Shaw 2015 Annual Report Download - page 41

Shaw Communications Inc.
Management’s Discussion and Analysis
August 31, 2015
Revenue and operating expenses
Consolidated revenue of $5.49 billion and operating income before restructuring costs and amortization of $2.38 billion for
fiscal 2015 improved 4.7% and 5.2%, respectively, over 2014. Revenue growth due to the addition of the new Business
Infrastructure Services division and customer growth in the Business Network Services division was partially offset by revenue
declines in the Consumer and Media segments. The decline in Consumer revenue was primarily due to higher promotional
amounts and video and phone subscriber losses including the one-time effect of the CRTC decision mandating
telecommunication providers remove the 30-day cancellation notice requirement, the total of which was partially offset by rate
adjustments effective in 2015 and growth in Internet subscribers. The decrease in Media was driven by specialty channel
advertising revenue declines reflecting general market softness combined with the effect of the disposition of Historia and
Series+ in the prior year. Improvements in operating income before restructuring costs and amortization are primarily attributed
to the acquisition of ViaWest and Consumer division rate increases introduced in fiscal 2015 offset partially by increase in
programming fees and promotional discounts.
Consolidated revenue of $5.24 billion and operating income before restructuring costs and amortization of $2.26 billion for
2014 both improved 1.9% over 2013. Revenue growth was primarily driven by consumer pricing adjustments and growth in
Business which was partially reduced by lower video subscribers, higher programming costs, increased operating costs related to
the new Anik G1 satellite which launched in the third quarter of fiscal 2013 and higher employee related amounts. In addition,
the 2013 fiscal year benefited from a one-time adjustment to align certain broadcast license fees with the CRTC billing period
totaling approximately $14 million.
Amortization
(millions of Canadian dollars) 2015 2014
Change
%
Amortization revenue (expense)
Deferred equipment revenue 78 69 13.0
Deferred equipment costs (164) (142) 15.5
Property, plant and equipment, intangibles and other (809) (692) 16.9
Amortization of deferred equipment revenue and deferred equipment costs increased over the comparable year primarily due to
the impact of the fluctuation in the sales mix of equipment, timing and volume of sales and amortization periods for amounts in
respect of customer premise equipment, as well as changes in customer pricing on certain equipment.
Amortization of property, plant and equipment, intangibles and other increased over the comparable year primarily due to the
impact of the acquisition of ViaWest on September 2, 2014.
Amortization of financing costs and interest expense
(millions of Canadian dollars) 2015 2014
Change
%
Amortization of financing costs – long-term debt 43 33.3
Interest expense 283 266 6.4
Interest expense increased over the comparable year primarily due to the impact of ViaWest’s debt and the drawdown of
US$330 million on the Company’s credit facility to partially finance the acquisition of ViaWest on September 2, 2014 which
was partially offset by the combined impact of a lower average cost of borrowing and an increase in capitalized interest.
2015 Annual Report Shaw Communications Inc. 39