Shaw 2014 Annual Report Download - page 122

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Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]
A change of one dollar in the market price per share of the Company’s publicly traded
investment would change other comprehensive loss by $1 at August 31, 2014.
At August 31, 2014, a one dollar change in the Company’s Class B Non-Voting Shares would
not have had an impact on net income in respect of the Company’s DSU plan.
Credit risk
Accounts receivable in respect of Cable and Satellite divisions are not subject to any significant
concentrations of credit risk due to the Company’s large and diverse customer base. For the
Media division, a significant portion of sales are made to advertising agencies which results in
some concentration of credit risk. At August 31, 2014, approximately 61% (2013 – 59%) of
the $201 (2013 – $196) of advertising receivables is due from the ten largest accounts. The
largest amount due from an advertising agency is $20 (2013 – $19) which is approximately
10% (2013 – 10%) of advertising receivables. As at August 31, 2014, the Company had
accounts receivable of $493 (August 31, 2013 – $486), net of the allowance for doubtful
accounts of $32 (August 31, 2013 – $27). The Company maintains an allowance for doubtful
accounts for the estimated losses resulting from the inability of its customers to make required
payments. In determining the allowance, the Company considers factors such as the number of
days the subscriber account is past due, whether or not the customer continues to receive
service, the Company’s past collection history and changes in business circumstances. As at
August 31, 2014, $129 (August 31, 2013 – $135) of accounts receivable is considered to be
past due, defined as amounts outstanding past normal credit terms and conditions.
Uncollectible accounts receivable are charged against the allowance account based on the age
of the account and payment history. The Company believes that its allowance for doubtful
accounts is sufficient to reflect the related credit risk.
The Company mitigates the credit risk of advertising receivables by performing initial and
ongoing credit evaluations of advertising customers. Credit is extended and credit limits are
determined based on credit assessment criteria and credit quality. In addition, the Company
mitigates credit risk of subscriber receivables through advance billing and procedures to
downgrade or suspend services on accounts that have exceeded agreed credit terms.
Credit risks associated with US currency contracts arise from the inability of counterparties to
meet the terms of the contracts. In the event of non-performance by the counterparties, the
Company’s accounting loss would be limited to the net amount that it would be entitled to
receive under the contracts and agreements. In order to minimize the risk of counterparty
default under its swap agreements, the Company assesses the creditworthiness of its swap
counterparties.
Liquidity risk
Liquidity risk is the risk that the Company will experience difficulty in meeting obligations
associated with financial liabilities. The Company manages its liquidity risk by monitoring cash
flow generated from operations, available borrowing capacity, and by managing the maturity
profiles of its long-term debt.
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