1. Summary of action undertaken
In accordance with the legal and statutory provisions, in particular under the terms of para c) of article 12 of the Statutes of the Instituto das Comunicações de Portugal (ICP), approved by Decree Law nº 283/89 of August 23rd, it is our duty to submit the report on our audit and express an opinion on ICP's Annual Report and Accounts for the fiscal year ending on December 31st 2000.
The Statutory Audit Committee held meetings and followed through the most relevant aspects of the management of the Institute, in particular the implementation of the budget, and:
- analysed, on the basis of a sampling, the financial information available, with a favourable result;
- took note of the External Report and Audit drawn up by the firm KPMG, Peat Marwick, S.A., responsible for carrying the Audit of ICP's Accounts of fiscal 2000. This firm collaborated with the Chartered Accountant to assist him in discharging his specific duties.
It may be pointed out that we did not take into account the opinion of the Advisory Board.
2. Legislative Framework
According to the Annual Report and Accounts, ICP followed the legal framework of the sector, with special emphasis on the following: in the telecommunications area, Order of the Ministry of Social Equipment nº 12.809/2000 (III Série), which introduced operator portability; in the UMTS area, Ministerial Ruling nº 532-A/2000, which regulated the call for tenders for four nation wide licences for international mobile telecommunications; and in the area of radio communication, Decree law nº 151-A/2000, which lays down the regime applicable to the licensing of networks and radio communication stations and the supervision of installation of the said stations and the utilization of the radioelectric spectrum.
3. ICP's activities
In the year under review ICP returned to keeping pace with the growth and dynamism expressed world wide by the communications sector, both domestically and internationally.
The Annual Report and Accounts submitted by the Board is clear and thorough in terms of characterizing the activity undertaken in fiscal 2000. As indicated therein, the Institute's activity was marked by the launch of the bid for four licences for the international mobile telecommunications systems (IMT2000/UMTS), involving a far reaching impact for the years to come.
4. Human Resources
In the area of human resources, the number of collaborators in service at the end of 2000 rose 2.9% compared with the same period in the previous year. This development was driven by the increase in the Institute's remit, due to the high level of development of the sector and the structural changes taking place
Here is a summary table:
The following tables indicate budget variations for fiscal 2000:
|Lands and buildings||99.047||64.000||35.097||54,84|
|Basic and radioelectric equipment||36.495||282.900||(246.405)||(87,10)|
|Other adm. equip. & sundries||89.480||41.900||47.580||113,56|
|Refurb. of facilities||36.413||40.000||(3.587)||(8,97)|
In the overall reckoning, the level of investment made was below what was budgeted at 31.38%.
The following projects contributed to the deviation observed. Thus:
|Integrated IT sil. for spectrum management||199||180.000||(179.801)||(99,89)|
|Technological modernization spectrum monitoring||19.761||53.000||(33.239)||(62,72)|
|Remote broadcasting stations control||---||7.000||(7.000)||(100,00)|
|Remote monitoring for DMD (Madeira branch) and DAC (Azores branch)||---||100.000||(100.000)||(100,00)|
|Technological outfit of DMD||---||39.000||(39.000)||(100,00)|
|Works at DMD building||27.108||23.000||4.108||17,86|
|Integrated Management calibration plan system||104||500||(396)||(79,20)|
|Tech. upgrade of CATV laboratory||---||10.000||(10.000)||(100,00)|
|Tech. upgrade of wireless laboratory||3.398||30.000||(26.602)||(88,67)|
|Tech. upgrade of the Electreomagnetig Compatibility laboratory||2.244||30.000||(27.756)||(92,52)|
|Buildings Improvement & Acqui. - Barcarena||60.157||30.000||30.157||100,52|
|E/S workflow documental management||20.893||270.000||(249.107)||(92,26)|
|Deleg. Powers organiz. efficiency||---||15.000||(15.000)||(100,00)|
|Human resources solution||---||100.000||(100.000)||(100,00)|
|Other current invest. + refurb. works||726.682||347.300||379.382||109,24|
6. Costs and Losses and Operating Income and Earnings
The following table explains the deviations observed in the face of the budget for the year 2000. Thus:
|Operating Income & Earnings|
|Additional operating income||2.098||2.000||98||4,90|
|Operating financial income & earnings||412.392||96.000||316.392||329,58|
|Extraordinary operating income & earnings||480.918||66.000||414.918||628,66|
|Costs & Losses|
|External supplies & services||1.980.597||2.544.500||(563.903)||(22,16)|
|Amortization & depreciation||815.847||950.400||(134.553)||(14,16)|
|Other operating costs & losses||875.373||885.600||(10.227)||(1,15)|
|Financial costs & losses||4.127||1.700||2.427||142,76|
|Extraordinary Costs & losses||393.411||101.000||292.411||289,52|
The Net Result of the Fiscal year in 2000 rose to PTE 5,888,620,000, whereas in 1999 it had been PTE 2,748,736,000, showing a positive variation of PTE 3,139,884,000.
The main deviations are duly justified in the Management Report 2000, where the deviation tends to be higher than what is budgeted in the billing of fees for radioelectric spectrum utilization, brought about by the significant increase in the public service mobile telecommunications activity.
7. Annual Report and Accounts
7.1.The Statutory Audit Committee conducted it's action with a view to checking the financial, accounting, administrative and management aspects and then issued its opinion on the report and accounts, in accordance with ICP's Statutes and, subsidiarily, what is applicable to public undertakings.
7.2.The Management Report and the Annual Report and Accounts for 2000, submitted by the Board, clearly define the macro-economic and sectorial framework in which ICP's action is developed. They also define ICP's activities, the trends in human and material resources and the economic and financial situation for the fiscal year ending December 31st 2000.
7.3. The financial statements and the accounting system upon which those statements are based are the ones overall in keeping with the Official Accounting Plan and appropriately and substantively reflect ICP's networth as at December 31st 2000, as well as the results of its operations in the fiscal year ending on that date.
The various accounting criteria adopted are in keeping with tose used in the previous fiscal year.
7.4.As mentioned in notes 3 and 31 of the Annexe to the Balance Sheet and the Statement of Profits and Losses, ICP set up on October 1st 1996 an independent pension fund in order to cover and fund the liabilities for the payment of the pensions of the staff co-opted from the former CTT - Correios e Telecomunições, E.P.
According to the actuarial study carried out by the management company of the Pension Fund - BPI - Pensões, the current sum of ICP's liabilities stands at PTE 2,006,700,000 and is fully covered as at December 31st 2000.
We do stress that the liabilities for services rendered prior to the date of integration of the respective beneficiaries in ICP, the liability of the former CTT in the order of PTE 1,719,600,000 are not covered. This sum figures in the Balance Sheet as at December 31st 2000, under the item "Other Debtors and Creditors", pending payment by the former CTT. At the date of this report, we are not in a position to reach any conclusion as to whether this sum could be recovered.
7.5. According to Accounting Directive nº 19 of the Accounting Standardization Commission, and following the procedure adopted in 1999, ICP opted to recognize the total liability for the health care of its retired and working staff, and charged to the 2000 results the sum of PTE 14,936,000;
7.6. We would like to point out that in this fiscal year, ICP registered a sum of PTE 153,083,000 in shares, co-shares, costs and sundry expenses (as per note 51 in the Annexe to the Balance Sheet and the Statement of Profits and Losses), under the terms of the protocol reached with the founders of the "Fundação Portuguesa das Comunicações" (Portuguese Communications Foundation).
In view of what has been set out and except for the situation mentioned in the last paragraph of point 7.4 of this report, we are of the opinion that that the following deserve to be approved:
- the Annual Report and Accounts submitted by the Board of the Instituto das Comunicações de Portugal, for the fiscal year ending on December 31st 2000; and
- the transfer of the Net Result of the fiscal year in the order of PTE 5,8888,620,000 to the account investment reserves, as per the terms of nº 3 of article 22 of the Statutes.
And lastly, the Statutory Audit Committee note with appreciation and is thankful for all the collaboration afforded to it by the Board and by all the Services contacted.
Lisbon, April 6th 2001
THE STATUTORY AUDIT COMMITTEE
Mr Henrique Armando Antunes Ferreira - Chairman
OLIVEIRA, REIS & ASSOCIADOS
Chartered Accountants Represented by Mr José Vieira dos Reis, licence nº 359 - Member
Mr Duarte Nuno de Carvalho Gomes de Castro - Member