |              |  |           | 189,137  |           |  |           | 0.83  |   |  |  | 49,706  |  |  |  | 0.18 | 
|First                                |  |            | 339,042   |               |  |            | 94,984  |              |  |           | (33,059  | )         |  |           | (0.21 | ) |  |  | 51,327  |  |  |  | 0.20 | 
|                                     |  |            |           |               |  |            |         |              |  |           |          |           |  |           |       |   |  |  |         |  |  |  |      | 
|Total                                |  |            | 1,536,953 |               |  |            | 460,340 |              |  |           | (147,421 | )         |  |           | (0.85 | ) |  |  | 210,514 |  |  |  | 0.77 | 
|                                     |  |            |           |               |  |            |         |              |  |           |          |           |  |           |       |   |  |  |         |  |  |  |      | 

|(1) |  | Operating revenues have been restated to net dealer discounts against
revenue. Previously these discounts were included in expense (see Note 1 to
the Consolidated Financial Statements).
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Diluted earnings (loss) per share equal basic earnings (loss) per share
except for in Second Quarter of 2001, where diluted earnings per share were
$0.76.                               

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Shaw Communications Inc.




CORPORATE INFORMATION  Fiscal 2002
August 31, 2002

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|DIRECTORS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | SENIOR OFFICERS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | CORPORATE OFFICE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | FURTHER INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|JR Shaw(4)
Executive Chair,
Shaw Communications Inc. Adrian
Burns(3)
Corporate Director Jim
Dinning(1)
Executive Vice President
Sustainable Development
and External Relations,
TransAlta Corporation George
F. Galbraith(4)
Corporate Director Ronald
V. Joyce(2)
Senior Chairman and
Co-Founder,
The TDL Group Ltd. Charles
V. Keating(2)
Corporate Director Rt.
Hon. Donald F.
Mazankowski(3)(4)
Corporate Director Harold
A. Roozen(1)(4)
President and Chief
Executive Officer,
CCI Thermal
Technologies Inc. Jeffrey
Royer(1)
Corporate Director Bradley
S. Shaw
Senior Vice President,
Operations
Star Choice Communications Inc.
 Leslie
E. Shaw
Chairman,
ShawCor Ltd.
 J.C. Sparkman(2)(4)
Corporate Director John
S. Thomas(3)
President, Delta Cable
Communications Ltd. & Coast
Cable Communications Ltd. 
 Willard
(Bill) H. Yuill(3)
Chairman,
Monarch Communications Inc. |  | 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. Margot
M. Micallef,(5) Q.C.
Senior Vice President, Law,
General Counsel and
Corporate Secretary Ronald
D. Rogers
Senior Vice President and
Chief Financial Officer Ken
C.C. Stein
Senior Vice President,
Corporate and Regulatory
Affairs HONORARY SECRETARY:
Louis
Desrochers 
(1) Audit
Committee
(2) Human Resources Committee
(3) Corporate Governance
Committee
(4) Executive Committee
(5) Secretary on all Committees |  | 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 |  | 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.

83



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(SHAW LOGO)











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





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##### Table of Contents






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. for the year ended August 31, 2002;                                                                                                                                                                                      
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 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, 2002, 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, 2002;
|
| | 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-14 and 15d-14) for the registrant and
have:                                                                                                    



| | a. |  | designed such disclosure controls and procedures 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 a date within 90 days
prior to the filing date of the Annual Report (the Evaluation
Date); and                                                                                                  
|
| | c. |  | presented in the Annual Report our conclusions about
the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;                                                                                                                        



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





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##### Table of Contents





| | a. |  | all significant deficiencies in the design or
operation of internal controls which could adversely affect the
registrants ability to record, process, summarize and report
financial data and have identified for the registrants auditors
any material weaknesses in internal controls; and any fraud,
whether or not material, that involves management or other
employees who have a significant role in the registrants
internal controls; and
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. |  | The registrants other certifying officers and I have indicated in the
Annual Report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Date: November 19, 2002



(Signed) Jim Shaw"
Jim Shaw
Chief Executive Officer
Shaw Communications Inc.





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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. for the year ended August 31, 2002;                                                                                                                                                                                      
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 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, 2002, 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, 2002;
|
| | 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-14 and 15d-14) for the registrant and
have:                                                                                                    



| | a. |  | designed such disclosure controls and procedures 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 a date within 90 days
prior to the filing date of the Annual Report (the Evaluation
Date); and                                                                                                  
|
| | c. |  | presented in the Annual Report our conclusions about
the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;                                                                                                                        



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





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##### Table of Contents





| | a. |  | all significant deficiencies in the design or
operation of internal controls which could adversely affect the
registrants ability to record, process, summarize and report
financial data and have identified for the registrants auditors
any material weaknesses in internal controls; and any fraud,
whether or not material, that involves management or other
employees who have a significant role in the registrants
internal controls; and
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. |  | The registrants other certifying officers and I have indicated in the
Annual Report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: November 19, 2002



(Signed) Ronald Rogers
Ronald D. Rogers
Senior Vice-President and Chief Financial Officer
Shaw Communications Inc.