there is something different in the air

Transcription

THERE IS SOMETHING
DIFFERENT IN THE AIR
ANNUAL REPORT AND ACCOUNTS
2007
ANNUAL REPORT
AND ACCOUNTS
2007
contents
03
Corporate Boards
05
Organisation Chart
07
2007 Performance
08
Operating Activities
12
Commercial Activities
13
Aircraft Handling Activities
17
Maintenance Activities
18
Flight Operations
19
Quality and Security
20
Human Resources
24
Information Systems
26
Economic and Financial Performance
33
Proposal for Appropriation of Profit
34
Financial Statements
36
Balance Sheet
38
Profit and Loss Account by Nature
40
Profit and Loss Account by Function
41
Cash Flow Statements
42
Notes to the Financial Statements
71
Legal Certification of the Accounts
74
Report and Opinion of the Statutory Auditor
76
Audit Report
ANNUAL REPORT
AND ACCOUNTS
2007
| 03
CORPORATE BOARDS
ANNUAL REPORT
AND ACCOUNTS
2007
CORPORATE BOARDS
General Assembly
Chairman:
Ana Maria Soares de Albergaria Pacheco Gouveia
Vice-Chairman:
Mónica Sílvia dos Anjos Vaz de Medeiros Fernandes
Secretary:
Maria Alexandra Celorico Pacheco Vieira
Board of Directors
Chairman:
António José Vasconcelos Franco Gomes de Menezes 8
Manuel António Carvalho Cansado 9
Members:
Luísa Maria Estrela Rego Miranda Schanderl 10
António Maurício do Couto Tavares de Sousa
Luís Filipe Soares Borges da Silveira
António Manuel da Silva Amaral 11
Antero Jerónimo Quental 12
Statutory Auditor:
Duarte Félix Tavares Giesta (auditor no. 520)
8
Took up duties on 1 November 2007
9
Stepped down on 31 October 2007
10
Took up duties on 1 November 2007
11
Took up duties on 8 January 2007
12
Stepped down on 8 January 2007
1947 | SATA IS BORN
SATA Sociedade Açoreana de Transportes Aéreos is created and spreads its wings with
a Beechcraft named Açor. The Azores are now closer to the rest of the world.
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ANNUAL REPORT
AND ACCOUNTS
2007
| 05
ORGANISATION CHART OF SATA AÇORES, SA
ANNUAL REPORT
AND ACCOUNTS
2007
ORGANISATION CHART OF SATA AÇORES, SA
Board of Directors
General Secretariat
Management Control Office
Image and Publicity Office
Human Resources Division
Finance Division
General Commercial Division
Marketing and Sales Division
Planning and Operation Division
Quality Office
Legal Office
Security Office
Accident Prevention Office
Information Systems Division
General Operations Division
Maintenance and Engineering Division
Flight Operations Division
Ground Operations Division
1957 | SATA HELPS VICTIMS OF THE CAPELINHOS TRAGEDY
SATA in partnership with Slick Airways provides travel assistance to victims of the Capelinhos
Volcano tragedy, flying them from the Lajes air base to the United States.
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ANNUAL REPORT
AND ACCOUNTS
2007
| 07
2007 PERFORMANCE
ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
Operating Activities
2007 was a historical year for SATA Air Açores. After 60 years flying within the Autonomous
Region of the Azores, the company break through its traditional borders and began
to operate in the archipelago of Madeira, providing scheduled airline services between
the two islands, Madeira and Porto Santo, and offering charter flights to the Canary Islands,
in particular Las Palmas, Fuerteventura and Tenerife.
Maps from the Atlantic archipelagos: Azores, Madeira and Canary Islands.
The Funchal Porto Santo Funchal route began to operate on 1 January 2007,
at the request of the Portuguese State, which launched an international public tender
for the operation of the route, with public service obligations, since the only company
that had been ensuring scheduled flights was to withdraw from the business on 31
December 2006.
SATA Air Açores was the only company to submit a bid under the subsequent call
for tenders, and it was awarded exclusive rights to the route, from 14 August 2007
and for a period of three years.
This operation required the company to create a base in Funchal, to where it transferred
an ATP aircraft, with crews and maintenance engineers. It was with these resources that
SATA Air Açores sought new business opportunities, starting with charter flights between
Madeira and the Canary Islands.
1959 | SATA PURCHASES TWA STRUCTURE IN SANTA MARIA
SATA acquires the TWA structure at the airport of Santa Maria, to realise its strategy
of growth and expansion.
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ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
The new operations, between Funchal and Porto Santo and between Funchal and the
Canary Islands, are reflected in the following indicators, in terms of flights operated,
passengers carried and respective load factors:
Funchal Porto Santo Funchal
2007
Flights Operated (No.)
2,108
Passengers Carried (No.)
70,457
Load Factor ASK/RPK (%)
52.20%
Funchal Canary Islands Funchal
2007
73
3,227
Load Factor ASK/RPK (%)
72.09%
As far as the traditional network of SATA Air Açores is concerned, the public service
operation agreement, which applies to the 15 routes defined within the Autonomous
Region of the Azores, remained in effect. Here also, there was an increase in operations
in 2007 in comparison with the previous year, due to the growth in demand, with 218
more flights operated and 12,899 more passengers carried. The load factor recorded
an extraordinary increase of 2.53 percentage points.
Autonomous Region of the Azores
2006
2007
Variation
12,109
12,327
+218
400,538
413,437
+12,899
Load factor ASK/RPK (%)
63.65%
66.18%
+2.53 pp.
Overall, in 2007, SATA Air Açores operated 2,399 more flights and carried 86,538 more
passengers than in the previous year. The load factor also recorded growth of 1.73%
compared with 2006.
Total SATA Air Açores
2006
2007
Variation
12,109
14,508
+2,399
400,538
487,121
+86,583
Load factor ASK/RPK (%)
63.65%
65.38%
+1.73 pp.
1963 | SATA PURCHASES ITS FIRST DC-3
SATA receives its first DC-3 aircraft, from the Irish company Aer Lingus.
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ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
1968 | FRIENDLINESS IS IN THE AIR
The Azorean spirit of the SATA service rides the skies, when in 1968 the company's flights
begin to employ air hostesses, who impress passengers with their attention and friendliness.
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ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
As shown in the following figure, the new routes accounted for 15%, in terms of passengers
carried, while operations within the Autonomous Region of the Azores remained dominant.
SATA Air Açores 2007: Share of Passengers per Geographic Area
Madeira
14%
Canárias
1%
Açores
85%
Fleet
Due to its expansion into the archipelago of Madeira, the company acquired another
British Aerospace ATP, under an operating lease, in June 2007. Its fleet therefore now
comprises five ATPs, two owned by the Company and the remainder under operating
leases, and a Dornier Luftfarht D228, also owned by SATA Air Açores.
The ATP aircraft flew 13,619 flights, corresponding to 8,309.83 block hours and the D228
flew 954 flights, corresponding to 570.48 block hours. These indicators include position,
training, experience and re-routing flights.
ACMI charters totalled 21 flights, with 7.24 block hours, 17 of which replacing the Dornier,
since it is the only aircraft operating on the Corvo island runway, and the continuity
of services to that island must be maintained when this aircraft is immobilised. It is to be
noted that in the previous year there were 65 flights for this same reason. The remaining
4 charters involved the SATA Internacional Airbus 320 on the Funchal Porto Santo
Funchal connection, in situations of fault in the ATP based on the island of Madeira.
1969 | SATA REACHES FLORES
Slowly, SATA begins to interconnect the islands of the archipelago, and in 1969 starts
scheduled flights to the island of Flores.
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ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
SATA Air Açores 2007: Total Flights and Block Hours
Fleet Type
Flights performed
Block hours
ATP
13,595
8,309.83
D28
953
570.48
Other (ACMI)
21
7.40
Sum
14,569
8,887.72
The following Figure summarises the Company's key performance indicators for the years
2006 and 2007, which illustrate its growth.
SATA Air Açores 2007: Commercial Traffic Details
Commercial traffic
2006
2007
Variation
Flights performed
12,109
14,508
+2,933
Km travelled
2,112,644
2,308,072
+195,428
ASK (million)
109.1
119.0
+9.9
RPK (million)
69.4
77.8
+8.4
Load factor (%)
63.65%
65.38%
-1.73 pp.
ATK (million)
12.3
13.4
+1.1
TKP (million)
7.1
7.9
+0.8
Punctuality 13 (%)
61.59%
61.23%
-0.36 pp.
Commercial Activities
2007 marked the start of scheduled operations by SATA Air Açores outside the Azores.
First, as a result of a direct agreement with the Portuguese State, necessary to guarantee
the public service, and then under a concession in compliance with EU regulations, SATA
Air Açores began to connect the islands of Porto Santo and Madeira.
13
Percentage of flights that departed within 4 minutes of the published time.
1969 | AIRPORT OPENED IN PONTA DELGADA
Nordela Airport, in Ponta Delgada, is opened, with a runway that is 1800 m long and
45 m wide.
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ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
The positioning of the aircraft in Madeira also enabled the company to offer a programme
of charter flights between Madeira and the Canary Islands for a Madeiran operator.
In 2007 the decision was taken and implemented to alter the computer system for
management of the frequent flyer programme. After studying various solutions, Crane
was chosen since it offers the most advanced FFP solutions in the industry while
guaranteeing interconnections with other customer service systems.
The SATA website was also entirely redesigned. In the stage implemented in 2007, the
whole architecture and image were renewed and the systems used were upgraded.
We continued to pursue our policy of closer relationships with national and foreign tour
operators, in order to consolidate our position on various routes in the leisure segment.
A significant effort was also made to build up a strong line of products in the Meetings
and Incentives segment.
An extensive programme of workshops demonstrated SATA markets to travel agents and
we attended the most important fairs and road shows in Europe.
A series of investments were made aimed at modernising and standardising the image
of our agencies whose services were improved with the help of a mystery shopper
programme and numerous training courses focusing on technical and behavioural aspects.
Aircraft Handling Activities
Reveneu
In terms of aircraft handling for third parties, there was a 14% increase in revenue compared
with the total figures budgeted, notably for the Stopovers:
Ponta Delgada
increase of 597,782 EUR
Terceira
Horta
Santa Maria
Pico
decrease of 7,395 EUR
1971 | FAIAL AIRPORT OPENED
Castelo Branco airport opens on the island of Faial, with the first scheduled flights by SATA
arriving in 1972.
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ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
The increases over the budget correspond to 1,051,023 EUR, and there was significant
deviation due to the difficulty in budgeting new operations and to unexpected technical
stopovers in Ponta Delgada, Terceira and Santa Maria, as well as to the fact that the
budget is based only on flight schedules. We achieved a global value of 8,650,000 EUR.
The reduction in flights to North Europe in November to February did not influence the
volume of revenue at Ponta Delgada.
The real values achieved by Revenue in 2007 from ground handling services for third
parties increased 5% in relation the real values of 2006, with the following variations:
Terceira
increase of 59,591 EUR + 3 %
Horta
Santa Maria
increase of 87,972 EUR + 16%
Pico
+0%
+ 1%
In an approximate total of 420,770 EUR over the budget.
Number of Flights
The number of flights handled per stopover increased compared to 2006 in all stopovers,
especially Santa Maria, with the exception of stopovers on Horta and Pico.
According to the Chart - Annex 2, the variations were:
Ponta Delgada
+ 6%
Terceira
+ 4%
Horta
-
Santa Maria
+ 14 %
compared with previous year overall
2%
In the overall number of flights handled, the increase compared with 2006 was + 5 %.
REVENUE 3rd PARTY HANDLING
2006
2007
SMA
536,308
624,280
PDL
4,939,899
5,209,960
TER
1,894,907
HOR
NUMBER 3rd PARTY FLIGHTS
2006
2007
SMA
827
939
14%
PDL
2,265
2,400
6%
1,954,498
TER
902
941
4%
774,367
776,451
HOR
434
424
-2%
PIX
83,749
84,811
PIX
57
56
-2%
Total
8,229,230
8,650,000
4,485
4,704
5%
1974 | SATA AND THE UNIONS
After the April Revolution in Portugal, all SATA employees become union members.
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VAR. %
ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
Self-Handling
The number of self-handled flights was 12,372, an increase of 2% compared with 2006,
as shown below:
STOPOVERS 2005
2006
2007
% VAR-05
% VAR-06
Santa Maria
652
668
-2.5%
2.5%
Ponta Delgada 3,276
3,320
3,424
1.3%
3.1%
Terceira
3,725
3,768
1.1%
1.2%
669
3,686
Horta
1,740
1,776
1,828
2.1%
2.9%
Pico
659
677
662
2.7%
-2.2%
S. Jorge
597
598
628
0.2%
5.0%
Graciosa
440
450
451
2.3%
0.2%
Flores
610
639
651
4.8%
1.9%
Corvo
282
290
292
2.8%
0.7%
Total
11,959
12,127
12,372
1.4%
2.0%
Ground and Other Equipment
Equipment was acquired with the purpose of:
- Replacing obsolete Island Handling and Services equipment.
- Updating computer equipment at stopovers according to the needs and requirements
of the programmes installed.
- Gradually replacing tractors with electrical units.
- Equipping island stopovers and services with sufficient and appropriate equipment
for Third Party Handling and Self-Handling, both in technical terms and in terms
of the obligation to comply with regulations concerning the characteristics, safety
parameters, and operability of the apron equipment to be used (IATA and JAR OPS).
The investments involved were around k 560, equivalent to implementation
of approximately 60% of scheduled investments (total of k 980).
1976 | SATA PROVIDES GROUND HANDLING FOR CONCORDE
The most advanced aircraft in the history of civil aviation, Concorde, makes a stopover
at Santa Maria airport, with ground handling provided by SATA.
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ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
Training
Various training initiatives were implemented:
- Training at IATA on components for Apron, Dangerous Goods and Cargo Rates,
in order to permit IATA certification.
- Continuation of internal training for knowledge consolidation and refreshment,
in order to contain costs, but including mandatory training in accordance with
JAR OPS, IATA and new National regulations.
- Training on Dangerous Goods in accordance with JAR OPS regulations
- Initial training for contract workers.
Personnel Costs
Total costs with the personnel involved in stopovers and island services in 2007 were
10,954,926, corresponding to an increase of 1,029,527 compared with 2006.
STOPOVERS 2005
2006
2007
% VAR-06
% VAR-07
PDL
3,694,839
3,984,460
4,004,350
7.8
0.5
TER
2,609,732
2.920,502
3,283,090
11.9
12.4
HOR
737,381
845,182
951,553
14.6
12.6
SMA
710,913
782,703
893,825
10.1
14.2
GRW
219,623
281,453
362,172
28.2
28.7
SJZ
214,524
303,254
415,597
41.4
37.0
PIX
317,952
407,591
576,380
28.2
41.4
FLW/CVU
355,243
400,254
467,959
12.7
16.9
Total
8,860,207
9,925,399
10,954,926
12.0
10.4
* These figures do not include Pension Fund and Pension Supplement costs.
1977 | 1 MILLION PASSENGERS
An increasing number of people use SATA flights to link what the sea separates, and
in 1977 SATA welcomes its 1 millionth passenger.
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ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
Cargo and Mail Movement
In stopovers overall there was a reduction in cargo and mail movement of around
4% (-594 tonnes) maintaining the trend already noted in 2005.
In relation to stopovers in general, there has been a steady fall in both exports and imports
between Mainland Portugal and the Azores.
Maintenance Activities
SATA Air Açores Maintenance and Engineering has been consolidated over the years
as a business unit of Aircraft Maintenance, guaranteeing, under certification accredited
by the INAC, the airworthiness of the turbo propeller fleet providing air transport between
the nine islands of the Azores, as well as aircraft line maintenance for the SATA Internacional
and TAP Air Portugal A310s and A320s that stop over at the Airports of the Azores.
This provision of services to third parties is offered basically at the Airports on the islands
of São Miguel and Terceira, with On Call ground handling on the islands of Santa Maria,
Faial and Pico.
Quality Management in these activities contributes actively to the maintenance of the high
levels of security required by the Aeronautic Industry, thus safeguarding the security
of people and goods and the preservation of the environment.
The Activities
- During 2007 the SATA Air Açores DME continued the maintenance of the 5 ATPs
and of the Dornier 228-202, through compliance with their approved maintenance plans.
With a total of 6,948 hours (FH) and 14,573 cycles with a ratio of 2.10 cycles/hour, 3058
contract inspections were made using 8,295 labour hours. 24,150 labour hours were
spent on the replacement of reparable parts, repair of faults and repair shop work.
- In the provision of services to third parties, in particular the SATA Internacional and TAP
Air Portugal fleets, the following handling operations were provided:
1982 | PICO AIRPORT OPENED
Continuing the process of interconnecting all islands by air, Pico airport is opened.
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ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
PDL Stopover
Lajes Stopover
Total
S4
TP
S4
TP
S4
TP
A310 Fleet
932
95
127
186
1,059
281
A320 Fleet
961
-
4
-
965
-
Total Stopover
1,988
317
2,305
- 3,315 labour hours from Aircraft Maintenance Personnel (AMP) with A310 and A320
certification produced revenue of around k 330.
- In addition to the handling referred to above, certified AMPs also handled 96 flights
by the company SAS and Finnair with stopovers at João Paulo II Airport.
- The implementation of the so-called new technologies available for Maintenance
Organisation led to the installation in the Hangar of a brand new telephone and information
network, permitting implementation of the VoIP telecommunications system.
- Investments made during the year totalling 123,000 Euros corresponded to the acquisition
of special tools for the Workshops and the remodelling of the materials storage site, which
involved a total cost of 67,000 Euros.
Human Resources
- As at 31/12/2007, the number of employees working in DME was 79, of whom 48 AMPs
with aeronautical certification under EASA Part 66.
Flight Operations
Each year there has been a gradual rise in the borrowing capacity attributed to SATA Air
Açores by reference to its schedule. This situation results from the need to improve the
network coverage in the archipelago, reflected in the increase in the number of flight
sectors to ensure full coverage of commercial passenger, cargo and mail transport
requirements. This increase in the number of flight sectors is visibly reflected in the annual
increase in the number of flight hours.
2007 saw the full and effective implementation of those requirements, the main objective
always being for all operating activities directly related to flights to comply with the highest
levels and standards of security and quality.
1983 | SÃO JORGE AIRPORT OPENED
Another step in bringing together the whole archipelago with the opening of São Jorge
airport.
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ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
In the area of training, there was a constant concern with improving the quality of annual
refresher training. Therefore the number of training hours was increased, and the syllabus
content adapted to better enrich and consolidate all the subjects taught, in order
to guarantee the highest levels of professionalism that the Company requires from its crew
members. This was only possible through the valuable contribution and commitment
of all instructors who made themselves available tirelessly, not only to enrich but also
to increase and consolidate the levels required.
Quality and Security
In order to offer a superior standard of service, in 2007 SATA Air Açores invested
in the area of quality and security.
Quality Management Bureau
In February 2005, a Quality Management Bureau was set up for the General Directorate
of Operations. Two qualified engineers from the P. Delgada and Terceira stopovers were
assigned, with advice from an external consultant, to implement the new Project.
Awareness-raising and training activities for various groups within the Company, to identify
and describe existing processes and their interactions, as well as the creation of various
manuals, characterised the activities of this bureau over the last year.
Security Quality Activities
In compliance with the provisions of the National Civil Aviation Security Quality Control
Programme (PNCQSAC) and with Chapter 16 of the SATA Air Açores and SATA Internacional
Security Manuals, it is reported that, in 2007, this Security Bureau monitored the security
quality, as well as security training, which reveals the growing role of this area
in the operations of the two SATA Group airlines.
1987 | SATA RENAMED SATA AIR AÇORES
SATA is renamed SATA Air Açores and in the same year it is awarded the silver medal for
tourism merit.
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ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
The initiatives that involved the various members of the security bureau are summarised
under security, auditing and training activities.
At SATA Açores, security audits were conducted on several Azores airports.
Human Resources
Growth of 14% in staff numbers
Our Resources
SATA Air Açores, as at 31 December 2007, employed 623 staff, 6% down from the previous
year, 9% of whom were Graduates.
The average age in 2007 was close to 39. In the last 4 years there has been growth of 14%
in staff numbers.
700
680
600
660
500
640
620
400
600
300
580
200
560
100
0
Total Average Staff
Total Staff 31Dec
Staff
540
2004
2005
Cabin Crew
Flight Officers
Ground Crew
Total - Staff 31Dec
Total - Average Staff
2006
2007
520
Total - Staff 31Dec
Total - Average Staff
1989 | ATPs ARRIVE IN THE AZORES
SATA acquires its first ATPs, which continue to guarantee air connections within the
archipelago today.
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ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
Staff Qualifications
2004
2005
2006
2007
Higher education
Basic education
Secondary education
Training and Development
Investment in human capital
A constant effort is made to provide the company with the appropriate human resources,
so that it can be a high quality, motivated workforce, with growing levels of productivity.
Selection and Recruitment
Ponta Delgada, Horta, Pico, Flores and Funchal
In 2007, SATA Air Açores organised 12 selection procedures, involving a total of 255
applicants. 52 trainees resulted from these procedures.
Vocational Training
In its continuous search to maximise the efficiency of its resources through the acquisition
of knowledge and vocational skills, the company trained 888 people in 2007 (down 12%
compared with 2006), offering, for this purpose, 178 training courses (an increase of 8%
compared with 2006), making a total of 20,173.15 training hours (an increase in 3%
compared with 2006).
1990 | CHANGE AND EXPANSION
SATA experiences a historical occasion: the era of the AVRO HS 748 comes to an end,
twenty years later; it joins the International Air Transport Association IATA and the
European Regional Airlines Association ERA; it acquires the Canadian Pacific Airlines
offices in Lisbon; and receives two ATP aircraft.
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ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
Unlike the situation observed in the last 3 years, there has been a 25% increase in training
costs, compared with 2006.
1400
1200
1000
800
600
400
200
0
2004
2005
2006
2007
35000
30000
25000
20000
15000
10000
5000
0
Courses held
Participants
Hours of training
Thousand euros
Total training costs
700,00
600,00
500,00
400,00
300,00
200,00
100,00
0,00
2004
2005
2006
Training costs
1994 | SATA AIR AÇORES AWARDED MEDAL OF HONOUR
As recognition for the quality of its flights and its operating method, SATA Air Açores is
awarded a coveted medal of honour by the International Civil Aviation Organization (ICAO).
| 22
2007
No. of hours
No. of Courses
No. of staff
Training
ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
Flight Operations (DOV) and Ground Operations (DOT) attract the highest costs among
Training Plan courses provided ( 203,933 and 142,219 respectively).
Training by Business Area
Other
67,554.07
14.6%
DGC
26,785.80
5.8%
DOV
203,933.66
44.2%
DOT
142,219.42
30.8%
DME
21,184.71
4.6%
DOV is the area of the company where more investment has been made in training.
The initial qualification of pilots in ATP aircraft and all refresher training required under
the JAR OPS (Joint Aviation Regulation for Operations) are some of the reasons that justify
44% of the total training costs being spent in this area.
DOT, with investment of 142,219, is the area with the second highest training costs
(30% of total costs). Most training costs are justified by the need to select, recruit
and train personnel to augment staff during the high season.
1995 | SATA CONTINUES TO GROW
SATA takes another step towards internationalisation, with its first charter flight outside
Portugal.
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ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
Information Systems
2007 for Information Systems was marked above all by two different major projects,
one focusing on administrative and financial procedures (MySAP ERP) and the other
with a significant impact on the service provided to our customers, namely frequent
flyers (Crane).
The MySAP ERP project was soon established as a true process of change for SATA
that can be considered quite ambitious, since its aim is to cover all the major functional
back office areas: Financial (General Accounting, Analytical Accounting and Budget Control,
Accounts Payable, Accounts Receivable, Treasury and Assets), Human Resources
(Personnel Administration, Salary Processing, Training, Recruitment, Assessment
and Performance and Occupational Medicine), Logistics (Supplies and Warehouse
Management), Sales and Invoicing and Ground Equipment Maintenance, as well
as advancing at the same time with a Document Management process (accounting
documents) and an Attendance Management process.
Decision taking for the implementation of MySAP ERP can be considered strategic,
if not crucial, for the future of all the SATA companies, since, while it is not a business
application, it can guarantee the proper functioning of business support processes.
The first transaction using this new application was performed on 1 January 2007
and the remaining modules were phased into production over the following months.
This process of change can be considered to have been successful concluded, although
there is still room for consolidation of processes in the future.
Electronic Tickets were launched by SATA in 2005, initially introduced for travel agencies
and then (last quarter of 2006) launched in full strength for all SATA agencies.
During 2007 the Interline eTicket (IET) process was implemented with our main business
partner, thus extending the services available associated with the existing code share.
1998 | SATA AWARDED AOC
SATA Internacional, with a Boeing 737, begins to diversify SATA destinations and is awarded
its AOC (Air Operator's Certificate), finally entering the competitive world of civil aviation.
| 24
ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
With the implementation of this functionality, SATA is now 100% eligible with regard to
the IATA adoption of Electronic Ticketing under its Simplifying the Business (StB) initiative.
No less significant was the expansion of eligibility to issue Electronic Tickets to routes
to and from the United States of America, this market now enjoying all associated
functionalities.
In May 2007 the Crane project went live and was soon introduced in all the areas
of the company in a way that can be considered non-intrusive for business procedures
in progress.
This change resulted from the need felt to adapt the support application to the business
procedures associated with the management of members of Clube SATA, and all the
objectives of this project were achieved with the entry into production of this application.
The value generated for members of the club is considerably higher than with the
previous solution and a platform has been created for the progress and development
of the club.
Internet sales, as a direct sales channel, play an increasingly important role in the life
of companies that seek to be competitive in their market, both as a matter of processing
efficiency and as a means to achieve greater presence and market penetration. Airline
companies are not uninvolved with this technology, and the success of both low-cost and
traditional airlines is directly related to how they sell their products on the Internet.
To provide SATA with an internet sales channel that allows it to achieve the group's sales
objectives, a project is being organised that has been given the name SOBE SATA
Booking Engine.
The plan for this project was the execution of a series of activities with an expected
duration of more than 1 year and the main functionalities are due to be made available
in 2008.
The first stage of this project was first developed in December 2007 and is expected to
be concluded in May 2008. It will permit full online reservations and payments and the
issuing of electronic tickets.
1999 | SATA GUARANTEES NEW ROUTES
SATA Internacional wins the concession for routes between Ponta Delgada and the cities
of Lisbon, Oporto and Funchal, with a Boeing 737 and, subsequently, the new A310.
| 25
ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
Economic and Financial Performance
Economic Situation
Performance
The Net Profit for 2007 of SATA Air Açores was k 1,176, excluding associated
companies. With the Consolidation using the Equity Method, the Company presents
a Net Profit of k 4,991.
Net Profit (k)
6,000
5,000
4,000
3,000
2,000
1,000
-
2003
2004
2005
2006
2007
Unit: k (thousand euros)
2007
2006
2005
2004
2003
Operating income
58,799
53,187
48,216
45,742
42,490
Operating costs
(57,596)
(52,908)
(47,601)
(46,507)
(43,751)
Operating profit
1,203
279
615
(765)
(1,261)
Financial profit
3,466
2,999
687
2,049
564
Current profit
4,669
3,278
1,302
1,284
(697)
Extraordinary profit
166
1,631
2,127
2,704
3,920
Tax on profit for the year
(156)
(6)
(8)
(1)
(3)
Net profit for the year
4,991
4,903
3,421
3,987
3,220
2000 | FLIGHTS TO NORTH AMERICA
SATA starts scheduled flights to the United States of America and Canada, strengthening
ties with the Azores Diaspora.
| 26
ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
Operating Profit
In 2007 the Company obtained an Operating Profit of k 1,203, this figure reflecting
a year-on-year increase in the Operating income of 10.6% compared with 2006. Likewise,
Operating costs increased by 8.9% compared with the previous year.
Total Operating Income representing more than 90% of the Total Income was up k 5,612
on the figure for the previous year. This increase is due above all to the performance
of Income generated by passenger and cargo revenue which significantly increased.
2007
2006
2005
Passengers and Cargo
27,737
23,802
23,846
Handling
8,652
8,215
8,062
Compensatory payments
14,823
14,211
10,609
Other operating income
7,587
6,959
5,792
Operating income
58,799
53,187
48,309
External supplies and services
22,759
18,542
17,125
Personnel costs
27,129
24,498
21,578
Other operating costs
7,708
9,868
8,898
Operating costs
57,596
52,908
47,601
Operating profit
1,203
279
708
2004 | NEW EQUIPMENT
SATA receives two new Airbus A320 with which it will increase flights to Europe.
| 27
ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
Operating Income 2007
Operating Income 2006
13%
13%
47%
25%
15%
15%
Handling
Operating Costs 2007
Handling
Operating Costs 2006
19%
12%
48%
45%
27%
40%
Personnel costs
46%
35%
Personnel costs
2005 | NEW ROUTES
SATA launches new routes to Europe. London and Madrid are the airline company's new
commitments for the IATA summer season.
| 28
ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
Compared with performance levels in 2006, the procurement of external services recorded
an increase of k 4,217, essentially due to the rise in fuel prices.
Personnel costs also increased by k 2,631 due to a review of provisions for the pension
fund, resulting from the change in the method for calculating Social Security pensions.
Financial Profit
The financial profit was k 3,466, k 467 higher than in 2006. The performance of the
company's financial capacity was affected above all by the good performance of the
subsidiaries SATA Internacional, Azores Express, SATA Express and SATA Gestão de
Aeródromos in 2007.
Extraordinary Profit
The extraordinary profit was k 166, k 1,465 less than in 2006.
EBITDAR
The free cash flow available for investments measured by the EBITDAR (Earnings Before
Interest, Taxes, Depreciation, Amortization, and Restructuring or Lease Costs) was
k 4,958, higher than k 338 of the previous year.
2007
2006
2005
EBITDAR
4,958
4,620
6,423
2005 | SATA AERÓDROMOS CREATED
The latest SATA group company, SATA Aeródromos, is set up to manage and maintain
4 of the 9 aerodromes in the Azores.
SATA Aeródromos designs and implements the new Aerodromes on the islands of Pico,
Flores, São Jorge and Graciosa.
| 29
ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
FINANCIAL SITUATION
The Company's Net Assets reported an increase of k 7,034, which represented a positive
variation of 9.35% reflecting to a great extent the effect of:
I - k 3,689 increase in Financial Investments;
II - k 2,806 increase in Accruals and Deferrals
Changes in Net Assets
100,000
80,000
60,000
40,000
20,000
2003
2004
2005
2006
2007
2006
2007
ECONOMIC AND FINANCIAL INDICATORS
Changes in Net Worth
35,000
30,000
25,000
20,000
15,000
10,000
5,000
-
2003
2004
2005
2007 SATA AND THE ARCHIPELAGO OF MADEIRA
At the request of the Portuguese Government, SATA Air Açores increases the scope of its
role in the Atlantic islands, ensuring the Funchal Porto Santo route.
It will also offer charter flights to Las Palmas during the IATA summer season.
| 30
ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
The analysis of economic and financial indicators shows once again a significant increase
in the Net Worth of the Company which reached k 32,713 in 2007, a value that represents
an increase of around 26.6%, in other words k 6,879. This is due to the significant
increase in Retained Earnings.
Ratios
2007
2006
2005
2004
Operating Profitability
3.78%
0.52%
1.47%
-1.57%
Return on Equity
14.97%
18.92%
16.05%
22.88%
Return on Assets
5.91%
6.52%
4.82%
5.52%
Equity to Debt Ratio
65.16%
52.28%
42.99%
31.81%
Debt
60.55%
65.67%
69.93%
75.87%
Equity to Assets Ratio
39.45%
34.33%
30.07%
24.13%
Operating profitability increased 3.26 pp due to the greater increase in Operating income
compared with Operating costs, while Return on Equity showed a fall of 3.05 pp.
The Equity to Assets Ratio was 39.47%, reflecting an increase of 5.12 pp compared with
2006, while the Equity to Debt Ratio of 65.16% shows an improvement of 12.88 pp. Also
debt ratio fell by 5.12 pp due to payment of the Company's bank loans.
The Company's Liabilities increased by 0.3%, in other words, a further k 155. This change
resulted essentially from the reduction of k 773 in Provisions and the increase in Accruals
and Deferrals of k 1,013.
2007 | SATA ACQUIRES TWO NEW AIRCRAFT
A British Aerospace ATP and one new Airbus A310 arrive at São Miguel and are named
on 15 June, the day the company celebrates its 60th anniversary.
| 31
ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
Changes in Liabilities
56,000
55,000
54,000
53,000
52,000
51,000
50,000
49,000
48,000
47,000
46,000
2003
2004
2005
2006
2007
Contribution to the Revenue of the State and the Region
The contribution of SATA Air Açores and its employees to the revenue of the State and
the Region rose to 7,885,674 Euros, divided as follows:
Company
Employees
Total
Social Security Contribution
3,714,895
1,720,750
5,435,645
Personal Income Tax
-
2,262,891
2,262,891
Corporation Tax
176,639
-
176,639
Other
10,499
-
10,499
3,902,033
3,983,641
7,885,674
2007 | SHUTTLE SERVICE TO EUROPE
Increase in the frequency of flights to London and new routes to Dublin and Paris. SATA
Internacional links the Archipelagos of Madeira and Azores to Europe.
| 32
ANNUAL REPORT
AND ACCOUNTS
2007
2007 PERFORMANCE
Proposal for Appropriation of Profit
In accordance with legal and statutory provisions, the Board of Directors of SATA Air
Açores proposes the following appropriation of the net profit calculated in the year 2007,
amounting to 4,991,087.17.
- Legal Reserve
249,554.36
- Retained Earnings
4,741,532.81
Ponta Delgada, 20 May 2008
THE BOARD OF DIRECTORS
António Vasconcelos
Franco Gomes
de Menezes
(Chairman)
Luísa Maria
Estrela Miranda
Schanderl
(Director)
António Maurício
do Couto
Tavares de Sousa
(Director)
Luís Filipe
Soares Borges
da Silveira
(Director)
2007 - SATA TODAY
The SATA Group is today an air transport group comprising two companies: SATA Air Açores
and SATA Internacional, two tour operators and a company that manages several aerodromes.
It operates more than 18,000 flights a year, and takes the Atlantic spirit to 50 destinations
throughout the world
This is the result of the dedication of more than 1200 employees who work every day so
that with SATA There is Something Different in the Air.
| 33
António
Manuel da Silva
Amaral
(Director)
ANNUAL REPORT
AND ACCOUNTS
2007
| 34
FINANCIAL STATEMENTS
ANNUAL REPORT
AND ACCOUNTS
2007
| 35
ANNUAL REPORT
AND ACCOUNTS
2007
BALANCE SHEETS AS AT 31 DECEMBER 2007 AND 2006
SATA AIR AÇORES - SOCIEDADE AÇORIANA DE TRANSPORTES AÉREOS, S.A.
(Amounts in euros)
Assets
FIXED ASSETS:
Tangible fixed assets:
Land and natural resources
Buildings and other constructions
Plant and machinery
Vehicles
Tools and utensils
Fixtures and fittings
Other tangible fixed assets
Fixed assets in progress
Advances on tangible fixed assets
Financial investments
Holdings in group companies
Holdings in subsidiary companies
Securities and other investments
CURRENT ASSETS:
Inventory:
Raw materials and consumables
Accounts receivable - Short term:
Trade debtors
Doubtful debts
Advances to suppliers
Group companies
Taxes and contributions recoverable
Other debtors
Notes
2007
Gross
Depreciation
assets and adjustments
2006
Net
assets
10
10
10
10
10
10
10
10
10
73,313
714,097
36,115,455
363,399
906,807
4,249,032
5,403,157
12,400
47,837,660
(188,235)
(31,584,281)
(281,585)
(816,319)
(3,429,276)
(3,927,762)
(40,227,458)
73,313
525,862
4,531,174
81,814
90,488
819,756
1,475,395
12,400
7,610,202
73,313
546,657
4,870,732
92,884
96,746
865,602
1,819,795
12,400
16,200
8,394,329
10 e 16
10, 16 e 34
10
20,165,213
138,246
18,594
20,322,053
(28,871)
(28,871)
20,165,213
109,375
18,594
20,293,182
16,476,006
109,375
18,594
16,603,975
21 e 41
2,539,500
(999,883)
1,539,617
1,229,616
5,250,207
229,285
547,967
12,160,262
366,468
10,410,319
28,964,508
(229,285)
(229,285)
5,250,207
547,967
12,160,262
366,468
10,410,319
28,735,223
2,915,770
60,076
12,397,411
2,347,491
9,476,019
27,196,767
21 e 23
16
48
49
Banks and cash
Bank deposits
Cash in hand
55
55
17,874,291
17,874,291
-
17,874,291
17,874,291
18,398,495
1,585
18,400,080
ACCRUALS AND DEFERRALS:
Accrued income
Deferred costs
Deferred tax assets
50
50
6
424,234
2,913,880
2,894,129
6,232,243
(40,227,458)
(1,258,039)
(41,485,497)
424,234
2,913,880
2,894,129
6,232,243
713,488
2,712,851
3,426,339
82,284,758
75,251,106
Total depreciation
Total adjustments
Total assets
123,770,255
The notes form an integral part of the balance sheet as at 31 December 2007.
THE CHARTERED ACCOUNTANT
António Jorge Ferreira da Silva
| 36
Net
assets
ANNUAL REPORT
AND ACCOUNTS
2007
BALANCE SHEETS AS AT 31 DECEMBER 2007 AND 2006
(Amounts in euros)
Equity and liabilities
EQUITY:
Capital
Adjustments to holdings in subsidiaries and associated companies
Revaluation reserves
Legal reserve
Other reserves
Retained earnings
Total equity
Notes
2007
2006
36, 37 e 40
40
40
40
40
40
40
16,809,500
(691,614)
287,370
1,066,137
3,318,091
6,932,395
4,991,087
32,712,966
16,809,500.0
(565,263)
287,370
820,990
3,318,091
260,029
4,902,939
25,833,656
34
34
20,599,259
12,093,942
32,693,201
22,064,468
11,401,131
33,465,599
-
1,346,755
1,350,371
3,702,271
2,215,532
43,649
2,108,977
175,670
1,226,677
1,408,696
12,231,843
3,087,680
2,983,055
951,815
1,023,439
424,929
523,018
1,977,204
10,971,140
4,521,192
125,556
4,646,748
3,202,057
431,899
3,633,956
49,571,792
82,284,758
49,417,450
75,251,106
LIABILITIES:
PROVISIONS:
Provisions for pensions
Other provisions
Accounts payable - Medium and long term:
Bank loans
Accounts payable - Short Term:
Bank loans
Trade creditors
Advances from customers (tickets to be used)
Advances from customers
Group companies
Trade accounts payable, fixed assets
Taxes and contributions payable
Other creditors
53
3.h)
16
48
51
ACCRUALS AND DEFERRALS:
Accrued costs
Deferred income
50
50
Total liabilities
Total equity and liabilities
The notes form an integral part of the balance sheet as at 31 December 2007.
Franco Gomes
de Menezes
(Chairman)
| 37
Luísa Maria
Estrela Miranda
Schanderl
(Director)
António Maurício
do Couto
Tavares de Sousa
(Director)
Luís Filipe
Soares Borges
da Silveira
(Director)
António
Manuel da Silva
Amaral
(Director)
ANNUAL REPORT
AND ACCOUNTS
2007
PROFIT AND LOSS ACCOUNTS BY NATURE
FOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006
(Amounts in euros)
COSTS AND LOSSES
Notes
2007
2006
Cost of materials consumed
41
1,368,141
1,111,652
52
22,758,647
18,541,672
Personnel costs:
Salaries
Social charges
Pensions
31
17,702,358
4,450,338
4,976,566
Depreciation of tangible fixed assets
Adjustments
Provisions
10
21
34
1,809,059
2,875
4,440,424
Taxes
Other operating expenses
(A)
13,508
73,928
27,129,262
17,011,741
3,463,655
4,022,330
24,497,726
6,252,358
1,823,498
5,814
6,860,045
8,689,357
87,436
57,595,844
(13)
67,307
Other interest payable and similar charges
(C)
45
2,771,742
60,367,586
1,680,405
54,588,106
Extraordinary expenses
(E)
46
159,146
60,526,732
64,352
54,652,458
Income tax for the year
(G)
6
(156,038)
60,370,694
6,189
54,658,647
4,991,087
65,361,781
4,902,939
59,561,586
The notes form an integral part of the profit and loss account by nature for the year ended 31 December 2007.
| 38
67,294
52,907,701
ANNUAL REPORT
AND ACCOUNTS
2007
PROFIT AND LOSS ACCOUNTS BY NATURE
FOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006
(Amounts in euros)
INCOME AND GAINS
Notes
2007
2006
Services rendered
16 e 44
42,681,514
37,714,585
Supplementary income
Operating subsidies
Reversals of depreciation and adjustments
(B)
3.j) e 49
21
Earnings in group and associated companies
Other interest receivable and similar income
1,282,887
14,823,096
11,584
3,819,580
2,418,221
6,237,801
65,036,882
3,192,661
1,486,620
4,679,281
57,866,362
46
324,899
1,695,224
65,361,781
59,561,586
1,203,237
3,466,059
4,669,296
4,835,049
4,991,087
279,380
2,998,876
3,278,256
4,909,128
4,902,939
(F)
Operating profit:
Financial profit:
Current profit:
Profit before taxes:
Net profit for the year:
15,472,496
53,187,081
45
45
(D)
Extraordinary income
16,117,567
58,799,081
1,244,441
14,210,763
17,292
(B) - (A)
(D-B) - (C-A)
(D) - (C)
(F) - (E)
(F) - (G)
The notes form an integral part of the profit and loss account by nature for the year ended 31 December 2007.
Franco Gomes
de Menezes
(Chairman)
| 39
Luísa Maria
Estrela Miranda
Schanderl
(Director)
António Maurício
do Couto
Tavares de Sousa
(Director)
Luís Filipe
Soares Borges
da Silveira
(Director)
António
Manuel da Silva
Amaral
(Director)
ANNUAL REPORT
AND ACCOUNTS
2007
PROFIT AND LOSS ACCOUNTS BY FUNCTION FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2007 AND 2006
(Amounts in euros)
Notes
2007
2006
Goods sold and services rendered
Cost of goods sold and services rendered
Gross profit
44
54
42,681,514
(35,272,182)
7,409,332
37,714,585
(28,656,020)
9,058,565
Distribution charges
Administrative costs
Other operating expenses
Operating profit
54
54
54
16,442,466
(8,795,820)
(7,201,557)
(7,206,031)
648,390
17,167,719
(8,188,878)
(7,306,140)
(9,044,040)
1,687,226
367,079
3,819,580
4,835,049
29,241
3,192,661
4,909,128
156,038
4,991,087
1,485
(6,189)
4,902,939
1,458
Net interest
Earnings relating to affiliates or associated companies
Current profit
Tax on current profit
Net profit
Earnings per share
45
6
40
The notes form an integral part of the profit and loss account by function for the year ended 31 December 2007.
Franco Gomes
de Menezes
(Chairman)
| 40
Luísa Maria
Estrela Miranda
Schanderl
(Director)
António Maurício
do Couto
Tavares de Sousa
(Director)
Luís Filipe
Soares Borges
da Silveira
(Director)
António
Manuel da Silva
Amaral
ANNUAL REPORT
AND ACCOUNTS
2007
CASH FLOW STATEMENTS FOR THE YEARS ENDED
31 DECEMBER 2007 AND 2006
(Amounts in euros)
OPERATING ACTIVITIES
Depreciation
Movements in provisions
Deferred taxes
Financial profit/loss
Gains on sales of fixed assets
Losses on sales of fixed assets
Increase in accounts receivable
Increase in inventory
Increase/(Decrease) in accounts payable
Increase/Decrease in deferred costs
Increase/Decrease in deferred income
(Increase)/Decrease in accrued income
Increase/Decrease in accrued costs
Net cash from operating activities (1)
Notes
2007
2006
40
10
21 e 34
6
4,991,087
1,809,059
(781,107)
(879,555)
(3,466,059)
(50)
20,569
(1,529,747)
(310,001)
3,247,263
(201,029)
(306,343)
289,254
1,323,938
4,207,279
4,902,939
1,823,498
6,884,180
(2,998,876)
(14,651)
19,869
(1,968,947)
(412,406)
(4,171,730)
277,751
150,851
(596,920)
(436,520)
3,459,038
4,022
32,986
1,025,039
1,029,111
3,353
576,369
612,708
(1,294,752)
(265,641)
(1,770,537)
(1,157,829)
(2,693,509)
(662,762)
(3,356,271)
(3,356,271)
(2,693,509)
(646,986)
(3,340,495)
(3,340,495)
585,367
(1,039,286)
720,601
18,005,908
17,870,674
223,026
19,268,220
18,005,908
46
46
INVESTMENT ACTIVITIES
Receipts relating to:
Financial investments
Tangible fixed assets
Interest receivable and similar income
45
50
Payments relating to:
Tangible fixed assets
Net cash from investing activities (2)
FINANCING ACTIVITIES
Payments relating to:
Loans obtained
Interest payable and similar charges
Net cash from financing activities (3)
Change in cash and cash equivalents (4)=(1)+(2)+(3)
Effect of exchange differences
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
55
55
The notes form an integral part of the cash flow statements for the year ended 31 December 2007.
Franco Gomes
de Menezes
(Chairman)
| 41
Luísa Maria
Estrela Miranda
Schanderl
(Director)
António Maurício
do Couto
Tavares de Sousa
(Director)
Luís Filipe
Soares Borges
da Silveira
(Director)
António
Manuel da Silva
Amaral
(Director)
ANNUAL REPORT
AND ACCOUNTS
2007
| 42
NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT
AND ACCOUNTS
2007
NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2007
SATA AIR AÇORES SOCIEDADE AÇORIANA DE TRANSPORTES AÉREOS, S.A.
(Amounts in euros)
INTRODUCTORY NOTE
SATA Air Açores Sociedade Açoriana de Transportes Aéreos, S.A. (Company or SATA)
is the result of the conversion into a limited company under Portuguese Decree-Law
276/2000, of 10 November, of SATA Air Açores Serviço Açoriano de Transportes Aéreos,
E.P. (incorporated under Portuguese Decree-Law 490/80 of 17 October).
It is a limited company, with registered office at Avenida Infante D. Henrique, 55 2º, in
Ponta Delgada and has as its corporate purpose the operation, both direct and through
holdings in other companies or organisations, of air transport of passengers, cargo and
mail, as well as the provision of services and the performance of commercial, industrial
and financial operations, directly or indirectly related, in their entirety or in part, to said
operation and liable to facilitate its implementation, including the handling of aircraft at
airports, the training of technical staff and assistance for other companies in the sector,
with the provision and supply of technical and human resources. The subsidiary SATA
Internacional Serviços e Transportes Aéreos, S.A. (SATA Internacional) has ensured
air links between Ponta Delgada and the Mainland and Funchal since 1 January 1999,
in an exclusive basis and through public tender procedures.
Scheduled air services within the Archipelago of the Azores have been regulated, since
1996, by the provisions of the public service contract signed on 24 May 1996 between
SATA and the Autonomous Region of the Azores, under the provisions of Article 19:2 of
the Articles of Association of SATA, approved by Regional Legislative Decree 2/88/A, of
5 February, and the provisions of Resolution No. 86/96, of 23 May. In 2006 an invitation
to tender was issued for the operation of routes in the Azores archipelago, the Company
having been awarded the contract for the period from 1 April 2006 to 31 March 2008.
On 14 August 2007 the Company signed with the Portuguese State a concession
agreement for scheduled airline services for the route to Funchal and Porto Santo, which
will have a duration of 3 years from that date.
As at 31 December 2007, the Company operated with five ATP aircraft and one Dornier,
of which two ATPs and the Dornier are the property of the Company and the remaining
three ATPs are operated by the Company under operating lease agreements.
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ANNUAL REPORT
AND ACCOUNTS
2007
Under the terms of Article 3 of Decree-Law 238/91, of 2 June, the Company is exempted
from drawing up consolidated financial statements given that its majority shareholder
(SATA Sociedade de Transportes Aéreos, SGPS, S.A.) will submit consolidated accounts
which include the Financial Statements of the Company and of its subsidiaries.
The notes that follow are in keeping with the sequential numbering as set forth in the
Official Chart of Accounts. Notes not included herein are not applicable to the Company
or are not relevant to the understanding of the financial statements.
2. ACCOUNTS NOT COMPARABLE WITH THE PREVIOUS YEAR
According to Law 18/82, of 8 June, the Company benefitted from complete exemption
from taxes and contributions to the State or to local authorities on its profits, with the
exception of transactions subject to autonomous taxation (taxation based on expenses).
Since the coming into effect of Law 53-A/2006, of 29 December, which revoked Law
18/82, the Company has been subject to general tax regulations, with effects since
1 January 2007. Thus, the Company began to record estimated current taxes for the
year 2007, amounting to 723,517 Euros (Note 48), for Corporate Income Tax, and
adopted the accounting policy of recording deferred taxes (Note 3.n), whose impact
on the profit/loss for the year and the retained earnings were 879,555 Euros and
2,014,574 Euros (Note 6), respectively.
3. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING PRINCIPLES
The accompanying financial statements were prepared on the going concern basis
from the accounting books and records of the Company, in accordance with generally
accepted accounting principles in Portugal.
The main accounting principles used in the preparation of the financial statements
were the following:
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ANNUAL REPORT
AND ACCOUNTS
2007
a) Tangible fixed assets
Flight equipment
Flight equipment is reflected in the balance sheet at cost. Depreciations are
calculated on cost less residual value (10% of the cost), on a straight-line basis
and from the month of acquisition or commissioning, over the estimated useful life
of the aircraft, spare engines and propellers and landing gear, and other spare
parts, which is currently 12 years.
The other tangible fixed assets acquired up to 31 December 1991 are stated
at cost, revalued in accordance with legal provisions (Note 12). Other tangible fixed
assets acquired after that date are stated in the balance sheet at cost.
Depreciation is calculated on a straight-line basis, from the month of acquisition
or commissioning, and determined based on the estimated useful life of the assets,
as follows:
Years of useful life
Plant and machinery
Vehicles
50
5 - 16
5-7
Tools and utensils
5 - 12
4 - 10
3 - 20
Repairs and routine maintenance costs are recorded as costs of the financial year
to which they refer. Major aircraft maintenance is recorded on an accruals basis,
as described in e) below.
b) Operating lease assets
Lease payments in respect of operating lease agreements are recorded as costs
in the period in which they are incurred.
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ANNUAL REPORT
AND ACCOUNTS
2007
Repairs and routine maintenance costs in respect of equipment operated under
operating leases are recorded as costs in the year in which they are incurred.
c) Inventory
Raw materials and consumables are valued according to the following criteria:
-
ATP material: Acquisition cost, adopting the FIFO costing method for
disbursements;
-
Other materials: Average cost.
An adjustment to inventory was made to reflect the difference in value between
inventory cost and its realisable value, in cases in which the latter is lower than the
cost on the balance sheet date (Note 21).
d) Financial investments
Financial investments in group and associated companies are recorded using the
equity method, with interests initially accounted for at cost, increased or reduced
by an amount proportional to the interest in the equity capital of these companies,
at the date of acquisition or of the first application of the equity method.
According to the equity method, financial holdings are adjusted annually by the
value corresponding to the share in the net profit of the group and associate
companies, offset against gains or losses for the year. In addition, the dividends
received from these companies are recorded as a reduction in the value of the
financial investments.
e) Provision for flight hours
The Company records on an accruals basis expenses to be incurred in the future
with general overhauls of aircraft, these being recorded in the profit and loss account
of the year on the basis of estimated costs and flight hours of each aircraft, against
Other Provisions - Provision for flight hours (Note 34).
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ANNUAL REPORT
AND ACCOUNTS
2007
f)
Accruals basis
The Company records revenue and expenditure on an accruals basis whereby
revenue and expenditure are recorded when generated, regardless of when they
are received or paid. The differences between the amounts received and paid and
the corresponding income and expenses are recorded under Accruals and deferrals
(Note 50).
g) Subsidies awarded to finance tangible fixed assets
Grants to finance tangible fixed assets are recorded as deferred income in Accruals
and deferrals (Note 50), and recognised in the profit and loss account in proportion
to the depreciations of the tangible fixed assets subsidised.
h) Recognition of transport revenue
Revenue from the sale of passenger transport is recorded as a liability at the time
of sale in Advances from customers. When the transport is made, the sale revenue
is transferred from Advances from customers to revenue for the year, if provided
by the Company, or transferred to accounts payable, if the transport is made by
another airline company.
i)
Recognition of revenue from ground handling and fees
Revenue from ground handling of aircraft belonging to other airlines is accounted
for as revenue for the year in which the service is provided. The revenue from fees
received is recorded when entitlement occurs.
j)
Financial compensation received as compensation for public services
The financial compensation attributed by the Regional Government of the Azores
for public services is recorded in the period when entitlement thereto occurs. This
compensation is calculated under the terms provided for and as a result of the
contract awarded to the Company through a public tender which was effective
until 31 March 2006, as well as the new contract commencing on 1 April 2006
and expiring on 31 March 2008.
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ANNUAL REPORT
AND ACCOUNTS
2007
l)
Pensions
As described in detail in Note 31, under the terms of the Works Council Agreement
(Acordo de Empresa) in force, the Company assumed responsibility for payment
to employees hired by the Company until 31 December 2003 of supplements to
the retirement pensions paid by Social Security. The Company records these
liabilities in the balance sheet, in accordance with the provisions of Accounting
Directive No. 19. The Company conducts each year an actuarial evaluation study
to quantify its liabilities on the balance sheet date and the cost of pensions recorded
that year. The liabilities thus estimated are compared to the market value of the
assets of the pension fund created for this purpose and to the accounting records
of the Company, in order to determine the amount of the differences to be recorded.
The gains and losses with retirement pensions are recorded in Personnel costs
based on the values determined by that actuarial study.
m) Assets and liabilities in foreign currencies
Assets and liabilities in foreign currencies as at 31 December 2007 were converted
into Euros using the exchange rates in effect on that date, published by a financial
institution, as follows:
USD
0.6798
GBP
1.3578
CAD
0.6944
Exchange rate differences, both favourable and unfavourable, resulting from
differences between exchange rates applicable at the transaction date and those
at the date of collection, payment or on the balance sheet date, were recorded
as income and costs in the profit and loss account (Note 45).
n) Deferred taxes assets
Deferred taxes refer to temporary differences between the values of assets and
liabilities for accounting purposes and their respective values for taxation purposes.
Deferred tax assets and liabilities are calculated and evaluated annually using the
taxation rates that are expected to be applicable on the date of the reversion
of the temporary differences.
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ANNUAL REPORT
AND ACCOUNTS
2007
Deferred tax assets are recorded exclusively when there are reasonable expectations
of sufficient future taxable profit against which they can be utilised. At the end of
each reporting period, a review is made of the temporary differences underlying
deferred tax assets with a view to recognising deferred tax assets not previously
recorded because the conditions to do so were not then extant and/or to reduce
the amount of deferred tax assets recorded in the light of present expectations for
their future recovery.
The main temporary differences and their effect on the financial statements for the
year ended 31 December 2007 are described in Note 6.
6. TAXES
In October 2004, the Company received a notification from the tax authorities concerning
the draft conclusions of the tax inspection report based on analysis of corporation tax
(IRC) for the years 2000, 2001, 2002 and 2003 and which concludes that the
Company did not enjoy a definitive exemption from IRC, and should thus pay IRC on
the taxable profit for those years.
In December 2004 and April 2005, the Company received revised assessments
concerning corporation tax for 2000 and corporation tax from 2001 to 2003, respectively,
which it contested in court. At the beginning of 2006, and in response to the legal
proceedings, the Company received notification from the Administrative and Tax Court
of Ponta Delgada, which found in the Company's favour, due the right to assessment
of IRC for 2000 and 2001 having expired. In addition, in May 2007, and also in response
to the aforementioned legal proceedings, the Company received notification from the
Administrative and Tax Court of Ponta Delgada, which found in the Company's favour
and annulled the revised assessments regarding IRC for 2002 and 2003 considering
that the company enjoyed, for those years, complete exemption from IRC.
As mentioned in Note 2, under Law No. 53-A/2006, of 29 December, the Company
became subject to general tax regulations since 1 January 2007. Thus the revised
assessments that the Company received in previous years were considered void by
the Inspectorate-General for Finance.
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ANNUAL REPORT
AND ACCOUNTS
2007
The Company's Directors believe that any corrections due to reviews/inspection by
tax authorities of those tax returns will not have a significant effect on the financial
statements as at 31 December 2007.
Under the terms of Article 81 of the Portuguese Corporation Income Tax Code, the
Company is subject to autonomous taxation of certain expenses at the rates provided
for in that article.
As mentioned in Notes 2 and 3.n), in 2007 the Company began to recognise the tax
effects of temporary differences between assets and liabilities for accounting and tax
purposes, and they were recognised as at 31 December 2007 based on an aggregate
tax rate of 19%.
Under the new law of local finances, effective from 1 January 2007, the municipal
surcharge (derrama) began to be calculated, from then on, based on 1.5% on the
taxable profit subject to and not exempt from corporation tax (IRC), when previously
it has corresponded to 10% of the corporation tax liability.
With respect to this last amendment, it should be noted that any practical effects
would be associated with the fact that all entities subject to corporation tax with
a non-exempt taxable profit, irrespective, for example, of whether they have tax losses
carried forward in their sphere, are subject to payment of municipal surcharge and
can hence only recover those losses based on a rate of 17.5%.
The major differences between the accounting and taxable values as at 31 December
2007 and the corresponding deferred tax assets and their effects in 2007 are
as follows:
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ANNUAL REPORT
AND ACCOUNTS
2007
2007
Increase / (decrease)
Profit
Retained
Deferred
for the year
earnings
Base
tax
(Note 2)
(Note 2)
250,000
47,500
-
47,500 a)
14,982,256
2,846,629
879,555 1,967,074 a)
15,232,256
2,894,129
879,555
Non-tax
deductible adjustments
Non-tax
deductible provisions
2,014,574
(a) Corresponding to balances of adjustments for provisions recorded in previous years.
As at 31 December 2007, the amount recorded in income tax is as follows:
Current tax (Note 48)
Deferred tax
723,517
(879,555)
(156,038)
7. AVERAGE NUMBER OF EMPLOYEES
During the years 2007 and 2006, the average number of employees working for the
Company was 663 and 656, respectively.
10. CHANGES IN FIXED ASSETS
During the year ended 31 December 2007, changes in the values of tangible fixed
assets and financial investments, as well as in their accumulated depreciation, were
as follows:
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ANNUAL REPORT
AND ACCOUNTS
2007
Gross assets
Application
of the
Opening
Headings
equity
Disposals /
balance
Increases
method
Write-offs
Transfers
Closin
balance
Land and natural resources
73,313
-
-
-
-
73,313
714,097
-
-
-
-
714,097
26,586,055
10,377
-
-
- 26.596,432
9,289,343
270,769
-
(50,389)
9,300
9,519,023
348,812
14,587
-
-
-
363,399
Plant and machinery flight equipment
Plant and machinery - other
Vehicles
Tools and utensils
885,377
21,430
-
-
-
906,807
4,056,070
297,142
-
(104,180)
-
4,249,032
4,971,931
431,196
-
(6,870)
6,900
5,403,157
12,400
-
-
-
-
12,400
(16,200)
-
Fixed assets in progress
Advances on tangible fixed assets
16,200
-
-
-
46,953,598
1,045,501
-
(161,439)
- 47,837,660
16,476,006
-
3,689,207
-
- 20,165,213
Holdings in subsidiary companies
138,246
-
-
-
-
138,246
Securities and others investments
18,594
-
-
-
-
18,594
16,632,846
-
3,689,207
-
- 20,322,053
Financial investments:
Holdings in group companies
Accumulated depreciation
Opening
Headings
Disposals /
Closin
balance
Increases
Write-offs
balance
167,440
20,795
-
188,235
Plant and machinery - flight equipment
23,580,598
75,851
-
23,656,449
7,424,068
534,184
(30,420)
7,927,832
Vehicles
255,928
25,657
-
281,585
Tools and utensils
788,631
27,688
-
816,319
3,190,468
342,388
(103,580)
3,429,276
3,152,136
782,496
(6,870)
3,927,762
38,559,269
1,809,059
(140,870)
40,227,458
Plant and machinery - other
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ANNUAL REPORT
AND ACCOUNTS
2007
As at 31 December 2007 and 2006, Plant and machinery flight equipment had the
following composition:
Headings
Aircraft Fleet
Spare parts
Spare engines
and propellers
Spare landing gear
2007
2006
Accumulated
Cost value depreciation
Net value
Net value
19,952,125 (17,873,171)
3,919,284 (3,330,710)
2,078,954
588,574
2,113,435
619,546
2,265,665 (2,039,148)
459,358
(413,420)
26,596,432 (23,656,449)
226,517
45,938
2,939,983
226,517
45,959
3,005,457
The air fleet recorded in the Company's books comprises two ATP aircraft, acquired
in 1990, and their spare equipment, and a Dornier aircraft, acquired in 2005.
In addition, the Company operates three other ATP aircraft, under a charter agreement.
These charters are treated, in the accounts, as operating leases for which reason the
lease payments resulting from their lease agreements are recorded as costs in the
year in which they are incurred.
The operating lease for two ATP aircraft commenced on 23 June 2000 and terminated
on 31 December 2003. During the year ended 31 December 2002, as a result of the
Company having been awarded the tender for the three year period between April
2003 and March 2006, the operating lease agreement was extended for the same
period. In addition, during the year ended 31 December 2006, as a result of the
Company having been awarded the tender for the three year period between April
2006 and March 2008 (Introductory Note), the operating lease agreement was extended
for the same period. The agreement for the third ATP aircraft commenced in May
2007, with a view to the implementation of the Funchal - Porto Santo route (Introductory
Note) and is due to terminate in May 2010. These agreements establish the payment
of monthly lease payments, without any purchase option at the end of the agreements.
To guarantee these agreements, the Company presented an irrevocable letter of credit
for USD 762,500 (corresponding to 518,348 (Note 32), for the three aircraft.
The increase in Plant and machinery Other of 270,769, corresponds essentially
to the acquisition of diverse ground apparatus and machines.
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ANNUAL REPORT
AND ACCOUNTS
2007
The increase in Fixtures and fittings of 297,142 corresponds essentially to the
acquisition of computer equipment.
The increase in Other tangible fixed assets corresponds essentially to the implementation
of the SAP system.
The effect of application of the equity method in 2007 of 3,689,207 consists of:
Application of the equity method
to the profit for 2007 from
the following subsidiaries (Nota 16):
Sata Internacional
2,662,896
Sata - Gestão de Aeródromos
531,324
Sata Express E.P., Inc. (CAN)
442,335
Sata Express E.P., Inc. (EUA)
179,003
Reflection on the profit and loss (Note 45)
3,815,558
Adjustments for exchange rate conversion
of financial statements of subsidiaries (Note 40)
(126,351)
3,689,207
As at 31 December 2007, the Company held financial investments amounting to
a total of 138,246, in respect of financial investments in Verdegolf, S.A. (0.75%
of the capital), in Banif Açor Pensões Sociedade Gestora de Fundos de Pensões,
S.A. (2.7% of the capital) and in Golf Açores, Lda. (33.33%), of 28,871 (fully provisioned
for), 49,880 and 1,995, respectively. In addition, it holds an interest in Associação
Açoreana de Turismo e Hotelaria, of 12,500, in Associação de Turismo dos Açores
of 20,000 and of 25,000 in Sociedade Ilhas de Valor, S.A. All these investments
were recorded at cost (Note 16).
12. REVALUATION OF TANGIBLE FIXED ASSETS (LEGISLATION)
In previous years, the Company has revalued its fixed assets in accordance with the
applicable legislation as follows:
| 54
-
Decree-Law 430/78, of 28 December
-
Decree-Law 219/82, of 2 June
-
Decree-Law 399-G/84, of 28 December
-
Decree-Law 118-B/86, of 27 May
ANNUAL REPORT
AND ACCOUNTS
2007
-
Decree-Law 111/88, of 2 April
-
Decree-Law 49/91, of 25 January
-
Decree-Law 264/92, of 24 November
16. GROUP, ASSOCIATED AND SUBSIDIARY COMPANIES
As at 31 December 2007, group, associated and subsidiary companies were
as follows:
31 December 2007
Stake
Balance
Total
Net
Group companies
Head Office
Assets
Equity
income
profit
%
sheet
value
Sata Internacional
Ponta Delgada
73,587,486
14,271,203
175,047,681
2,662,896
100
14,271,203
Sata Gestão de Aeródromos
Ponta Delgada
9,408,476
1,452,526
2,698,698
531,324
100
1,452,526
Sata Express E.P., Inc.
EUA
3,397,343
2,482,256
21,146,012
179,003
100
2,482,256
Sata Express E.P., Inc.
Canadá
6,706,385
1,959,188
28,559,643
442,335
100
1,959,188
93,099,690
20,165,173
227,452,034
3,815,558
20,165,173
31 December 2007
Stake
Balance
Associated and
subsidiary companies
Total
Net
sheet
Provisions
Head Office
Assets
Equity
income
profit
%
value
(Note 34)
Banif Açor Pensões, S.A. Ponta Delgada
3,630,553
2,536,000
942,166
161,773
2.7%
49,880
-
Ponta Delgada
na
na
na
na
0.75%
28,871
(28,871)
Ponta Delgada
na
na
na
na
20,000
-
Ponta Delgada
na
na
na
na
12,500
-
de Valor, S.A.
Ponta Delgada
na
na
na
na
25,000
-
Golf Açores, Lda.
Ponta Delgada
na
na
na
na 33.33%
1,995
-
3.630,553
2.536,000
942,166
138,246
(28,871)
Verdegolf, S.A.
Associação
de Turismo dos Açores
Associação Açoreana
de Turismo e Hotelaria
Sociedade Ilhas
161,773
The aforementioned information with regard to group and subsidiary companies was
extracted from their financial statements on the date indicated. However, the last
approved accounts for these subsidiary companies correspond to the year ended
31 December 2006.
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ANNUAL REPORT
AND ACCOUNTS
2007
Balances and transactions between group companies
The balances on 31 December 2007 and the transactions made with group companies
in the year then ended are the following:
Balances
Group
Group
companies
companies
Accrued
(credit
costs
(debit
Other
Customers
balances)
debtors
Suppliers
balances)
(Note 50)
156,379
8,776,172
-
115,253
-
716,199
Sata Gestão Aeródromos
-
2,618,843
3,240
-
-
-
Sata SGPS
-
24,812
-
3,974
-
-
Sata Express (EUA)
-
-
-
-
2,108,977
-
Sata Express (Canadá)
-
740,435
-
-
-
-
156,379
12,160,262
3,240
119,227
2,108,977
716,199
Sata Internacional
Transactions
External
supplies and
Services
services
rendered
Sata Internacional
696,868
7,471,026
Sata Gestão Aeródromos
771,616
169,003
-
138,847
1,468,484
7,778,876
Sata Express (Canadá)
Other services rendered essentially includes technical support and commissions
on passengers and cargo ticket sales to SATA Internacional.
21. ADJUSTMENTS TO THE VALUE OF CURRENT ASSETS
In the year ended 31 December 2007, the following changes in adjustment to current
assets occurred:
Opening
Closing
Description
balance
Increase
Reversals
balance
Inventory adjustments
999,883
-
-
999,883
237,994
2,875
(11,584)
229,285
1,237,877
2,875
(11,584)
1,229,168
Adjustments to trade
accounts receivable
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ANNUAL REPORT
AND ACCOUNTS
2007
23. DOUBTFUL DEBTS
As at 31 December 2007, there were debts classified as doubtful amounting to
229,285 that were fully provisioned (Note 21).
25. CREDIT AND LIABILITIES WITH EMPLOYEES
As at 31 December 2007, the Company had the following credit and liabilities with
employees:
Debit balance
291,520
Credit balance
212,619
31. FINANCIAL COMMITMENTS ASSUMED AND NOT INCLUDED IN THE BALANCE
SHEET
i)
Pension supplements
In accordance with the Works Council Agreement (Acordo de Empresa) in force,
the Company assumed responsibility for payment to employees hired up to 31
December 2003 of monetary payments as supplements to retirement pensions
and invalidity benefits. These payments are calculated based on the number of
years of service of the employee and the pay scale negotiated each year.
On 29 December 1994, the Company set up an Independent Pension Fund (Fundo
de Pensões da SATA) intended to finance the Company's liabilities to employees
in active employment as of that date.
On 1 January 2001, as referred to in Note 3.l), the Company adopted the provisions
of Accounting Directive No. 19 and began to record these liabilities on an accruals
basis. During the year ended 31 December 2007, the Company contributed
5,401,636 to the Pension Fund (Note 34) having used the provision for pensions.
In addition, it reviewed the balance of the provision given the liabilities quantified
by an actuarial study and the market value of the Pension Fund, increasing it by
3,936,427 (Note 34). The justification for the increase in the fund liability for the
current year is related to the application of legislation in force concerning the
calculation of Social Security pensions.
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ANNUAL REPORT
AND ACCOUNTS
2007
Liabilities for past services of employees as at 31 December 2000, concerning the
period before the adoption of the provisions of the Accounting Directive No. 19
in respect of retirement benefits, of 3,485,515, were recorded in Deferred costs
(Note 50) and can be found recognised in the remaining period of working life
of employees working for the company on that date (twenty years).
In accordance with actuarial studies performed by an independent entity, using
the Projected Unit Credit method and the following assumptions: TV 88/90 Mortality
Table; EKV 80 Invalidity Table; 5% technical interest rate; 2.0% pension growth
rate; 2.5% salary growth rate; 5% fund performance rate; and taking into consideration
changes in the calculation of Social Security pensions established in Decree-Law
187/2007, of 10 May, and the provisions of Rules 298/91 of 13 November and
21/96-R of 5 December of the Portuguese Institute of Insurance, the current value
of the Company liabilities as at 31 December 2007 and 2006 is as follows:
2007
2006
29,873,516
29,299,388
8,972,052
6,079,366
38,845,568
35,378,754
Provisions (Note 34)
20,599,258
22,064,468
Pension fund assets
18,246,310
13,314,286
38,845,568
35,378,754
Liabilities:
Retired Staff
Active - past services
Coverage of liabilities:
With regard to pension fund assets, changes for 2007 are detailed as follows:
2007
Pension fund assets:
Balance as at 31 December 2006
Contributions to the fund
Payment of pensions
Fund performance
Balance as at 31 December 2007
| 58
13,314,286
5,401,636
(800,429)
330,817
18,246,310
ANNUAL REPORT
AND ACCOUNTS
2007
As at 31 December 2007, the number of employees in active employment and
retired staff was as follows:
Active Staff
469
Retired Staff
146
Costs with pensions recorded in the profit and loss accounts for the years ended
31 December 2007 and 2006 in Personnel costs include:
Increase in provision (Note 34)
2007
2006
3,936,427
3,011,188
1,040,139
1,011,142
4,976,566
4,022,330
Payments to retired staff recorded directly
as cost and without using the provision
ii) Health insurance
The Company offers its active staff and retired staff collective health insurance that
grants access to subsidised medical services. These expenses are recorded
on the profit and loss account for the year in which the insurance premiums are
paid. In the year ended 31 December 2007, health expenses of 95,346 were
recorded corresponding to health insurance premiums paid in that year ( 72,288
for active staff and 23,058 for retired staff). In addition, the Company maintains
a provision intended to cover liabilities with future payments of the insurance policy
of current active employees when they retire, of 249,399 (Note 34).
iii) Operating lease agreements
The Company has liabilities with two operating lease agreements not recorded
in the balance sheet (Note 3.b) of approximately USD 2,080,000.
32. GUARANTEES PROVIDED
As at 31 December 2007, the Company had assumed liabilities for guarantees provided,
as follows:
| 59
ANNUAL REPORT
AND ACCOUNTS
2007
Amount
Currency
Euros
6,109,691
EUR
6,109,691
4,800,000
EUR
4,800,000
Portuguese State
701,804
EUR
701,804
Trident Aviation (Note 10)
762,500
USD
518,348
Autonomous Region of the Azores
FRAAE- Fundo Regional
de Apoio às Actividades Económicas
Ruag Aerospace Services GMBH
15,000
EUR
15,000
Esso Portuguesa, S.A.
14,964
EUR
14,964
5,000
EUR
5,000
10,767
EUR
10,767
Directorate General of Customs
Other
12,175,574
As indicated in the Introductory Note, the Company signed a concession agreement
for air services for the Funchal Porto Santo route. This route is subsidised through
financial compensation and return on capital, the company having provided a guarantee
in favour of the Portuguese State of 701,804 in August 2008.
34. MOVEMENTS IN PROVISIONS
The following movements in provisions occurred during the year ended
31 December 2007:
Opening
Deductions
Closing
balance
Increase
Utilised
(Note 46)
balance
28,871
-
-
-
28,871
22,064,468
3,936,427
(5,401,636)
2,858,116
3,263,342
(3,647,588)
-
2,473,870
49,879
-
-
-
49,879
Health insurance (Note 31)
249,399
-
-
-
249,399
Losses on salvage value of flight equipment
668,042
-
-
-
668,042
Expenses with pilot salary adjustment
105,000
145,000
-
-
250,000
"Frequent Flyer" Programme
204,000
-
-
(100,025)
103,975
Description
Provision for financial investments (Note 16)
Provisions:
Provision for pensions (Note 31)
20,599,259
Other provisions:
Provision for flight hours (Note 3.e))
Provision for legal disputes in progress
Other
| 60
7,266,695
1,032,082
-
-
8,298,777
11,401,131
4,440,424
(3,647,588)
(100,025)
12,093,942
33,465,599
8,376,851
(9,049,224)
(100,025)
32,693,201
ANNUAL REPORT
AND ACCOUNTS
2007
The increase in provisions, of 8,376,851 was recorded against Personnel costs
and Provisions, amounting to 3,936,427 (Note 31) and 4,440,424, respectively.
Other provisions for liabilities and charges amounting to 8,298,777 are intended
to provide for contingencies resulting from the Company's operations.
36. CAPITAL STRUCTURE
As at 31 December 2007, the Companys fully subscribed and paid up share capital
consisted of 3,361,900 shares with a par value of 5 Euros each.
37. DETAILS OF ENTITIES HOLDING MORE THAN 20% OF THE SHARE CAPITAL
The following entities held over 20% of the share capital as at 31 December 2007:
Name
Sata - Sociedade de Transportes Aéreos, SGPS, S.A.
%
Euros
100
16,809,500
40. CHANGES IN SHAREHOLDERS EQUITY
The changes in shareholders equity during 2007 were as follows:
Application
Opening
Heading
Capital
of equity
Appropriation
method
of the profit
Closing
balance
Increases
(Note 10)
from 2006
balance
16,809,500
-
-
-
16,809,500
(565.263)
-
(126,351)
-
(691,614)
287,370
-
-
-
287,370
Adjustments to holdings
in subsidiaries or associated companies
Revaluation reserves
Legal reserve
Other reserves
Retained earnings
| 61
820,990
-
-
245,147
1,066,137
3,318,091
-
-
-
3,318,091
260,029
2,014,574
-
4,657,792
6,932,395
4,902,939
4,991,087
-
(4,902,939)
4,991,087
25,833,656
7,005,661
(126,351)
-
32,712,966
ANNUAL REPORT
AND ACCOUNTS
2007
The reduction in Adjustments in holdings in subsidiaries and associated companies
of 126,351, results from the effect of foreign exchange adjustments in the financial
statements of group companies expressed in foreign currencies (Note 10).
The increase in Retained earnings, of 2,014,574, corresponds to the initial recording
of deferred taxes resulting from accumulated differences on 1 January 2007.
Revaluation reserve: This reserve results from the revaluation of tangible fixed assets
carried out under the terms of the applicable legislation (Note 12). In accordance with
prevailing legislation and accounting principles accepted in Portugal, these reserves
are not distributable to shareholders and may only, under certain circumstances,
be used for future increases in the Companys share capital.
Legal reserve: Commercial legislation establishes that at least 5% of the net annual
profit must be used to increase the legal reserve until it represents at least 20% of the
capital. This reserve may not be distributed except in the event of liquidation of the
company, but may be used to absorb losses after other reserves have been exhausted,
or may be incorporated into the capital.
As deliberated at the General Meeting held on 31 March 2007, the net profit for the
year 2006, amounting to 4,902,939, was applied as follows:
Legal reserve
Retained earnings
245,147
4,657,792
4,902,939
41. COST OF MATERIALS CONSUMED
The cost of materials consumed in 2007 was calculated as follows:
Opening inventory
2,229,499
Purchases
1,678,142
Closing inventory
(2,539,500)
1,368,141
| 62
ANNUAL REPORT
AND ACCOUNTS
2007
43. REMUNERATION OF BOARD MEMBERS
The remuneration of board members in 2007 and 2006 was 268,339 and 231,427,
respectively.
44. SALES AND SERVICES RENDERED BY ACTIVITY AND GEOGRAPHICAL MARKET
In the years ended 31 December 2007 and 2006, services rendered were as follows
2007
2006
27,737,156
23,802,838
Ground handling of third party aircraft
8,651,878
8,215,293
Traffic commissions
1,727,327
1,501,586
Personnel secondment
1,487,763
1,199,067
Terminal fee
1,061,402
1,030,731
Other
2,015,988
1,965,070
42,681,514
37,714,585
Air operations
45. STATEMENT OF FINANCIAL PERFORMANCE
The financial performance for the years ended 31 December 2007 and 2006
is as follows:
2007
2006
135,069
181,614
2,113,783
1,018,924
Costs and losses:
Interest paid
Foreign exchange losses
Cash discounts granted
46,156
24,576
Other financial expenses
476,734
455,291
2,771,742
1,680,405
3,466,059
2,998,876
6,237,801
4,679,281
777,701
680,210
Foreign exchange gains
1,393,182
795,898
Earnings in group companies
3,819,580
3,192,661
247,338
10,512
6,237,801
4,679,281
Financial profit/loss
Income and gains:
Interest earned
Other financial income
| 63
ANNUAL REPORT
AND ACCOUNTS
2007
Earnings in group companies of 3,819,580 corresponds to the appropriation using
the equity method of the profit for 2007 of group companies amounting to 3,815,558
(Notes 10 and 16) and earnings from securities and other financial investments
of 4,022.
46. STATEMENT OF EXTRAORDINARY PROFIT OR LOSS
The extraordinary profit or loss for the years ended 31 December 2007 and 2006
are as follows:
2007
2006
11,000
1,000
350
5,524
Losses on fixed assets
20,569
19,869
Fines and penalties
35,600
10,311
Adjustments in respect of previous years
90,537
27,622
1,090
26
Costs and losses:
Donations
Inventory losses
Other extraordinary expenses
159,146
64,352
165,753
1,630,872
324,899
1,695,224
Inventory gains
15
258,645
Gains on fixed assets
50
14,651
100,025
-
82,836
532,502
Extraordinary profit/loss
Income and gains:
Reduction of provisions (Note 34)
Adjustments in respect of previous years
Other extraordinary income
141,973
889,426
324,899
1,695,224
As at 31 December 2007 and 2006, Other extraordinary income included essentially
141,973 and 226,568 related to recognition of the EC subsidy granted through
the Specific Plan for the Development of the Autonomous Region of the Azores to
meet the costs borne by the company in the context of the Strategic Plan (Note 3.g)
and 50).
| 64
ANNUAL REPORT
AND ACCOUNTS
2007
48. TAXES AND CONTRIBUTIONS PAYABLE / RECOVERABLE
As at 31 December 2007 and 2006, the balances of these headings were
as follows:
2007
2006
366,468
2,347,491
111,105
-
(170,450)
-
723,517
5,738
- Persons - IRS - Tax deducted at source
178,401
162,000
Social Security Contributions
381,834
354,883
2,270
397
1,226,677
523,018
Debit balances:
Value Added Tax
Credit balances:
Value Added Tax
Corporation Tax IRC
- Minimum corporation tax and deductions at source
- Current tax (Note 2 and 6)
Personal Income Tax IRS:
Other
49. OTHER DEBTORS
As at 31 December 2007 and 2006, this heading was as follows:
2007
2006
(concession agreement)
7,045,189
6,811,983
IATA Clearing House
1,605,232
1,029,111
750,044
-
S.R.E. - Financial compensation
Directorate General of Treasury Madeira Ticket Subsidy
DREPA - Community Funds (PRODESA)
Other
| 65
99,523
151,403
910,331
1,483,522
10,410,319
9,476,019
ANNUAL REPORT
AND ACCOUNTS
2007
The sum of 7,045,189 concerns financial compensation for the public service in the
Autonomous Region of the Azores concerning the third and fourth quarters of 2007.
The amount of compensation is calculated under the terms envisaged and as a result
of the contract awarded to the Company by public tender (Note 3.j). According to the
calculation formula defined in that contract, the Company calculated compensation
concerning the public service for the year 2007 of 13,533,052, which was recorded
in the profit and loss account in Operating subsidies.
During 2007, the Company received 13,839,756, of which 6,803,183 represented
financial compensation for the year 2006 and 7,036,573 for the year 2007.
As indicated in the Introductory Note, the Company signed a concession agreement
for air services for the Funchal Porto Santo route. The amount of financial compensation
is calculated as envisaged and, using the calculation formula defined in that contract,
the Company calculated compensation concerning the public service for the year
2007 of 750,044, which was recorded in the profit and loss account in Operating
subsidies.
The heading DREPA Community Funds (PRODESA) corresponds to receivables
concerning the construction, improvement and running of regional aerodromes.
| 66
ANNUAL REPORT
AND ACCOUNTS
2007
50. ACCRUALS AND DEFERRALS
As at 31 December 2007 and 2006, the balances of these headings were as follows:
2007
2006
424,234
114,353
-
599,135
424,234
713,488
Accrued income:
Interest
Other
Deferred costs:
Pension benefits (a)
2,091,310
2,265,586
Construction work at head office
222,933
139,211
Insurance paid in advance
161,668
235,659
Leases paid in advance
158,205
-
Expenditure related to the AMSYS project
14,481
55,235
265,283
17,160
2,913,880
2,712,851
Other
Accrued costs:
Holiday pay and holiday bonuses
2,744,500
2,746,908
Agent commissions
237,169
236,121
Insurance
142,327
156,040
9,692
14,495
Interest
Other
1,387,504
48,493
4,521,192
3,202,057
125,556
274,659
-
157,240
125,556
431,899
Deferred income:
European subsidies (Note 46)
Other deferred income
(a) On 31 December 2000 the Company decided to record in the balance sheet all
liabilities not covered by the Pension Fund and by the provisions set aside, while those
concerning assets, of 3,485,515 as at 1 January 2000, were recorded in deferred
costs and are being depreciated throughout the remaining working life of employees,
now 20 years (Note 31).
As at 31 December 2007 Accrued costs Other corresponded essentially to: (i) the
amount received by the Company, on behalf of SATA Internacional, concerning gains
obtained with financial operations involving currency acquisition (USD) of 716,199,
which had not been transferred to SATA Internacional by the end of the year (Note
16); and (ii) 643,950 concerning unbilled airport charges.
| 67
ANNUAL REPORT
AND ACCOUNTS
2007
51. OTHER CREDITORS
In the years ended 31 December 2007 and 2006, this heading was as follows:
2007
2006
Handling
356,011
-
Passenger fees
271,068
177,619
Airport fees payable
196,525
246,058
74,679
453,278
Regional Department of Economic Affairs
Group companies
Other
-
393,331
510,413
706,918
1,408,696
1,977,204
Regional Department of Economic Affairs concerns advances of funds to the Company
to perform improvements and to acquire equipment for aerodromes on behalf
of Regional Government of the Azores.
52. EXTERNAL SUPPLIES AND SERVICES
External supplies and services for the years ended 31 December 2007 and 2006 were
as follows:
Rubrica
2007
2006
Communication
3,481,478
2,575,635
Fuel and lubricants
3,179,206
2,935,031
Rents and leases
2,503,534
2,269,005
Advertising and promotion
2,371,905
1,968,665
Services in respect of traffic
2,022,266
1,780,865
Commissions
1,328,856
1,289,019
Flight fees
1,255,654
885,154
Maintenance and repair
1,035,912
1,294,023
Personnel secondment
1,009,547
582,527
Other
4,570,289
2,961,748
22,758,647
18,541,672
Rents and leases includes the values concerning operating lease agreements for
the ATP (Note 10).
Commissions concerns the commissions awarded essentially to Company agents
for sales of SATA tickets.
| 68
ANNUAL REPORT
AND ACCOUNTS
2007
Maintenance and repair essentially represents the costs incurred by the Company
in the maintenance of ATP aircraft engines, propellers and landing gear.
53. LOANS
As at 31 December 2007 the Company had the following bank loans:
Medium and
Short term
long term
Total
1,346,754
-
1,346,754
3,617
-
3,617
1,350,371
-
1,350,371
Loans:
Caixa Geral de Depósitos ("CGD")
Bank overdrafts (Note 55)
The amount of 1,346,754 was intended to refinance the acquisition of the ATP
aircraft having been taken out in 1998, with a duration of 10 years and to be repaid
in equal half-yearly instalments over the years of 2003 to 2008 subject to half-yearly
and end-of-period interest at the 6-month Euribor rate plus a spread of 0.5%.
54. PROFIT & LOSS ACCOUNT BY FUNCTION
The profit and loss account by function was drawn up taking into consideration the
provisions of Accounting Directive No. 20 and the following aspects should be noted:
(a) Cost of goods sold and services rendered includes essentially the values of the
profit and loss account by nature recorded in: Cost of materials consumed;
External supplies and services - Fuel and lubricants, Rents and leases, Maintenance
reserves per flight hours, Handling, Flight and other charges, Charters, Catering
and Other (Note 52); Personnel costs in respect of on-board staff.
(b) Other operating income includes essentially the values of the profit and loss
account by nature recorded in: Operating subsidies; Supplementary income
and part of Extraordinary income.
| 69
ANNUAL REPORT
AND ACCOUNTS
2007
(c) Distribution charges includes essentially the values of the profit and loss account
by nature recorded in: External supplies and services Commissions, Advertising
and other supplies and external services; and Personnel costs concerning sales
department staff.
(d) Administrative costs includes essentially the values of the profit and loss account
by nature recorded in: External supplies and services Rents and leases and
others supplies and external services and Personnel costs concerning
administrative staff.
55. CASH FLOW STATEMENTS
The breakdown of cash components and their equivalents, reconciling the amounts
shown in the cash flow statement with the balance sheet headings, is as follows:
2007
2006
-
1,585
17,874,291
18,398,495
(3,617)
(394,172)
17,870,674
18,005,908
Cash
Bank deposits repayable on demand
Bank overdrafts (Note 53)
Banks and cash as per balance sheet
| 70
Franco Gomes
de Menezes
Luísa Maria
Estrela Miranda
Schanderl
António Maurício
do Couto
Tavares de Sousa
Luís Filipe
Soares Borges
da Silveira
António
Manuel da Silva
Amaral
(Chairman)
(Director)
(Director)
(Director)
(Director)
ANNUAL REPORT
AND ACCOUNTS
2007
| 71
LEGAL CERTIFICATION OF THE ACCOUNTS
ANNUAL REPORT
AND ACCOUNTS
2007
| 72
ANNUAL REPORT
AND ACCOUNTS
2007
| 73
ANNUAL REPORT
AND ACCOUNTS
2007
| 74
ANNUAL REPORT
AND ACCOUNTS
2007
| 75
ANNUAL REPORT
AND ACCOUNTS
2007
Audit Report
| 76
ANNUAL REPORT
AND ACCOUNTS
2007
Audit Report
| 77

there is something different in the air

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