Shaw Communications Inc. Announces Fourth Quarter and Full Year Results, Highlighted by Customer and Free Cash Flow Growth.

CALGARY, Alberta -- Shaw Communications Inc.(NYSE:SJR) (TSX:SJR.B) announced net income of $28.9 million or $0.08 per share for the quarter ended August 31, 2004 compared to net income of $4.4 million and a loss of $0.02 per share for the comparable period in 2003. Net income for the year, was $90.9 million which represents $0.22 per share, versus a net loss of $46.9 million ($0.38 per share) last year.

Total service revenue in the fourth quarter was $531.8 million, a 5.9% increase over the fourth quarter of 2003, and on a year-to-date basis, was $2.1 billion compared to $2.0 billion in 2003.

Customer growth occurred in both cable and DTH, with Internet customers reaching the one million mark on June 14, 2004.

"We are pleased with our continued customer growth. The achievement of over one million Internet customers underscores the high quality of our product offering and is a great milestone for our Company," said Jim Shaw, C.E.O. of Shaw Communications Inc.

Consolidated service operating income before amortization1 was $239.2 million in the fourth quarter (2003 - $224.1 million), an increase of 6.8%, and was $925.9 million for the year (2003 - $817.6 million), a 13.2% increase over last year. Cash flow from operations  of $186.3 million in the fourth quarter and $694.8 million for the year represents growth of 15.8% and 27.7% over the same periods last year.

In fiscal 2003, the Company sold its US cable systems. Excluding the US cable systems, quarterly and annual increases in service revenue over last year, were 7.0% and 7.1%, respectively. Increases in operating income before amortization were 7.6% for the quarter and 16.4% year-to-date.

On a consolidated basis, the Company achieved positive free cash flow(1) of $56.1 million in the fourth quarter (2003 - $56.9 million), bringing the year-to-date amount to $278.9 million (2003 - $98.3 million). For the second consecutive quarter, the satellite division generated positive free cash flow of $7.5 million compared to negative free cash flow of $16.1 million in the same quarter last year. Cable free cash flow was $48.6 million for the quarter compared to $73.0 million last year. The decrease is due to a higher level of capital expenditures in the fourth quarter this year, partly offset by improved operating cash flows.

(1) See definitions under Key Performance Drivers in Management's Discussion and Analysis

Customer growth continued during the fourth quarter despite the competitive challenges from new video entrants in some of Shaw's markets and increases in monthly subscriber rates in both cable and DTH, which were implemented in previous quarters. In the fourth quarter, basic cable subscribers increased by 5,830, digital customers grew by 24,712 and Internet customers increased by 23,488 to 1.02 million. DTH customers grew by 1,506 in the fourth quarter bringing total DTH customers to approximately 828,000.

"We almost tripled our annual consolidated free cash flow over last year. This achievement is the result of a number of factors, the key one being the improvement in service operating income before amortization. In addition, we reduced capital spending and equipment costs by $18 million, or approximately 5%, despite incurring Digital Phone costs during the year of approximately $14 million and while supporting year-to-date customer increases of 30,520 for basic cable, 72,904 for digital customers, 126,006 for Internet and 19,377 for DTH," noted Jim Shaw.

In terms of divisional results, cable service revenue for the quarter and year-to-date was $379.4 million (2003 - $362.7 million) and $1,491.6 million (2003 - $1,460.0 million), respectively. The increases in quarterly and annual service revenue over 2003 results (adjusted to exclude the US cable systems sold on June 30, 2003) were 6.2% and 6.3%, respectively. On the same basis, quarterly and annual service operating income before amortization of $195.8 million and $779.6 million, increased by 6.2% and 10.5% over the same periods last year. The main drivers of this growth were higher customer levels, rate increases implemented over the last two years and the recent Monarch systems acquisition.

Satellite division quarterly and annual service revenue of $152.4 million and $588.2 million, respectively, grew by approximately 9% over the same periods in 2003, while service operating income before amortization was $43.4 million (45.6% increase) and $152.8 million (67.2% increase). Both of these improvements are primarily the result of growth in DTH customers and rate increases.

"Both divisions have generated strong improvements," said Jim Shaw. "Bundling, the addition of new services, and the introduction of new technologies, such as cable's launch of the dual tuner  personal video recorder ("PVR") and HDTV set-top receiver, continue to add value to our service offerings and contribute to growing our customer base. In addition, we're looking forward to the launch of Digital Phone, our primary line telephone offering, in 2005 as our next growth opportunity."

The continued strength in Shaw's operating results and the generation of free cash flow has enabled the Company to improve its financial position and reward shareholders through an increase to the quarterly dividend rate on its Class B Non-Voting Shares. The quarterly dividend, which was $0.03 per share on September 30, 2003, was increased to $0.07 per share commencing September 30, 2004. This increases the dividend from $0.16 per share in fiscal 2004 to a projected annual rate of $0.28 per share in fiscal 2005.

During the fourth quarter, Shaw repurchased 837,500 of its Class B Non-Voting Shares for cancellation, pursuant to the normal course issuer bid, for $16.8 million ($20.00 per share). On a year-to-date basis, the Company has repurchased and cancelled 4,134,000 Class B Non-Voting Shares for $86.0 million ($20.80 per share). In addition, Shaw repaid $210.6 million of debt during the year.

In closing, Mr. Shaw stated "The efforts of Shaw's management and staff have enabled us to meet the free cash flow target and strengthen our financial position. Our strong service offerings continue to generate customer growth and will soon be further enhanced by the addition of Digital Phone. As a result, we believe that shareholder value will continue to improve. As stated in the third quarter release, our preliminary view for fiscal 2005 is free cash flow of approximately $325 million. We intend to continue to use free cash flow to reduce debt, pay dividends and, subject to market conditions, repurchase Class B Non-Voting Shares for cancellation".

Shaw Communications Inc. is a diversified Canadian communications company whose core business is providing broadband cable television, Internet and satellite direct-to-home ("DTH") services to approximately 3.0 million customers. Shaw is traded on the Toronto  and New York stock exchanges (Symbol: TSX - SJR.B, NYSE - SJR).

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 as outlined in Management's Discussion and Analysis. 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) speaks only as of the date on which it was originally made and the Company expressly disclaims 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 the Company to predict what factors will arise or when they may arise. In addition, the Company cannot assess the impact of each factor on its 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.

SHAREHOLDERS' REPORT
FOURTH QUARTER ENDING AUGUST 31, 2004

SELECTED FINANCIAL HIGHLIGHTS
CONSOLIDATED RESULTS OF OPERATIONS
FOURTH QUARTER ENDING AUGUST 31, 2004

                                        Three months ended August 31,
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                                                              Change
                                            2004        2003       %
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($000's Cdn. except per share amounts)
Operations:

 Service revenue (1)                     531,821     502,296     5.9

 Service operating income
  before amortization (1) (2)            239,212     224,086     6.8

 Cash flow from operations (3)           186,311     160,840    15.8

 Net income (loss) (1)                    28,882       4,385   558.7

Per share data:

 Earnings (loss) per share -
  basic and diluted (4)                    $0.08      ($0.02)

 Weighted average participating
  shares outstanding during
  period (000's)                         232,234     231,850
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                                                Year ended August 31,
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                                                              Change
                                            2004        2003       %
--------------------------------------------------------------------

($000's Cdn. except per share amounts)
Operations:

 Service revenue (1)                   2,079,749   1,998,421     4.1

 Service operating income
  before amortization (1) (2)            925,935     817,641    13.2

 Cash flow from operations (3)           694,770     544,175    27.7

 Net income (loss) (1)                    90,909     (46,864)  294.0

Per share data:

 Earnings (loss) per share -
  basic and diluted (4)                    $0.22      ($0.38)

 Weighted average participating
  shares outstanding during
  period (000's)                         231,605     231,848
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(1) In conjunction with the adoption of EIC 141 in the third quarter,
    the Company separated the reporting of its ongoing service
    revenue from its equipment revenue.   Service revenue, service
    operating income before amortization and net income (loss) have
    been restated to reflect adoption of the new accounting policy as
    more fully described in Note 1 to the unaudited interim
    Consolidated Financial Statements.  The accounting change
    resulted in a nominal change in net income (loss).
(2) See definition under Key Performance Drivers in Management's
    Discussion and Analysis.
(3) Cash flow from operations is before changes in non-cash working
    capital as presented in the unaudited interim Consolidated
    Financial Statements.
(4) After deducting entitlements on the equity instruments, net of
    income taxes, amounting to $10,282 or $0.04 per share
    (2003 - $10,135 or $0.04 per share) and $40,185 or $0.17 per
    share (2003 - $40,193 or $0.17 per share) for the quarter and
    year respectively.

OPERATING HIGHLIGHTS

- Net income was $28.9 million for the quarter compared to $4.4 million for the same quarter last year. The Company generated positive net income in all quarters this year.

- Earnings per share were $0.08 for the quarter compared to a loss of $0.02 last year.

- Service revenue for the quarter improved from $502.3 million in the fourth quarter of last year to $531.8 million this year, a 5.9% increase.

- Service operating income before amortization was up 6.8% this quarter to $239.2 million over last year's amount of $224.1 million.

- The Satellite division achieved positive free cash flow(1) for the second consecutive quarter despite a marginal decline in revenue compared to the previous quarter. Free cash flow was $7.5 million compared to negative free cash flow of $16.1 million in the same quarter last year.

(1) See definitions under Key Performance Drivers in Management's Discussion and Analysis

- The Company's customer base continued to grow in the fourth quarter with increases of 5,830 for basic cable, 24,712 for digital, 23,488 for Internet and 1,506 for DTH. Approximately 42.4% (2003 - 37.9%) of cable customers now subscribe to a bundled service. This reduces churn and builds longer-term relationships with customers and provides cost savings for both the customer and Shaw.

- $210.6 million of debt was repaid in fiscal 2004 which should result in annual savings of approximately $12.0 million in debt servicing costs based on current rates of interest.

- Quarterly dividends on the Class B Non-Voting Shares increased from $0.05 per share to $0.07 per share effective September 30, 2004.

Our objective is to continue to increase stakeholder value. We accomplish this primarily through delivery of strong financial performance and development of future growth opportunities. On the first front, we continued to improve financial results and to grow the customer base across all divisions in fiscal 2004. Shaw exceeded fiscal 2004 free cash flow guidance of $275 million and our preliminary view for fiscal 2005 is free cash flow of approximately $325 million. In fiscal 2004, the Company repaid debt of $210.6 million, repurchased 4.1 million of Class B Non-Voting Shares or 1.9% of the outstanding share capital, and increased the quarterly dividend.

Improved financial performance strengthens our ability to focus on the disciplined pursuit of future growth opportunities. Shaw's emphasis on providing our customers with high value services in a cost effective manner lays the groundwork for the development of our Digital Phone service. In the same way that customers have embraced  the value of Shaw's bundling of video and Internet services, we believe they will be eager to do the same with our "triple play" bundle of video, Internet and voice. To this end, we are working diligently to deploy our Digital Phone service in calendar 2005.

JR Shaw                         Jim Shaw
Executive Chair                 Chief Executive Officer

MANAGEMENT'S DISCUSSION AND ANALYSIS

AUGUST 31, 2004

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.

The following should also be read in conjunction with Management's Discussion and Analysis included in the Company's August 31, 2003 Annual Report and Financial Statements and the Notes thereto.

Consolidated Overview

Consolidated service revenue was $531.8 million in the fourth quarter compared to $502.3 million last year, and on a year-to-date basis was $2.1 billion versus $2.0 billion in 2003. The improved service revenue resulted from growth in the customer base, rate increases and the acquisition of the Monarch cable systems effective March 31, 2004.

Quarterly and annual service operating income before amortization(1) of $239.2 million and $926.0 million respectively increased by 6.8% and 13.2% over last year. The improvements resulted from growth in revenue and cost savings across all divisions.

(1) See definitions under Key Performance Drivers in Management's Discussion and Analysis

In fiscal 2003, the Company sold its US cable systems. To present a view of continuing operations excluding the US cable systems, quarterly and annual increases in service revenue over last year, were 7.0% and 7.1%, respectively. The increases in service operating income before amortization were 7.6% and 16.4%, respectively.

Net income of $28.9 million and $90.9 million increased by $24.5 million and $137.8 million for the quarter and year, respectively, as follows:

Three months ended   Year ended
                                             August 31,   August 31,
                                                  2004         2004
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($millions Cdn)
Increased service operating
 income before amortization                       15.1        108.3
Decreased amortization of deferred
 net equipment cost                               12.0         13.0
Decreased amortization of deferred
 charges and property, plant and equipment           -         23.3
Decreased interest expense                         9.1         40.2
Change in net other costs and revenue(1)          10.7         (4.5)
Increase in income taxes                         (22.4)       (44.2)
Decrease in equity loss on investees                 -          1.7
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                                                  24.5        137.8
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(1) Net other costs and revenue include: gain on sale of
    investments, write-down of investments, gain on redemption of
    SHELS, loss on sale of satellite assets, foreign exchange gain
    (loss) on unhedged long-term debt, debt restructuring costs,
    provision for loss on sale and write-down of assets and other
    revenue as detailed in the unaudited interim Consolidated
    Statements of Income (Loss) and Deficit.

Earnings per share were $0.08 and $0.22 for the quarter and year, respectively, compared to losses per share of $0.02 and $0.38 in the respective periods last year.

Cash flow from operations before changes in non-cash working capital was $186.3 million in the fourth quarter compared to $160.8 million last year, and on a year-to-date basis was $694.8 million compared to $544.2 million in 2003. The growth over the respective quarterly and yearly comparative periods was due to increased service operating income before amortization of $15.1 million and $108.3 million, reduced interest expense of $9.1 million and $40.2 million, and decreased current income tax expense of $5.9 million and $9.0 million.

On a consolidated basis, the Company achieved positive free cash flow(1) of $56.1 million in the fourth quarter (2003 - $56.9 million), bringing the year-to-date amount to $278.9 million (2003 - $98.3 million). The satellite division generated positive free cash flow of $7.5 million compared to negative free cash flow of $16.1 million in the same quarter last year. This is the second consecutive quarter that the division generated positive free cash flow. Cable generated $48.6 million of positive free cash flow for the quarter compared to $73.0 million last year. The decrease is due to a higher level of capital expenditures in the fourth quarter this year, partly offset by improved operating cash flows.

(1) See definitions under Key Performance Drivers in Management's Discussion and Analysis

Update to critical accounting policies

In Management's Discussion and Analysis included in the Company's August 31, 2003 Annual Report, the Company discusses critical accounting policies including key estimates and assumptions that management has made under these principles and how they affect the amounts reported in the Consolidated Financial Statements. The MD&A also describes significant accounting policies where alternatives exist. We focus your attention to the following changes in respect of our discussion of critical accounting policies.

Recent Canadian Accounting Pronouncements

In the third quarter of 2004, the Company adopted the Emerging Issues Committee ("EIC") Abstract 142 for revenue arrangements with multiple deliverables and Abstract 141 for revenue recognition. The Company had the choice of adopting the new accounting policies prospectively or retroactively, with restatement of prior periods and chose the latter to assist in the comparison of historical results.

The Abstracts, as they pertain to Shaw, address the accounting treatment for arrangements involving multiple deliverables. Multiple deliverables would include situations where companies provide multiple solutions to their customers' needs and may involve the delivery or performance of multiple products, services, or rights to use assets, and performance may occur at different points in time or over different periods of time. In some cases, the arrangements include initial installation, initiation, or activation services and involve consideration in the form of a fixed fee or a fixed fee coupled with a continuing revenue stream.

The Company has determined that its Cable, DTH and Satellite Services divisions have multiple deliverables comprised of subscriber connection fee revenue, customer premise equipment revenue and related subscription revenue. The Company determined that the upfront fees charged to customers in respect of connection fees and customer premise equipment (DCTs, modems, DTH equipment and truck tracking equipment) do not constitute separate units of accounting based on the criteria outlined in EIC 142. Accordingly, these revenue streams were assessed as an integrated package as outlined in EIC 141.

Under EIC 141, up-front fees such as subscriber connection fees and amounts charged on customer premise equipment, that have no utility to the purchaser separate and independent of the seller providing additional products or services, must be deferred and recognized systematically over the periods that the fees for additional products or services are earned. Therefore, the Company must defer and amortize connection fees and amounts received on the sale of customer premise equipment over the expected term of the related subscription service.

In conjunction with these up-front fees, the Company also incurs incremental direct costs which include, in the case of equipment revenue, the cost of the equipment and related installation costs, and in the case of subscriber connection fee revenue, commissions, installation costs on reconnections and other costs. There are two alternatives to account for these incremental direct costs. The first alternative is to expense the costs immediately. The second alternative, as permitted by primary sources of GAAP, is to defer and amortize incremental costs directly related to the upfront revenue. EIC-141 states that the costs incurred related to the acquisition or origination of a customer contract should be accounted for on a basis similar to the three criteria set forth in EIC-27, "Revenues and Expenditures during the Pre-operating Period." The Company has determined that the aforementioned incremental costs identified above meet the criteria for deferral. First, the costs, such as the equipment and installation, are directly related to obtaining the equipment revenue or connection fee revenue from the new customer. Second, the costs are incremental in nature. Third, the costs are recoverable from the related revenues. Historically, the Company has determined that the excess cost of the equipment over the upfront equipment revenue is recoverable from the related revenues of the ongoing subscription revenue.

The Company has chosen to defer and amortize the related costs as this provides the best matching of the costs of the equipment and subscriber connection costs with the related up-front revenue and future revenue stream of subscription services and is consistent with Canadian accounting standard "Financial Statement Concepts" which recognizes that 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. This view is consistent with Shaw's previous policy of deferral and amortization of equipment subsidies as the Company views the sale of the equipment and subscription for services as one transaction; however, the Company must now defer and recognize the equipment revenue and the cost of equipment over the expected term of the ongoing subscription service. Previously, the Company immediately recognized revenue and an equal cost on the sale of the equipment when the customer service was activated. The subsidized portion of the equipment cost of sale was deferred and included in amortization expense over a period of two years.

The adoption of the new accounting policy also affects the Satellite Services division. Under EIC 141, the Company must defer and recognize the revenue and the cost of equipment on the sale of truck tracking equipment over the term of the related service contract for airtime, which is generally five years. Previously, the revenue, cost and profit on truck tracking equipment were recognized immediately when the equipment was shipped. As a result of this accounting change, the Company adjusted its opening purchase equation on the acquisition of Cancom in fiscal 2000 to recognize a deferred charge of $32.3 million, a deferred credit of $46.4 million and a reduction to the future income tax liability of $4.9 million attributable to net deferral on truck tracking equipment sales. The adjustments to the purchase equation resulted in the recognition of additional goodwill of $9.2 million.

Finally, the adoption of the policy affects the recognition of subscriber connection fee revenue and related expenses. Subscriber connection fees must now be deferred and amortized over the anticipated period of the related subscription revenue. As the term for which the customer will receive the subscription services is not specified, we have used customer churn and factored in considerations such as increased competition from new entrants in the video and high-speed Internet markets to determine that an amortization period of two years is reasonable. As permitted under EIC 141, the Company may also defer and recognize the direct and incremental costs related to obtaining the subscriber connection fee over the same period. A review of the costs of connecting a customer indicates that the cost is equal to or greater than the connection fee revenue. As a result of this review and because of the nature of connection costs, the Company has limited its deferral of subscriber connection fee costs to the amount of deferred connection fee revenue. Previously, as per industry practice and in accordance with US GAAP, subscriber connection fees were recognized as revenue when the connection was completed as it was considered a partial recovery of initial selling expenses and related administrative expenses.

In conjunction with the adoption of EIC 141, the Company changed its income statement presentation to distinguish the amortization of deferred equipment revenue and deferred equipment costs from the revenue and expenses recognized from ongoing service activities. The equipment revenue and equipment costs are deferred and recognized over the anticipated term of the related future revenue (i.e., the monthly service revenue) with the period of recognition spanning over two to five years. As a result, the amortization of deferred equipment revenue and deferred equipment cost are non-cash items on the income statement, similar to the Company's amortization of deferred IRU revenue, which the Company also currently separates from ongoing revenue. Further, within the lifecycle of a customer relationship, the customer generally purchases the customer premise equipment only once, at the beginning of that relationship, whereas the subscription revenue represents a continuous revenue stream throughout that customer relationship. Therefore, the segregated presentation provides a clearer distinction within the income statement between cash and non-cash activities and between upfront and continuous revenue streams, which assists financial statement readers to predict future cash flows from operations.

The retroactive adoption of the accounting policy primarily resulted in changes to the income statement presentation as described in Note 1 to the unaudited interim Consolidated Financial Statements, and was neutral with respect to net income, with no impact on earnings per share. Also described in Note 1 to the unaudited interim Consolidated Financial Statements are new accounting principles that the Company will be required to adopt in future periods starting as early as the first quarter of 2005.

Reclassification

As more fully described in Note 1 to the unaudited interim Consolidated Financial Statements, the Company reclassified its DTH customer premise equipment sold to retailers not yet activated, net of working capital, to deferred charges. This balance sheet reclassification had no impact on earnings.

Key Performance Drivers

The Company's continuous disclosure documents may provide discussion and analysis of non-GAAP financial measures. These financial measures do not have standard definitions prescribed by Canadian GAAP or US GAAP and therefore may not be comparable to similar measures disclosed by other Companies. The Company utilizes these measures in making operating decisions and assessing its performance. Certain investors, analysts and others, utilize these measures in assessing the Company's financial performance and as an indicator of its ability to service debt. These non-GAAP financial measures have not been presented as an alternative to net income or any other measure of performance required by Canadian or US GAAP.

The following contains a listing of the Company's use of non-GAAP financial measures and provides a reconciliation to the nearest GAAP measurement or provides a reference to such reconciliation.

Service operating income before amortization

The Company utilizes this measurement as it is a widely accepted financial indicator of a company's ability to service and/or incur debt. In respect of the calculation of consolidated service operating income before amortization, it is presented as a sub-total line item in the Company's unaudited interim Consolidated Statements of Income (Loss) and Deficit. It is calculated as service revenue less service operating, general and administrative expenses.

Free cash flow

The Company utilizes this measurement as it measures the Company's ability to repay debt and return cash to shareholders. Consolidated free cash flow is calculated as follows:

Three months ended,           Year ended,
                                     August 31,            August 31,
--------------------------------------------------------------------
                                2004      2003       2004       2003
--------------------------------------------------------------------
($000's Cdn)
Cable free cash flow(1)       48,554    72,994    272,250    205,178
Combined satellite free
 cash flow(2)                  7,506   (16,143)     6,631   (106,919)
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Consolidated                  56,060    56,851    278,881     98,259
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(1) The reconciliation of free cash flow for cable is provided on
    page 13 of Management's Discussion and Analysis.

(2) The reconciliation of free cash flow for combined satellite is
    provided on page 17 of Management's Discussion and Analysis.


CABLE

FINANCIAL HIGHLIGHTS

                                        Three months ended August 31,
--------------------------------------------------------------------
                                                              Change
                                            2004        2003       %
--------------------------------------------------------------------
($000's Cdn)
Service revenue (third party)(1)         379,445     362,679     4.6
--------------------------------------------------------------------
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Service operating income
 before amortization (1) (2)             195,820     186,277     5.1
Less:
 Interest                                 44,035      46,797    (5.9)
 Entitlements on equity
  instruments, net of current
  taxes                                   10,282      10,135     1.5
 Cash taxes on net income                  2,082       8,978   (76.8)
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Cash flow before the following:          139,421     120,367    15.8
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Capital expenditures and
 equipment costs (net):
 New housing development                  13,390      11,441    17.0
 Success based                            16,905       9,751    73.4
 Upgrades and enhancement                 43,557      17,777   145.0
 Replacement                               6,561       3,758    74.6
 Buildings/other                          10,454       4,646   125.0
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Total as per Note 2 to the
 unaudited interim Consolidated
 Financial Statements                     90,867      47,373    91.8
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Free cash flow (3)                        48,554      72,994   (33.5)
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Operating margin                            51.6%       51.4%    0.2
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                                                Year ended August 31,
--------------------------------------------------------------------
                                                              Change
                                            2004        2003       %
--------------------------------------------------------------------
($000's Cdn)
Service revenue (third party) (1)      1,491,569   1,459,833     2.2
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Service operating income
 before amortization (1) (2)             779,579     727,458     7.2
Less:
 Interest                                174,988     190,002    (7.9)
 Entitlements on equity
  instruments, net of current
  taxes                                   40,185      40,193       -
 Cash taxes on net income                 25,043      34,809   (28.1)
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Cash flow before the following:          539,363     462,454    16.6
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Capital expenditures and
 equipment costs (net):
 New housing development                  63,906      83,009   (23.0)
 Success based                            54,540      71,301   (23.5)
 Upgrades and enhancement                112,223      62,133    80.6
 Replacement                              16,070      15,016     7.0
 Buildings/other                          20,374      25,817   (21.1)
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Total as per Note 2 to the
 unaudited interim Consolidated
 Financial Statements                    267,113     257,276     3.8
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Free cash flow (3)                       272,250     205,178    32.7
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Operating margin                            52.3%       49.8%    2.5
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(1) In conjunction with the adoption of EIC 141 in the third quarter,
    the Company separated the reporting of its ongoing service
    revenue from the amortization of equipment revenue. See Note 1 to
    the unaudited interim Consolidated Financial Statements in
    respect of the change in accounting policy and Note 2 to the
    unaudited interim Consolidated Financial Statements in respect of
    equipment revenue reported by the division.  The accounting
    change resulted in a change in presentation of cable revenue
    only; service operating income before amortization and free cash
    flow were not affected.

(2) Excludes other operating costs as itemized in Note 2 to the
    unaudited interim Consolidated Financial Statements.

(3) See definitions under Key Performance Drivers in Management's
    Discussion and Analysis.

OPERATING HIGHLIGHTS

- Cable generated free cash flow of $48.6 million in the fourth quarter compared to $73.0 million last year and $272.3 million on a year-to-date basis, which represents a 32.7% increase over 2003 free cash flow of $205.2 million.

- Effective March 31, 2004, Shaw acquired cable systems from Monarch Cablesystems Ltd. which served approximately 40,000 customers in Banff, Canmore and the Medicine Hat regions in Alberta as well as the Kimberley and Hope areas in British Columbia.

- Commencing in February 2004 Shaw applied rate increases of $1 to $2 per month to most of its packages. The increases generated additional monthly revenue of approximately $1.5 million when they were fully implemented at the end of May 2004.

The quarterly and annual increases in cable service revenue over last year were 4.6% and 2.2% respectively. The year-over-year increases, after adjusting 2003 results to exclude the US cable systems sold in 2003, were 6.2% and 6.3%. The revenue growth is primarily the result of increased customer base, rate increases implemented in the current and prior year and the recent Monarch systems acquisition. Monarch systems generated service revenue of $5.8 million in the fourth quarter and $9.7 million for the year ended August 31, 2004.

Quarterly and annual service operating income before amortization increased by 5.1% and 7.2%, respectively, and by 6.2% and 10.5% after taking the 2003 sale of the US systems into account. The Monarch systems, acquired March 31, 2004, had fourth quarter service operating income before amortization of $3.5 million and $5.6 million for the year. The principal reason for the balance of the increases in service operating income before amortization, is revenue growth arising from a higher customer base, rate increases and reduction of costs, including decreased bandwidth costs.

Despite customer growth and the contribution of the Monarch systems, fourth quarter revenue and service operating income before amortization increased marginally over the third quarter of this year. This occurred because the increase in customers, which more than offset seasonal losses in June and July, took place in the latter part of the quarter. In addition, there was an increase in promotional and bundle discounts over the third quarter as new customers took advantage of various promotional offers.

The cable division has experienced increased competition with the entrance of new video competitors, such as Manitoba Tel and SaskTel  in Winnipeg and Saskatoon. In addition, Telus, which operates in Shaw's Alberta and British Columbia service areas, has also been granted a broadcasting distribution license to enter the video market in the near future. In response, Shaw is solidifying its strong customer relationships through initiatives such as same day, next day service, enhancing the attractiveness of its current products with new features (e.g. HDTV, DVR, a new interactive program guide, Xtreme-I Internet Service(TM), launching Digital Phone and expanding its marketing efforts. This investment in marketing, customer service and product innovation may put some upward pressure on costs in the cable division in the short term. However, this activity and the "triple play" offering of voice, video and data is expected to position Shaw for growth in the near future.

Although total capital expenditures of $267.1 million in fiscal 2004 increased marginally from $257.3 million last year, the components of spending have changed. The increase in upgrades and enhancements of $50.1 million (80.6%) reflects projects undertaken this year related to 860 MHz upgrades, preparation for Digital Phone and further DOCSIS (TM) 2.0 deployments. New housing development decreased $19.1 million (23.0%) as a result of the sale of the US cable systems and better coordination of construction projects with developers. Success based spending decreased $16.8 million (23.5%) despite this year's net increase of Internet customers of 126,006 and digital terminal growth of 107,879 compared to 125,933 and 57,093, respectively, last year. The decrease in spending reflects the deployment of lower cost DOCSIS(TM) modems for Internet customers, the strengthened Canadian dollar and reduced customer churn.

On a quarterly basis, total capital expenditures increased from $47.4 million to $90.9 million this year. Increased upgrade activity as described above accounted for $25.8 million of this increase. Success based spending increased by $7.2 million over the same quarter last year due to net deployment of digital terminals this year of 38,517 compared to 7,870 last year. The remaining increase was mainly due to increases in building expenditures including leasehold additions to Shaw's office space in Vancouver and renovations to three other properties.

SUBSCRIBER STATISTICS
                                        Three months       Year
                                            ended          ended
                                        -------------  -------------
                 August 31, August 31,         Change         Change
                      2004     2003(1)  Growth      %  Growth      %
--------------------------------------------------------------------
CABLE:
Basic service:
 Actual          2,122,488  2,091,968    5,830    0.3  30,520    1.5
 Penetration as
 % of homes
 passed               67.2%      68.1%
Digital
 terminals         640,975    533,096   38,517    6.4 107,879   20.2
Digital
 customers (2)     540,535    467,631   24,712    4.8  72,904   15.6
--------------------------------------------------------------------

INTERNET:
Connected and
 scheduled
 installations   1,020,938    894,932   23,488    2.4 126,006   14.1
 Penetration
  as % of basic       48.1%      42.8%
 Stand-alone
  Internet not
  included in
  basic cable      114,767    103,894   (1,779)  (1.5) 10,873   10.5
--------------------------------------------------------------------

(1) August 31, 2003 statistics are restated for comparative purposes
    to adjust subscribers as if the acquisition of the Monarch cable
    systems had occurred on that date.

(2) August 31, 2003 digital customer count was restated to exclude
    customers with digital boxes who do not receive digital services.

Shaw added 5,830 basic subscribers in the current quarter compared to 2,197 in the same quarter last year, and on a year-to-date basis added 30,520 customers versus 18,935 in 2003. Shaw continued its innovative service offerings such as its basic and full cable service introductory offer to standalone Internet and other potential customers. The intent of this offer is to encourage these customers to develop viewing habits that recognize the value of a monthly cable subscription and to continue as customers at the end of the promotional period. This program has been in place for over a year and has proven successful.

During the quarter, Shaw launched a marketing campaign which helped push digital customer additions to 24,712 for the quarter compared to 5,475 in the same quarter last year. Growth has also been stimulated by recent initiatives from DTH suppliers in both the US and Canadian markets to crack-down on illegal satellite systems. In addition, the introduction of HDTV in most major centers as well as the offering of time-shifting channels and VOD have increased the attractiveness of Shaw's digital product. Shaw has further enhanced its digital offering through the introduction of the DCT 6208 digital terminal, the first set top box to incorporate both HDTV and a personal video recorder, as well as the launch of a new interactive program guide that provides significant improvements over the previous version.

The Internet customer base grew by 23,488 during the fourth quarter compared to 18,929 in the same period last year, and year-to-date growth was approximately 126,000, consistent with last year. Total Internet customers surpassed the one million mark in June, and stood at 1,020,938 at August 31, 2004. Internet penetration  as a percentage of basic was 48.1% compared to 42.8% last year. Shaw continues to be the most successful North American cable operator in this regard. The recent addition of Xtreme-I(TM) to the Internet product line in a number of major systems has been successful. Xtreme-I(TM) uses DOCSIS(TM) technology to significantly increase download and upload speeds, which is appealing to customers who download large files or visit online gaming and "content-rich" multimedia sites.

The continued growth in Shaw's customer base is noteworthy given that it more than offset declines in customers as a result of intensified competition from the entry of new video competitors and it occurred during a period in which Shaw implemented rate increases. To maintain growth in this highly competitive market, the Company continues to deliver high-quality, reliable service with excellent customer care, which includes support 24/7/365.

At the end of the fourth quarter, approximately 42.4% of Shaw customers subscribed to bundled services compared to 37.9% last year. The attractiveness of the bundled packages is enhanced by Shaw's ability to offer services such as VOD, HDTV and, in the near future, Digital Phone. Shaw's bundling strategy has proven to be an effective customer retention tool for its digital and Internet customers as shown by churn rates in the table below.

Three months ended            Year ended
                                     August 31,            August 31,
                           -----------------------------------------
Churn (1)                       2004      2003       2004       2003
--------------------------------------------------------------------
Digital customers                4.2%      5.2%      15.5%      21.8%
Internet customers               5.2%      5.5%      17.7%      20.1%
--------------------------------------------------------------------

(1) Calculated as the number of new customer activations less the net
    gain of customers during the period divided by the average of the
    opening and closing customers for the applicable period. It
    should be noted that seasonality and marketing programs could
    impact any comparison of quarterly churn on a sequential basis.


COMBINED SATELLITE (DTH and Satellite Services)

FINANCIAL HIGHLIGHTS

                                        Three months ended August 31,
--------------------------------------------------------------------
                                                              Change
                                            2004        2003       %
--------------------------------------------------------------------
($000s Cdn)
Service revenue (third party)(1)         152,376     139,617     9.1
--------------------------------------------------------------------
--------------------------------------------------------------------
Service operating income
 before amortization (1) (2)              43,392      29,809    45.6
Less:
 Interest (3)                              9,819      16,146   (39.2)
 Cash taxes on net income                  1,225         190   544.7
--------------------------------------------------------------------
Cash flow before the following:           32,348      13,473   140.1
--------------------------------------------------------------------
Capital expenditures and
 equipment costs (net):
 Success based                            23,054      28,460   (19.0)
 Other                                     1,788       1,156    54.7
--------------------------------------------------------------------
Total as per Note 2 to the
 unaudited interim Consolidated
 Financial Statements                     24,842      29,616   (16.1)
--------------------------------------------------------------------
Free cash flow (4)                         7,506     (16,143)  146.5
--------------------------------------------------------------------
--------------------------------------------------------------------


                                                Year ended August 31,
--------------------------------------------------------------------
                                                              Change
                                            2004        2003       %
--------------------------------------------------------------------
($000s Cdn)
Service revenue (third party) (1)        588,180     538,588     9.2
--------------------------------------------------------------------
--------------------------------------------------------------------
Service operating income
 before amortization (1) (2)             152,840      91,433    67.2
Less:
 Interest (3)                             44,484      69,700   (36.2)
 Cash taxes on net income                  1,692         897    88.6
--------------------------------------------------------------------
Cash flow before the following:          106,664      20,836   411.9
--------------------------------------------------------------------
Capital expenditures and
 equipment costs (net):
 Success based                            95,958     122,419   (21.6)
 Other                                     4,075       5,336   (23.6)
--------------------------------------------------------------------
Total as per Note 2 to the
 unaudited interim Consolidated
 Financial Statements                    100,033     127,755   (21.7)
--------------------------------------------------------------------
Free cash flow (4)                         6,631    (106,919)  106.2
--------------------------------------------------------------------
--------------------------------------------------------------------

(1) In conjunction with the adoption of EIC 141 in the third quarter,
    the Company separated the reporting of its ongoing service
    revenue from the amortization of equipment revenue. See Note 1 to
    the unaudited interim Consolidated Financial Statements in
    respect of the change in accounting policy and change in
    accounting presentation and Note 2 to the unaudited interim
    Consolidated Financial Statements in respect of equipment revenue
    reported by the division. The accounting change resulted in a
    change in presentation of the Satellite division's revenue and
    resulted in a nominal increase in the division's operating income
    before amortization and free cash flow.

(2) Excludes other operating costs as itemized in Note 2 to the
    unaudited interim Consolidated Financial Statements.

(3) Interest is allocated to the Satellite division based on the
    actual cost of debt incurred by the Company to repay prior
    outstanding Satellite debt and to fund accumulated cash deficits
    of Cancom and Star Choice.

(4) See definitions under Key Performance Drivers in Management's
    Discussion and Analysis.

The Satellite division increased quarterly and annual service revenue by approximately 9% over the same periods in 2003, and service operating income before amortization grew by 45.6% and 67.2%, respectively. These improvements resulted mainly from customer growth and rate increases in DTH.

The Satellite division achieved its second consecutive quarter of positive free cash flow of $7.5 million compared to negative $16.1 million in the same quarter last year. The outlook for free cash flow remains positive; however, due to one-time capital costs of approximately $10.3 million in connection with the launch of Anik F2, it is expected that the Satellite division will report negative free cash flow in the first quarter of fiscal 2005. In addition, the division will likely incur higher success-based capital expenditures during the first quarter in preparation for the Christmas season.

The improvement in free cash flow over comparative periods primarily resulted from increased service operating income before amortization in the DTH (Star Choice) segment, reduced success-based expenditures due to lower customer activations, and reduced interest expense as a result of last year's redemption of the US $150 million senior secured notes of Star Choice and this year's repayment of the $250 million Cancom structured note.

DTH (Star Choice)

FINANCIAL HIGHLIGHTS


                                        Three months ended August 31,
--------------------------------------------------------------------
                                                              Change
                                            2004        2003       %
--------------------------------------------------------------------
 ($000s Cdn)
Service revenue (third party)(1)         130,972     119,391     9.7
Service operating income
 before amortization                      32,795      20,256    61.9
Operating margin                            25.0%       17.0%    8.0
--------------------------------------------------------------------



                                                Year ended August 31,
--------------------------------------------------------------------
                                                              Change
                                            2004        2003       %
--------------------------------------------------------------------
 ($000s Cdn)
Service revenue (third party)(1)         505,637     450,176    12.3
Service operating income
 before amortization                     111,150      52,814   110.5
Operating margin                            22.0%       11.7%   10.3
--------------------------------------------------------------------

(1) In conjunction with the adoption of EIC 141 in the third quarter,
    the Company separated the reporting of its ongoing service
    revenue from the amortization of equipment revenue. See Note 1 to
    the unaudited interim Consolidated Financial Statements in
    respect of the change in accounting policy and Note 2 to the
    unaudited interim Consolidated Financial Statements in respect of
    equipment revenue reported by the division. The impact of the
    accounting change resulted in a change in presentation of DTH
    service revenue only; service operating income before
    amortization was not affected.


CUSTOMER STATISTICS

                                        Three months       Year
                                            ended          ended
                                        -------------  -------------
                 August 31, August 31,         Change         Change
                      2004       2003   Growth      %  Growth      %
--------------------------------------------------------------------
Star Choice
 customers (1)     827,903    808,526    1,506    0.2  19,377    2.4
--------------------------------------------------------------------

(1) Including seasonal customers who temporarily suspend their
service.


                             Three months ended        Year ended
                                  August 31,            August 31,
                             ---------------------------------------
Churn (2)                       2004      2003       2004       2003
--------------------------------------------------------------------
Star Choice customers            4.4%      4.2%      16.8%      17.2%
--------------------------------------------------------------------

(2) Calculated as the number of new customer activations less the net
    gain of customers during the period divided by the average of the
    opening and closing customers for the applicable period.

OPERATING HIGHLIGHTS

- DTH added 1,506 customers in this quarter compared to 4,010 the same quarter last year and added 19,377 customers for the full year compared to 48,502 last year.

- Service operating income before amortization at Star Choice was $32.8 million compared to $20.3 million in the fourth quarter of fiscal 2003 and on a year-to-date basis was $111.2 million versus $52.8 million in 2003.

- Effective February 1, 2004, the monthly fee on most programming packages increased by $3. This resulted in an increase in revenue of approximately $2 million per month when fully implemented by the end of March 2004.

- Fourth quarter service operating income before amortization increased approximately 3% over the third quarter despite a decrease in service revenue of approximately 1%.

Service revenue increased by 9.7% over the same quarter last year and 12.3% for the year as a result of rate increases and subscriber growth. The growth in service revenue combined with cost savings, including call center efficiencies and lower sales and marketing expenses, resulted in service operating income before amortization increasing by 61.9% and 110.5% over the comparable periods last year.

Although the rate of customer growth has declined in relation to last year, it is encouraging that DTH was able to grow its customer base despite the competitive challenges from the "black market" and other service providers and the monthly rate increase of $3 implemented on February 1, 2004. Customer churn rates increased marginally in the fourth quarter compared to last year partially due to the repackaging of certain programming services in early August. On an annual basis churn rates improved marginally over 2003.

The annual increase in customer retention was enhanced by improvements in customer service starting with the call center, where the percentage of abandoned calls during the fourth quarter dropped to 2.1% compared to 31.4% a year ago. Not only does this reduce churn, but telecom costs are significantly reduced as a result of lower call waiting times. In addition, customer growth is enhanced as a result of Star Choice's simple and affordable entry offers, in which, unlike its direct competitor, there are no long-term contracts that lock customers into high-end programming packages. Star Choice's lineup was also bolstered by the introduction of 15 new video services during the third quarter, which represents a significant value-add to customers as they are able to take advantage of more time-shifting opportunities.

In early fiscal 2005, Star Choice further enhanced its service offerings. First, Star Choice is operating with additional capacity on Telesat's Anik F2 satellite, which replaced the Anik E2R satellite. This has enabled Star Choice to offer its customers more HDTV channels. Second, Star Choice introduced new receivers which have provided a more economical entry point for new customers and have enabled existing customers to expand Star Choice services in their homes.

Satellite Services

FINANCIAL HIGHLIGHTS


                                        Three months ended August 31,
--------------------------------------------------------------------
                                            2004        2003       %
--------------------------------------------------------------------
 ($000's Cdn)
Service revenue (third party) (1)         21,404      20,226     5.8
Service operating income
 before amortization (1)                  10,597       9,553    10.9
Operating margin                            49.5%       47.2%    2.3
--------------------------------------------------------------------


                                                Year ended August 31,
--------------------------------------------------------------------
                                            2004        2003       %
--------------------------------------------------------------------
 ($000's Cdn)
Service revenue (third party) (1)         82,543      88,412    (6.6)
Service operating income
 before amortization (1)                  41,690      38,619     8.0
Operating margin                            50.5%       43.7%    6.8
--------------------------------------------------------------------

(1) In conjunction with the adoption of EIC 141 in the third quarter,
    the Company separated the reporting of its ongoing service
    revenue from the amortization of equipment revenue. See Note 1
    to the unaudited interim Consolidated Financial Statements in
    respect of the change in accounting and Note 2 to the unaudited
    interim Consolidated Financial Statements in respect of equipment
    revenue reported by the division. The accounting change resulted
    in a change in presentation of the Satellite Services division's
    service revenue and resulted in a nominal decrease in the
    division's service operating income before amortization.

The year over year decline in service revenue of approximately $5.9 million is due to the March 2003 sale of Business Television, which had revenue of $7.2 million in 2003. Excluding the Business Television unit, service operating income before amortization increased by 10.3% mainly due to improvements in the Truck Tracking division.

OTHER OPERATING COSTS:

Included in consolidated service operating income before amortization are other operating costs as outlined in Note 2 to the unaudited interim Consolidated Financial Statements. Other operating costs of $6.5 million recorded in the second quarter of 2004 represent the excess of the cost of settling an alleged breach of contract claim over the amount which had previously been provided. For the year ended August 31, 2003, other operating costs included a fourth quarter corporate restructuring charge offset by the reversal  of a $12.0 million litigation accrual, as well as a DTH inventory writedown of $4.4 million and the satellite division restructuring charge of $4.8 million recorded in the first nine months of 2003. The 2003 restructuring charges totaling $8.8 million included severance  costs of $8.0 million and $0.8 million of exit costs related to centralization of operational functions in Calgary. Approximately $7.0 million of severance costs were incurred in 2003, and the remaining severance and exit costs were incurred this year.

OTHER INCOME AND EXPENSE ITEMS:

Amortization

                                        Three months ended August 31,
--------------------------------------------------------------------
                                                              Change
                                            2004        2003       %
--------------------------------------------------------------------
($000s Cdn)
Amortization revenue (expense) -
 Deferred IRU revenue                      3,098       3,126    (0.9)
 Deferred equipment revenue               18,466      20,159    (8.4)
 Deferred equipment cost                 (55,852)    (69,500)  (19.6)
 Deferred charges                         (1,570)     (2,451)  (35.9)
 Property, plant and equipment           (94,124)    (93,277)    0.9
--------------------------------------------------------------------
--------------------------------------------------------------------



                                                Year ended August 31,
--------------------------------------------------------------------
                                                              Change
                                            2004        2003       %
--------------------------------------------------------------------
($000s Cdn)
Amortization revenue (expense) -
 Deferred IRU revenue                     12,098      11,984     1.0
 Deferred equipment revenue               82,711      91,863   (10.0)
 Deferred equipment cost                (229,013)   (251,103)   (8.8)
 Deferred charges                         (7,796)    (21,125)  (63.1)
 Property, plant and equipment          (403,395)   (413,381)   (2.4)
--------------------------------------------------------------------
--------------------------------------------------------------------

As outlined under "Recent Canadian Accounting Pronouncements", in conjunction with the adoption of changes required by EIC 141, the Company has segregated the presentation of the amortization of equipment revenue and equipment cost in its income statement. Equipment revenue and cost of equipment on customer premises is deferred and recognized over the anticipated term of the related future revenue with the period of recognition spanning two years for cable and DTH equipment and five years for Satellite Services equipment. The year-over-year decrease in the amortization of the deferred equipment revenue of 8.4% in the fourth quarter and 10.0% for the year is primarily the result of lower truck tracking and DTH equipment sales over the last few years. Due to the lower sales and as a result of Star Choice retaining ownership to the Satellite dishes from September 2001 to February 2003, the fourth quarter and year-to-date amortization of the deferred cost of equipment decreased 19.6% and 8.8%, respectively, compared to 2003.

Amortization of deferred charges decreased over the comparative periods primarily due to marketing launch costs becoming fully amortized in the prior year and lower amortization of deferred financing costs resulting from the repayment of the Big Pipe and Cancom bank facilities. Amortization of property, plant and equipment decreased over the comparative year due to the sale of the US cable systems effective June 30, 2003.

Interest

                                        Three months ended August 31,
--------------------------------------------------------------------
                                                              Change
                                            2004        2003       %
--------------------------------------------------------------------
($000s Cdn)
Interest                                  53,854      62,943   (14.4)
--------------------------------------------------------------------
--------------------------------------------------------------------


                                                Year ended August 31,
--------------------------------------------------------------------
                                                              Change
                                            2004        2003       %
--------------------------------------------------------------------
($000s Cdn)
Interest                                 219,472     259,702   (15.5)
--------------------------------------------------------------------
--------------------------------------------------------------------

Interest charges decreased over the same periods last year as a result of reduced consolidated debt levels and lower average cost of borrowing in fiscal 2004. Debt reduction commenced in the latter portion of 2003 as Shaw generated consolidated positive free cash flow and utilized the proceeds from sale of the US cable systems in June, 2003.

Foreign exchange gain (loss) on unhedged and hedged long-term debt

Shaw records foreign exchange gains and losses on the translation of foreign denominated unhedged long-term debt, which at August 31, 2004 was comprised of US $51.5 million of bank loans. As a result of fluctuations of the Canadian dollar relative to the US dollar, the Company recorded foreign exchange gains of $2.6 million for the quarter and $4.0 million for the year ended August 31, 2004. In the same periods last year, a foreign exchange loss of $6.8 million and a gain of $32.6 million resulted from the strengthening of the Canadian dollar relative to the US dollar on the translation of US dollar denominated unhedged debt, which in 2003 included the Star Choice US $150 million Senior unsecured notes.

As required by generally accepted accounting principles ("GAAP") the Company is required to translate long-term debt at the period-end and year-end foreign exchange rates. The resulting foreign exchange gains or losses on translating hedged long-term debt are included in deferred credits or deferred charges. As a result, the amount of hedged long-term debt that is reported under GAAP is often different than the final amounts that the hedged debt would be settled at under existing cross-currency interest rate agreements. As outlined in Note 4 to the unaudited interim Consolidated Financial Statements, if the rate of translation was adjusted to reflect the hedged rates of the Company's cross-currency interest rate agreements (which fix the liability for interest and principal) long-term debt would increase by $208.3 million (2003 - $138.1 million) which represents the corresponding deferred foreign exchange gain included in deferred credits.

Debt retirement costs

During the current quarter, the Company repurchased $3.2 million of the $300 million Senior unsecured notes due October 17, 2007 and incurred $0.2 million in costs.

In November 2003, the Company issued $350 million of Senior unsecured notes at 7.5% and used the net proceeds to repay its $350 million credit facility due February 10, 2006. The Company incurred $2.4 million of costs in connection with the repayment comprised of approximately $1.0 million on the cancellation of a related interest rate hedge on the $350 million and approximately $1.4 million on the write-off of deferred financing charges on the credit facility. The debt restructuring resulted in the extension of Shaw's credit horizon for another 8 years on $350 million of debt at a fixed rate of 7.5%.

Other revenue

Other revenue decreased over the comparative quarter and year mainly due to foreign exchange gains realized on the settlement of US denominated accounts payable in fiscal 2003.

RISKS AND UNCERTAINTIES

There have been no material changes in any risks or uncertainties facing the Company since the year ended August 31, 2003.

FINANCIAL POSITION

Overview

Total assets at August 31, 2004 were $7.6 billion compared to $7.7 billion at August 31, 2003. The following discussion describes the significant changes in the consolidated balance sheet since August 31, 2003.

Current assets decreased by $57.4 million due to a reduction in accounts receivable of $24.4 million, a reduction in inventory of $12.4 million and a decrease in cash and term deposits of $20.8 million. The decrease in receivables is primarily due to timing and improved collection of subscriber receivables, such as an increase in number of customers on preauthorized payment plans. The decrease in inventory is mainly due to write-off of obsolete DTH equipment.

Property, plant and equipment decreased by $123.3 million due to current year amortization being in excess of capital expenditures and amounts assigned to property, plant and equipment on business acquisitions during the year.

Deferred charges decreased by $25.6 million due to a decrease in deferred equipment costs of $27.2 million.

Broadcast licenses increased by $57.9 million due to the acquisition of cable systems from Monarch.

Current liabilities, excluding the current portion of long-term debt, increased by $20.6 million due to increases in accounts payable and accrued liabilities of $5.7 million, income taxes payable of $3.8 million, unearned revenue of $6.7 million and bank indebtedness of $4.3 million. Accounts payable and accrued liabilities increased due to timing of bonus payments. The increase was partly offset by the settlement of litigation in the current year. Unearned revenue increased primarily due to an increase in prepayments on cable subscriber accounts. Income taxes payable increased by $3.8 million due to income tax refunds received in the current year.

Long-term debt, including current portion, decreased by $266.4 million resulting from the net repayment of Shaw Communications Inc. and Cancom debt of $210.6 million and a decrease of $74.1 million relating to the translation of the US dollar denominated debt. This was offset by an increase in the Burrard Landing Lot 2 Holdings Partnership debt of $18.4 million.

Other long-term liability, which is the provision for the Company's defined benefit pension plan, increased by $7.5 million primarily due to the current year pension expense of $8.7 million.

Deferred credits increased by $48.0 million primarily from a $70.2 million increase in deferred foreign exchange gains on the translation of hedged US dollar denominated debt and a $5.7 million prepayment on the grant of a new IRU, which was offset by $12.1 million in amortization of prepaid IRU rental revenue and a $15.1 million decrease in deferred equipment revenues. Future income taxes increased by $43.0 million due to the future income tax expense of $48.0 million recorded in the current year offset by the future income tax asset of $5.4 million recorded on the purchase of cable systems from Monarch. The current year income tax expense includes a $22.9 million valuation allowance in respect of capital losses offset by provincial income tax rate reductions of $14.1 million.

Share capital increased by $25.5 million primarily due to $65.0 million on the issuance of 3,737,780 Class B Non-Voting Shares on the acquisition of Monarch cable systems offset by $39.7 million on the repurchase of 4,134,000 Class B Non-Voting Shares for cancellation.

LIQUIDITY AND CAPITAL RESOURCES

Last year, Shaw strengthened its financial position through the sale of non-strategic assets, including the sale of the US cable assets, and through the generation of consolidated free cash flow of $98.3 million. Shaw continued its focus on strengthening its financial position with the generation of $278.9 million of free cash flow for the year ended August 31, 2004. Shaw used its free cash flow of $278.9 million plus cash of $25.1 million, working capital and inventory reduction of $51.6 million and other cash items of $2.2 million to purchase $86.0 million of Class B Non-Voting Shares for cancellation, pay dividends on Class A and Class B Non-Voting Shares of $36.9 million, pay the cash component of the Monarch cable systems acquisition of $24.3 million and repay long-term debt of Shaw Communications Inc. and Cancom of $210.6 million.

Shaw received approval from The Toronto Stock Exchange ("TSX") to make a normal course issuer bid to purchase its Class B Non-Voting Shares for the period November 7, 2003 to November 6, 2004. Under the bid, Shaw is authorized to acquire up to 11,000,000 Class B Non-Voting Shares, representing approximately 5% of the issued and outstanding Class B Non-Voting Shares. The purchase and cancellation of outstanding Class B Non-Voting Shares under the bid may represent an opportunity to provide capital appreciation and market stability for the benefit of Shaw's shareholders. Pursuant to the normal course issuer bid, during the quarter Shaw repurchased 837,500 of its Class B Non-Voting Shares for cancellation for $16.8 million for a year-to-date total of 4,134,000 Class B Non-Voting Shares for a total of $86.0 million.

The Company also improved its financial flexibility in fiscal 2004 through the continued reorganization of its debt. During the first quarter, Shaw issued $350 million in Senior unsecured notes at a rate of 7.5% due November 20, 2013. The net proceeds (after issue and underwriting expenses) from the issuance of the notes were $343.1 million which were used to repay the $350 million credit facility due February 10, 2006. Shaw cancelled its interest rate hedge for the $350 million facility incurring costs of $1.0 million. As a result of the debt restructuring, Shaw was able to extend $350 million of its credit horizon for another 8 years at a fixed rate of 7.5%. In addition, in the third quarter Shaw amended its revolving credit  facility such that $910 million will be available through to April 30, 2009. Previously, the revolving facility was subject to an amortization schedule which reduced it to nil by April 30, 2007. The amended facility requires no amortization. It continues to be unsecured and ranks pari passu with the senior unsecured notes. The amendment provides Shaw with increased flexibility, a longer debt horizon and underscores the significant credit support that Shaw has from its existing banking syndicate.

On December 15, 2003, Shaw repaid the $250 million Cancom Structured Note with $22 million in cash and the drawdown of its own credit facility. At August 31, 2004, Shaw had access to $859 million of available credit facilities based on existing bank covenants. Based on available credit facilities and forecasted free cash flow, the Company expects to have sufficient liquidity to fund operations and obligations during the next fiscal year. On a longer-term basis, Shaw expects to generate adequate free cash flow and to have sufficient borrowing capacity to finance foreseeable future business plans and refinance maturing debt.

CASH FLOW

Operating Activities


                                        Three months ended August 31,
--------------------------------------------------------------------
                                            2004        2003       %
--------------------------------------------------------------------
($000s Cdn)
Cash flow from operations                186,311     160,840    15.8
Net decrease (increase) in
 non-cash working capital
 balances related to operations           30,098     (10,054)  399.4
--------------------------------------------------------------------
                                         216,409     150,786    43.5
--------------------------------------------------------------------
--------------------------------------------------------------------


                                                Year ended August 31,
--------------------------------------------------------------------
                                            2004        2003       %
--------------------------------------------------------------------
($000s Cdn)
Cash flow from operations                694,770     544,175    27.7
Net decrease (increase) in
 non-cash working capital
 balances related to operations           36,183      (5,734)  731.0
--------------------------------------------------------------------
                                         730,953     538,441    35.8
--------------------------------------------------------------------
--------------------------------------------------------------------

Cash flow from operations increased over comparative periods as a result of growth in service operating income before amortization and due to decreased interest and current income tax expenses. The year-over-year increase in cash flow from working capital of $41.9 million is a result of the repayment of current vendor financing of approximately $40 million last year. The quarter-over-quarter increase in cash flow from working capital of $40.2 million is mainly due to the portion of the vendor financing that was due in the fourth quarter of last year.

Investing Activities

                                        Three months ended August 31,
--------------------------------------------------------------------
                                         2004        2003   Decrease
--------------------------------------------------------------------
($000s Cdn)
Cash flow provided by (used in)
 investing activities                 (94,601)    175,009   (269,610)
--------------------------------------------------------------------


                                                Year ended August 31,
--------------------------------------------------------------------
                                         2004        2003   Decrease
--------------------------------------------------------------------
($000s Cdn)
Cash flow provided by (used in)
 investing activities                (407,218)    (95,037)  (312,181)
--------------------------------------------------------------------

The cash from investing activities was $269.6 million higher in the comparative quarter primarily due to US cable systems sale proceeds of $257.4 million and lower capital expenditures and equipment subsidies of $30.3 million. For the year ended August 31, 2004, the principal use of cash was for capital expenditures and equipment subsidies of $388.8 million and $24.3 million on the purchase of the Monarch cable systems, while in the comparative year, the cash required to fund capital expenditures and equipment subsidies of $420.6 million was mainly offset by the US cable systems sale proceeds of $257.4 million and reduction in inventory of $59.7 million.

Financing Activities

The changes in financing activities during the comparative periods were as follows:

Three months ended            Year ended
                                     August 31,            August 31,
--------------------------------------------------------------------
                                2004      2003       2004       2003
--------------------------------------------------------------------
(In $millions Cdn)
Repayment of $350 million
 credit facility                   -         -     (350.0)         -
Repayment of $250 million
 Structured Note                   -         -     (250.0)         -
Partial repayment of $300
 million Senior notes           (3.2)        -       (3.2)         -
Proceeds on $350 million
 Senior notes                      -         -      350.0          -
Bank loans and bank
 indebtedness - net
 borrowings (repayments)       (89.3)    (83.4)      47.0     (140.5)
Repayment of Cancom
 credit facilities                 -         -          -     (364.0)
Repayment of US $150
 million Star Choice
 Senior notes                      -    (211.0)         -     (211.0)
Proceeds on term loan              -         -          -      350.0
Purchase of Class B
 Non-Voting Shares for
 cancellation                  (16.8)        -      (86.0)         -
Dividends and equity
 entitlements                  (20.1)    (14.2)     (75.3)     (50.6)
Debt restructuring costs        (0.2)    (17.1)      (1.1)     (17.1)
Proceeds on prepayment
 of IRU                          2.9       0.2        5.7        0.2
Increase in Partnership
 bank loans                      4.9       3.6       18.4       10.4
--------------------------------------------------------------------
                              (121.8)   (321.9)    (344.5)    (422.6)
--------------------------------------------------------------------
--------------------------------------------------------------------

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) speaks only as of the date on which it was originally made and the Company expressly disclaims 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 the Company to predict what factors will arise or when they may arise. In addition, the Company cannot assess the impact of each factor on its 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.

CONSOLIDATED BALANCE SHEETS
(Unaudited)

                                           August 31,       August 31,
(thousands of Canadian dollars)                 2004             2003
---------------------------------------------------------------------
                                                           Restated -
                                                               note 1
ASSETS
Current
 Cash and term deposits                            -           20,753
 Accounts receivable                         119,519          143,920
 Inventories                                  42,973           55,364
 Prepaids and other                           16,975           16,783
---------------------------------------------------------------------
                                             179,467          236,820
 Investments and other assets                 43,965           49,415
 Property, plant and equipment             2,292,340        2,415,662
 Deferred charges                            267,439          293,065
 Intangibles
  Broadcast licenses                       4,685,582        4,627,728
  Goodwill                                    88,111           88,111
---------------------------------------------------------------------
                                           7,556,904        7,710,801
---------------------------------------------------------------------
---------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
 Bank indebtedness                             4,317                -
 Accounts payable and accrued liabilities    410,037          404,303
 Income taxes payable                          5,563            1,725
 Unearned revenue                             96,095           89,359
 Current portion of long-term debt (note 4)  306,655          271,520
---------------------------------------------------------------------
                                             822,667          766,907
 Long-term debt (note 4)                   2,344,025        2,645,548
 Other long-term liability                    16,933            9,409
 Deferred credits                            898,980          850,991
 Future income taxes                         982,281          939,281
---------------------------------------------------------------------
                                           5,064,886        5,212,136
---------------------------------------------------------------------
Shareholders' equity
 Share capital (note 5)                    2,860,356        2,834,878
 Contributed surplus                             412                -
 Deficit                                    (369,194)        (336,695)
 Cumulative translation adjustment               444              482
---------------------------------------------------------------------
                                           2,492,018        2,498,665
---------------------------------------------------------------------
                                           7,556,904        7,710,801
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes



CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND DEFICIT
(Unaudited)

                         Three months ended               Year ended
                                  August 31,               August 31,
                        --------------------   ---------------------
(thousands of Canadian
dollars except per
share amounts)              2004       2003         2004        2003
--------------------------------------------------------------------
                                   Restated                 Restated
                                   - note 1                 - note 1

Service revenue
(note 2)                 531,821    502,296    2,079,749   1,998,421
Service operating,
 general and
 administrative
 expenses                292,609    278,210    1,153,814   1,180,780
--------------------------------------------------------------------
Service operating
 income before
 amortization (note 2)   239,212    224,086      925,935     817,641
  Amortization:
   Deferred IRU revenue    3,098      3,126       12,098      11,984
   Deferred equipment
    revenue (note 2)      18,466     20,159       82,711      91,863
   Deferred equipment
    cost (note 2)        (55,852)   (69,500)    (229,013)   (251,103)
   Deferred charges       (1,570)    (2,451)      (7,796)    (21,125)
   Property, plant and
    equipment            (94,124)   (93,277)    (403,395)   (413,381)
--------------------------------------------------------------------
Operating income         109,230     82,143      380,540     235,879
Interest on long-term
 debt                    (53,854)   (62,943)    (219,472)   (259,702)
--------------------------------------------------------------------
                          55,376     19,200      161,068     (23,823)
Gain on sale of
 investments                 356        729          356       1,957
Write-down of
 investments                (651)         -         (651)    (15,000)
Gain on redemption of
 SHELS                         -          -            -     119,521
Loss on sale of
 satellite assets              -          -            -      (3,800)
Foreign exchange gain
 (loss) on unhedged
 long-term debt            2,596     (6,819)       3,963      32,617
Debt retirement costs       (170)   (10,634)      (2,598)    (10,634)
Provision for gain
 (loss) on sale and
 write-down of assets          -      5,326            -    (124,674)
Other revenue              1,285      4,068        3,753       9,338
--------------------------------------------------------------------
Income (loss) before
 income taxes             58,792     11,870      165,891     (14,498)
 Income tax expense       29,899      7,505       74,732      30,445
--------------------------------------------------------------------
Income (loss) before
 the following            28,893      4,365       91,159     (44,943)
 Equity income (loss)
  on investees               (11)        20         (250)     (1,921)
--------------------------------------------------------------------
Net income (loss)         28,882      4,385       90,909     (46,864)
Deficit beginning of
 period as previously
 reported               (367,557)  (328,535)    (340,294)   (240,737)
Adjustment for change
 in accounting policy
 (note 1)                      -      3,358        3,599       2,635
--------------------------------------------------------------------
Deficit, beginning of
 period restated        (367,557)  (325,177)    (336,695)   (238,102)
Reduction on Class B
 Non-Voting Shares
 purchased for
 cancellation             (8,636)         -      (46,313)          -
Dividends -
 Class A and Class B
  Non-Voting Shares      (11,601)    (5,768)     (36,910)    (11,536)
 Equity instruments
  (net of income taxes)  (10,282)   (10,135)     (40,185)    (40,193)
--------------------------------------------------------------------
Deficit, end of period  (369,194)  (336,695)    (369,194)   (336,695)
--------------------------------------------------------------------
--------------------------------------------------------------------
Earnings (loss)
 per share (note 6)
 Basic and diluted          0.08      (0.02)        0.22       (0.38)
--------------------------------------------------------------------
(thousands of shares)
Weighted average
 participating shares
 outstanding during
 period                  232,234    231,850      231,605     231,848
Participating shares
 outstanding, end of
 period                  231,469    231,857      231,469     231,857
--------------------------------------------------------------------
See accompanying notes



CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

                         Three months ended               Year ended
                                  August 31,               August 31,
                        --------------------   ---------------------
(thousands of
Canadian dollars)           2004       2003         2004        2003
--------------------------------------------------------------------
                                 Restated -               Restated -
                                     note 1                   note 1

OPERATING ACTIVITIES
(note 7)
Cash flow from
 operations              186,311    160,840      694,770     544,175
Net decrease
 (increase) in non-cash
 working capital
 balances related to
 operations               30,098    (10,054)      36,183      (5,734)
--------------------------------------------------------------------
                         216,409    150,786      730,953     538,441
--------------------------------------------------------------------
INVESTING ACTIVITIES
 Additions to property,
  plant and equipment
  (note 2)               (78,611)   (54,302)    (256,136)   (257,683)
 Additions to equipment
  costs (net) (note 2)   (39,653)   (33,680)    (132,711)   (162,876)
 Net reduction to
  inventories             17,723     15,125        7,898      59,708
 Proceeds on sale of US
  cable systems                -    257,435            -     257,435
 Cable systems
  acquisitions (note 3)      (84)    (1,508)     (24,298)     (3,634)
 Proceeds on sale of
  satellite assets             -          -            -       6,461
 Proceeds on sale of
  investments and other
  assets                   6,024      2,368        9,530      22,469
 Cost on redemption of
  SHELS                        -          -            -      (2,113)
 Acquisition of
  investments                  -     (7,313)        (495)     (9,662)
 Additions to deferred
  charges                      -     (3,116)     (11,006)     (5,142)
--------------------------------------------------------------------
                         (94,601)   175,009     (407,218)    (95,037)
--------------------------------------------------------------------
FINANCING ACTIVITIES
 Increase (decrease) in
  bank indebtedness        3,640          -        4,317      (2,303)
 Increase in long-term
  debt                     4,912      3,640      666,873     505,599
 Long-term debt
  repayments             (96,240)  (294,510)    (859,142)   (858,510)
 Debt retirement costs      (170)   (17,134)      (1,139)    (17,134)
 Proceeds on
  pre-payment of IRU       2,850        235        5,700         235
 Purchase of Class B
  Non-Voting Shares for
  cancellation           (16,752)         -      (85,968)          -
 Issue of Class B
  Non-Voting Shares, net
  of after-tax expenses        -         95          133          95
 Dividends paid -
  Class A and Class B
   Non-Voting Shares     (11,601)    (5,768)     (36,910)    (11,536)
  Equity instruments,
   net of current taxes   (8,442)    (8,475)     (38,343)    (39,084)
--------------------------------------------------------------------
                        (121,803)  (321,917)    (344,479)   (422,638)
--------------------------------------------------------------------
Effect of currency
 translation on cash
 balances and cash
 flows                        (5)        89           (9)        (13)
--------------------------------------------------------------------
Increase (decrease)
 in cash                       -      3,967      (20,753)     20,753
Cash, beginning of
 the period                    -     16,786       20,753           -
--------------------------------------------------------------------
--------------------------------------------------------------------
Cash, end of the
 period                        -     20,753            -      20,753
--------------------------------------------------------------------
--------------------------------------------------------------------
Cash includes cash and term deposits

See accompanying notes


Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

August 31, 2004 and 2003
(all amounts in thousands of Canadian dollars, except per share
    amounts)

1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES

The unaudited interim Consolidated Financial Statements include the accounts of Shaw Communications Inc. and its subsidiaries (collectively the "Company"). The notes presented in these unaudited interim Consolidated Financial Statements include only significant events and transactions occurring since the Company's last fiscal year and are not fully inclusive of all matters required to be disclosed in the Company's annual audited consolidated financial statements. As a result, these unaudited interim Consolidated Financial Statements should be read in conjunction with the Company's consolidated financial statements for the year ended August 31, 2003.

The unaudited interim Consolidated Financial Statements follow the same accounting policies and methods of application as the most recent annual consolidated financial statements except as noted below.

Adoption of recent Canadian accounting pronouncements

Revenue arrangements with multiple deliverables

The Emerging Issues Committee (EIC) recently issued Abstract 142, "Revenue Arrangements with Multiple Deliverables", which the Company adopted retroactively with restatement beginning March 1, 2004. This Abstract is consistent with the U.S. standard with the same title, and addresses both when and how an arrangement involving multiple deliverables should be divided into separate units of accounting and how the arrangement's consideration should be allocated among separate units. The Company determined that in both its cable and satellite divisions it has multiple deliverables of subscriber connection fee revenue, customer premise equipment revenue and related subscription revenue. According to the criteria outlined in EIC 142, management has determined that these should not be considered separate units of accounting. As a result, these multiple revenue streams must be assessed as an integrated package under the guidance of EIC Abstract 141 outlined below.

Revenue recognition

Concurrent with EIC 142, the EIC issued Abstract 141, "Revenue Recognition", which the Company adopted retroactively with restatement beginning March 1, 2004. This Abstract was issued to summarize principles set forth in the SEC's Staff Accounting Bulletin 101, Revenue Recognition in Financial Statements. The Abstract provides general interpretative guidance on the application of CICA 3400, "Revenue". As outlined above, the Company has multiple deliverable arrangements of subscriber connection fee revenue, customer premise equipment and related subscription revenue that must be assessed as an integrated package under EIC 141. Under EIC 141, up-front fees such as subscriber connection fees and amounts charged on customer premise equipment, that have no utility to the purchaser separate and independent of the seller providing additional products or services, must be deferred and recognized systematically over the periods that the fees for the additional products or services are earned. The impact of the retroactive adoption of this policy is as follows:

- Subscriber connection fees received from customers are deferred and recognized as revenue over two years. The incremental and direct costs of the connection in an amount not exceeding the initial subscriber connection fee revenue is deferred and recognized as an operating expense over the same two-year period. Previously, subscriber connection fees were recognized immediately in revenue as they were considered to represent a partial recovery of initial selling expenses and related administrative and general office expenses.

- Revenue from sales of DTH equipment, DCTs and modems is deferred and recognized as revenue over a two-year period commencing when subscriber service is activated. The total cost of the equipment, including installation, is deferred and recognized as an operating expense over the same two-year period. Previously the equipment revenue and an equal cost were recognized as revenue and expense immediately upon the activation of the related subscriber service and the resulting equipment subsidy, being the difference between the revenue received and the actual cost of the equipment including installation, was deferred and amortized over two years.

- Tracking hardware sales and cost of goods sold are deferred and recognized as revenue and operating expense over the related service contract for monthly service charges for air time which is generally five years. Previously, the revenue, costs and profit on truck tracking hardware sales were recognized when the goods were shipped. As a result of this accounting change, the Company adjusted its opening purchase equation on the acquisition of Cancom in fiscal 2000 to recognize deferred credits of $46,379, deferred charges of $32,282 and a reduction to future income tax liability of $4,934 attributable to deferred net revenue on truck tracking hardware sales. The adjustment in the purchase equation resulted in the recognition of additional goodwill of $9,163.

- In conjunction with the adoption of EIC 141, the Company changed its income statement presentation to distinguish amortization of deferred equipment revenue and deferred equipment cost from the revenue and expenses from ongoing service activities. The equipment revenue and equipment cost are deferred and recognized over the anticipated term of the future revenue (i.e. the monthly service subscription revenue) with the period of recognition spanning over two to five years. As a result, the equipment revenue and expense are non-cash items on the income statement, similar to the Company's recognition of deferred IRU revenue, which the Company also currently separates from ongoing service revenue. Further, within the lifecycle of a customer relationship, the customer generally purchases the customer premise equipment only once, at the beginning of that relationship, whereas the subscription revenue represents a continuous revenue stream throughout that customer relationship. Therefore, in addition to the segregated presentation providing consistent treatment as the amortization of IRU revenue, it also provides a clearer distinction within the income statement between cash and non-cash activities and between upfront revenue streams and continuous revenue streams, which assists financial statement readers to predict future cash flows from operations.

A summary of the above-mentioned reclassifications and adjustments is as follows:

Income statement:
Increase (decrease)

                          Three months ended              Year ended
                                   August 31,              August 31,
                          -------------------------------------------
                              2004      2003        2004        2003
                                 $         $           $           $
---------------------------------------------------------------------
Revenue:
Remove equipment revenue
 previously reported prior
 to adoption of EIC 141    (16,875)  (18,023)    (67,611)    (78,319)
---------------------------------------------------------------------
---------------------------------------------------------------------
Operating, general and
 administrative expenses:
Remove equipment cost
 previously reported prior
 to adoption of EIC 141    (15,860)  (17,258)    (64,143)    (75,360)
---------------------------------------------------------------------
---------------------------------------------------------------------
Amortization - deferred
 equipment revenue
  Cable                      6,470     5,877      26,774      26,489
  DTH                        8,436    10,880      42,608      50,461
  Satellite Services         3,560     3,402      13,329      14,913
---------------------------------------------------------------------
                            18,466    20,159      82,711      91,863
---------------------------------------------------------------------
---------------------------------------------------------------------
Amortization - deferred
 equipment cost
  Cable                     21,915    18,030      84,560      89,605
  DTH                       31,444    49,204     135,129     151,028
  Satellite Services         2,493     2,266       9,324      10,470
---------------------------------------------------------------------
                            55,852    69,500     229,013     251,103
---------------------------------------------------------------------
---------------------------------------------------------------------
Amortization - deferred
 charges                   (38,453)  (50,477)   (150,307)   (163,683)
---------------------------------------------------------------------
---------------------------------------------------------------------
Operating income before
 amortization - Satellite
 Services                       52       371         537       1,484
Future income tax expense       18       130         188         520
---------------------------------------------------------------------
Net income                      34       241         349         964
---------------------------------------------------------------------
---------------------------------------------------------------------

The change in net income had no impact on earnings per share.

As a result of the retroactive adoption of these changes, the August 31, 2003 balance sheet was restated to increase goodwill by $9,163; increase deferred charges by $107,078; increase deferred credits by $115,638; decrease future income tax liability by $2,996 and to decrease the deficit by $3,599.

Stock-based compensation and other stock-based payments

Commencing September 1, 2003, the Company prospectively adopted the amended Canadian standard for stock-based compensation and other stock-based payments which now requires that all stock-based compensation awards be accounted for at fair value. No restatement of prior periods was required as a result of adoption of the amended standard.

Reclassification and Income Statement presentation

In the second quarter, the Company reclassified DTH customer premise equipment inventory sold to retailers and not yet activated, net of related working capital, to deferred charges. Previously when inventory was sold to retailers at a subsidized price, the inventory item remained classified as inventory and the cash received on sale was recorded as unearned revenue. Upon activation, the inventory net of the cash received was transferred to deferred charges as an equipment subsidy and was deferred and amortized over two years. The Company reviewed the terms of its sales contracts with its retailers and believes the classification as a deferred charge is more appropriate as the risks and rewards of the inventory has passed to the retailer upon the sale. In conjunction with the adoption of EIC 141, the Company will commence the recognition of the deferred equipment revenue and deferred equipment costs upon activation of the subscriber service. As a result of the change in accounting presentation, accounts receivable has increased by $2,294 (2003 - $2,922), inventory decreased by $22,501 (2003 - $26,423), deferred charges increased by $13,660 (2003 - $16,942) and unearned revenue decreased by $6,547 (2003 - $6,559). There is no impact on earnings as a result of this change.

Recent Canadian accounting pronouncements

GAAP Hierarchy and General Standards of Financial Statement Presentation

In 2005, the Company will adopt the CICA issued new Handbook Sections 1100, "Generally Accepted Accounting Principles," and 1400, "General Standards of Financial Statement Presentation". Section 1100 describes what constitutes Canadian Generally Accepted Accounting Principles ("GAAP") and its sources and provides guidance on sources to consult when selecting accounting policies and determining appropriate disclosures when a matter is not dealt with explicitly in the primary sources of generally accepted accounting principles, thereby re-codifying the Canadian GAAP hierarchy. The effect of any change in accounting policy made on adopting this Section applies only to events and transactions occurring after the date of the change and to any outstanding related balances existing at the date of the change. Section 1400 provides general guidance on financial statement presentation and further clarifies what constitutes fair presentation in accordance with GAAP. The Company does not expect these recommendations to have a significant impact on its consolidated financial statements upon adoption.

Asset retirement obligations

Effective 2005, the Company will adopt CICA issued Section 3110, "Asset Retirement Obligations". This standard requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated costs are capitalized as part of the carrying value of the related asset and depreciated over its remaining useful life. Section 3110 is applicable to fiscal years beginning on or after July 1, 2004 and must be applied retroactively with restatement of prior periods. The application of this standard is not expected to have a significant impact on the financial position or results of operations of the Company.

2. BUSINESS SEGMENT INFORMATION

The Company provides cable television services, high-speed Internet access and Internet infrastructure services (Big Pipe) ("Cable"); DTH (Star Choice) satellite services; and, satellite distribution services. All of these operations are located in Canada  except for two small cable television systems located in the United States which were sold effective June 30, 2003. Information on operations by segment is as follows:

Operating information

                          Three months ended              Year ended
                                   August 31,              August 31,
                          -------------------------------------------
                              2004      2003        2004        2003
                                 $         $           $           $
---------------------------------------------------------------------
Service revenue
  Cable                    380,118   363,320   1,494,176   1,462,440
  DTH                      132,081   120,639     510,386     455,343
  Satellite Services        24,904    24,710      96,543     106,413
---------------------------------------------------------------------
                           537,103   508,669   2,101,105   2,024,196
Inter segment -
  Cable                       (673)     (641)     (2,607)     (2,607)
  DTH                       (1,109)   (1,248)     (4,749)     (5,167)
  Satellite Services        (3,500)   (4,484)    (14,000)    (18,001)
---------------------------------------------------------------------
                           531,821   502,296   2,079,749   1,998,421
---------------------------------------------------------------------
---------------------------------------------------------------------
Service operating income
 before amortization
  Cable                    195,820   186,277     779,579     727,458
  DTH                       32,795    20,256     111,150      52,814
  Satellite Services        10,597     9,553      41,690      38,619
   Other operating costs -
    Litigation settlement        -         -      (6,484)          -
    Satellite restructuring      -         -           -      (4,850)
    Write-down of DTH
     inventory                   -         -           -      (4,400)
    Corporate restructuring      -    (4,000)          -      (4,000)
    Recovery of Cable
     litigation accrual          -    12,000           -      12,000
---------------------------------------------------------------------
                           239,212   224,086     925,935     817,641
---------------------------------------------------------------------
---------------------------------------------------------------------
Amortization - deferred
 equipment revenue
  Cable                      6,470     5,877      26,774      26,489
  DTH                        8,436    10,880      42,608      50,461
  Satellite Services         3,560     3,402      13,329      14,913
---------------------------------------------------------------------
                            18,466    20,159      82,711      91,863
---------------------------------------------------------------------
---------------------------------------------------------------------
Amortization - deferred
 equipment cost
  Cable                     21,915    18,030      84,560      89,605
  DTH                       31,444    49,204     135,129     151,028
  Satellite Services         2,493     2,266       9,324      10,470
---------------------------------------------------------------------
                            55,852    69,500     229,013     251,103
---------------------------------------------------------------------
---------------------------------------------------------------------


Capital expenditures

                          Three months ended              Year ended
                                   August 31,              August 31,
                          -------------------------------------------
                              2004      2003        2004        2003
                                 $         $           $           $
---------------------------------------------------------------------
Capital expenditures
 accrual basis
  Cable                     67,619    35,600     209,227     163,835
  Corporate                 12,865     8,296      34,231      36,789
---------------------------------------------------------------------
  Sub-total Cable
   including corporate      80,484    43,896     243,458     200,624
---------------------------------------------------------------------
  DTH                          566     4,181      11,656      35,038
  Satellite Services         1,274        24       3,119       1,912
---------------------------------------------------------------------
  Sub-total Satellite        1,840     4,205      14,775      36,950
---------------------------------------------------------------------
Total capital expenditures
 accrual basis              82,324    48,101     258,233     237,574
Change in working capital
 related to capital
 expenditures               (3,713)    6,201      (2,097)     20,109
---------------------------------------------------------------------
Additions to property,
 plant and equipment per
 Consolidated Statements
 of Cash Flows              78,611    54,302     256,136     257,683
---------------------------------------------------------------------
---------------------------------------------------------------------

Equipment costs
 (net of revenue received)
  Cable                     15,584     7,133      43,448      67,628
  DTH                       24,069    26,547      89,263      95,248
---------------------------------------------------------------------
Additions to equipment costs
 (net) per Consolidated
 Statements of Cash Flows   39,653    33,680     132,711     162,876
---------------------------------------------------------------------
---------------------------------------------------------------------

Free cash flow calculations:
Cable:
  Capital expenditures on an
   accrual basis as above   80,484    43,896     243,458     200,624
  Equipment costs (net)
   as above                 15,584     7,133      43,448      67,628
  Less: Partnership capital
   expenditures (1)         (4,913)   (3,656)    (18,373)    (10,976)
  Less: IRU prepayments (2)   (288)        -      (1,420)          -
---------------------------------------------------------------------
Capital expenditures and
 equipment costs (net) per
 free cash flow statement   90,867    47,373     267,113     257,276
---------------------------------------------------------------------
---------------------------------------------------------------------

Satellite:
  Capital expenditures on an
   accrual basis as above    1,840     4,205      14,775      36,950
  Satellite Services
   equipment profit         (1,067)   (1,136)     (4,005)     (4,443)
  Equipment cost (net)
   as above                 24,069    26,547      89,263      95,248
---------------------------------------------------------------------
Capital expenditures and
 equipment costs (net) per
 free cash flow statement   24,842    29,616     100,033     127,755
---------------------------------------------------------------------
---------------------------------------------------------------------

(1) Consolidated capital expenditures include the Company's 38.3%
    proportionate share of the Burrard Landing Lot 2 Holdings
    Partnership ("Partnership") capital expenditures which the
    Company is required to proportionately consolidate (see Note 1 to
    the Company's 2003 Consolidated Financial Statements). As the
    Partnership is financed by its own credit facility, this is a
    non-cash item for the Company for the purposes of calculating
    free cash flow.

(2) The Company received prepayments in respect of its grant of an
    indefeasible right to use ("IRU") certain specifically identified
    fibres built during the period. These prepayments are recorded as
    deferred revenue and are amortized over the period of the related
    IRU. For the purposes of calculating free cash flow, these
    prepayments are presented as a reduction of cash required for
    capital expenditures.


Assets

                                     August 31, 2004

                     ------------------------------------------------

                                             Satellite
                         Cable         DTH    Services         Total
                             $           $           $             $
---------------------------------------------------------------------
Segment assets       5,842,338     926,478     558,402     7,327,218
-------------------------------------------------------
-------------------------------------------------------
Corporate assets                                             229,686
                                                       --------------
Total assets                                               7,556,904
                                                       --------------

                                     August 31, 2003

                     ------------------------------------------------

                                             Satellite
                         Cable         DTH    Services         Total
                             $           $           $             $
---------------------------------------------------------------------
Segment assets       5,891,064   1,002,951     587,085     7,481,100
-------------------------------------------------------
-------------------------------------------------------
Corporate assets                                             229,701
                                                       --------------
Total assets                                               7,710,801
                                                       --------------

3. BUSINESS ACQUISITIONS

           ----------------------------------------------------------
           Issue of Class B
                 Non-Voting
                     Shares    Cash  Accounts payable          price
                          $       $                 $              $
---------------------------------------------------------------------
Monarch (i)          65,000  24,122               198         89,320
Other (ii)                -     176                 -            176
---------------------------------------------------------------------
                     65,000  24,298               198         89,496
---------------------------------------------------------------------
---------------------------------------------------------------------

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

                                                                   $
---------------------------------------------------------------------
Identifiable net assets at assigned fair values
Property, plant and equipment                                 27,146
Deferred charges                                                 450
Broadcast licenses                                            57,854
Future income taxes                                            5,400
---------------------------------------------------------------------
                                                              90,850
Working capital deficiency                                    (1,354)
---------------------------------------------------------------------
Purchase price                                                89,496
---------------------------------------------------------------------
---------------------------------------------------------------------

(i) Effective March 31, 2004, the Company purchased certain cable systems, serving approximately 40,000 basic subscribers in the Medicine Hat (Medicine Hat, Taber, Brooks), Canmore (Canmore, Banff, Lake Louise) and southern B.C. (Hope, Fernie, Kimberley) regions from Monarch Cablesystems Ltd. ("Monarch"), a corporation controlled by a Director of the Company. The results of Monarch's operations have been included in the unaudited interim Consolidated Financial Statements since that date. The $65,000 value of the 3,737,780 Class B Non-Voting Shares issued was determined based upon the average market price around the date of the signing of the letter of intent on September 2, 2003.

As part of the purchase agreement, the Company and Monarch entered into agreements spanning twenty years whereby the Company will provide maintenance services in respect of parts of the fiber system that was retained by Monarch and in return, Monarch will pay access fees and related costs for the fiber that was acquired by the Company. No consideration was exchanged for this transaction which was fair valued at $2,000 for the full term of the agreements.

(ii) Effective September 1, 2003, the Company purchased a cable television system serving approximately 200 subscribers in the interior of British Columbia from a Director of the Company.

Both transactions were reviewed and approved by independent members of the Board of Directors.

4. LONG-TERM DEBT

                                            August 31, 2004
                                  ----------------------------------
                                  Translated
                         Effective   at year
                          interest       end  Adjustment  Translated
                             rates  exchange  for hedged   at hedged
                                 %      rate      debt(1)       rate
--------------------------------------------------------------------
                                           $           $           $
Corporate
                         Fixed and
Bank loans (2)            variable   295,433           -     295,433
Senior notes-
 Due April 11, 2005           7.05   275,000           -     275,000
 Due October 17, 2007         7.40   296,760           -     296,760
 US $440,000
  due April 11, 2010          7.88   577,720      64,900     642,620
 US $225,000
  due April 6, 2011           7.68   295,425      60,413     355,838
 US $300,000 due
  December 15, 2011           7.61   393,900      82,950     476,850
 Due November 20, 2013 (3)    7.50   350,000           -     350,000
--------------------------------------------------------------------
                                   2,484,238     208,263   2,692,501
--------------------------------------------------------------------

Cancom
Structured Note,
 due December 15, 2003 (4)    7.00         -           -           -
--------------------------------------------------------------------

Other subsidiaries and
 entities
Videon CableSystems Inc.
 8.15% Senior Debentures
 Series "A" due April 26,
 2010                         7.63   130,000           -     130,000
Burrard Landing Lot 2
 Holdings Partnership (5) Variable    36,442           -      36,442
--------------------------------------------------------------------
                                     166,442           -     166,442
--------------------------------------------------------------------
Total consolidated debt            2,650,680     208,263   2,858,943
Less current portion (6)             306,655           -     306,655
--------------------------------------------------------------------
                                   2,344,025     208,263   2,552,288
--------------------------------------------------------------------
--------------------------------------------------------------------


                                            August 31, 2003
                                  ----------------------------------
                                  Translated
                                     at year
                                         end  Adjustment  Translated
                                    exchange  for hedged   at hedged
                                        rate      debt(1)       rate
--------------------------------------------------------------------
                                           $           $           $
Corporate

Bank loans (2)                       606,798           -     606,798
Senior notes-
 Due April 11, 2005                  275,000           -     275,000
 Due October 17, 2007                300,000           -     300,000
 US $440,000
  due April 11, 2010                 609,708      32,912     642,620
 US $225,000
  due April 6, 2011                  311,783      44,055     355,838
 US $300,000
  due December 15, 2011              415,710      61,140     476,850
 Due November 20, 2013 (3)                 -           -           -
--------------------------------------------------------------------
                                   2,518,999     138,107   2,657,106
--------------------------------------------------------------------

Cancom
Structured Note,
 due December 15, 2003 (4)           250,000           -     250,000
--------------------------------------------------------------------

Other subsidiaries and
 entities
Videon CableSystems Inc.
 8.15% Senior Debentures
 Series "A" due April 26,
 2010                                130,000           -     130,000
Burrard Landing Lot 2
 Holdings Partnership (5)             18,069           -      18,069
--------------------------------------------------------------------
                                     148,069           -     148,069
--------------------------------------------------------------------
Total consolidated debt            2,917,068     138,107   3,055,175
Less current portion (6)             271,520           -     271,520
--------------------------------------------------------------------
                                   2,645,548     138,107   2,783,655
--------------------------------------------------------------------
--------------------------------------------------------------------

(1) As required by GAAP, foreign denominated long-term debt is to be
    translated at the period-end and year-end foreign exchange rates
    and the resulting exchange gains and losses on translating
    hedged long-term debt are included in deferred charges or
    deferred credits. If the rate of translation was adjusted to
    reflect the hedged rates of the Company's cross-currency interest
    rate agreements (which fix the liability for interest and
    principal), long-term debt would increase by $208,263 (2003
    - $138,107) representing a corresponding amount in deferred
    credits. The hedged rates on the Senior notes of US $440 million,
    US $225 million and US $300 million are 1.4605, 1.5815 and 1.5895
    respectively.

(2) Availabilities under banking facilities are as follows at August
    31, 2004:

                            Total  Operating  Revolving (a)  Term (b)
                                $          $             $         $
                        ---------------------------------------------
Total facilities        1,159,933     60,000       910,000   189,933
Amount drawn (excluding
 letters of credit of
 $1,321)                  299,750      4,317       105,500   189,933
                        ---------------------------------------------
                          860,183     55,683       804,500         -
                        ---------------------------------------------
                        ---------------------------------------------

(a) Effective April 30, 2004 Shaw amended its revolving credit
    facility such that the facility has been reduced to $910,000 and
    the maturity has been extended to April 30, 2009 with no
    amortization. Previously the available facility was $1,035,000
    and was subject to an amortization schedule which reduced the
    facility to zero by April 30, 2007. The new facility continues
    to be unsecured and ranks pari passu with the senior secured
    notes.

(b) The term facilities are repayable in increasing semi-annual
    installments in April and October of each year until fully repaid
    on April 30, 2007.

(3) On November 20, 2003 the Company issued $350 million of senior
    notes at a rate of 7.50%. 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 plus a make-whole premium.

(4) The structured note was repaid on December 15, 2003 with cash and
    the drawdown of bank loans.

(5) Effective November 3, 2003, the Partnership entered into an
    interest rate hedge to fix the interest rate at 5.125% plus a
    stamping fee on $58 million of the loan until October 1, 2004. In
    July of this year, the construction facility was increased from
    $121.0 million to $128.5 million.

(6) Current portion of long-term debt includes the current portion of
    the term facilities.


5. SHARE CAPITAL

Issued and outstanding

                                                      August 31,
                                                   ----------------
                                                   2004        2003
--------------------------------------------------------------------
--------------------------------------------------------------------
Number of Securities                                $           $
-------------------------
  August 31,   August 31,
       2004         2003
-------------------------
-------------------------

 11,359,932   11,360,432 Class A Shares           2,490       2,491
220,109,372  220,496,092 Class B Non-Voting
                          Shares              2,132,943   2,107,464
--------------------------------------------------------------------
231,469,304  231,856,524                      2,135,433   2,109,955
--------------------------------------------------------------------
                         EQUITY INSTRUMENTS
                         COPrS -
  5,700,000    5,700,000 8.45% Series A US
                          $142.5 million due
                          Sept. 30, 2046        192,871     192,871
    100,000      100,000 8.54% Series B Cdn
                          $100 million due
                          Sept. 30, 2027         98,467      98,467
  6,900,000    6,900,000 8.50% Series US
                          $172.5 million due
                          Sept. 30, 2097        252,525     252,525
  6,000,000    6,000,000 8.875% Series Cdn
                          $150 million due
                          Sept. 28, 2049        147,202     147,202
--------------------------------------------------------------------
                                                691,065     691,065
--------------------------------------------------------------------
                        Zero Coupon Loan
                         - US $22.8 million      33,858      33,858
--------------------------------------------------------------------
                                              2,860,356   2,834,878
--------------------------------------------------------------------
--------------------------------------------------------------------

Purchase of shares for cancellation

During the year the Company purchased 4,134,000 Class B Non-Voting Shares for cancellation for $85,968, of which $39,655 reduced the stated capital of the Class B Non-Voting Shares and $46,313 increased the deficit.

Stock option plan

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

The changes in options for the year ended August 31, 2004 are as
follows:

                                                    Weighted average
                                                      exercise price
                                          Shares                   $
---------------------------------------------------------------------
Outstanding at August 31, 2003         7,607,500               32.58
Granted                                1,216,750               32.49
Forfeited                               (977,250)              32.68
---------------------------------------------------------------------
Outstanding at August 31, 2004         7,847,000               32.55
---------------------------------------------------------------------
---------------------------------------------------------------------

The following table summarizes information about the options
outstanding at August 31, 2004:

                  Number     Weighted               Number
             outstanding      average Weighted exercisable  Weighted
                      at    remaining  average          at   average
Range of       August 31, contractual exercise   August 31, exercise
prices              2004         life    price        2004     price
---------------------------------------------------------------------
$17.37            10,000          9.1    17.37           -         -
$29.70
 - $34.70      7,837,000          6.9    32.55   5,196,000     32.53
---------------------------------------------------------------------
---------------------------------------------------------------------

For all common share options granted to employees up to August 2003, had the Company determined compensation costs based on the fair values at grant dates of the common share options consistent with the method prescribed under CICA Handbook Section 3870, the Company's net income (loss) and earnings (loss) per share would have been reported as the proforma amounts indicated below:

Three months ended              Year ended
                                   August 31,              August 31,
                          -------------------------------------------
                              2004      2003        2004        2003
---------------------------------------------------------------------
Net income (loss)
 for the period             28,882     4,385      90,909     (46,864)
Pro forma income (loss)
 for the period             24,708      (749)     74,213     (67,700)
Pro forma earnings (loss)
 per share                    0.06     (0.05)       0.15       (0.47)
---------------------------------------------------------------------
---------------------------------------------------------------------

The weighted average estimated fair value at the date of the grant for common share options granted was $3.33 per option (2003 - $1.27 per option) and $2.50 per option (2003 - $1.36 per option) for the quarter and year respectively. The fair value of each option granted was estimated on the date of the grant using the Black-Scholes option-pricing model with the following assumptions:

Three months ended              Year ended
                                   August 31,              August 31,
                          -------------------------------------------
                              2004      2003        2004        2003
---------------------------------------------------------------------
Dividend yield                1.18%     0.30%       0.94%       0.33%
Risk-free interest rate       3.93%     3.69%       3.70%       3.19%
Expected life of options   4 years   4 years     4 years     4 years
Expected volatility factor
 of the future expected
 market price of Class B
 Non-Voting Shares            40.5%     36.5%       39.7%       40.4%
---------------------------------------------------------------------
---------------------------------------------------------------------

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

Other stock options

In conjunction with the acquisition of Cancom, holders of Cancom options elected to receive 0.9 of a Shaw Class B Non-Voting Share in lieu of one Cancom share which would have been received upon the exercise of an option under the Cancom plan.

At August 31, 2004, there were 68,002 Cancom options outstanding with exercise prices between $7.75 and $23.25 and a weighted average price of $12.37. The weighted average remaining contractual life of the Cancom options is 3.0 years. At August 31, 2004, 68,002 Cancom options were exercisable into 61,202 Class B Non-Voting Shares of the Company at a weighted average price of $13.74 per Class B Non-Voting Share.

Warrants

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

A total of 248,205 warrants remain outstanding under the plan and vest evenly over a four year period. The weighted average remaining contractual life of the warrants is 1.2 years. At August 31, 2004, 181,641 of these warrants had vested.

6. EARNINGS (LOSS) PER SHARE

Earnings (loss) per share calculations are as follows:

                                          August 31,
                          -------------------------------------------
                          Three months ended              Year ended
                          -------------------   ---------------------
                              2004      2003        2004        2003
                                 $         $           $           $
---------------------------------------------------------------------
Net income (loss)           28,882     4,385      90,909     (46,864)
Equity entitlements,
 net of income tax         (10,282)  (10,135)    (40,185)    (40,193)
---------------------------------------------------------------------
                            18,600    (5,750)     50,724     (87,057)
---------------------------------------------------------------------
---------------------------------------------------------------------

Earnings (loss) per share
 - basic and diluted          0.08     (0.02)       0.22       (0.38)
---------------------------------------------------------------------
---------------------------------------------------------------------

Weighted average number of
 Class A and B Non-Voting
  Shares used as denominator
   in above calculations
  (thousands of shares)    232,234   231,850     231,605     231,848
---------------------------------------------------------------------
---------------------------------------------------------------------

Class B Non-Voting Shares issuable under the terms of the Company's stock option plans are anti-dilutive (increase earnings per share or decrease loss per share) and are therefore not included in calculating diluted earnings (loss) per share.

7. STATEMENTS OF CASH FLOWS

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

(i) Cash flow from operations

                                          August 31,
                          -------------------------------------------
                          Three months ended              Year ended
                          -------------------   ---------------------
                              2004      2003        2004        2003
                                 $         $           $           $
---------------------------------------------------------------------
Net income (loss)           28,882     4,385      90,909     (46,864)
Non-cash items:
 Amortization -
  Deferred IRU revenue      (3,098)   (3,126)    (12,098)    (11,984)
  Deferred equipment
   revenue                 (18,466)  (20,159)    (82,711)    (91,863)
  Deferred equipment cost   55,852    69,500     229,013     251,103
  Deferred charges           1,570     2,451       7,796      21,125
  Property, plant and
   equipment                94,124    93,277     403,395     413,381
 Future income tax expense
  (recovery)                26,592    (1,663)     47,997      (5,261)
 Gain on sale of
  investments                 (356)     (729)       (356)     (1,957)
 Write-down of investments     651         -         651      15,000
 Gain on redemption of SHELS     -         -           -    (119,521)
 Loss on sale of satellite
  assets                         -         -           -       3,800
 Foreign exchange loss
  (gain) on unhedged
  long-term debt            (2,596)    6,819      (3,963)    (32,617)
 Provision for loss (gain)
  on sale and write-down
  of assets                      -    (5,326)          -     124,674
 Equity loss (income) on
  investees                     11       (20)        250       1,921
 Debt retirement costs         170    10,634       2,598      10,634
 Stock option expense          190         -         412           -
 Defined benefit pension
  plan                       1,279     4,700       7,524       9,409
 Other                       1,506        97       3,353       3,195
---------------------------------------------------------------------
Cash flow from operations  186,311   160,840     694,770     544,175
---------------------------------------------------------------------
---------------------------------------------------------------------

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

                                          August 31,
                          -------------------------------------------
                          Three months ended              Year ended
                          -------------------   ---------------------
                              2004      2003        2004        2003
                                 $         $           $           $
---------------------------------------------------------------------

Accounts receivable          3,108    19,676      24,865      49,864
Prepaids and other          (5,272)   (3,087)       (144)      3,369
Accounts payable and
 accrued liabilities        32,325   (31,065)      1,067     (76,494)
Income taxes payable        (2,709)    6,693       5,322       8,655
Unearned revenue             2,646    (2,271)      5,073       8,872
---------------------------------------------------------------------
                            30,098   (10,054)     36,183      (5,734)
---------------------------------------------------------------------
---------------------------------------------------------------------

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


                                          August 31,
                          -------------------------------------------
                          Three months ended              Year ended
                          -------------------   ---------------------
                              2004      2003        2004        2003
                                 $         $           $           $
---------------------------------------------------------------------
Interest                    24,155    58,119     213,326     272,110
Income taxes                 1,425    (1,922)         51       3,151
---------------------------------------------------------------------
---------------------------------------------------------------------

8.UNITED STATES ACCOUNTING PRINCIPLES

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

August 31,
                          -------------------------------------------
                          Three months ended              Year ended
                          -------------------   ---------------------
                              2004      2003        2004        2003
                                 $         $           $           $
---------------------------------------------------------------------

Net income (loss) using
 Canadian GAAP              28,882     4,385      90,909     (46,864)
  Add (deduct)
   adjustments for:
  Deferred charges (2)        (874)   10,187      14,424      (9,849)
  Foreign exchange gains
   (losses) (3)             15,876    (5,418)     22,899      54,527
  Equity in loss of
   investees (4)                 -         -           -       2,001
  Entitlement on equity
   instruments (8)         (15,579)  (15,552)    (62,302)    (64,827)
  Income tax effect of
   adjustments               5,675     2,724      15,724      18,005
  Effect of future income
   tax rate reductions on
   differences                (534)        -        (534)          -
---------------------------------------------------------------------
Net income (loss) using
 US GAAP                    33,446    (3,674)     81,120     (47,007)
---------------------------------------------------------------------

Unrealized foreign exchange
 gain (loss) on translation
 of self-sustaining foreign
 operations                    (23)   17,731         (38)     (1,031)
Unrealized gains on
 available-for-sale
 securities, net of tax (7)
  Unrealized holding gains
   arising during the period   838     1,316       5,456       1,361
  Less: reclassification
   adjustments for gains
   included in net income   (1,055)        -      (1,055)    (95,879)
---------------------------------------------------------------------
                              (240)   19,047       4,363     (95,549)
Adjustment to fair value of
 derivatives (9)           (33,708)  (43,619)    (67,408)   (224,341)
Foreign exchange gains
 (losses) on hedged
 long-term debt (10)        40,058   (13,610)     57,704     136,975
Minimum liability for
 pension plan (12)          (3,864)   (1,928)     (3,864)     (1,928)
Effect of future income tax
 rate reductions on
 differences                   (63)        -         (63)          -
---------------------------------------------------------------------
                             2,183   (40,110)     (9,268)   (184,843)
---------------------------------------------------------------------
Comprehensive income (loss)
 using US GAAP              35,629   (43,784)     71,852    (231,850)
---------------------------------------------------------------------
---------------------------------------------------------------------

Net income (loss) per share
 using US GAAP                0.14     (0.02)       0.35       (0.20)
Comprehensive earnings
 (loss) per share using
  US GAAP                     0.15     (0.19)       0.31       (1.00)
---------------------------------------------------------------------
---------------------------------------------------------------------


Balance sheet items using US GAAP

                               August 31,            August 31,
                                  2004                  2003
                          --------------------- ---------------------
                           Canadian         US   Canadian         US
                               GAAP       GAAP       GAAP       GAAP
                                  $          $          $          $
---------------------------------------------------------------------

Investments and other
 assets (7)                  43,965     72,998     49,415     74,758
Deferred charges
 (2) (10) (11) (12)         267,439    147,353    293,065    161,122
Broadcast licenses
 (1) (5) (6)              4,685,582  4,660,348  4,627,728  4,602,494
Other long-term liability
 (12)                        16,933     51,345      9,409     40,397
Deferred credits
 (10) (11) (12)             898,980    674,718    850,991    696,884
Derivative instruments
 liability (9)                    -    250,160          -    168,757
Future income taxes         982,281    943,531    939,281    896,263
Long-term debt (8)        2,344,025  3,037,603  2,645,548  3,363,685
Shareholders' equity      2,492,018  1,660,593  2,498,665  1,646,074
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The cumulative effect of these adjustments on consolidated
shareholders' equity is as follows:

                                               August 31,  August 31,
                                                    2004        2003
                                                       $           $
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Shareholders' equity using Canadian GAAP       2,492,018   2,498,665
Amortization of intangible assets (1)           (124,179)   (123,542)
Deferred charges (2)                             (35,817)    (44,973)
Equity in loss of investees (4)                  (35,710)    (36,202)
Gain on sale of subsidiary (5)                    15,309      13,822
Gain on sale of cable television systems (6)      47,745      47,501
Equity instruments (8)                          (688,520)   (709,540)
Accumulated other comprehensive income (loss)     (9,809)        825
Cumulative translation adjustment                   (444)       (482)
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Shareholders' equity using US GAAP             1,660,593   1,646,074
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Included in shareholders' equity is accumulated other comprehensive income (loss), 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 (loss) is comprised of the following:

August 31,  August 31,
                                                    2004        2003
                                                       $           $
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Accumulated other comprehensive income (loss)
Unrealized foreign exchange gain on translation
 of self-sustaining foreign operations               444         482
Unrealized gains on investments (7)               23,880      20,721
Fair value of derivatives (9)                   (199,622)   (131,698)
Foreign exchange gains (losses) on hedged
 long-term debt (10)                             171,296     113,248
Minimum liability for pension plan (12)           (5,807)     (1,928)
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                                                  (9,809)        825
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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 intangibles prior to September 1, 2001 is required on a straight-line basis for US GAAP purposes, instead of an increasing charge method.

(2) US GAAP requires all costs associated with launch and start-up activities and the excess of equipment cost deferrals over equipment revenue deferrals to be expensed as incurred instead of being deferred and amortized.

(3) US GAAP requires exchange gains (losses) on translation of equity instruments treated as debt as described in item 8 below, to be included in income or expense.

(4) Equity in loss of investees have been adjusted to reflect US GAAP.

(5) Gain on a sale of a subsidiary that was not permitted to be recognized under Canadian GAAP was required to be recognized under US GAAP.

(6) Gain on an exchange of cable systems was required to be recorded under US GAAP but may not be recorded under Canadian GAAP.

(7) US GAAP requires equity securities included in investments to be carried at fair value rather than cost as required by Canadian GAAP.

(8) US GAAP treats equity instruments classified as equity under Canadian GAAP as debt and the related interest as an expense rather than a dividend.

(9) Under US GAAP, all derivatives are recognized in the balance sheet at fair value with gains and losses recorded in income or comprehensive income (loss). Under Canadian GAAP, derivatives are not recognized in the balance sheet.

(10) Foreign exchange gains (losses) on translation of hedged long-term debt are deferred under Canadian GAAP but included in comprehensive income (loss) for US GAAP.

(11) US GAAP requires subscriber connection revenue and related costs to be recognized immediately instead of being deferred and amortized.

(12) The Company's unfunded non-contributory defined benefit pension plan for certain of its senior executives has an accumulated benefit obligation of $52,507 as at August 31, 2004. Under US GAAP, an additional minimum liability is to be recorded for the difference between the accumulated benefit obligation and the accrued pension liability. The additional liability is offset in deferred charges up to an amount not exceeding the unamortized past service costs. The remaining difference is recognized in other comprehensive income (loss), net of tax. Under Canadian GAAP, the accumulated benefit obligation and additional minimum liability are not recognized.

9. PENSION PLAN

The total benefit costs expensed under the Company's defined benefit pension were $1,480 (2003 - $4,970) for the quarter and $8,686 and (2003 - $9,679) for the year.