Rogers 2015 Annual Report Download - page 77

MANAGEMENT’S DISCUSSION AND ANALYSIS
and punitive damages, effectively equal to the reimbursement of
the portion of revenue the defendants have received that can
reasonably be attributed to the sale of cellular phones in Canada.
We have not recognized a liability for this contingency.
OTHER CLAIMS
There are certain other claims and potential claims against us. We
do not expect any of these to have a material adverse effect on our
financial results.
OUTCOME OF PROCEEDINGS
The outcome of all the proceedings and claims against us,
including the matters described above, is subject to future
resolution that includes the uncertainties of litigation. It is not
possible for us to predict the result or magnitude of the claims due
to the various factors and uncertainties involved in the legal
process. Based on information currently known to us, we believe it
is not probable that the ultimate resolution of any of these
proceedings and claims, individually or in total, will have a material
adverse effect on our business or financial results or financial
condition. If it becomes probable that we will be held liable for
claims against us, we will recognize a provision during the period in
which the change in probability occurs, which 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, 2015, private, Rogers family holding
companies controlled by the trust owned approximately 91% of
our outstanding Class A Voting shares (2014 – 91%) and
approximately 10% of our Class B Non-Voting shares (2014 – 10%),
or in total approximately 28% of the total shares outstanding (2014
– 28%). 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, 2015, 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, 2015, 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, 2015, 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 our 2015 audited consolidated financial statements
filed on SEDAR (sedar.com).
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 2015 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 Innovation, Science and
Economic Development on behalf of the Minister of Innovation,
Science and Economic Development; 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;
2015 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 75