Rogers 2014 Annual Report Download - page 77

MANAGEMENT’S DISCUSSION AND ANALYSIS
ultimate resolution of any such proceedings and claims, individually or
in total, will have a material adverse effect on our Consolidated
Statements of Income or Consolidated Statements of Financial
Position. If it becomes probable that we are liable, we record a
provision in the period the change in probability occurs, and it could
be material to our Consolidated Statements of Income or
Consolidated Statements of Financial Position.
OWNERSHIP RISK
CONTROLLING SHAREHOLDER
Rogers is a family-founded, family-controlled company. Voting control
of Rogers Communications is held by Rogers Control Trust, whose
beneficiaries are a small group of individuals that are members of the
Rogers family, several of whom are also directors of our Board. The
trust holds voting control of Rogers Communications Inc. and its
subsidiaries for the benefit of successive generations of the Rogers
family. The trustee is the trust company subsidiary of a Canadian
chartered bank.
As of December 31, 2014, private Rogers family holding companies
controlled by the trust owned approximately 90.9% of our outstanding
Class A Voting shares and approximately 9.9% of our Class B Non-
Voting shares, or in total approximately 28% of the total shares
outstanding. Only Class A Voting shares carry the right to vote in most
circumstances. As a result, the trust is able to elect all members of our
Board and to control the vote on most matters submitted to a
shareholder vote.
CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
We conducted an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures as of
December 31, 2014, under the supervision and with the participation
of our management, including the Chief Executive Officer and Chief
Financial Officer, pursuant to Rule 13a-15 promulgated under the US
Securities Exchange Act of 1934, as amended. Based on this
evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures were effective
at that date.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate
internal controls over financial reporting.
Our internal control system is designed to give management and the
Board reasonable assurance that our financial statements are prepared
and fairly presented in accordance with International Financial
Reporting Standards as issued by the International Accounting
Standards Board. The system is intended to provide reasonable
assurance that transactions are authorized, assets are safeguarded and
financial records are reliable. Management also takes steps to assure
the flow of information and communication is effective, and monitors
performance and our internal control procedures.
Management assessed the effectiveness of our internal control over
financial reporting as of December 31, 2014, based on the criteria set
out in the Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(COSO), and concluded that it was effective at that date. Our
independent auditors, KPMG LLP, have issued an audit report on
management’s assessment of internal control over financial reporting
as of December 31, 2014, and provided an unqualified opinion on the
effectiveness of the Company’s internal control over financial reporting
as of that date. This report is included in Exhibit 99.2 to RCI’s Annual
Report on Form 40-F for the fiscal year ended December 31, 2014,
which can be found on EDGAR (sec.gov).
All internal control systems, however, no matter how well designed,
have inherent limitations, and even systems that have been
determined to be effective can only provide reasonable assurance
about the preparation and presentation of financial statements.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL
REPORTING AND DISCLOSURE CONTROLS AND
PROCEDURES
There were no changes in 2014 that materially affected, or are
reasonably likely to materially affect, our internal controls over financial
reporting.
Regulation in Our Industry
Our business, except for the non-broadcasting operations of Media, is
regulated by two groups:
• the Canadian Federal Department of Industry on behalf of the
Minister of Industry (Canada) (together, Industry Canada); and
• the CRTC, under the Telecommunications Act (Canada)
(Telecommunications Act) and the Broadcasting Act (Canada)
(Broadcasting Act).
Regulation relates to the following, among other things:
• wireless spectrum and broadcasting licensing;
• competition;
• the cable television programming services we must, and can,
distribute;
• wireless and wireline interconnection agreements;
• rates we can charge third parties for access to our network;
• the resale of our networks;
• roaming on our networks and the networks of others;
• ownership and operation of our communications systems; and
• our ability to acquire an interest in other communications systems.
Regulatory changes or decisions can adversely affect our consolidated
results of operations.
Our costs of providing services may increase from time to time as we
comply with industry or legislative initiatives to address consumer
protection concerns or Internet-related issues like copyright
infringement, unsolicited commercial e-mail, cybercrime and lawful
access.
Generally, our spectrum and broadcast licences are granted for a
specified term and are subject to conditions for maintaining these
licences. The regulators can modify these licensing conditions at any
time, and they can decide not to renew a licence when it expires. If we
do not comply with the conditions, a licence may be forfeited or
revoked, or we may be fined.
The licences have conditions that require us, amongst other things, to
comply with Canadian ownership restrictions of the applicable
legislation, and we are currently in compliance with them. If we violate
2014 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 73