Vision/Mission/Corporate Values Notice of 56th Annual General Meeting Corporate Profile Board of Directors’ Profile Board of Directors’ Committees Directors’ Report Attendance of Directors Review Report on Statement of Compliance Statement of Compliance Pattern of Shareholding Categories of Shareholders Share Capital Six - year Summary Auditors’ Report to the Members on Unconsolidated Financial Statements Unconsolidated Financial Statements Auditors’ Report to the Members on Consolidated Financial Statements Consolidated Financial Statements Form of Proxy

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Unconsolidated financial statements 39 .

Chartered Accountants State Life Building No. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. An audit includes examining. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. 1956 and the Companies Ordinance. 1956 and the Companies Ordinance. It is the responsibility of the Corporation’s management to establish and maintain a system of internal control. Our responsibility is to express an opinion on these statements based on our audit. 1956 and the Companies Ordinance. after due verification. and (iii) the business conducted. investments made and the expenditure incurred during the year were in accordance with the objects of the Corporation. to the best of our knowledge and belief. KCHSU Sharah-e-Faisal Karachi – 75350 AUDITORS’ REPORT TO THE MEMBERS We have audited the annexed unconsolidated balance sheet of Pakistan International Airlines Corporation (the Corporation) as at December 31. unconsolidated profit and loss account. unconsolidated cash flow statement and unconsolidated statement of changes in equity together with the notes (b) 40 . proper books of accounts have been kept by the Corporation as required by the Pakistan International Airlines Corporation Act. unconsolidated cash flow statement and unconsolidated statement of changes in equity together with the notes forming part thereof. the unconsolidated balance sheet. O. we report that: (a) In our opinion. Chartered Accountants Cavish Court. as well as. were necessary for the purposes of our audit. unconsolidated statement of comprehensive income. 1984. on a test basis. 1-C I. evaluating the overall presentation of the above said statements. (c) in our opinion and to the best of our information and according to the explanations given to us. Box 4716 Karachi – 74000 M. 1984. We believe that our audit provides a reasonable basis for our opinion and. 2012 and the related unconsolidated profit and loss account.A. F. for the year then ended and we state that we have obtained all the information and explanations which. 1984. A-35. Block 7 & 8. unconsolidated statement of comprehensive income. evidence supporting the amounts and disclosures in the above said statements. Ferguson & Co. I. and are in agreement with the books of accounts and are further in accordance with accounting policies consistently applied. Yousuf Adil Saleem & Co. (ii) the expenditure incurred during the year was for the purpose of the Corporation’s business. An audit also includes assessing the accounting policies and significant estimates made by management. Chundrigar Road P. in our opinion: (i) the balance sheet and profit and loss account together with the notes thereon have been drawn up in conformity with the Pakistan International Airlines Corporation Act. and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Pakistan International Airlines Corporation Act.

914. We draw attention to note 1.613 million. 144. and give the information required by the Pakistan International Airlines Corporation Act.540 million during the year ended December 31. resulting in accumulated loss of Rs.forming part thereof conform with the approved accounting standards as applicable in Pakistan. total comprehensive income. cash flows and changes in equity for the year then ended. and (d) in our opinion. Audit Engagement Partner: Khurshid Hasan Date: April 26. the Corporation’s current liabilities exceeded its current assets by Rs. 1984. Our opinion is not qualified in respect of this matter. which states that the Corporation incurred a loss of Rs. no Zakat was deductible at source under the Zakat and Ushr Ordinance. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Corporation’s ability to continue as a going concern. as of that date.445. 2013 Place: Karachi Chartered Accountants Audit Engagement Partner: Syed Asad Ali Shah Chartered Accountants 41 . in the manner so required and respectively give a true and fair view of the state of the Corporation’s affairs as at December 31. 1980. 2012.479 million as of December 31.181. 2012 and of the loss. 151. and.2 to the unconsolidated financial statements. 2012. 1956 and the Companies Ordinance. 33.

351 3.397 821 985.084 984.057 Lt.711 61.474 110.936. Gen Asif Yasin Malik (Retd) Chairman Syed Omar Sharif Bokhari Director 42 .440.Property.323.444.523 8.396.814 16.685.499.140 1.927 Long-term investments Long-term advances Long-term deposits and prepayments 7 8 9 4.407 1.UNCONSOLIDATED BALANCE SHEET UNCONSOLIDATED BALANCE SHEET AS AT DECEMBER 31.800 128.863.491 5.410.044 43.948 184.844 25.917 CURRENT ASSETS Stores and spares Trade debts Advances Trade deposits and prepayments Other receivables Short-term investments Cash and bank balances TOTAL ASSETS 10 11 12 13 14 15 16 4.622 1.416.037 6.045.174.990 49.340 587 1. 2012 PAKISTAN INTERNATIONAL AIRLINES CORPORATION 2012 2011 2012 2011 ----------------------------Rupees Note in '000--------------------------------------------------------US$ in '000-----------------------------ASSETS NON CURRENT ASSETS Fixed assets .397 42.957 106.712.885 8.074.465 2.140.266.454 9.225.012 45.057.229 52.172.091.074.958 93.875 79.201.133 2.565 126.632.673.343 231.792.820 95.302 214 9.855 96.Intangibles 5 6 95.218 1. 2012 AS AT DECEMBER 31. plant and equipment .210 198 22.732 96.943 3.699 4.143 4.648 9.828.389 22.843 21.220 894.562.838 19.368 101.061 1.862 795.330 19.220 2.275.695 96.577 41.481 316.381 587.

530 20.354 1.928.472 4.069.027 10.198 71.951 166.559) (85.933.027 38.207 734.327 100.945.145 31.294) 319.198 4.352.047.407.834.167 (116.308.394) (955.272.578.195.057 21 22 23 24 25 26 13.113.759 676.933.278.202.779.653 47.944 101.394) 20 7.354.286 95.492 7. 2012 2012 2011 2012 2011 ----------------------------Rupees Note in '000--------------------------------------------------------US$ in '000-----------------------------EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Share capital Reserves Advance against equity from Government of Pakistan (GoP) TOTAL EQUITY SURPLUS ON REVALUATION OF PROPERTY.144 11.635 13.413 238.957.518.281 25.925.174.414 347.UNCONSOLIDATED BALANCE SHEET AS AT DECEMBER 31.499 135.015 2.594 1.968 204.189 100.996 (1.Long-term financing .733 9.899.125) 19.930 61.146.557 1.577 548.036 74.451.361) (955.220.827.001 8.530 534.967 (1.100 126.598 121.403 444.685 9.558 128.970 2.000 4. PLANT AND EQUIPMENT .673.366.222.025 209.901 10.410.164.621 286.Term finance and sukuk certificates .779.783.818 96.997 1.323.371 1.132 143.384 17 18 19 28.851 121.674 (147.225 6.606.465 156.345.305.092 1.615 52.Liabilities against assets subject to finance lease TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES CONTINGENCIES AND COMMITMENTS 30 27 28 29 21 22 23 53.376 11.828.968 11.831 (1.121) (1.429 1.144.269 69.264.262 87.000 5.397 495.107) 28.469 526.962 631.559) 295.045.301 989.107 9. Gen Asif Yasin Malik (Retd) Chairman Syed Omar Sharif Bokhari Director 43 .192 393.948) (118.770.801.988 104.690.NET NON CURRENT LIABILITIES Long-term financing Term finance and sukuk certificates Liabilities against assets subject to finance lease Advance from a subsidiary Long-term deposits Deferred liabilities CURRENT LIABILITIES Trade and other payables Accrued interest Provision for taxation Short-term borrowings Current maturities of: .274) 1.394.664.717.957.275.285 15.928.097 The annexed notes 1 to 45 form an integral part of these unconsolidated financial statements.713. Chairman Director Lt.548 45.637 6.943 44.233) (85.674 (114.

708) 3.421) 545.11) (0.746) (7.066 (216.872) (656.886) (33.87) (0.791.291.183) 17.219.993 (297.654) (457.529) (1.897) (11.295.027) (97.230) (219.664) (730.448.513) (68.307) (112.024.525) (3.540) (Rupees) (62.788 32 (61.00) (5.996) (527. 10 each 'B' class ordinary shares of Rs.696.266) (17.583.023) (21.000 (21.510.911) 6.50) (9.342.038) (578.388.US$ in '000 ------------1.649) (112.767.net COST OF SERVICES Aircraft fuel Others GROSS (LOSS) / PROFIT Distribution costs Administrative expenses Other provisions and adjustments Exchange loss .709) (341.291) (51.645 (19.156.197) (9.279) (73.511 (6.net Other operating income LOSS FROM OPERATIONS Finance cost LOSS BEFORE TAXATION Taxation LOSS FOR THE YEAR 38 37 33 34 35 36 31 2012 2011 -----------.279) (311.155.605 (71.454) (6.046) (28.06) (0.153.559) (4.590) (101.576 2012 2011 ------------.278.509) (117.965.757) (32.UNCONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31.246 1.576) (8.Rupees in '000 -----------112.020 (216.801) 1.145) (1.294) (46.130.066 116.926.586) 13.380.065) 1.025.11) (0.940) (318.001.630) (114.050) (336.099. 2012 PAKISTAN INTERNATIONAL AIRLINES CORPORATION UNCONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31. Gen Asif Yasin Malik (Retd) Chairman Chairman Syed Omar Sharif Bokhari Director 44 Director .207) (628.755) (10.723.912) (199. Lt. 5 each 39 39 (11.550.BASIC AND DILUTED Loss attributable to: 'A' class ordinary shares of Rs.181.435) (52.272) (7.874) (7.405.268) (US$) (700.157.042) (4.73) (4.967.594 (26.875) 35.258.846.593) EARNINGS PER SHARE . 2012 Note REVENUE .06) The annexed notes 1 to 45 form an integral part of these unconsolidated financial statements.

268) (297. in a separate account below equity. 2012 FOR THE YEAR ENDED DECEMBER 31.UNCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME PAKISTAN INTERNATIONAL AIRLINES CORPORATION UNCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31.037 (33. 2012 2012 2011 --------Rupees in '000-------2012 2011 ---------US$ in '000--------- Loss for the year (33.118) (26.226) (57) (297.772.767.207) (341. Gen Asif Yasin Malik (Retd) Chairman Syed Omar Sharif Bokhari Director 45 .503) (5. Chairman Director Lt.540) (26.177. 1984.181.325) 42 (341. plant and equipment has been reported in accordance with the requirements of the Companies Ordinance. The annexed notes 1 to 45 form an integral part of these unconsolidated financial statements.593) Other comprehensive income Unrealised gain / (loss) on re-measurement of available for sale investments Total comprehensive income 4.650) Surplus / (deficit) arising on revaluation of property.

678) 3.682) (236.499) (566.100 (2.638.354.997) (7.158) (2.107.294) (5.542) 8.560) 60.493) 2012 2011 ---------Rupees in '000--------PAKISTAN INTERNATIONAL AIRLINES CORPORATION UNCONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31.311) (24.389 (61.906.214) 7. plant and equipment Purchase of intangibles Proceeds from held to maturity investments Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of share capital Receipt of advance against equity from GoP Repayment of long-term financing Proceeds from long-term financing Receipt of advance from a subsidiary Redemption of term finance certificates Proceeds from long-term deposits Repayment of obligations under finance lease .676) (623.399 (9.677) 7.615) 13.914.090) (648.298.845) 81.141) (21.903) (24.370) (11.072.UNCONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31.819) 18.343 (631.756) 79.033) 529 (95.831 (104.950 (8.149 (3.225.net Net cash (used in) / generated from financing activities Decrease in cash and cash equivalents CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR Effects of exchange rate changes on cash and cash equivalents CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR CASH AND CASH EQUIVALENTS Cash and bank balances Short-term borrowings 16 29 2.141) 894.530) (59.143 925 (84.814 (25. 2012 Note CASH FLOWS FROM OPERATING ACTIVITIES Cash (used in) / generated from operations Profit on bank deposits received Finance costs paid Taxes paid Staff retirement benefits paid Long-term deposits and prepayments . 2012 2012 2011 ------------US$ in '000------------ The annexed notes 1 to 45 form an integral part of these unconsolidated financial statements.182.289 (3.547) 19. plant and equipment Proceeds from sale of property.172.350 (18.672) (6.874.213) (256.974) 5.766 45.704.204) (608.948 (286.640) 500.213) 22.726 (7.190 (1.851) (276.213) (214.450) 40 (1.528. Lt.800) (40.491) (415) (276.133) 5.320) 33.906.206. Gen Asif Yasin Malik (Retd) Chairman Chairman Syed Omar Sharif Bokhari Director 46 Director .250) (59.903) 1.412 (10.251 10.660) (15.368) (7.272.389 (111.000 89.141 (3.801.182.600) (163.555) 1.408) 7.650.663.022) 148.027) (24.306 (53.271.025) (608.318.300.818) (3.946 (39.485 (28) 673 (94.137) (461.318) (75.521 943.675) (350.710) 51.481.928.061.012) 718.682) 9.183) (34.524 (8.334.586) 91 (36) 81 (40.355) (37.906.406 (79.004.net Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property.597.687) 481.369 511 (94.650) (6.067) 816 (549) (74.296) (6.167 (10.997 (8.

674 1.038 1.037 (33. 2011 Total comprehensive income for the year ended December 31.327.928.118) (26.779.782 (119.037 (33.727) 3.674 26.674 2.779. 2011 Loss for the year Other comprehensive income for the year Total comprehensive income for the year Surplus on revaluation of property.177.540) (33.207) (26.540) 4.501.540) (33. subscribed.501.Rupees in '000 ---------------------------------------------------------------------------------------------------------Balance as at January 1.167 2.223 78.767.726 (85.914.UNCONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31.772.016.774. 2012 Issued.167 3.181. plant and equipment realised during the year on account of incremental depreciation charged thereon .net of tax Transactions with owners Issue of share capital 'A' class ordinary shares Balance as at December 31.181.501.183) - - - - - 78.207) (26.038 1.004.948 2.559) (5.037 4.038 1.674 27.118) (5. Chairman Director Lt.118) (26.004. 2012 1.928.900 (92.503) 1.819 283.674 22.net of tax Balance as at December 31.726 28.779.167 4.181.223 28.244.933.788 (151.479) 283.767. plant and equipment realised during the year on account of incremental depreciation charged thereon .899. Gen Asif Yasin Malik (Retd) Chairman Syed Omar Sharif Bokhari Director 47 .325) 25.788 (116.107) The annexed notes 1 to 45 form an integral part of these unconsolidated financial statements. 2011 Total comprehensive income for the year ended December 31.779.767.779. 2012 Loss for the year Other comprehensive income for the year Total comprehensive income for the year Advance against equity from GoP Surplus on revaluation of property.928.207) (5. 2012 Reserves Unrealised gain / (loss) on remeasurement of investments Accumulated losses Total ---------------------------------------------------------------------------------------------------------------------.743) (62. and paid-up share capital Advance against equity from Government of Pakistan (GoP) Capital reserves Revenue reserves PAKISTAN INTERNATIONAL AIRLINES CORPORATION UNCONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31.

Rollover / Extension of GOP guarantees amounting to approximately Rs. since then it has been extending support to the Corporation through the following measures to ensure that it (the Corporation) continues and sustains in the long-term as a viable business entity: - Reimbursement of financial charges on term finance and sukuk certificates payable by the Corporation. the plan was amended and the amended plan was submitted to the Board of Directors for their approval in their meeting held on January 21. Issuance / renewal of guarantees to financial institutions. The Board while considering the plan as an interim plan asked management to hire services of a reputable international aviation consultant for the preparation of five year strategic business plan. Jinnah International Airport.NOTES TO AND FORMING PART OF THE UNCONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31. the Corporation presented a proposal for financing support required along with its interim business plan to the ECC at its meeting held on February 26. 144. 13. 2012. restructuring of existing loans to reduce finance cost and issuance of GoP guarantees. 21.2 - - - The Corporation continued to pursue approval of its business plan (the plan) with the GoP at various levels and in this respect it (the Corporation) presented the plan to the President and the Prime Minister of Pakistan. 2008 communicated that it would extend all maximum support to maintain the Corporation’s going concern status. among other measures. 2013. as disclosed in notes 22. 9.000 million to meet working capital requirements of the Corporation. During the current year. which was subsequently repealed and replaced by the Pakistan International Airlines Corporation Act. the Economic Coordination Committee (ECC) of the Cabinet accorded approval for extending the repayment period of the term finance certificates aggregating Rs.1 THE CORPORATION AND ITS OPERATIONS Pakistan International Airlines Corporation (the Corporation) was incorporated on January 10.767.1.2.914. both local and foreign. Accordingly. 51. Further. Economic Reforms Unit of the Ministry of Finance and the Economic Coordination Committee (ECC) in current and previous years.1. Further. 1. amounts aggregating to Rs. 2009 and 2010. The principal activity of the Corporation is to provide commercial air transportation. 12. 26. 33. include attaining fuel efficiency through fleet modernization and optimum fleet deployment on network.479 million as of December 31. 1956 (the Act).700 million into new term finance certificates (refer note 22. The ECC approved the following financing support proposal subject to the condition that the timeline will be fixed for repayment of loans and there will be quarterly monitoring of the Corporation’s business plan by the Ministry of Finance: - - - - - New loans / guarantees for repayment of loans amounting to Rs. 1. which among other things should also be marketable. 1955 under the Pakistan International Airlines Corporation Ordinance.403 million). New guarantees against loans already taken on the basis of letter of comfort amounting to Rs. the GoP has provided long-term financing aggregating to Rs. the Corporation has not been able to pay interest and principal amount of term finance and sukuk certificates and other borrowings. and Funds of US$ 46 million for acquisition of narrow body aircraft on dry lease. which includes passenger. The Government of Pakistan (GoP).16 billion.1 billion becoming due in year 2013. 2012 current liabilities of the Corporation exceeded its current assets by Rs. Karachi. Other activities of the Corporation include provision of engineering and allied services. so as to enable the Corporation to raise / rollover funds. In this respect. The objectives of the business plan.9 and 29. 2013. cargo and postal carriage services.1). and On July 3.5 billion.3.613 million (2011: Rs. 151. 1955. 2012 1.830 million have been provided to the Corporation towards equity during the years ended December 31. 22.221. which are overdue as at December 31. as of December 31. 2012. 88. 12 billion. separation of the core airline business from non-core activities and controlling costs. During the years ended December 31. 11. 119. being the majority shareholder of the Corporation. 8. The business plan includes GoP’s support in terms of providing necessary funding for recapitalization.207 million) resulting in accumulated loss of Rs.790 million along with conversion of certain short term loans amounting to Rs.727 million).445. 2008 to 2012.016. The shares of the Corporation are quoted on all Stock Exchanges of Pakistan. 20. Furthermore. The head office of the Corporation is situated at PIA Building. On their advice. Additional funding to provide fiscal space to the Corporation amounting to Rs. the Corporation incurred a net loss of Rs.540 million (2011: Rs. 2012 (2011: Rs. 48 . had through its finance division’s letter dated September 2.181. enhancing revenues through additional frequencies on high demand high yield routes.

2. and defined benefit obligations are stated at present value in accordance with International Accounting Standard (IAS) . 2. profit and loss account. the requirements of the Act or the provisions or directives of the Companies Ordinance.3 Functional and presentation currency Items included in the unconsolidated financial statements are measured using the currency of the primary economic environment in which the Corporation operates. collateral agreements).retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but - 49 . therefore.1 BASIS OF PREPARATION Statement of compliance These unconsolidated financial statements are the separate financial statements of the Corporation and have been prepared in accordance with the requirements of the Act and approved accounting standards as applicable in Pakistan.2 2. The disclosures also apply to recognised financial instruments that are subject to an enforceable master netting arrangement or similar agreement.‘Presentation of Financial Statements’ (effective for annual periods beginning on or after July 1. the going concern assumption is appropriate and has. statement of comprehensive income and cash flow statement are stated as additional information.g. 89. certain financial assets are carried at fair value. provisions of and directives issued under the Companies Ordinance. beginning on or after the date mentioned herein: - IFRS 7 . 97.5 Amendments to published standards and new interpretation to existing standard that are not yet effective and have not been early adopted by the Corporation The following amendments to published standards and new interpretation to existing standard are effective for accounting periods. Basis of measurement These unconsolidated financial statements have been prepared under the historical cost convention except that: - - - - certain items of property.9457 = US $ 1). amendments to following standards and interpretations became effective.Financial Instruments: Disclosures .23 = US $ 1 (2011: Rs.(effective for annual periods beginning on or after January 1. The new disclosures are required for all recognised financial instruments that are set off in accordance with IAS 32 ‘Financial Instruments: Presentation’. liability on account of frequent flyer programme is recognised at fair value.19 ‘Employee Benefits’. as such. which is the Corporation’s functional and presentation currency. Adoption of amended standards During the year.4 2.Deferred Tax: Recovery of underlying assets Amendments to IFRS 7 . their application did not have material impact on the unconsolidated financial statements of the Corporation: - - Amendments to IAS 12 .‘Financial Instruments: Disclosures’ . prepared these unconsolidated financial statements on a going concern basis. management believes that considering the mitigating factors set out in the preceding paragraphs. 1984 shall prevail.. IAS 1 . 2. The US Dollar amounts reported in the balance sheet. however. The US Dollar amounts in the unconsolidated balance sheet. irrespective of whether they are set off in accordance with IAS 32. 1984. solely for the convenience of the users of these unconsolidated financial statements.Transfer of financial assets 2. 2013) . plant and equipment are stated at revalued amount.These amendments require an entity to disclose information about rights to set-off and related arrangements (e.Income Taxes . The unconsolidated financial statements are presented in Pakistani Rupees. it may be unable to realize its assets and discharge its liabilities in the normal course of business. 2012) . statement of comprehensive income and cash flow statement have been translated into US Dollar at the rate of Rs. However. material uncertainty exists that may cast significant doubt on the Corporation’s ability to continue as a going concern and. The disclosures would provide users with information that is useful in evaluating the effect of netting arrangements on an entity’s financial position. 1984. profit and loss account. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance. In view of the situation described above. In case requirements differ.

the Corporation will recognise the actuarial gains and losses in other comprehensive income. the amendments to IAS 1 require additional disclosures to be made in the other comprehensive income section such that items of other comprehensive income are grouped into two categories: (a) items that will not be reclassified subsequently to profit or loss. 2014) . The amendments also clarify the application of the IAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous.6 3. liabilities. to immediately recognise all past service costs. The estimates and underlying assumptions are reviewed on an on-going basis. 2013) . there would not be any impact on Corporation’s equity. Income tax on items of other comprehensive income is required to be allocated on the same basis.‘Employee Benefits’ (effective for annual periods beginning on or after January 1. IFRIC 20 . The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. As a result of adoption of this amendment. This change will remove the corridor method and eliminate the ability for entities to recognise all changes in the defined benefit obligation and in plan assets in profit or loss. and addresses the issues pertaining to the recognition of production stripping cost as an asset. - - The above mentioned amendments to published standards and new interpretation to existing standard are either not relevant to the Corporation’s operations (except for the impact of IAS 19 as described above) or are not expected to have significant impact on the Corporation’s financial statements other than increase in disclosure in certain cases. which currently is allowed under IAS 19. Other standards issued by IASB but not adopted by Securities and Exchange Commission of Pakistan (SECP) The IASB has also issued following standards that have not been adopted in Pakistan by the SECP: - - - - - - - - IFRS 1 – First Time Adoption of International Financial Reporting Standards IFRS 9 – Financial Instruments IFRS 10 – Consolidated Financial Statements IFRS 11 – Joint Arrangements IFRS 12 – Disclosure of Interests in Other Entities IFRS 13 – Fair Value Measurement IAS 27 (Revised 2011) – Separate Financial Statements due to non-adoption of IFRS 10 and IFRS 11 IAS 28 (Revised 2011) – Investments in Associates and Joint Ventures due to non-adoption of IFRS 10 and IFRS 11 2. requires management to make estimates. In the process of applying the Corporation’s accounting policies. as applicable in Pakistan. 2013) – This interpretation applies to all types of natural resources that are extracted using a surface mine activity process.‘Financial Instruments: Presentation’ . However.(effective for annual periods beginning on or after January 1. However. and to replace interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability / asset.‘Stripping Costs in the Production Phase of a Surface Mine’ . Actual results may differ from these estimates. management has made the following estimates and judgments which are significant to the unconsolidated financial statements: 50 . initial measurement of stripping activity at cost and subsequent measurement of stripping activity asset at depreciated or amortised cost based on a systematic basis over the expected useful life of the identified component of ore body.These amendments clarify the meaning of “currently has a legally enforceable right to set-off”. IAS 32 . which are currently being recognised in the profit and loss account. income and expenses.consecutive statements. - IAS 19 . CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS The preparation of unconsolidated financial statements in conformity with approved accounting standards. and (b) items that will be reclassified subsequently to profit or loss when specific conditions are met. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period.The amendments require actuarial gains and losses to be recognised immediately in other comprehensive income. assumptions and judgments that affect the application of policies and reported amounts of assets. or in the period of the revision and future periods if the revision affects both current and future periods.(effective for annual periods beginning on or after January 1. the results of which form the basis of making the judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

which is made in proportion to the estimated utilised life of the relevant category of the aircraft attained up to the balance sheet date. Trade debts The Corporation reviews its doubtful trade debts at each balance sheet date to assess the adequacy of the provision there against. whereas the effect on future years is impracticable to ascertain considering subsequent measurement of aircraft fleet under the revaluation model and inherent uncertainties attached thereto. expected rates of return on pension plan assets. Had there been no change in useful lives and residual values of aircraft and related spares. The consideration in respect of initial sale is allocated to award credits based on their fair value and is accounted for as a liability in the unconsolidated financial statements. Due to the long-term nature of these benefits. plant and equipment The Corporation reviews appropriateness of the rates of depreciation / useful lives and residual values used in the calculation of depreciation at each financial year end. In particular.2 3. the Corporation estimates revalued amounts and useful life of aircraft fleet.4 3. Liability on account of frequent flyer programme The Corporation operates a frequent flyer programme that provides travel awards to members of the programme based on accumulated mileage. 411. The fair value of credits awarded is estimated by reference to the fair value of the services for which the award credits may be redeemed. 3.3. judgment is required in the estimation of the amount and timing of future cash flows when determining the level of provision required. such estimates are subject to certain uncertainties. Any change in estimate in future might affect the carrying amounts of the respective item of property. In addition. plant and equipment with a corresponding effect on the depreciation charge and impairment. The method involves making assumptions about discount rates. the management has reassessed the residual values of aircraft and related capital spares. the Corporation takes into account the applicable tax laws. the useful lives of aircraft fleet have been reassessed. surplus on revaluation and annual transfer of incremental depreciation from surplus on revaluation of property. Determination of the fair value of the award credit involves estimations. Change in accounting estimate As a result of revaluation exercise conducted by an independent valuer as of December 31.3 3.5 3. These changes in accounting estimates have an impact on depreciation expense for the current year. Significant judgment is exercised to determine the amount of deferred tax asset to be recognised. The Corporation accounts for award credits as separately identifiable component of the sales transaction in the period in which they are granted. and estimating the expected award credit redemption rate. Significant assumptions used to carry out the actuarial valuation have been disclosed in note 26 to these unconsolidated financial statements. Employee benefits The liabilities relating to defined benefit plans are determined through actuarial valuation using the Projected Unit Credit Method. leasehold land and buildings based on the periodic valuations carried out by independent professional valuers.1 Property. The provision for frequent flyer programme is determined based on the valuation carried out by an independent professional valuer. These estimates are reviewed as and when a significant change in the assumptions used is observed and the liability is adjusted annually as appropriate.896 million. future salary increases. Due to the complex nature and huge quantum of the items of stores and spares the net realisable value is arrived at by estimating the provision against slow moving stores and spares. Stores and spares The Corporation at each balance sheet date reviews the net realisable value of stores and spares to assess any diminution in their respective carrying values. future increase in medical costs and future pension increases.6 51 . mortality rates. 2011. plant and equipment account to accumulated loss. based on the average of air fares. Taxation In making estimate for income tax payable by the Corporation. Such estimates are based on assumptions about a number of factors and actual results may differ. resulting in future changes to the provision. Deferred tax asset is recognised for all unused tax losses and available credits to the extent that it is probable that sufficient taxable temporary differences and taxable profits will be available against which such losses and credits can be utilised. the value of each award credit assuming a 100% redemption rate. depreciation expense pertaining to aircraft fleet and capital spares for the year would have been lower by Rs. Further.

Proportionate depreciation on aircraft fleet is charged from the date of acquisition till the date of disposal. other than the aircraft fleet. Revaluation is carried out with sufficient regularity to ensure that the carrying amount of assets does not differ materially from the fair value. useful lives and methods are reviewed. land and buildings is credited to the surplus on revaluation account and is shown in the balance sheet below share capital and reserves. if appropriate. technical and commercial obsolescence. the related surplus on revaluation of property. at each financial year end. plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. only when it is probable that future economic benefits associated with the item will flow to the Corporation and the cost of the item can be measured reliably. plant and equipment is capitalised and the asset so replaced is derecognised. depreciation is charged from the month in which the asset is available for use until it is derecognised.7 Revenue recognition Revenue for passenger tickets and cargo airway bills is recognised when the transportation services are provided. Depreciation is charged to the profit and loss account. Leasehold land and buildings thereon and aircraft fleet are measured at revalued amounts. expected physical wear and tear.. are recognised as revenue on the basis of estimated number of days delay between the date of sale of ticket / airway bills and the date of actual travel / lift. The cost of an item of property.e. Cost incurred to replace a component of an item of property. Accumulated depreciation at the date of the revaluation is eliminated against the gross carrying amount of the asset and the net amount restated to the revalued amount of the asset. plant and equipment are stated at cost less accumulated depreciation and impairment losses. if any. if any. is written down over their expected useful lives. The useful lives of aircraft fleet are determined by independent valuer. as appropriate. whereas buildings classified as ‘others’ in the aforesaid note are stated at cost less accumulated depreciation and accumulated impairment losses. All other repairs and maintenance including cost incurred under ‘power-by-the-hour’ contracts are charged to the profit and loss account during the financial period in which they are incurred. Surplus on revaluation of aircraft fleet. Useful lives (except for aircraft fleet) are determined by the management based on expected usage of asset. 4. The rates of depreciation are disclosed in note 5. i. plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. which are the fair values at the date of revaluation less accumulated depreciation and impairment. The assets’ residual values. and other similar factors. Major renewals. applying the straight-line method whereby the cost or revalued amount of assets. if any. 2011 and are enumerated as follows: Fixed assets Property. In respect of additions and disposals of assets. plant and equipment Owned Lands classified as ‘others’ in note 5. less their residual values. Other items of property.3. improvements and overhauls are capitalised and depreciated over the period to the next major overhaul. plant and equipment (net of deferred taxation) is transferred directly to retained earnings / accumulated loss. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset. Aircraft and related equipment acquired on an exchange basis are stated at amounts paid plus the fair value of the fixed asset traded-in. To the extent of the incremental depreciation charged on the revalued assets. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies adopted in the preparation of these unconsolidated financial statements are same as those applied in the preparation of the unconsolidated financial statements of the Corporation for the year ended December 31. Tickets / airway bills that are un-utilised.1 are stated at cost. and adjusted.1 52 . Any gain or loss arising on derecognition of the asset (calculated as the difference between the net 4. recognised subsequent to the date of revaluation.1. up to the month preceding the disposal. An item of property.

Finance charges are allocated to accounting periods in a manner so as to provide a constant periodic rate of charge on the outstanding liability. Finance lease Assets held under finance lease are accounted for by recording the assets and related liabilities at the amounts determined on the basis of the lower of fair value of assets and the present value of minimum lease payments. the recoverable amounts are estimated to determine the extent of impairment losses. Leased Leased assets under which the Corporation assumes substantially all the risks and benefits of ownership are classified as finance leases. less impairment. Investments Subsidiaries and associates 4. Intangible assets with finite lives are amortised on a straight line basis over their estimated useful lives as specified in note 6. Available for sale Investments classified as available for sale are initially recognised at fair value.2. Capital spares which are not useable are treated as scrap and charged to profit and loss account. When revalued assets are sold. plus transaction costs and are subsequently marked to market using year end bid prices from stock exchange quotations and quotations from brokers and in case of unquoted investments. Initial direct costs are added to the amount of the asset. Following initial recognition. Capital work-in-progress These are stated at cost less impairment. plant and equipment and are depreciated based on the average remaining useful life of the related aircraft. Capital spares Rotable and repairable stores are stated at cost and treated as property. The assets are transferred to relevant category of property. Gains and losses on disposal of assets are taken to profit and loss account. construction and installation. Any resultant unrealised gain or loss is recognised in other comprehensive income.disposal proceeds and the carrying amount of the asset) is included in the profit and loss account in the year the asset is derecognised. if any. if any. When 53 . At subsequent reporting dates. and consist of expenditure incurred and advances made in respect of assets in the course of their acquisition.3 Investments in subsidiaries and associates are initially recognised at cost. if any. plant and equipment when they are available for intended use. Costs that are directly associated with identifiable software products / licenses controlled by the Corporation and that have probable economic benefit beyond one year are recognised as intangible assets. the relevant remaining surplus is transferred directly to retained earnings (unappropriated profits / accumulated loss).2 4. at cost. Intangibles Intangible assets are measured on initial recognition at cost. Depreciation is charged on leased assets on a basis similar to that of owned assets. intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss account when the asset is derecognised. Operating lease Payments made under operating leases (net of any incentives received from the lessor) are charged to the profit and loss account on a straight-line basis over the lease term. Other leases are classified as operating leases. and carrying amounts of investments are adjusted accordingly.

Trade debts and other receivables considered irrecoverable are written off. Cash and cash equivalents also include bank overdrafts / short-term borrowings that are repayable on demand and form an integral part of the Corporation’s cash management. if any. Cash and cash equivalents For the purposes of cash flow statement. 4.6 4. Pension funds For all the permanent employees hired prior to July 1. employees are entitled to basic salary and flight allowance whereas under Employees’ Pension Fund. Contributions are made to the scheme on the basis of actuarial valuation that is carried out annually. A provision for impairment is established if there is objective evidence that the Corporation will not be able to collect all amounts due according to the original terms of the receivables. balances with banks and other short-term highly liquid investments with original maturities of three months or less. These investments are initially recognised at fair value plus transaction costs and subsequently measured at amortised cost using effective interest method. Trade debts and other receivables These are recognised initially at fair value (original invoice / ticket amount) plus directly attributable transaction costs (if any) and subsequently measured at amortised cost less provision for impairment. Goods-in-transit are valued at cost plus other charges incurred thereon. Pension scheme is a final salary pension scheme and is invested through three funds namely Pakistan Airline Pilot Association (PALPA).these investments are sold or impaired. for which the Corporation has the ability to hold them till maturity. these are measured at amortised cost using the effective interest method. Under PALPA and FENA. Flight Engineering Association (FENA) and Employees’ Pension Funds. Trade and other payables Liabilities for trade creditors and other amounts payable are recognised initially at fair value plus directly attributable transaction cost. Held to maturity Investments with fixed or determinable payments and fixed maturity. Cost is determined as follows: Fuel and medical inventories Other stores and spares first-in-first-out basis weighted moving average cost 4. if any. and subsequently measured at amortised cost. Provisions for impairment in value.4 4. 2008 the Corporation operates a funded benefit pension scheme for its three categories of employees. All investments categorised under held to maturity are subject to annual review for impairment. Equal monthly contributions are made to the Fund by the Corporation and the employees in accordance with the Fund’s Rules. if any is taken to the profit and loss account. are classified as held to maturity investments. cash and cash equivalents comprise of cash in hand.5 Provision against slow moving stores and spares is made in proportion to the estimated utilised life of the relevant category of the aircraft attained up to the balance sheet date.7 4. Subsequently. the accumulated fair value adjustments recognised in other comprehensive income are reclassified in the profit and loss account. Stores and spares These are stated at lower of cost and net realisable value.8 4. employees are entitled to basic salary and certain other allowances. Employee benefits Provident fund The Corporation operates a defined contribution provident fund scheme for all its permanent employees. if any. Loans and borrowings Loans and borrowings are initially recognised at fair value of the consideration received less directly attributable transaction costs.9 54 .

Deferred tax asset is recognised for all deductible temporary differences.11 55 . Compensated absences The Corporation accounts for all accumulated compensated absences when the employees render service that increases their entitlement to future compensated absences on the basis of actuarial valuation that is carried out annually. Passenger and cargo revenue Passenger and cargo revenue is recognised when the transportation service is provided. 2008 in lieu of the pension funds as described above. Deferred tax assets and deferred tax liabilities are offset. Unrecognised deferred tax asset is reassessed at each balance sheet date and recognised to the extent that it has become probable that future taxable profits or taxable temporary differences will allow the deferred tax asset to be recovered. Current Provision for current taxation is based on taxable income at current rates of taxation after taking into account tax credits and rebates available. It also includes any adjustment to tax payable in respect of prior years. based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. air charters and related activities. or one quarter percent of turnover. For all the permanent employees hired on or after July 1. whichever is higher. mail and excess baggage and provision of handling services to other airlines. Taxation Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit and loss account except to the extent that it relates to items recognised directly in equity or in other comprehensive income. Actuarial gains and losses on employee benefits Actuarial gains and losses (if any) on all employee benefits are recognised immediately in the profit and loss account. to the extent that it is probable that taxable profits or taxable temporary differences will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised. Post-retirement medical benefits The Corporation operates an unfunded defined benefit medical scheme and provides medical allowances and free hospitalisation benefits to all its retired employees and their spouses in accordance with their service regulations.7. engineering services.10 4. cargo. the Corporation operates a defined contribution pension fund whereby a contribution of 5% of the pensionable benefits is made to the Fund in accordance with the relevant rules. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled. The value of unused tickets and airway bills is included in current liabilities as ‘advance against transportation’ until recognised as revenue. Revenue recognition The Corporation principally earns revenue from the carriage of passengers. The carrying amount of deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. The estimates involved in revenue recognition are disclosed in note 3. if any. 4. Deferred taxation Deferred income tax is recognised using the balance sheet method on temporary differences at the balance sheet date between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes. The post-retirement medical benefit is accounted for on the basis of actuarial valuation that is carried out annually. carry forward of unused tax credits and unused tax losses.

Engineering and other services Revenue from repairs and maintenance and overhaul services of engine and component to other airlines is recognised when such services are rendered. Provisions are reviewed at each balance sheet date and adjusted to reflect current best estimate. construction or production of a qualifying asset (i. In addition. An impairment loss is recognised. Dividend income is recognised when the Corporation’s right to receive dividend is established. Borrowing costs The Corporation recognises the borrowing costs as an expense in the period in which these costs are incurred. when the miles expire or when they are not expected to be redeemed. as an expense in the profit and loss account. if no impairment loss had been recognised. The cost of redemption of miles is recognised when miles are redeemed. except the borrowing costs directly attributable to the acquisition. interest bearing advances and held to maturity investments on time proportion basis using effective interest method. Value in use is ascertained through discounting of the estimated future cash flows using a discount rate that reflects current market assessments of the time value of money and the risk specific to the assets. The fair value of the miles sold is deferred and recognised as revenue on redemption of the miles by the participants to whom the miles are issued. an asset that necessarily takes a substantial period of time to get ready for its intended use or sale) are capitalised as part of the cost of that asset. assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Interest / mark-up and dividend income The Corporation recognises interest income / mark-up on short-term bank deposits. If any such indication exists then the asset’s recoverable amount is estimated.. For the purpose of assessing impairment.6.14 56 . Frequent flyer programme revenue The Corporation operates two principal loyalty programmes. The recoverable amount is the higher of an asset’s fair value less cost to sell and value in use. The estimates involved in recognising revenue from frequent flyer programme are disclosed in note 3. primarily free travel. miles are sold to a commercial partner to use in promotional activity. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.e. it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation.12 4. for the amount by which the asset’s carrying amount exceeds its recoverable amount. 4.13 4. The fair value attributed to the awarded mileage credits is deferred as a liability and recognised as revenue on redemption of the miles by the participants to whom the miles are issued. Impairment Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined. Provisions Provisions are recognised in the balance sheet when the Corporation has a legal or constructive obligation as a result of a past event. Non-Financial assets The carrying amounts of non-financial assets are assessed at each reporting date to ascertain whether there is any indication of impairment. net of depreciation or amortisation. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. The airline’s ‘frequent flyer programme’ allows frequent travellers to accumulate travel miles that entitle them to a choice of various awards.

Derivative financial instruments Derivatives that do not qualify for hedge accounting are recognised in the balance sheet at estimated fair value with corresponding effect to profit and loss account. Earnings per share The Corporation presents basic and diluted earnings per share (EPS) data for its ordinary shares. Offsetting of financial assets and financial liabilities Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet only when there is a legally enforceable right to set-off the recognised amounts and the Corporation intends either to settle on a net basis or to realise the assets and settle the liabilities simultaneously. Financial liabilities are de-recognised at the time when they are extinguished. Non-monetary items. measured at fair value in a foreign currency.632.014.1 5.16 4. PROPERTY. cancelled.217. Gains and losses on translation are taken to profit and loss account currently.15 Foreign currency transactions Foreign currency transactions during the year are recorded at the exchange rates approximating those ruling on the last week of the preceding month’s average rate of exchange at the date of the transaction. are translated using the exchange rates at the date when the fair value was determined.548 96. Financial assets are de-recognised at the time when the Corporation loses control of the contractual rights that comprise the financial assets. Any gains or losses on de-recognition of the financial assets and financial liabilities are taken to the profit and loss account immediately. Derivative financial instruments are carried as assets when fair value is positive and as liabilities when fair value is negative. 4. Monetary assets and liabilities in foreign currencies are translated at the rates using the average spot rate on the balance sheet date.571 68.876 95. PLANT AND EQUIPMENT Operating fixed assets .428 2.leased Capital work-in-progress 5.17 4.229 57 .18 4. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.owned .875 26. Financial instruments Financial assets and financial liabilities are recognised when the Corporation becomes a party to the contractual provisions of the instrument.261.560 973.8 2012 2011 ----------Rupees in '000---------- 25.19 Note 5. when the obligation specified in the contract is discharged. that is.644.712. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Corporation by the weighted average number of ordinary shares outstanding during the year.2 5.233. Financial assets and liabilities are initially measured at fair value and subsequently at fair value or amortised cost as the case may be.4. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares. or expired.121 69.

5 902.700 359.488.615.2) 58 Workshops and hangars Renovation and improvements Aircraft fleet (note 5.057) 401.123 779.733 (29.100 (649) 649 (77.000 5.1 Owned fixed assets Land Leasehold Others (note (notes 5.779) 58.400 1.369) 68.360 (762.921 20 41.358 17.633.100 789.1 These represent leasehold land and buildings owned by the Corporation that are freely transferable and can be disposed off as and when required.234 5.979.3 and 5.633. 2012 Opening net book value Additions / transfers Revaluation Cost or revalued amount Accumulated depreciation Adjustments / transfer Cost or revalued amount Accumulated depreciation Disposals Cost or revalued amount Accumulated depreciation Write off Cost or revalued amount Accumulated depreciation Depreciation charge for the year Closing net book value As at December 31.529 39.920.337.1.2) Buildings on: Leasehold land (notes 5. These are non-transferable as these were allotted at below market price.853 (13.669 (1.1.793.860) 401. catering. due to certain formalities required to be fulfilled.472 24.1 Owned fixed assets 5.875 68.1.364) 299.397) 1.410.078.171 11.310.2 Land and buildings classified as 'Others' are amenity plots licensed from Civil Aviation Authority (CAA).570 5 .800 (721.000 24.184) 27.083 2.400 24.000 24.787) (3.000 5.921 (3.1.691) 136.1.266 187.230 (86.175) 506.100 10 1.083 (20.430) 151.993.225 (269) 269 (48. the title was not transferred in the name of the Corporation as at December 31.368 (591.3) Buildings on: Leasehold Other land land (notes (note 5.3. 2011 Cost or revalued amount Accumulated depreciation Net book value Year ended December 31.364 899.986.664) 527.954) (2.511) 506.400 1.239.708.982 (638.830 10. 5.1.1 5.567) 11.410.20 5.364 136.410 3.1.307.Rupees in ' 0 As at December 31.2) 5.206.4) Operating ground.472 5.216) 1.1.830 1.400 1.581) 299.234 10 .599.819) 1.1 and 5. 2012.453.100 10 . Land Leasehold (notes 5.000 24.529 33.669 2.070 527.028 (312.410.410.069.275) 4. catering.291 (1.708.400 (131. communication and meteorological equipment Engineering equipment and tools Traffic equipment -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------.895.1 and 5.235 (776.570 (86) 86 (47.704.028 (333.853 2.2) and 5.1) and these have been transferred from leased assets.106 442.793.681 (1.196.410.1.100 (65.410 840.882) 151.410.3) Others (note 5.3) Other land (note 5.3 During the year.690 (21.473 (114.1.519.358 1.551) 11.866) 359.20 1.078.898 (673. communication and Engineering equipment and tools Traffic equipment .229 (100. the lease term of an engine and propulsor expired (note 23.197) 442. However.748 (5.400 24.669 741. 2012 Cost or revalued amount Accumulated depreciation Net book value Annual depreciation rate (%) 5.4) Operating ground.224 (1.1.622 5.123 1.319) 126.5 840.163) 11.787) 10. 5.879) 58.225 5 780.206.249.010) 126.3) Workshops and hangars Renovation and improvements Aircraft fleet (notes 5.000 24.538) 187.11 5.299 (232.316.1 and 5.1.

756 - - 1.446.571 1.314 31.449.950) 2.908) - 1.787) (3.229 1.229 941 207.117 (13. fixtures and fittings Motor transport Office equipment Computer and office automation Precision engineering equipment Printing press equipment Reservation equipment Other equipment Capital spares Total --------------------------------.411) (3.024.109) 26.044) 207.621.613.571 Engineering equipment and tools Traffic equipment Furniture.651) 71.519.311 (330.039) 20 11.630 1.212 (4.039 (15.463) 166.100 (65.018 (5.239.364) 299.217.106 (809.860) 401.527) 12.472 861.787) 10.291 (1.681 (1.793.890 4.014.278 (36.260 (36.358 1.472 24.908 (11.996 15.105 16.014.902 (3.234 (376) 376 (34.581) 299.331) (26.20 1.170 25 79.599.204 (205) 68 (137) (581) 529 (52) (51.469.801.804 (649) 649 (77.417) 12.913 (184.793.799 (11.605.039) - 11.607.093.233 (349.051 188.685) 164.132) 164.895.615.20 877.369 (92.762) 4.641 8.285 10 8.207) 4.622 184.117 10 420.585 (5.105 402.222.170 (966) 2.441.791) 54.057) 401.817) (18.11 Engineering equipment and tools Traffic equipment Furniture.422) (134.310) 4.063) 71.415) 1.258 (4.398.234 10 .730) 69.316.650) 967.314 78.179 (75.072 10 .619) 96.471.121 1.335 - (109) 109 - (59.235) 967.441.920.862 (811.024.144.100 68.916) 8.051 60.453.121 359.902 5 .997) 71.Rupees in ' 000 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ 1.689) 98.663.106 442.301.144.486 (132.996 2. fixtures and fittings Motor transport Office equipment Computer and office automation Precision engineering equipment 59 Printing press equipment Reservation equipment Other equipment Capital spares Total .728) 184.285 (254.838 2.335 10 15.358 17.230 (34.217.204 (1.833 (677.197) 442.685 (1.039 (15.815) 166.785 (43.045 (443.932 (711.390) 25.362) 4.224 (1.120 (76.214) 25.916) 2.359) (263.799) 10 1.20 823.072 (2.486) 18.204 15 1.100 10 .866) 359.789 26.725.923.468.669 (1.417.305 11.641 821.110) 11.656 (146.475 71.630 8.935 (502.688.

491.1 and 5.151.463 898.400 24.3 During the year.572 (606) (2.100 499.664) 527.898 (673.100 10 10 .669 (1.097) 136.496 829. 2010 Cost or revalued amount Accumulated depreciation Net book value Year ended December 31.461.2) Workshops and hangars Renovation and improvements Aircraft fleet (note 5.3) Others (note 5.369) 68.798) 537.229 (100.708.796 5.150 34.572.830 (218) 218 (95.874 (545.163) 14.021) (855.187) 359.400 1. However.410 840.538) 187.900.439 2.439 1.830 1.472 Annual depreciation rate (%) - - 2.964 22.1.749 1. the title was not transferred in the name of the Corporation as at December 31.669 741.955 (1.1.109 14.567) 11.733) 934.700 352.206.646 (1. the lease term of an engine and propulsor expired (note 23.461.5 2.730) 68.964 5.897) 427.1.885 777.1.911 (748.472 As at December 31.789 (613.1) and these have been transferred from leased assets.400 (80.20 10 .854 1.887.Rupees As at December 31.854 22.855 499.819) 1.307.529 33.976) 11.360 (762.855 7.885 154.317 449 109.453.368 (591.001 427.854 1.964 22.000 24.224 (1.669 (59.388.3.841 232. due to certain formalities required to be fulfilled.700 (855.021) 5.599.150 19. communication and meteorological equipment Engineering equipment and tools Traffic equipment -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------.866) 527.307.196.5.3) Other land (note 5.639) 109.206.358 352.895. catering.410.463 10.5 5 20 5 .364 899.900. 60 .488. Cannibalisation refers to the practice of obtaining the spare parts necessary to repair an aircraft by removing them from another similar aircraft.261 (291.714 (65. 2012.708.866) 359.2) Buildings on: Leasehold land (notes 5.000 24.1 and 5.529 (155.4) Operating ground.052.786) 1.20 * Represents adjustments in respect of cannibalisation of aircraft. Land Leasehold (notes 5.435) 232.178) * 154.048 (19.239.964) Adjustments / transfer Cost or revalued amount Accumulated depreciation Disposals Cost or revalued amount Accumulated depreciation Write off Cost or revalued amount Accumulated depreciation Depreciation charge for the year Closing net book value 5.749 26. 2011 Cost or revalued amount Accumulated depreciation Net book value 5.410.964) (51.364 (14.565) 187.358 1.000 5.461.690 (21. 2011 Opening net book value Additions / transfers Revaluation Cost or revalued amount Accumulated depreciation (51.229 (372.123 (507) 462 (45) (46.144.546 934.317 722.594) 150.410 (20.097 442.496 537.691) 136.767 150.1.028 (312.123 779.197 442.410.

Engineering equipment and tools

Traffic equipment

Furniture, fixtures and fittings

Motor transport

Office equipment

Computer and office automation

Precision engineering equipment

Printing press equipment

Reservation equipment

Other equipment

Capital spares

Total

---------------------------------- Rupees in ' 000 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

1,572,646 (1,144,897) 427,749

1,887,955 (1,388,100) 499,855

844,999 (644,778) 200,221

387,106 (306,919) 80,187

77,946 (74,908) 3,038

1,586,988 (1,336,367) 250,621

819,787 (806,866) 12,921

15,039 (15,039) -

11,908 (11,908) -

515,439 (417,187) 98,252

8,734,737 (3,910,915) 4,823,822

60,527,480 (31,781,246) 28,746,234

427,749 26,796

499,855 7,714

200,221 17,815

80,187 32,482

3,038 388

250,621 19,951

12,921 1,319

-

-

98,252 952,665

4,823,822 87,253

28,746,234 1,335,096

-

-

-

-

-

-

-

-

-

-

-

(906,985) 352,700 (554,285)

-

-

-

-

-

-

-

-

-

-

28,868 28,868

28,868 28,868

-

-

(784) 784 -

(17,277) 12,326 (4,951)

-

(1,254) 1,183 (71)

-

-

-

-

(5,982) 5,982 -

(25,297) 20,275 (5,022)

(218) 218 (95,187) 359,358

(65,097) 442,472

(197) 197 (33,931) 184,105

(36,404) 71,314

(155) 155 (1,197) 2,229

(62,860) 207,641

(2,244) 11,996

-

-

(59) 59 (26,287) 1,024,630

(181,618) 113,397 (68,221) (430,671) 4,441,051

(337,932) 269,060 (68,872) (3,467,898) 26,014,121

1,599,224 (1,239,866) 359,358

1,895,669 (1,453,197) 442,472

861,833 (677,728) 184,105

402,311 (330,997) 71,314

78,179 (75,950) 2,229

1,605,685 (1,398,044) 207,641

821,106 (809,110) 11,996

15,039 (15,039) -

11,908 (11,908) -

1,468,045 (443,415) 1,024,630

8,663,258 (4,222,207) 4,441,051

60,621,230 (34,607,109) 26,014,121

10 - 20

10 - 20

10

25

15

10 - 20

10

20

10

10

5 - 100

61

13 2012 Note 5.2 Leased fixed assets (Aircraft fleet) As at January 1 Cost or revalued amount Accumulated depreciation Net book value Year ended December 31 Opening net book value Additions Revaluation Cost or revalued amount Accumulated depreciation 5.4 Transfer to owned fixed assets Cost or revalued amount Accumulated depreciation 5.1.3 Depreciation charge for the year Closing net book value As at December 31 Cost or revalued amount Accumulated depreciation Net book value Annual depreciation rate (%) 5.3 Revaluation of leasehold land and buildings The leasehold land and buildings were revalued by the following independent professional valuers, as of December 31, 2011: Arif Evaluators, based in Pakistan Narendar Consultants and Subhash Shah and Associates, based in India Eastern Appraisal Co. INC., based in USA 68,233,428 68,233,428 5 - 20 72,779,943 (3,135,383) 69,644,560 5 - 13 (10,979,748) 5,993,275 (4,986,473) (4,303,753) 68,233,428 (3,564,845) 69,644,560 1,840,609 1,445,861 3,286,470 3,968,247 3,968,247 69,644,560 4,592,624 66,833,053 2,408,105 72,779,943 (3,135,383) 69,644,560 70,371,838 (3,538,785) 66,833,053 2011

----------Rupees in '000----------

62 Olimp – Baholash Va Ekspertiza Markazi LLC, based in Tashkent
Lankhort Vastogoed, based in Netherlands

5.3

Revaluation of leasehold land and buildings The leasehold land and buildings were revalued by the following independent professional valuers, as of December 31, 2011: - - - - - Arif Evaluators, based in Pakistan Narendar Consultants and Subhash Shah and Associates, based in India Eastern Appraisal Co. INC., based in USA Olimp – Baholash Va Ekspertiza Markazi LLC, based in Tashkent Lankhort Vastogoed, based in Netherlands

The valuation was carried out on the basis of professional assessment of fair values with reference to market based evidence, based on active market prices, and adjusted for any difference in nature, location or condition of specific property and resulted 14 in a net revaluation surplus of Rs. 300.736 million as at December 31, 2011.
5.4

5.4

Aircraft fleet During the year, the aircraft fleet of the on Corporation was revalued by an independent valuer,values Ascend a December part of Reed Business Limited (2011: Ascend Worldwide Limited), the basis of professional assessment of current market as -of 31, 2012. The Information Limited (2011: Ascend Worldwide Limited), on the basis of professional assessment of current market values as current market value represents the value that an aircraft could best achieve under today's open market conditions and, therefore, takes into of December 31, review 2012. of The current market valuetransaction represents the value that an aircraft could best achieve under today’s open account a thorough market activity and known data involving the subject aircraft types, covering 'open' market and financial market and, therefore, takes into account a thorough review of in market activity known involving sales. It conditions additionally considers the perceived demand for each type, its availability the market andand further takestransaction into accountdata the expressed the subject aircraft types, covering ‘open’ market and financial sales. It additionally considers the perceived demand for each views of informed industry sources. type, its availability in the market and further takes into account the expressed views of informed industry sources. The appraisal has taken into account the age, specification, accrued hours and cycles of the aircraft and produced Current Market The appraisal has taken into account the age, specification, accrued hours and cycles of the aircraft and produced Current Market Half Life Half Life Values (CMHLV). Half life or mid-time assumes that the airframe, engine, landing gears and all major components are Values (CMHLV). Half life or mid-time assumes that the airframe, engine, landing gears and all major components are half way between major half way between major overhauls or in the mid point of their useful lives for the life limited parts. CMHLV has then been adjusted overhauls or in the mid point of their useful lives for the life limited parts. CMHLV has then been adjusted to account for the maintenance status of to account for the maintenance status of the aircraft in accordance with the information supplied. The determination of such the aircraft in accordance with the information supplied. The determination of such values involves a multiplicity of variables and some variation in values involves a multiplicity of variables and some variation in perceived value must be expected.
perceived value must be expected. During the year, the aircraft fleet of the Corporation was revalued by an independent valuer, Ascend - a part of Reed Business Information

Aircraft fleet

The valuer has conducted an extended desktop appraisal of the aircraft and engines. This does not include an inspection of the aircraft or engines nor their records, but does take into account the maintenance status of the airframe, engine, landing gear, The valuer has conducted an extended desktop appraisal of the aircraft and engines. This does not include an inspection of the aircraft or auxiliary power unit (APUs) and engine limited life parts (LLPs). Had there been no revaluation, the written down value of the revalued assets in the balance sheet would have been as follows:
Had there been no revaluation, the written down value of the revalued assets in the balance sheet would have been as follows: 2012 2011 Accumulated Accumulated Book Cost Cost Book value depreciation depreciation value -------------------------------------------------- Rupees in '000 -------------------------------------------------Leasehold Land Buildings on leasehold land Aircraft fleet 44,166 351,558 122,284,511 122,680,235 176,287 48,346,073 48,522,360 44,166 175,271 73,938,438 74,157,875 44,166 348,488 121,935,050 122,327,704 167,737 43,394,508 43,562,245 44,166 180,751 78,540,542 78,765,459 engines nor their records, but does take into account the maintenance status of the airframe, engine, landing gear, auxiliary power unit (APUs) and engine limited life parts (LLPs).

5.5
5.5

5.6 5.6

Depreciation charge for the year has been allocated as under: Cost of services - others Distribution costs Administrative expenses

Note 32 33 34

2012 2011 --------- Rupees in '000 -----------7,145,728 36,855 214,560 7,397,143 6,764,275 40,723 227,745 7,032,743

5.7

Following fixed assets were disposed off during the year: Description Sold to

63 Method of disposal

Motor vehicles to employees

Accumulated Net Sale depreciation book value proceeds ---------------------------- Rupees in '000 ---------------------------Cost

others Distribution costs Administrative expenses Note 32 33 34 2012 2011 --------. INTANGIBLES Note 2012 2011 ------------Rupees in '000------------ .745 195.965. 2012 Year ended December 31. 50. Irshad Ghani Mr.743 5.459 5.172 Exchange 114.723 20.396) 289. 2011 Balance as at January 1.7 Following fixed assets were disposed off during the year: Description Sold to Method of disposal Accumulated Net Sale depreciation book value proceeds ---------------------------. Iftikhar Jawed Corporation policy -------do-------------do-------------do-------------do-------------do-------------do-------------do-------------do-------------do-------------do-------------do------- * This includes various operating fixed assets.522. Amin Ullah Mr.200 11.070 (770.548 64 6.972.131 973.Rupees in '000 ---------------------------Cost 846 846 846 854 854 854 746 1. 2012 Additions during the year Transfer to operating fixed assets Balance as at December 31.068 1.562.000.548 2. Mamoon Rashid Mrs.591 1.114 1.723 227.8 Capital work-in-progress Year ended December 31. Nazir Hussain Mr.764.207 1. 5. Ejaz Latif Mr.066.157.111 1.876 777. 2011 15 Aircraft fleet Others Total --------------------------Rupees in '000-------------------------777. Maheen Fatima Mr.143.024.184 761 761 761 832 816 816 587 401 354 172 197 112 6.282) 1.504) 195. Jawed Sardar Mr.032.855 214.397.765.500 223 2. 50.888 (1. 2012 Balance as at January 1.398 Motor vehicles to employees Honda City Honda City Honda City Honda City Honda City Honda City Honda City Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Mr.369 20.672 72.680.261.143.678) 2.066.050.275 40.230 85 85 85 22 38 38 159 667 757 972 1.144 1. In view of large number of items.745 7.327.006 (1.845 (1. Sale of fixed assets is made through a disposal committee in accordance with the prescribed procedures.Various Total 2012 2011 204 146.728 36.145.936 (254.791 25. Tariq Farooq Mr.275 135 92.110 86. 50.450 700 4.311 1.957 1.704 43. Asghar M Wardag Mr.591 347.000 .000 .570 27.297 69 54.Rupees in '000 -----------7.504) 973.680 Aircraft fleet Aggregate value of other items where NBV is above Rs.560 7.6 Depreciation charge for the year has been allocated as under: Cost of services .422 5.957 777.022 64 79. 2011 Additions during the year Transfer to operating fixed assets Balance as at December 31.245 78.122. having NBV above Rs.207 272. Mansoor A Khan Mr.235 48.306 8. the management considers it impracticable to disclose the particulars of all items.875 122.360 74.957 1.954 85 85 85 85 85 85 150 548 645 669 1.313.143 6.088 5.Various* Aggregate value of items where NBV is less than Rs. Hasan Jamil Alvi Mr.149 20.

1 7.667 50 24. 65 Equity held 100% (2011: 100%).604 6.415. INTANGIBLES Computer software Cost Accumulated amortisation 6.714 396 4.972 274.749) 52.444.143.245. LONG-TERM INVESTMENTS Unquoted .591 1.10 years 204.403 251.110 24.3 4.686 26.803 224.888 (1.344 4.214 277.2.714 (2011: Rs.440. 2012 2011 ------------Rupees in '000------------ 2.957 1.820 277.152) 79.749 5 .491 4.066.946 19.2 2012 2011 ------------Rupees in '000------------ 330. 2012.957 777. 2011 777. 31.845 (1.604 53. 38. Break-up value of each ordinary share of AED 100: Rs.000 (2011: 792.504) 973.2 Accumulated amortisation Opening balance Amortisation for the year Closing balance Useful life 6.749 26.at cost Subsidiaries Associate Other investments 7.245.855 6.368 330.803 7.1 6.000) fully paid ordinary shares of AED 100 each.1 Cost Opening balance Additions during the year Closing balance 277.207 272.548 Note 6.155 2.714 396 4.152 5 .Year ended December 31. 2011 Balance as at January 1.454 1.2 7.604 (224.504) 195.1 Subsidiaries PIA Investments Limited (PIAIL) 792.2.416.416.207 1.390 3. 2011 Additions during the year Transfer to operating fixed assets Balance as at December 31.972 (251.415.110 28.050.10 years 6.1 224.381 4.121) per ordinary share based on the audited financial statements for the year ended December 31.403 7.066.others Distribution costs Administrative expenses 32 33 34 1.1 Amortisation charge for the year has been allocated as under: Cost of services .967 50 17.786 19.155 .143.

3 Other investments Available for sale 7. Abacus Distribution Systems Pakistan (Private) Limited 312.522 (68.Sharjah 1.000 28. 40.000 (2011: 2.522 (68.155 2. 43.714 7. 38. 24 (2011: negative Rs.416.441 (2011: Rs.110 28. 10 each. 2012. 100: Rs.415. 375) per ordinary share based on the unaudited (2011: audited) financial statements for the year ended December 31.712 40.110 24. 512 (2011: Rs. 10: negative Rs.3 4.2 Associate Minhal Incorporated . Equity held 40% (2011: 40%).960.70% (2011: 70%). 100 each.381 4.415.000) fully paid ordinary shares of Rs. Note 7. Break-up value of each ordinary share of Rs.714 396 4.2 7. Nil) per ordinary share.245. Break-up value of each ordinary share of Rs.000.714 68.714 (2011: Rs.000.000) fully paid ordinary shares of AED 100 each.170. Advance against equity Skyrooms (Private) Limited 4. 23) per ordinary share based on the unaudited financial statements for the year ended December 31.444. Equity held .1 28.566) per ordinary share based on the audited financial statements for the year ended December 31.121) per ordinary share based on the audited financial statements for the year ended December 31. Break-up value of each ordinary share of Rs. Equity held 100% (2011: 100%).415.520) 2 4.960.170.000 2.1 All subsidiaries were incorporated in Pakistan except for PIAIL.1. Equity held 100% (2011: 100%). Break-up value of each ordinary share of AED 100 each: Rs.415. 2012. Provision for diminution in value of investments 2012 2011 ------------Rupees in '000------------ 2.491 4. 10: Rs.415.712 40.557 4.3.000 (2011: 4.245. Midway House (Private) Limited (under winding-up) 2. however.415. 7.586) fully paid ordinary shares of Rs.586 (2011: 312. Equity held 100% (2011: 100%).440. Nil (2011: Rs. Break-up value of each ordinary share of AED 100: Rs.557 4.714 396 4.520 28. 2012. United Arab Emirates.Subsidiaries Associate Other investments 7.000) fully paid ordinary shares of Rs.155 2.1 Subsidiaries PIA Investments Limited (PIAIL) 792.000 (2011: 792. 31.344 396 396 2012 2011 ------------Rupees in '000------------ 7. 10 each. 2012.416.454 7. Financial statements are not available.600 fully paid ordinary shares (2011: 1.381 24. which was incorporated in Sharjah.520 2 2 68.1 Available for sale Quoted 66 Note 2012 2011 ------------Rupees in '000------------ .600) of AED 100 each.344 4.1 7. subsequently it was registered in British Virgin Islands.3.520) 2 4.

000) ordinary shares of Rs.943 1. 100 each 2012 2011 ------------Rupees in '000------------ 28.831 (224.441 (2011: Rs.576 8.660 177.140.381 100 269 24.512 (2011: 87. 40.518 (119.136.482 1.1 396 396 28.474 9.1 Available for sale Quoted Pakistan Services Limited 172.169 5.227.512) ordinary shares of Rs.476 119.3.851 81. 2012.948 79.904 12. LONG-TERM ADVANCES Subsidiaries .755) 796.566) per ordinary share based on the audited financial statements for the year ended December 31.344 8. as disclosed in note 23. 43.000 (2011: 10.606 11. Equity held 40% (2011: 40%).300) 1.3 Other investments Available for sale 7.518 (119.936.2.479.3.65) each Unquoted Pakistan Tourism Development Corporation Limited 10.600 fully paid ordinary shares (2011: 1.476 119. 7.1 This represents the remaining balance of maintenance reserve which was required to be kept by the Corporation with a lessor.231 13.518) - 9.788 9. 10 each having market value per ordinary share of Rs.913) ordinary shares of Rs.924 (219. 9.2 67 .577 23.730 21. LONG-TERM DEPOSITS AND PREPAYMENTS Deposits Aircraft fleet lease deposits Maintenance reserve Engine maintenance Rent Utilities Aircraft fuel Guarantee deposit Others Prepayments Exposure fee to support financing Less: current portion 3.1.381 24.500 8. 10 each Duty Free Shops (Private) Limited 87.600) of AED 100 each.342.913 (2011: 172.003.587 4.344 Note 7.015. This represents consideration paid to Ex-Im Bank for the purpose of 12 year guarantees issued by it in favour of the Corporation.518) 37. Break-up value of each ordinary share of AED 100 each: Rs. which is being amortised over the lease term.042 82. 138. under the terms of the lease agreement that has been terminated during the year.1 1.140.531 9.741 12.975 100 269 28.891 154.900 5.042 82.considered doubtful Skyrooms (Private) Limited Midway House (Private) Limited Provision for doubtful long-term advances 37.547 81.957 3.1 9.292.2 13.012 23.482. 162 (2011: Rs. The balance will be utilized for future purchases from lessor.

109 418.327 3.092 265.292 (924.426 252.292) 8.959.1 Movement in provision is as follows: Balance at the beginning of the year 68 Note 2012 2011 ------------Rupees in '000-----------924.859.859 6.579.882) 3.1 756.057.481 924.640 327.535 859.836.165 740.043 252.174 4.18 Note 10.314 8. TRADE DEBTS Considered good Considered doubtful Less: provision for doubtful debts 11.656 512.347 3.637 440.104 .657 9.819.959.071.474 73.242 2.192 151.292 929.093 (2.859 7.293 123.396.133 1.707.885 2012 2011 ------------Rupees in '000------------ 11.163.610 1.191 5.984.247.262.356 (3.396.292 8.535) 3.133 The ageing analysis of these trade debts is as follows: 2012 2011 Trade debts Trade debts Impaired Impaired gross gross -------------------------Rupees in '000------------------------Within current year 1 year old 2 years old Over 3 years old 9.1 9. STORES AND SPARES Stores Spare parts Inventory held for disposal .088.1 Movement in provision is as follows: Balance at the beginning of the year Provision for the year Balance at the end of the year 35 2.773 43.864 520.adjusted to net realisable value Provision for slow moving and obsolete spares Stores and spares-in-transit 10.143 293.005 10.314) 9.262.238.416.959.447 250.320.163.163.347 924.481 11.558 4.882 2.535 303.682 199.071 6.648 10.830 561.197 103.863.416.314 (1.

587 50. TRADE DEPOSITS AND PREPAYMENTS Trade deposits Prepayments 13.300 317.320.339 191.2 12.157 464.292 35 11.381 12.229 5.527 42.734 69 14.125 1.045.163. Note 2012 2011 ------------Rupees in '000-----------191.755 184.775 148.633 2.045.640 327.579.047 5.864 520.731 753.070 307 538.1 Movement in provision is as follows: Balance at the beginning of the year Written off during the year Provision for the year Balance at the end of the year Note 2012 2011 ------------Rupees in '000-----------924.207 55.734 795.1 49.527 12.575 25.Suppliers Provision for doubtful advances 178.Skyrooms (Private) Limited Others .546 (233.314 929.292 11.208 924.546) 2. 136.854 125.071.020) 110.1 178.614 10.699 41.109 418.2 Movement in provision is as follows: Balance at the beginning of the year Provision for the year Balance at the end of the year 13.339 233.364 122.682 199.381 178.143 293.2 Certain portion of trade debts is secured by cash and bank guarantees received from agents but due to very large number of agents all over the world the amount of secured trade debts is not determinable.273 587.314 8. OTHER RECEIVABLES Note 2012 2011 ------------Rupees in '000------------ .192 151. Note 2012 2011 ------------Rupees in '000------------ 12.397.-------------------------Rupees in '000------------------------Within current year 1 year old 2 years old Over 3 years old 9.546 140.657 9.527 (191.862 12.655 316.188 million).188 55.292 (32.188 37.544 1.088.662 234 753.447 250.104 (115.637 440.207 million (2011: Rs.527) 316.273 224.610 1.830 561.347 924.103) 271.426 538.1 Prepayments Current portion of exposure fee to support financing Commission Interest on leased aircraft Insurance Rent Others 35 13.656 512.1 Maximum aggregate gross amount due from the subsidiary at the end of any month was Rs.465 9 219. ADVANCES Considered good Employees Fuel suppliers Other suppliers Others Considered doubtful Subsidiary .163.197 103.165 740. 178.019 233.773 43.092 265.940 191.287 8.862 136.005 10.

N.833 4.070 307 538.077 (177.172.755 184.182 88.000 3.606 47.933.000 1.1 6.275.V.105 894.890 2.1 19.1 (a) 14.077) 2.720 332. 7.389 16.595. Note 15.077) 4.275. OTHER RECEIVABLES Considered good Claims receivable Excise duty Sales tax receivable Receivable from GoP Others Considered doubtful Less: provision for doubtful other receivables Note 2012 2011 ------------Rupees in '000------------ 92.838 177. Note 16.491 (2011: 325.220 19.809 176.734 14.330 177.755 179.in deposit accounts 16. 325.317 82.287 8.330 71.Unquoted SITA INC N.814 2012 2011 ------------Rupees in '000------------ 70 .125% to 5%) per annum.188 2.1% to 7% (2011: 0.1 These shares are held by SITA INC. CASH AND BANK BALANCES In hand In transit With banks .838 14.188 37.499 1.1 100.1 This represents maintenance and other charges incurred in respect of aircraft owned by GoP.201.491) ordinary shares 2012 2011 ------------Rupees in '000------------ 15.220 15.in current accounts .396 2.Current portion of exposure fee to support financing Commission Interest on leased aircraft Insurance Rent Others 9 219.300 317.090 332.751 100.494 150.273 224. on behalf of the Corporation and are transferable subject to certain specified conditions.V.662 234 753.404.077 (177.854 125.809 270.201.1 These carry interest ranging from 0.775 148.083. SHORT-TERM INVESTMENTS Available for sale .968 30.575 25.709 660.350 840.103 54.

000 2.339.217.000 2.713.000 30.500.208.000. With effect from 1989-90. the GoP held 2.250. of shares---------2. 10 each Issued.877. RESERVES Capital reserves Reserve for replacement of fixed assets Capital redemption reserve fund Others Revenue reserve Unrealised gain on remeasurement of investments Accumulated loss 18.750.000 Note Authorised capital Ordinary share capital 'A' class shares of Rs.779.028 233. SHARE CAPITAL 2012 2011 -----------.3 2012 2011 -----------No.479) (151.351.519 9.950.750.003.501.750.877.016.467 2.000 30.423.492.500 28.727) (118. the Corporation has not issued the shares to GoP due to reasons as set out in note 19.No.934.500 28.000 1.310 2.038 1.208.887.501.779 250.1 1.625 494.467 17.435.499.21 17.519 9.439 'A' class ordinary shares and 1.345 28.500.038 1.339.500 7.000.779.174 5.642.772.674 17.966.515 'B' class ordinary shares respectively (2011: 2.779.217.966. 5 each Preference share capital Preference shares of Rs.639 2.000 50.945) (114.374 2.000 284. During the year.877.642. subscribed and paid up share capital Ordinary share capital 'A' class shares of Rs.000 50.000 284.217.259 2.606.950.957 931.439 and 1.877.217.1 Upto June 1988.500. This represents shares issued to GoP against mark-up payments for term finance and sukuk certificates.000 1.772.028 233.345 28.482 2.492.712 22.999 2.500 29.2 17.000 1.957 931.217.374 2.467 1.674 4.017 13 2.000. 10 each: Shares at the beginning of the year Issued during the year for cash Shares at the end of the year 17.000 500.280.949.000.for acquisition of shares Issued as bonus shares 'B' class shares of Rs.782 (119.674 26.467 1.499.993.000 500.500.000 29.744.482 2.250.934. depreciation on fully depreciated aircraft was charged and credited to the reserve for replacement of fixed assets and excess of sale proceeds over cost of fixed assets disposed off was also credited to the aforesaid account.174 5.819 (151.674 4. 10 each 'B' class shares of Rs.000.000 2.423.233) 18.999 26.3 At December 31.000 1.779 250.576. of shares -----------2.750.948) 1.000.435.877.515 'A' class ordinary shares and 'B' class ordinary shares respectively).000 3.470 7.000 2.712 26.462.1 2012 2011 ------------Rupees in '000-----------29.470 7.280.003.625 494. 10 each Issued for consideration in cash Issued for consideration other than cash . 2012.467 2.779.914. 5 each Issued for consideration in cash Issued for consideration other than cash -for acquisition of shares Issued as bonus shares 17.017 13 2.828 300.949.462.000 3.310 2.259 2.472. Note 2012 2011 ------------Rupees in '000------------ 18. the Corporation changed this policy to comply with the IFRSs and the depreciation and excess proceeds over cost of relevant assets are recorded in the profit and loss account.1 Reconciliation of number of 'A' class ordinary shares of Rs.500 29. 71 .500 7.660) (147.351.

5 & Term 21. plant and equipment during the year .6 & Demand 21.2013 20 Half-yearly 30 Monthly 36 Monthly Bullet 24 Monthly 24 Monthly 24 Monthly 19 Quarterly 36 Fortnightly 5. 19. The Corporation has not This represents advance from theshare Government (GoP) for mark-up payments on term and sukuk certificates.75% Note 21.068 1.793.2013 2009 .291 (283.561) (152. Corporation is currently in the process of increasing its authorised share capital.7 Demand Finance 21. has issued issued shares to GoP asreceived the authorised capital of of Pakistan the Corporation was insufficient to cover thefinance amount of ordinary shares toThe be Corporation issued in lieu ofnot advance shares to GoP as the authorised share capital of the Corporation was insufficient to cover the amount of ordinary shares to be issued in lieu of advance against equity.Bahrain National Bank of Pakistan .unsecured Long-term loan .Related deferred tax liability 9.329.000.366.5 & Demand 21.Revaluation as at January 1 .809) 998. ADVANCE EQUITY FROM GOVERNMENT OFOF PAKISTAN (GoP) ADVANCEAGAINST AGAINST EQUITY FROM GOVERNMENT PAKISTAN (GoP) This represents advance received from the Government of Pakistan (GoP) for mark-up payments on term finance and sukuk certificates.25% & 3 month EIBOR + 3.2020 16 Half-yearly 10% fixed 8.795.994.492 (78.2014 2013 .992 2.8 & Demand 21.28% fixed 3 month LIBOR + 4.958 8.(Deficit) / surplus arising on property.597) 8. The Corporation is currently in the process of increasing its authorised share capital.662 7.098.50% 1 month LIBOR + 5.264.000 PKR 2011 .25% 3 month LIBOR +1.2013 2012 .10 Finance 21. The against equity.957.1 21.25% & 1 month SIBOR + 5.Netherlands KASB Bank Limited Others .957.000 PKR 120 USD 70 USD 30 USD 40 USD & 75 SAR 59.000 10.Surplus on revaluation of property.834.068 (507.from Banking Companies Citibank.50% 1 month LIBOR +5.809) (436. PLANT AND EQUIPMENT .2012 2010 .241.Bahrain National Bank of Pakistan .570 2.60% 3 month KIBOR + 2.Bahrain Royal Bank of Scotland .036 Less: related deferred tax liability on: .413. SURPLUS ON REVALUATION OF PROPERTY.827.329.323.282.22 19.902 (10.751 5.net of tax .Bahrain National Bank of Pakistan .667.329 3.000.825 AED 2.154 1.901 21.000 34. plant and equipment during the year Less: transferred to accumulated loss: . N.309.413 2.032 (177.124.483 (20.4 1 month LIBOR +5.221.10 Finance Current maturity shown under current liabilities 72 .788) (152.941 7.2012 2011 .000. Citibank.321 3.844 - 21.285) 13.962 9.032 7.10 Finance 21.001) 31.655.779. Faysal Bank Limited National Bank of Pakistan .A.163.163.75% 6 month KIBOR + 1.851 3.223) 9.219.5 USD 194 PKR 2006 .317) 8.4 Demand Finance Islamic Finance Term Finance Syndicate Finance 82 USD 75 USD & 91.GoP 21.9 Term Finance 8.131.000 11.733 1.223) (78.10 Finance 21.600 259. plant and equipment realised during the year on account of incremental depreciation charged thereon .A.Incremental depreciation charged during the year on related assets transferred to profit and loss account As at December 31 21.329.120. 2012 2011 ------------Rupees in '000-----------20.2017 2011 .032 1.000.2016 2013 2010 .5% 3.220.273 1.NET As at January 1 (Deficit) / surplus arising on property.484 2.000 42.405 186.198 8.2 21. N. LONG-TERM FINANCING Financier Note Type of facility Facility amount (million) Repayment Number of period instalments/ Mode Mark-up 2012 2011 ------------Rupees in '000------------ Secured .3 21.

The finance is secured against all the present and future receivables of the Corporation generated through sale of tickets in United Arab Emirates and The finance is secured by way million of unconditional and irrevocable GoPwas guarantee. Presently. 2013.760 6. 2012 paid byThe the first Corporation subsequent end2013. however the 22. Initially it was carrying mark-up at the rate of 3 months LIBOR + 1.000 19.440 million dueand on various dates December 31.394.397. 138.660 million (with 25% margin). On January 15. The Corporation paid instalment since of first instalment. The finance is secured against all the present and future receivables of the Corporation generated through sale of tickets in United Arab Emirates and United States of America. 666.60%. The payment of full amount was due subsequent to year end on January 16.3 22.2) (ECC) / approvedfor the restructuring of term certificates from banks alongwith restructuring certain into a new has termdecided finance certificates a period of 6 years with 2finance years grace period on thevarious terms and conditions to be approved byof Ministry ofshort-term Finance.3 21..rectified the Corporation hasyear not paid was rectified before the year end. to Rs.832 million due on November 15. During year.5 million Rs.Habib Bank Limited (HBL) National Bank of Pakistan (NBP) .60%.Bahrain. 666. finalisation of the restructuring process with a consortium of TFC investors is at an advanced December 31. On January 15.325%.- National Bank of Pakistan (NBP) .1 The Corporation has not made payments of principal redemptions aggregating Rs. The following are the participating banks: European Credit Agencies / GoP Guarantee.HBL . December 31.800.2) into a new term with finance certificates a period of 6 2 years grace period on the terms and conditions Presently. Interest The following are the participating banks: - .4 21.452. During the year.733) 4.660 million (with 25% margin). instalment of principalto is the dueyear in June Interest amounting amounting to Rs. 2012 is included in current maturity. which has not been made. 2012 was paid by the Corporation subsequent to the year end on February 21.1 The finance is secured by way of: 23 - Mortgage over of the seven ATR aircraft purchased. October 23.1 22.3 months LIBOR + 3.4 United States of America.800. The finance is secured by GoP Guarantee. the Corporation has not paid some instalments of principal and/or mark-up of these financings on the due dates. and This finance is secured by way of for GoP Guarantee.e. default before the end.452.1 21.21. TERM FINANCE AND SUKUK CERTIFICATES Note Security GoP Guarantee GoP Guarantee TERM FINANCE AND SUKUK CERTIFICATES Repayment period 2009-2014 2012-2014 Number of instalments 10 half yearly 6 half yearly Mark-up 6 month KIBOR +0. The overdue isamount includedisin current maturity. During the year. 2011.055 million respectively. The first instalment of principal is due in June 2013. finalisation of the restructuring process a consortium of for TFC investors isyears at an with advanced stage.1 22.. The finance is arrangement secured by GoP Company. 21.and 2. 2010. The finance is secured against all the present and future receivables generated from the sale of tickets in United Kingdom and Kingdom of Saudi The Corporation has entered into an arrangement with the bank to finance 15% of the purchase price of two B 777-300 aircraft acquired from The finance is secured by way of 1st Pari Passu charge over the Corporation’s receivables amounting to Rs. and The finance is secured byeach way of: European Credit GoPaircraft Guarantee. the Economic Coordination Committee (ECC) has decided on / behalf the of the TFC investors has not notified any event of default to the Corporation.6 21. Management applied for restructuring of TFCs prior to the due date of first redemption and the Trustee investors has not notified any event of default to the Corporation. amount was due subsequent to year end on January 16. 2013.10 The finance is secured against all the present and future receivables generated from the sale of tickets in United Kingdom and Kingdom of Saudi Arabia.8 The ofthis full loan. 1.9 21.789.8 21.5 million and Rs.3 months LIBOR + 3. the bank to finance 15% of the purchase price of two B 777-300 aircraft acquired from Boeing Boeing Company. The overdue principal amount as at December 31. the the finance was renegotiated additional three years following finance was renegotiated for additional three years at following mark-up rates: � - NBP . 22.5 21. The finance is secured against all the present and future receivables generated from the sale of tickets in United Kingdom.653 Term finance certificates Sukuk certificates 22.2 Less: current maturity 22. however the default During the was year.2 21. 2012 as Corporation has not made payments redemptions aggregating Rs.3 months LIBOR + 3. on February 21.760 (15. and . 21. the Economic Coordination Committee approved restructuring of term finance certificates from various banks alongwith restructuring ofthe certain short-term borrowings (refer note 29. The overdue principal amount as at to be approved Ministry in of current Finance.664.3 21.000 19. October 23. TheThe overdue principal and and mark-up as at at December 31.- NBP HBL . Initially it at was carryingmark-up mark-uprates: at the rate of 3 months LIBOR + 1. 6.062. and . i. Management applied of forprincipal restructuring of TFCs prior to the due date of first redemption the Trustee onuntil behalf of the TFC 2012 as per repayment schedule. perThe repayment schedule.some instalments of principal and/or mark-up of these financings on the due dates. 2010.5 21. The Corporation is in the process The finance is secured against all the present and future receivables generated from the sale of tickets in United Kingdom.589.062.is 2012 is Rs.25% . 1.760 6. i. The Corporation has entered into an with Guarantee.1.10 21. 2013.e.25% This finance is secured by way of GoP Guarantee. borrowings (refer note 29. Mortgage over each of Agencies the seven /ATR purchased.440 million due on various dates until December 31. 2013.107) 10.1. 2011. The finance is secured by way of unconditional and irrevocable GoP guarantee. 2012 Rs. 2. which has not been made.760 (8.055 million respectively.589.2 21.7 21. The finance is secured by way of 1st Pari Passu charge over the Corporation's receivables amounting to Rs.7 21.832 due on November 15.Bahrain.325%. The principal overdue amount principal included in current maturity. and - 21. 6. and Habib Bank Limited (HBL) . The Corporation is in the process of ofpayment renewing renewing this loan.397.9 21.6 21. 73 .3 months LIBOR + 3. overdue principal mark-up as The Corporation hashas not not paid anyany instalment since the the duedue datedate of first instalment.789.027 12.195. .85% 6 month KIBOR +1. stage. 2012by is included maturity.75% 2012 2011 ------------Rupees in '000-----------12. 138.925.. Arabia.

813 33. The remaining balance of the maintenance reserve will be available to the Corporation as a credit for future purchases from the lessor and will bear annual interest at LIBID rate. one spare engine and one propulsor.951) 38.667 million which became due on various dates until December 31. The transaction has resulted in net gain of Rs.2).24 22. 2012. 1.739.787.314) 23.943 27.951 11.one aircraft and propulsor Lease period .1 & 22.637 13.65% Three month LIBOR 144 months 96 months 818.988) 47.047.289 (9. a special purpose entity incorporated in Cayman Islands.081 (36. 2. The overdue principal amount is included in current maturity.3 23.527 75.e.aircraft Lease period .3 23. the Corporation arranged an Ex-Im Bank guaranteed financing of US$ 345 million to acquire three Boeing 777-200 ER aircraft.268. the Corporation entered into an agreement with the lessor for early purchase of six A310-300 leased aircraft at a price of US$ 5.578.040 26.two aircraft Discount rate . -----------------------------------------------------------Rupees in '000-------------------------------------------------------------Not later than one year Later than one year but not later than five years Later than five years 35.327. The delivery dates were between July 24 to 27.252 56.847.207. 2012.466.3.652.289 10. hence the related security deposit was received during the year and the assets were transferred from leased assets to owned assets (notes 5.168 million).236 3.2. The salient features of the lease are as follows: Note Discount rate .497 51.244.190 6.2 The Corporation has not made payments of principal redemption amount of Rs. the transaction for relevant aircraft was executed on the delivery date.902. This includes current maturity of the TFC and Sukuk certificates related to the principal redemption including overdue instalment as disclosed in note 22.137 11.097. 74 . In 2004.726.65% Three month LIBOR 144 months 96 months 853.272.028 million per aircraft (aggregating to US$ 30.1 The amount of future payments and the year in which they will become due are: Minimum lease payments 2012 Finance cost Present value of minimum lease payments Minimum lease payments 2011 Finance cost Present value of minimum lease payments 4.131 5.546 12.354 62.2 23.862 11.1 and 5.4 23. Further.164 56.1 23. The Sukuk investors were requested to re-profile the principal repayment schedule alongwith other terms of Sukuk Certificates with the assistance of Ministry of Finance.345. the date at which the title of relevant aircraft will be transferred to the Corporation and a bill of sale will be executed by the lessor.032 9.742 9.393.337.3.aircraft fleet A-310-300 B-777-200 ER B-777-200 LR B-777-300 ER Less: current maturity 23.604 5.148.725 315.321 23.457 11.060.046.292 (23. the Corporation has also signed lease amendment and termination agreement by virtue of which the original lease agreement of A310300 aircraft has been terminated upon delivery of aircraft and the lease liability has been extinguished.524 million.5 9.601.1 The lease term of spare engine and propulsor expired in January 2012 and April 2012 respectively.544 4.693 1.508 (9.spare engine and propulsor Security deposits (Rupees in '000) Contingent rent (Rupees in '000) 2012 4.338. The guaranteed lender is Citibank N. which has been recorded as other income (refer note 36).047.508 39.922 47.020 1.320.A. i.988 During the year.894.393.305.2 2. The approval of revised proposal is currently awaited from the Ministry of Defence.272. from Taxila Limited.998.557 23.299.1). 2012 2011 Note ------------Rupees in '000-----------LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE Present value of minimum lease payments .301 22. which has been adjusted against the maintenance reserve (refer note 9.266.924) 2011 4.947 36. In accordance with the agreement.307.008.953 47.3 23.578.606.153.

04% 1. the Corporation arranged an Ex-Im Bank guaranteed financing of US$ 472 million to acquire three Boeing B 777300 ER aircraft and one engine from White Crescent Limited.777. the Corporation arranged an Ex-Im Bank guaranteed financing of US$ 266 million to acquire two Boeing B 777200 LR aircraft and one propulsor from Taxila .892 9. a subsidiary of the Corporation which will be adjusted against future dividends if any.2 5. distributed by PIAIL and if within five years from the date of disbursement of advance from PIAIL.643.297 3.617 (363.one aircraft Discount rate .671 (514.0. The guaranteed lender is Royal Bank of Scotland.3 to 23.635 182.107 1.415 20 444.25% Three month LIBOR .617 75 .159) 23.12% 144 months 96 months 1.A. 25.883 7.383.297 1.0.076 548.198 26.648.006.059) During the year 2006.aircraft Lease period .387 1.250 262.648.335) 2011 Three month LIBOR .propulsor Security deposits (Rupees in '000) Contingent rent (Rupees in '000) 23.02% 144 months 96 months 744.671 4.25% Three month LIBOR .648.75% per annum. at the end of lease term.321.368.321. PIAIL shall have the right to call payment from the Corporation.085) 5.777.1 Post retirement medical benefits Liability recognised in the balance sheet Present value of defined benefit obligation Movement in liability during the year Balance at the beginning of the year Expense recognised Payments made during the year Balance at the end of the year Expense recognised in profit and loss account Current service cost Interest cost Net actuarial loss recognised 5.02% 144 months 96 months 688.174.0.aircraft and propulsor Lease period .two aircraft Discount rate . The Corporation has an option to acquire the ownership of the aircraft and engines mentioned in notes 23.5 2012 Three month LIBOR . DEFERRED LIABILITIES Post retirement medical benefits Pension obligation 26. a special purpose entity incorporated in Amsterdam.0.spare engine Security deposits (Rupees in '000) Contingent rent (Rupees in '000) 5.146.883 88.04% 1.000 (138.6 24.740 348. ADVANCE FROM A SUBSIDIARY This represents advance received from PIA Investments Limited (PIAIL).375 (638.5.883 4.907 1.923 (182.4 During the year 2006.858 473.648.aircraft Lease period .772 123 534. The salient features of the lease are as under: 2012 Discount rate . The salient features of the lease are as follows: Discount rate . LONG-TERM DEPOSITS Deposits from agents Retention money Others Note 2012 2011 ------------Rupees in '000-----------185.496.775) 2011 5. a special purpose entity incorporated in Cayman Islands.315 13.12% 144 months 96 months 1.189 26. Netherlands.685 4. no dividend is declared or the amount of principal is not wholly paid off.690.707) 4.spare engine Lease period . The advance carries mark-up at the rate of 1 month LIBOR plus 1.652 782.297 65.525.2 Limited.643.297 4.25 23. The guaranteed lender is Citibank N.1 26.688 1.608 (702.777.

473) 4.640 1.678 1.568 4.000 (1.155 (79.461 (37.368.861.85% 87.989 629.329) 7.958) 302.418 355.200 3.076 (164.483 (1.25% 91.200.162.315 2.272 (1.81% 61.575 13.640 1.714.329 9.062 79.833 0.849.479 37.975 202.623 0.207 116.83% 60.049.821) 1.388 629.453 (1.368.215.988 12.034 1.556 394.865) 1.2 Pension obligation The details of three different categories of plans are as follows: 26 Liability / (Asset) recognised Fair value of plan assets PALPA FENA MAIN PENSION TOTAL 2012 2011 2012 2011 2012 2011 2012 2011 ---------------------------------------------------------------------------------------.707.062) 1.244.707.315 17.907 67.58% 62.780.00% 37.858 2.491 (14.923.978.840 97.568 2.323 0.290) 90.415 0.669.955 (943.479.796 1.341.932 2.213.775) (86.435 17.200.768) 155.545.213.294) (3.733 569.469 0.289 79.923.199) 257.995) (449.105 (123.775.809 569.352 (97.000 14.146 1.556 17.830 146.261 10.923.940.581.00% 174.840) 1.315) (16.863 1.421 223.064) 18.988) 4.932 2.272 (1.50% 100.825) 314.15% 100.403 (97.980) 7.892 2.186.980) 4.479.635 (228.199) 125.545.00% 12.402) (29.809 40.076 (223.383) 7.786) 4.532.433 20.37% 100.445) 13.17% 100.479.092.991 238.472 355.461 (116.995 (64.388 146.402) 61.421) 125.786 (1.393 14.986.42% 100.525.174 2.403 400.00% 216.142 1.244.018.432 6.819 67.485) 2.686 (1.804 17.488 3.064) 17.768) 1.485) 108.907 67.352 125.064 10.073.681) (358.55% 100.624.279 97.786 (943.018.000 4.635 (114.00% 1.529 13.775.789.073.383 12.409) (86.488) 69.980 (1.186.954.383 228.745.953.096.199 (164.307 0.289) 929.892 Present value of defined benefit obligation Movement in the defined benefit obligation Obligation as at January 1 Service cost Interest cost Benefits paid Actuarial loss / (gain) Obligation as at December 31 Movement in fair value of plan assets Fair value as at January 1 Expected return on plan assets Employer contributions Benefits paid Actuarial (loss) / gain Fair value as at December 31 Movement in liability / (asset) during the year Opening liability / (asset) Expense recognised Employer contributions Closing liability / (asset) Expense recognised in profit and loss account Current service cost Interest cost Expected return on plan assets Actuarial loss / (gain) recognised .45% 44.01% 8.250.698 15.849 1.456) 10.064.Rupees in '000 ---------------------------------------------------------------------------------------2.491 4.199 (114.00% 106.698 (13.365 76 .532.064.064) 4.479.383 400.250.892 1.935.00% 39.473 1.904.529 (10.00% 39.net 40.445) 58.568 20.958) (12.789.940.273 1.155 439.00% 1.787.825 14.420.706 326.028) 1.009 2.50% 60.199 1.861.378 (3.034 1.520 1.978.849.162.315) 52.434 1.525.19% 100.819 67.165 3.525.483 1.796 (186.453 (1.62% 87.809 (1.064 123.029.365 (12.991 238.479.953.687) 257.904) (249.980 (1.200 14.787.123.00% 1.854 18.26.908.290 14.607 The plan assets comprise of: Equity instruments Debt instruments Others including cash and cash equivalents 0.995) (434.018.388 (449.342) 12.367) (434.797 0.279.904) 326.786) 7.165) (44.279) 1.365 439.686 518.904) 680.421 1.953.581.714.955 (1.378 6.051 (1.051 (1.064) (449.473 1.681) 569.849.307) (203.988 1.530.986.01% 12.558.624.434 1.975 202.092.954.937 37.904.00% Actual return on plan assets 193.073.861.00% 1.096.687 1.940.418 (79.367 877.986.105 (64.607 (14.641.556 (10.995 (37.307) 996.279.00% 55.00% 38.74% 100.294) 394.

3 The expected pension and medical expense for the next one year from January 1.4)% 20.892 5.383) 7.2) were carried out at December 31. 26.479.010.000 (11.8% 3.213.476 4.3 6.365 (12.01 million (2011: Rs.507 77 27. 2.449 5.282 39.50% 3. 2012.00% 10. 1.525.437.793 15.383 (12.068.681 million (2011: Rs.690.506.585 (12.883 17.262.903 3. 2013 amounts to Rs. 793.50% 3.495.473) 4.777.865. distribution costs and administrative expenses in the amount of Rs.520 3.387 28.206.987 million) and Rs.489 million respectively.1 Number of employees covered by the various schemes are as follows: Pension scheme Post retirement medical benefit scheme 2012 2011 -----------------Number--------------13.4% 2.978.2.109.944.000 2012 2011 2010 2009 2008 ---------------------------------------------Rupees in '000-------------------------------------------- Actuarial valuations of pension funds.390 5.1 27.799 16.315 10.291. 737.190.610.287 million (2011: Rs. TRADE AND OTHER PAYABLES Trade creditors Goods Services Airport related charges Others Accrued liabilities Advance against transportation (unearned revenue) Obligation for compensated absences Unredeemed frequent flyer liabilities Note 6.8)% 17.738. 587. 2012 2011 ------------Rupees in '000-----------1. 797.50% 10.045 16% (4)% 0% 6% 11.089 27.50% Expected rate of return on plan assets is based on the return earned on the market expectations and depends upon the asset portfolio of the Funds.368. The expected amount of Pension fund is the amount which the Corporation has to contribute for the next one year. Rs. 1. 1.117 million).581.790.180 4.953.4 The total expense relating to deferred liabilities has been allocated to cost of services.648. 26.924 6. The valuations have been carried out using Projected Unit Credit method and the following significant financial assumptions have been used: 2012 Valuation discount rate Salary increase rate Pension indexation rate Medical inflation rate Expected rate of return on plan assets 11.665 .530.2.289 4.093. 2.0% (0.665.222 million and Rs.383 million (2011: Rs.7% 1. amounting to Rs.00% 12.540) 1.724 16.698 (13.2% 1.00% 11.458 million).294.226 14.000) 6.669.863) 2.297 16.000 (5.684.528.675.2 The fair value of plan assets of pension funds includes investment in the Corporation's shares.954 26.00% 11.50% 2011 12.288. 26.2 27.793.797 7.459 6.27 Historical Information Pension Funds Present value of defined benefit obligation Fair value of plan assets Deficit Experience adjustments arising on plan liabilities Experience adjustments arising on plan assets Medical Scheme Present value of defined benefit obligation Experience adjustments arising on plan liabilities 5. 1.3% (0.6% 15.2.407 1.425. post retirement medical benefit scheme and compensated absences (note 27.535 1.2.2)% 13.50% 10.200.743.4% 4.902 14.524 million) respectively.683.

067 million) and Rs.835 2.407 2011 27. and accumulated points above 11.650 5. 26.535 1.610.291.2.507 683.term finance certificates 78 3.109 (18.524 million) respectively.726 8. 27.109. 587.222 million and Rs.954). 2012 2011 ------------Rupees in '000-----------1.961 53.2.1 27.578.2 Obligation for compensated absences Liability recognised in the balance sheet Balance at the beginning of the year Expense recognised during the year Benefits paid during the year Balance at the end of the year 3.283 239. Rs.093.903 3.331 177.681 million (2011: Rs. ACCRUED INTEREST Mark-up / profit payable on: .291 million) payable to PIA Investments Limited.2 The total expense relating to compensated absences has been allocated to cost of services. Note 2012 2011 ------------Rupees in '000------------ 28.1 This includes Rs.832.665 713. 2012 27.383 million (2011: Rs. distribution costs and administrative expenses in the amount of Rs.938 4.089 27.3 The liability for frequent flyer programme is based on the valuation carried out by an independent professional valuer.206.489 million respectively.188 million (2011: Rs.262. Points lower than 11.190. The amount is payable to Pakistan International Airlines Corporation Provident Fund and carries mark-up based on the discount rate announced by the State Bank of Pakistan.924 6. Rs. 192. 161. 57.390 5.535 2.689 .01 million (2011: Rs.187. 27.948 million (2011: Rs.887 44.308. 81.565. 334.226 (2011: 16.Preference shares Collection on behalf of others Customs and central excise duty Capital value tax Income tax deducted at source Short-term deposits Note 6.349. The assumptions used to determine the obligation for compensated absences are disclosed in note 26.117 million).4 6. 797.683.493 8.493. Significant assumptions include: 27.987 million) and Rs. 99.797 7.010.459 6.289 4. 679.2 27. 142.929 154.407 515. The expected amount of Pension fund is the amount which the Corporation has to contribute for the next one year.738.748 326.2.495. 1.673 8.3 The expected pension and medical expense for the next one year from January 1.250.944.978.947) 4.793 15.848 3. a subsidiary company.528.476 4.790. 1. 26. expiry of unavailed points after three years.5%).506.735) 3.684.180 4.075 (10.902 14.494 4.010.865.2.4 ticket inflation and discount rate at the rate of 11.3 27.000 are valued on aggregate cost of redeemed points.714 667.long-term financing .032.483 152.005 million).180 321.225 27.252 1.506.793.036 million) respectively.4 The total expense relating to deferred liabilities has been allocated to cost of services. 2.407 1.1. 737. distribution costs and administrative expenses in the amount of Rs.307.470 million (2011: Rs. 1.378.458 million).506. 793.404.000 can be used for purchase of tickets.033 1.5 % (2011: 12.449 5.1 Number of employees covered by the compensated absences are 16.010. 2013 amounts to Rs. TRADE AND OTHER PAYABLES Trade creditors Goods Services Airport related charges Others Accrued liabilities Advance against transportation (unearned revenue) Obligation for compensated absences Unredeemed frequent flyer liabilities Advances from customers Payable to employees' provident fund Unclaimed dividend .417 million (2011: Rs.472 ------------Rupees in '000------------ 27.665.2.846 2.

000 16-Aug-13 16-Aug-13 PKR 1.600.759 2012 2011 2011 4.000.000.2 29.2 29.600.000 1.835 625.000 3.1.1.000 1.1.000 1.801.2 GoP Guarantee GoP Guarantee Habib Bank Habib Limited Bank Limited 29.600.264 20126.2 29. Short-term Short-term loans loans Running Running financefinance under mark-up under mark-up arrangements arrangements 29.600 PKR 500 30-Sep-13 30-Sep-13 PKR 1.714 667. Airport Branch.1.1.000 2.5%).500.000 30-Sep-13 30-Sep-13 PKR 2.880.000 8-Sep-13 8-Sep-13 PKR 1.1.000 500.1.2 29.500.000.500 19-Aug-13 19-Aug-13 PKR PKR 5.000 875.000.000 1.000 - From Banking From Banking Companies Companies Askari Bank Askari Limited Bank Limited 29.1.000 2.000.1.500.600 3.1.410.025 954.796.800 PKR 4.000 1. and accumulated points above 11.000 1.000 30-Dec-13 30-Dec-13 PKR PKR 4 USD 4 USD 02-Apr-13 02-Apr-13 5 USD 5 USD 31-Dec-12 31-Dec-12 Hypothecation Hypothecation of entire of receivables.3 The liability for frequent flyer programme is based on the valuation carried out by an independent professional valuer.530 25.000 2.511 1.690.000 5.000.2 GoP Guarantee GoP Guarantee Habib Bank Habib Limited Bank Limited 29.000.5 % (2011: 12. Karachi.1 56.000.Karachi.2 29.secured Financier Financier Note Note Security Security Facility Facility ExpiryExpiry date date 2012 2012 2011 2011 amount amount ------------Rupees ------------Rupees in '000-----------in '000-----------(million) (million) 1.000 2.746 1. 27.1.000 can be used for purchase of tickets.191 29.431.1.2 GoP Guarantee.2 GoP Guarantee GoP Guarantee Habib Allied Habib International Allied International Bank Limited Bank .1.27.1.000.500.000 1.000 are valued on aggregate cost of redeemed points.1.000 1.000.680 2.600. 79 .600.000 PKR 1. entire receivables.000 2.000 1.000.836 4.2 GoP Guarantee GoP Guarantee Habib Bank Habib Limited Bank Limited 29.600.010.796.Karachi.2 debts.800 PKR PKR million million inclusive inclusive of 25% of margin.500.000 15-Jun-13 15-Jun-13 over all receivables over all receivables in connection in connection with sales with sales PKR PKR 30-Sep-13 30-Sep-13 routed through routed through collection collection accountaccount in NBPin NBP 28-Oct-13 28-Oct-13 Airport Branch.500 1.4 The amount is payable to Pakistan International Airlines Corporation Provident Fund and carries mark-up based on the discount rate announced by the State Bank of Pakistan.000.689 186.000 1.753 Note Note 29 29 2. 25% margin.000 13-Mar-13 13-Mar-13 National Bank National of Pakistan Bank of Pakistan 29.317 314.372.Branch. Points lower than 11.000 5.2 29.859 1.746 1.000 PKR 1.410.000.250.557.500.000 2.801.390.252 1. GoP Guarantee.027 25.1 29.000 500. expiry of unavailed points after three years. SHORT-TERM SHORT-TERM BORROWINGS BORROWINGS .1.2 4.836 61.191 21.secured 29.1.000. Note 2012 2011 ------------Rupees in '000------------ 28.000 500.000 1.000.354.600.2 29.680 1.530 61.Limited London .2 GoP Guarantee GoP Guarantee KASB Bank KASB Limited Bank Limited GoP Guarantee GoP Guarantee Habib Bank Habib Limited Bank Limited 29.000 1.667and million lienand / specific lien / specific right toright set.672 25. Significant assumptions include: ticket inflation and discount rate at the rate of 11.000 1.000.600 30-Dec-13 30-Dec-13 and fixed and assets fixed amounting assets amounting to PKRto4. lien / specific lien / specific right to right set-off to set-off5.000 3.Karachi.2 29.000 National National Bank of Pakistan Bank of Pakistan 29. GoP Guarantee GoP Guarantee National Bank National of Pakistan Bank of Pakistan 29.1 Short-term Short-term loans .770.027 29.000. GoP Guarantee.390.500. Airport Branch.000 2.to setoff over off receivables over receivables in connection in connection with sales with sales routed through routed through collection collection accountaccount in NBPin NBP Airport Branch. Karachi.2 GoP Guarantee GoP Guarantee KASB Bank KASB Limited Bank Limited 29.070 875.000 5.2 1.000 1.500 1. Karachi.secured loans .London EURO receivables EURO receivables 2.824 21.000 1.000 PKR 2.092 ------------Rupees ------------Rupees in '000-----------in '000------------ 29.706 4.372.706 4.000 2.880.1.1.000 5.349. lien / lien / specific specific right to set-off right toover set-off all over receivables all receivables in in connection connection with sales with sales routed routed throughthrough collection collection account account in NBPinAirport NBP Airport Branch.000 2.500. ranking ranking charge charge over current over current3.1.000 809.728 605.2 29.2 29.500 31-Dec-12 31-Dec-12 PKR PKR 500 PKR 1.557.600 12-Dec-13 12-Dec-13 PKR 1.000 3. and stocks spares and amounting spares amounting to PKRto PKR PKR PKR 2.511 809. book book2.000 3. ACCRUED INTEREST Mark-up / profit payable on: long-term financing term finance certificates sukuk certificates short-term borrowings provident fund advance from a subsidiary 3.2 29.743 38.824 56. stocks debts.354. National Bank National of Pakistan Bank of Pakistan 29.000.600.2 GoP Guarantee.000 1.667 million 2.070 1.1 29.secured .000 500.

000 500.027 29.000 1.Note 2012 2011 ------------Rupees in '000------------ 29.000.000 1.796. book debts. National Bank of Pakistan 29.354.191 2012 2011 ------------Rupees in '000-----------26.000 500.941 21.2 5.000 National Bank of Pakistan National Bank of Pakistan 29. ranking charge over current and fixed assets amounting to PKR 4.2 29.000 1.2 29.824 4.390.1.667 million and lien / specific right to setoff over receivables in connection with sales routed through collection account in NBP Airport Branch.secured Financier Note Security Facility amount (million) 1.712.500.000 PKR Expiry date 2012 2011 ------------Rupees in '000-----------31-Dec-12 30-Sep-13 30-Sep-13 8-Sep-13 16-Aug-13 12-Dec-13 30-Dec-13 02-Apr-13 31-Dec-12 13-Mar-13 1.000 2.801.000 809.1.2 56.600.500.500 PKR 3.1. GoP Guarantee.557.000.000 - Carried forward 30 Financier Security Facility amount (million) Expiry date 26. ranking hypothecation charge over current and fixed assets amounting to PKR 5.000 PKR 28-Jun-13 2.070 1. Karachi.2 29.2 29.746 1.000 3.London National Bank of Pakistan 29.600 PKR 2.000 PKR 1. ranking hypothecation charge over current and fixed assets 2.000 2. Karachi. GoP Guarantee GoP Guarantee.600.000 National Bank of Pakistan .000 PKR 1.191 - Brought forward National Bank of Pakistan 80 GoP Guarantee.000 875. Lien over Saudi Arabia and UK collection and receivables.530 21. Karachi.000 1.000.511 1. stocks and spares amounting to PKR 2.500.000 PKR 4 USD 5 USD 2.000.600.2 GoP Guarantee GoP Guarantee GoP Guarantee GoP Guarantee GoP Guarantee GoP Guarantee GoP Guarantee EURO receivables Hypothecation of entire receivables. lien / specific right to set-off over all receivables in connection with sales routed through collection account in NBP Airport Branch.000.000 PKR 15-Jun-13 30-Sep-13 28-Oct-13 5.600 PKR 19-Aug-13 30-Dec-13 1.680 From Banking Companies Askari Bank Limited KASB Bank Limited KASB Bank Limited Habib Bank Limited Habib Bank Limited Habib Bank Limited Habib Bank Limited Habib Allied International Bank Limited .000.000.712.2 29.390.000 2.706 61.372.Bahrain National Bank Of Pakistan 29.secured Short-term loans Running finance under mark-up arrangements 29.3 25 USD 4.000 3. GoP Guarantee.880. lien and specific right to set-off over all receivables in connection with sales routed through collection account in NBP Airport Branch.1.1.1. Karachi.600. SHORT-TERM BORROWINGS .836 25.125 4.360 PKR 30-Jan-13 24-May-13 405.1.000.2 1.000 5.360.000 2.2 29.800 million inclusive of 25% margin.000 1.1.191 4.941 21.500 PKR 500 PKR 1.1.813 million inclusive of 25% margin.000 PKR 2.000.1 Short-term loans .410.000 .390.2 29.000. lien / specific right to set-off over all receivables in connection with sales routed through collection account in NBP Airport Branch.000 1.1.500.1.1 29.

Karachi. Karachi. 20.667 million inclusive of 25% margin.700 million into term 81 29. Karachi. The borrowings in foreign currency carry mark-up of 2.000.191 The borrowings in PKR carry mark-up with a spread of 0. ranking charge over movable current and fixed assets amounting to PKR 4.75% over 1 month LIBOR and 3 months LIBOR (2011: a spread of 2.000 PKR 28-Jun-13 2.667 million inclusive of 25% margin.000 million inclusive of 25% margin. assignments of ticket sales collection for UK sector through IATA..000.667 million inclusive of 25% margin.000 PKR 28-Jun-13 3.000 - National Bank Of Pakistan 3.000. the Economic Coordination Committee (ECC) has approved the conversion of short-term loans amounting to Rs.360.667 million inclusive of 25% margin.950 - 13-Aug-13 3.667 million inclusive of 25% margin.1. lien and specific right to set-off over all receivables in connection with sales routed through collection account in NBP Airport Branch. GoP Guarantee. Karachi.Bahrain Standard Chartered Bank 65 USD 35 USD 27-Jun-13 6. Karachi.25% over 3 months LIBOR).712. lien and specific right to set-off over all receivables in connection with sales routed through collection account in NBP Airport Branch.500. ranking hypothecation charge over current and fixed assets amounting to PKR 2. First prior security over collection and facility service reserve account.712. ranking charge over movable current and fixed assets amounting to PKR 6. lien and specific right to set-off over all receivables in connection with sales routed through collection account in NBP Airport Branch.360 PKR 24-May-13 4. USD 4. lien and specific right to set-off over all receivables in connection with sales routed through collection account in NBP Airport Branch.000 - National Bank of Pakistan . Karachi.941 21.941 21. GoP Guarantee.500 PKR 3-Oct-13 3.000 PKR 13-Nov-13 5. 2. ranking hypothecation charge over current and fixed assets amounting to PKR 5. GoP Guarantee.000 - Carried forward 30 Financier Security Facility amount (million) Expiry date 26.000 PKR 15-Mar-13 2.000 - National Bank Of Pakistan 5.2 .390.000 PKR 20-Dec-13 5. GoP Guarantee.0% over 1 month and 3 months KIBOR (2011: spread of 0.000. Charge over assets to the extent of facility amount with 25% margin. Karachi.85% to 2.000 National Bank Of Pakistan 2. ranking hypothecation charge over current and fixed assets amounting to PKR 2. GoP Guarantee. Lien over collection proceeds from Kingdom of Saudi Arabia.557.024. lien / specific right to set-off over all receivables in connection with sales routed through collection account in NBP Airport Branch.85% to 2.390. During the year.824 29.1. GoP Guarantee.390.191 - Brought forward National Bank of Pakistan GoP Guarantee. ranking charge over movable current and fixed assets amounting to PKR 6.191 2012 2011 ------------Rupees in '000-----------26.1 21.000 - National Bank Of Pakistan 5.0% over 1 month and 3 months KIBOR).000. lien and specific right to set-off over all receivables in connection with sales routed through collection account in NBP Airport Branch. Sultanate of Oman and Bangladesh. lien and specific right to set-off over all receivables in connection with sales routed through collection account in NBP Airport Branch. ranking hypothecation charge over current and fixed assets amounting to PKR 4.Bahrain National Bank Of Pakistan and receivables.319.25% to 5.813 million inclusive of 25% margin.933 - 56.000 - National Bank Of Pakistan 3.

irrevocable undertaking to route all collection in Mirpur.837 4.827 269.768 First pari passu charge on certain specific 155 PKR receivables amounting to PKR 533. United Bank Limited .2.1.2 29.735 291. accessories of aircraft assets and on domestic receivables. 31-Jul-13 449.933 - 56. Hypothecation charge on all present and future spare parts.1 21.750 2. 29.191 The borrowings in PKR carry mark-up with a spread of 0.2 82 . First prior security over collection and facility service reserve account.75% over 1 month LIBOR and 3 months LIBOR (2011: a spread of 2.410. 2012.London KASB Bank Limited 3 USD 24 PKR - On Demand 30-Jun-13 292.991 256.700 million into term finance certificate for a period of 6 years with 2 years grace period on the terms and conditions to be approved by the Ministry of Finance.083 million.667 million on all present and future current assets with a margin of 25%. Sultanate of Oman and Bangladesh. Karachi. the overdue balances of principal amounts of these short-term loans aggregate USD 2.000 million including 25% margin.5% over 1 month LIBOR and 4% over USD Prime Rate (2011: spread of 3% over 1 month LIBOR and 4% over USD Prime Rate). The borrowings in foreign currency carry mark-up of 2.25% to 5.2 6 PKR Expiry date 2012 2011 29. Unavailed credit represents the difference between the facility amount and the balance as per bank statement as at December 31. lien and specific right to set-off over receivables in connection with sales routed through collection account in NBP Airport Branch.25% per annum) whereas variable rate borrowings carry mark-up with a spread of 3.824 29.0% over 1 month and 3 months KIBOR).836 The borrowings in PKR carry mark-up with a spread of 2.690 4.659 146.0% over 1 month and 3 months KIBOR (2011: spread of 0.1.5% over 1 month and 3 months KIBOR). As at December 31.2 ------------Rupees in '000-----------1-Jan-14 543.0% to 2. Borrowings in USD comprise of fixed and variable rate borrowings.009 Un-secured Habib American Bank Citibank N.5% over 1 month and 3 months KIBOR (2011: 2.017.. the Economic Coordination Committee (ECC) has approved the conversion of short-term loans amounting to Rs.3 29. 2012. (2011: 400 PKR) 575 PKR National Bank of Pakistan First pari passu hypothecation charge of PKR 766. 20.168 271.761 572.A.33 million.0% to 2.545.024.036 2. At present the finalisation of the restructuring process is at advanced stage (refer note 22.85% to 2.1.25% (2011: 3.220 Secured The Bank of Punjab Ranking charge on present and future stocks and book debts of Mirpur Azad Jammu Kashmir (AJK) for PKR 1.8 USD On Demand On Demand 66. Fixed rate borrowing carries mark-up at the rate of 3.2.1).666 546.85% to 2. During the year. assignments of ticket sales collection for UK sector through IATA.390. EURO receivables 550 PKR Habib Bank Limited 350 PKR - 9-Feb-13 460. Charge over assets to the extent of facility amount with 25% margin.570 PKR 25 PKR 31-Jul-13 2. Running finance under mark-up arrangements Banks Security Facility amount (million) Unavailed credit (million) Note 29.2.1 79. 1.Bahrain Standard Chartered Bank of Saudi Arabia. AJK from BOP counter.168 Habib Allied International Bank Limited . USD 35 USD 13-Aug-13 3.796.257 397. The Corporation has not paid the balances of the short-term loans that became due during the year.557.427 million on all present and future stocks and spares and assignment of receivables from Karachi and Lahore.25% over 3 months LIBOR).706 29.Karachi Hypothecation charge of PKR 3.5 USD 3 USD 0.

100 million (note 14) against the subject demand which is considered fully recoverable from the department. 1. 1.101 million (2011: Rs. the Corporation has received an order from CIR(A) deleting all penalties and default surcharges.969 million. 30. The Corporation and the department have filed appeal with the Tribunal.005 million) on the contention that the Corporation had not collected FED on tickets provided to its employees either free of cost or at concessional rates.110 million and Rs.January 2011 and April 2011 respectively.91 million (2011: Rs. 7.319. Rs. Sales Tax and Federal Excise (Appeals). The Corporation filed an appeal with the Collector of Customs. 87. 2. The tax department has also raised demands of Rs.621 million) as FED and sales tax respectively along with penalty of Rs. 566.005 million (2011: Rs. January . therefore. 1 million) and additional duty of Rs.621 million (2011: Rs. This case is currently under adjudication before Appellate Tribunal Inland Revenue (ATIR). The tax department has also raised demands of Rs. Accordingly.1 a) CONTINGENCIES AND COMMITMENTS Contingencies The tax department had raised demand of Rs. November 2010 . Accordingly.926 million (2011: Rs. 5. partially against it and partially remanded back. 25 million (2011: Rs. The Corporation has paid an amount of Rs.205 million (2011: Rs. The Corporation and the department both have filed appeals at the ATIR level which are pending adjudication.877. In respect to April 2011. These demands have been raised mainly on the issues of collection of FED at incorrect rate and incorrect apportionment of input tax. default surcharge and 5% penalty on the unpaid sales tax and FED were maintained.88 million. Management believes that the case will be decided in the favour of the Corporation. no provision has been made in these unconsolidated financial statements in respect of the subject orders / show cause notices.March 2010.926 million) in respect of custom duties and other taxes levied on the import of simulator.205 million) and additional duty / default surcharge of Rs. collection of FED at incorrect rate.110 million (2011: Rs. The Corporation has filed application for waiver of penalty for the months of November .319. 6. 5. 277. Currently.544 million) as Federal Excise Duty (FED) along with penalty of Rs. 5. 534.804 million (2011: Rs.877.923. no provision has been made in these unconsolidated financial statements in this regard. which has been decided partially in its favour. 79. Rs. 12.91 million) during the audit of the Corporation for the periods 20042005 and 2005-2006.March 2010. Management is confident that all the above appeals will be decided in favour of the Corporation. the Corporation has filed appeal against this at ATIR level and a rectification application with CIR (A) both of which are pending adjudication. The Corporation filed appeal at Commissioner Inland Revenue (Appeals) level. 87.679. 6. 277. which was decided in favour of the department. These demands were raised on the issues of late payment of FED. which are pending adjudication.30.058 million) and additional duty / default surcharge of Rs. 1 million (2011: Rs. Further. 66. Accordingly.000 million (2011: Rs. Management believes that the case will be decided in the favour of the Corporation.065 million) and Rs. 74 million and Rs. A show cause notice was issued to the Corporation by the Collector of Customs demanding payment of Rs. 7. In addition to this. no provision has been made in these unconsolidated financial statements in this regard.270 million) and Rs. the tax department has also levied default surcharge and 5% penalty on the unpaid sales tax and FED amounting to Rs. 5.412 million) during the audit of the Corporation for the period 2007-2008. The Corporation has paid Rs.058 million (2011: Rs.544 million (2011: Rs. The Corporation has filed an appeal before the Appellate Tribunal which is pending adjudication.January 2011. Accordingly.679. 5. no provision has been made in these unconsolidated financial statements in this regard. 2. incorrect apportionment of input tax and failure to collect FED on carriage of goods / mail of Pakistan Post.270 million (2011: 7.351 million (2011: Rs. Rs. Management believes that the case will be decided in its favour.025. no provision has been made in these unconsolidated financial statements.March 2010 and November 2010 .412 million (2011: Rs.923.679.CIR(A) has deleted the penalties of Rs.025. The tax department has levied penalties of Rs.065 million (2011: Rs.110 million). the Corporation has filed an application for rectification. Management believes that the case will be decided in its favour. 17. which is still pending before ACIR.December 2008 before Federal Board of Revenue on which the decision is pending. 1. 25 million) in this regard which is considered fully recoverable. 2.101 million) as FED and sales tax respectively along with penalty of Rs. 17. 38.351 million). For the months of January .804 million) and Rs. for the months of January . however. 2. Rs.270 million respectively through its orders in 2011. 534. 566. b) c) d) e) 83 .000 million) on account of delayed payment of sales tax and FED for the months of November . 1. the Commissioner Inland Revenue (Appeals) . 2. 2.December 2008.648 million respectively.025. 66.

473 million (2011: Rs.536.245 million and filed a petition in the High Court of Sindh.2 a) b) c) d) e) 84 . Competition Commission of Pakistan (CCP) vide its order dated November 20.193. and chemicals and repair / overhaul of rotables for a period of 5 years. The Corporation is contesting several litigations mainly relating to suits filed against it for unlawful termination of contracts.f) g) The custom authorities raised demands aggregating Rs.311 million). Management believes that both appeals will be decided in its favour. 274. 402.184 million). 508. Various ex-employees of the Corporation have lodged claims against the Corporation for their dues specifically relating to their reinstatements. the Corporation is committed to buy goods and/or services in the amount of USD 40 million annually.095 million (2011: Rs.172 million) as a result of the decision of ADRC.172 million (2011: Rs. Commitments Commitments for capital expenditure amounted to Rs. The Corporation has filed appeals simultaneously in Lahore High Court and the Supreme Court of Pakistan. However. 531. no provision has been made in these unconsolidated financial statements in this regard. h) i) j) k) 30. The Corporation has entered into an agreement for purchase of aircraft. 54. Further. 27.1. 1. 4. 95. the remaining commitments of which aggregate to USD 1. Contingencies relating to income tax matters are disclosed in note 38. 226. no provision has been made in these unconsolidated financial statements against these claims amounting to Rs. 130. 54.609 million) based on catalogue prices. no provision has been made in these unconsolidated financial statements. 274. sales tax and income tax and penalty of Rs.372 million (2011: Rs. Accordingly.904 million (2011: USD 1. 417 million. Management is of the view that these cases have no sound legal footing and it does not expect these contingencies to materialise. on account of discrimination between Hajj passengers and regular passengers the Corporation was directed to work out an amount of refund to be paid back to Hajis based on the difference of fare between regular passenger and short duration Hajis who flew during Hajj season 2008. no provision has been made in these unconsolidated financial statements in this regard. The Corporation has entered into an agreement with a vendor for supply of spare parts. Outstanding letters of guarantee amounted to Rs.413 million) equivalent to Rs.700 million). the liability that may arise in these cases cannot be determined and consequently. Accordingly.210 million). 148.172 million. the Corporation has paid an amount of Rs.525 million). breach of contractual rights and obligations.690. 5. The appeals are pending for hearing and accordingly stay order has not been granted to the Corporation till date. According to the terms of the agreement.824 million (2011: Rs. 63.120 million (2011: Rs.824 million) on reimport of aircraft engines after repair.259 million (2011: Rs.326 million (2011: Rs.120 million) in total of 44 cases of identical nature by imposing custom duty. 138.129 million (2011: Rs. consumables. 2009 has imposed a token penalty of Rs. Against the amount of Rs.558. Claims against Corporation not acknowledged as debt amount to Rs. The total demand raised by the custom authorities was reduced to Rs. 226. 10 million on account of unreasonable increase in Hajj fare during the year 2008 as compared to Hajj season 2007. Outstanding letters of credit amounted to Rs. The total amount of refund estimated by the Corporation is Rs. non-performance of servicing stipulations due to negligence or otherwise. which is pending adjudication. 1. Accordingly. 226.527. The Corporation filed an application to the FBR at Alternate Dispute Resolution Committee (ADRC) for review of the demands. Management believes that the case will be decided in its favour. materials.

575 137.441.764.223 2.967 237.066 The analysis of revenue by origin is derived by allocating revenue to the area in which the sale was made.others Salaries.345 31.net Passenger Cargo Excess baggage Charter services Engineering services Handling and related services Mail Others 31.514.667 225.1 85 1.831.562 6.508.701 118.202.728 1.739 617.478 5.550.260 4.806 103.823.634 738. wages and allowances Welfare and social security costs 10.804 3.435.521 5.642.505.703.186 12.987.142 471.014 21.041 1.170 .130.743.691.066 in '000-----------116.247.119 7.852.264 51.550.2.225 7.076. Note 2012 2011 ------------Rupees in '000-----------10.847 5.412.576 1.576 2.365 52.051.609 952.6 6.435 13.470 17.152. wages and allowances Welfare and social security costs Retirement benefits Compensated absences Legal and professional charges Stores and spares consumed Maintenance and overhaul Flight equipment rental Landing and handling Passenger services Crew layover Staff training Utilities Communication Insurance Rent.497.730.100 667.578 1. rates and taxes Printing and stationery Depreciation Amortisation on intangibles Others 5.684 4.461 53.298 1.522.598 112.f) The amount of future payments in operating lease arrangement relating to Aircraft 777-200 ER and the period in which these payments will become due is as follows: 2012 2011 ------------Rupees in '000-----------Not later than one year Later than one year but not later than five years Later than five years 31.678 188.805.1 Revenue by geographical segments Revenue analysis USA / Canada Europe Middle East / Africa Asia (excluding Pakistan) Pakistan 8.072.427 21.067 1.608.352 2.291.630 8.016 415.073.732 215.428.063 1.454 1.098.649 33.960.764.809 135.544 647.999 2012 2011 112.228 6. DISTRIBUTION COSTS Salaries.301 143.521 3.005 59.994 334.312.576 ------------Rupees 32.506 116.145.629 1.218.147.359 3.758.296.828.833 1.628 98.583 50.622.295.893 37.816 3.001.446 58.059 22.956 5.858.736.519 674.088 1.920 710. REVENUE .136 5.495 1.275 1.653 983.326 187.132.367 3.486.495 29.833 2.115 679.281.676 6.130.433 34 100.132 22.070. COST OF SERVICES .

001. rates and taxes Welfare and social security costs Utilities Retirement benefits Auditors' remuneration Communication Compensated absences Depreciation Distribution and advertising expenses Amortisation on intangibles Legal and professional charges Donations Repairs and maintenance Others Insurance 10.291. 14.521 Communication 29.925 94.2.697 2.150 2.409 2012 2011 Rent.225 21.190 24.732 Pakistan 53.793 70.215 53.527 Auditors' remuneration Staff training 70.786 2012 2011 86 Donations 34.723 7.1 million (2011: Rs.517 6.159 575 7.435 53.145.944 4. information wages and allowances Consolidated financial Welfare and social security costs statements Retirement benefits Compensated absences Code of Corporate Governance 4.105. wages Welfare Welfare and and social social security security costs costs Retirement benefits Compensated absences Distribution and advertising expenses Legal and professional charges Legal charges Storesand andprofessional spares consumed Repairs and maintenance Maintenance and overhaul Insurance Flight equipment rental Printing and stationery Landing and handling Communication Passenger services Staff training Rent.6 6.745 Amortisation on intangibles 6.197 647.560 3.170 649.630 226.152.162 81.435.254 1.281.529 million (2011: Rs.130.576 70. rates and taxes 307.202.1 5.779 107.098.576 Crew layover 2.235.739 6.275 1.2.938 1.542 161.1 1.521 3.105 2.1 33.454 3. 50 --------------------------------------------------------------.542 Besides this.576 617.223 25.872 .035 434.701 50.041 156.533 6.427 Staff training 143.770 473.428.564 307.956 62.345 Europe 21.301 21.356 99.283.023 2. & Co.977 59.745 24.867 6. wages and and allowances allowances Salaries. rates and taxes 647.067 679.686 33.621 Audit fee Fee for review of interim ADMINISTRATIVE EXPENSES financial Salaries.072.960.070. rates and taxes 539.901 137.235.145.728 2.2. none of the directors or their spouse have any interest in the donees.701 539.others 51.973 2.831.417 214.967 237.088 159.517 and Rs.852.319 99.155.1 24.188 192.145.508 2.076. 3.667 The analysis of revenue by origin is derived by allocating revenue to the area in which the sale was made.076.6 6.066 Depreciation 5.388.145.575 8.264 51.967 874.21.522.667 1.2 34.014 137.430. 32.051.119 112. Karachi Airport.791.005 2.647 Donations situated at TerminalUtilities include payments aggregating Rs.215 12.202.277 633.779 70.126 8.977 17.6 7.130.779 2.275 633 8.874 3.446 1.275 1. 5.697 8.314 70. Road.356 237. Co.301 USA / Canada 8. wages and allowances Rent.772 17.197 Auditors' remuneration 24.277 2.345 36.172 70.622.723 Amortisation on intangibles 6. Others 225.560 227.170 1.544 7.035 3.629 25.197 3.793 Out of pocket expenses 392 1.831 143.159 2.132 7.872 Communication 492.703.833 30. Depreciation 5.1 34.367 488.833 135.478 37.059 Utilities 31.758.443 34. rates and taxes ADMINISTRATIVE EXPENSES Printing and stationery Salaries.837.874 488.105.736.764.686 17.782 13.486.409 338.664 8.809 529.944 434.837.243 in '000-----------3.342 1.023 10.670 21.6 214.994 633.831.188 355. Co.576 6.364 161.739 617.1 50 & Co.186 38.312. Pakistan in which the Managing Director of the Corporation acts as a Trustee.846.703. 34.544 Rent.576 7.264 Note 3.492 2.678 188.041 5. Yousuf A.2 8.517 1.388.855 40. Compensated absences Legal and professional charges Repairs and maintenance Insurance Printing and stationery DISTRIBUTION COSTS Staff training Salaries.734 34.335.809 98.243 62. 719.647 135.649 52.291.325 million) to Al-Shifa Trust.296.973 34.621 1.927 156.492 338.547 1.314 1.277 7.564 54.506 188.172 21.254 1.998 1.521 54.745 2.130.225 40.312.678 58.598 Printing and stationery 215. wages and allowances Depreciation Welfare and social security costs Amortisation on intangibles Retirement benefits Others DISTRIBUTION COSTS COST OF SERVICES .998 10.664 8.174 118.638 368.036 368.224 2. Communication 1.228 116.155.6 6.527 3.Revenue analysis Passenger services 3.035 25.949 192.225 874.734 327 413 740 Printing and stationery 70.608.461 Insurance 1.925 Note ------------Rupees Others 473.855 31.628 1.275 633 4.649 261. Nil) to Pakistan Airline Pilots' Association (PALPA) which is an association of and run by PIAC's pilots.6 Saleem Ferguson & Depreciation 36.317 14.225 225.443 Staff training 107.960. 3.533 70.901 Total Total Adil Saleem Ferguson & Adil 5.831 F.352 33.001. 4.105 Insurance 28.998 81.088 Asia (excluding Pakistan) 5.816 118.684 94.266 3.364 14.2.335.441.867 1.550 1.067 227.846.575 23.949 Repairs maintenance 355.443 1.454 719.804 492.428.630 575 1.786 30. 1.770 5.115 845.119 2.583 1.670 Tax and and other services 10.262 1.736.319 226. Salaries.630 2012 2011 ------------Rupees in '000------------ 5.728 Amortisation on intangibles 6.779 845.547 Rent.Rupees in '000 --------------------------------------------------------------Others 159.1 Printing and stationery 38.938 1.2.691.1 34.441.893 22.495 50 29.553 OTHER PROVISIONS AND ADJUSTMENTS 9. layover rates and taxes Crew Utilities Staff training Depreciation Utilities Amortisation on intangibles Communication Others Insurance Rent.987.365 52.927 1.228 2.035 M.638 28.162 24.791.998 1.550.365 33.318 2.190 17.224 3. M.497. F.553 25.495 Middle East / Africa 22.277 649.247.262 1.2 35.470 3.764.893 50 37. Utilities 23.174 529.430.732 215.417 334.2.073. Yousuf A.630 6.782 9.823.283.730.764.036 218 218 436 198 198 396 Legal and professional charges 261.

745 10.315) 70.454 68. The Corporation was required to make monthly payments in accordance with the FMP rate mutually agreed with the vendor.1 12.Tax and other services Out of pocket expenses 392 6.440 1.871 342.405.948 14. Note 2012 2011 ------------Rupees in '000------------ 37.897 333.325 38.517 327 6.099.753 (512.269.688 986. plant and equipment Others 10.610 1.399 6.834.411 303.997 213.268 15.2 Donations include payments aggregating Rs.431 3. plant and equipment Gain on termination of lease Gain on termination of fleet management program of leased aircraft Insurance claims Others 23.528 million.046 38.561 582.346.208 50. unless earlier terminated.879 3. 2012 2011 Note ------------Rupees in '000-----------OTHER PROVISIONS AND ADJUSTMENTS Property.443 34.126 906.811.2 36.347 271.242 110.882 259.048 730.715 10.772 10.short-term borrowings . 4. which resulted in a net gain of USD 19.advance from a subsidiary Profit on sukuk certificates Interest on liabilities against assets subject to finance lease Interest on provident fund Arrangement.550 477.318 285. a reconciliation of FMP services vis-à-vis FMP billings to the Corporation has been made. 3.317 2.962 1.000 45.300 43. situated at Terminal2.071 67.long-term financing .151 1.042 35.2 36. 3.972 4.107 211.325 million) to Al-Shifa Trust. and Rs. 36.780 656.438 (1.026 2.872 123.125 42.for the year Current .524 1.205.325 177.940 302.105 740 14.023 1. Besides this. Road.032) 87 .766 545.342 17.1 11. OTHER OPERATING INCOME Income from financial assets Profit on bank deposits Derivative income Interest on maintenance reserve Income from assets other than financial assets Gain on disposal of property.105 413 8.329.849 3. FINANCE COST Mark-up on: . plant and equipment written off Provision for slow moving and obsolete spares Provision for doubtful debts Provision against doubtful advances Derivative expense Loss on exchange of property. agency and commitment fee Amortisation of prepaid exposure fee Bank charges. to obtain repairs and maintenance services for certain aircrafts according to the Fleet Management Program (FMP) offered by the vendor. On termination of the contract.307.017 1.757 2. the Corporation and a vendor mutually agreed to terminate a contract which was entered in the year 2003 for a period of ten years.126 2.734 24.556 47.852 1.529 million (2011: Rs.752 58.term finance certificates .848.018.023 1.391 11.529. 2012.931 523 188.532. guarantee commission and other related charges 2.380.321 174.1 51. none of the directors or their spouse have any interest in the donees.019 15.598. Nil) to Pakistan Airline Pilots' Association (PALPA) which is an association of and run by PIAC's pilots.127 108.1 38.1 During the year on August 23.907 49.093 21.for prior years Deferred 280. TAXATION Current .380 224.2 280. Karachi Airport.197 million (2011: Rs.645 36. Pakistan in which the Managing Director of the Corporation acts as a Trustee.

300 43.972 1.107 333. The main contention among others was application forof rectification against thison order and aircraft.O. also filed appeal before CIR(A).766 36.480. 324.1 department. received show disallowance depreciation claimed leased The Corporation claimedThe theCorporation depreciationhas on also the contention that cause notices in respect of tax years 2007 to 2009 on account of disallowance of depreciation on leased aircraft and other those aircraft were obtained under hire purchase arrangement which has been approved by Ministry of Finance as a provisions. The Corporation has filed appeal before CIR (A) against the said order. 48.852 1. 48. All assessments for tax years 1991 to 2002 have been finalized by the 457.1.688 986. a reconciliation which resulted in a Arrangement. The Corporation is confident that this issue will ultimately be decided 2012 2011 88 in its favour and the amount will be recovered.753 2.046 ------------Rupees 38. No numeric tax rate reconciliation is given as the Corporation is liable for turnover tax only. 2001 in respect of tax year 2006 disallowing the depreciation claimed on leased aircrafts and other department has filed appeal in the Supreme Court.2 The Corporation has filed tax returns for tax years up to tax year 2012 of which tax returns from tax years 2003 to 2012 inadmissible. the Additional Commissioner Inland Revenue (ACIR) has issued order under section 122 (5A) of the Income of assessment year 2000-01. the Federal Board of Revenue (FBR) issued an S.2 177.advance from a subsidiary Profit on sukuk certificates Interest on liabilities against assets subject to finance lease Deferred Interest on provident fund Arrangement. Being further aggrieved.5% of turnover. The the main contention among others for the Corporation for tax year 2013 became 0.1. CIT (A) levelno which was decided partially inthese favour of the Corporation.2 Deferred taxation ------------Rupees in '000------------ Further. the rate of turnover tax Current . provision minimum has taxation made in accordance section 113 38.advance from a subsidiary 21. however.897 (1.598. The department did not accept this contention and disallowed depreciation expense as 38.871 Interest on provident fund of FMP services vis-à-vis FMP billings to the Corporation has been made.R.325 906. TAXATION During the year. The department did not accept this contention and disallowed depreciation expense as inadmissible.834.438 1. The Corporation has filed an (DCIR) by issuing an amended order in relation to the tax year 2005.391 2.126 15.645 .972 280. Being further aggrieved.1. Management believes that this issue will be decided in favour of provisions of Rs. of Interest on against assets subject to finance lease 986.329.235 million was also recovered by FBR in this respect. The Corporation had filed appeals against the above demands which have been decided in favour of the Corporation at In view of Tribunal availableInland tax losses for the year.315) for the Corporation for tax year 2013 became 0.594) 333.529.3 rate A demand of Rs.380. 2001.550 177. The in its favour and the amount will be Corporation had filed appeals against the above demands which have been decided in favour of the Corporation at Appellate Tribunal Inland Revenue (ATIR) level.269.046 section 113 38. department has filed appeal in the Supreme Court.017 70.715 38.071 342.1 In view of available tax losses for the year. 38. 38. An amount of Rs.for the year 280.032) 342. The Corporation claimedfor the depreciation on the contention that those aircraft were obtained under hire purchase arrangement which has been approved by Ministry of Finance as a financing arrangement.962 required to liabilities make monthly payments in accordance with the FMP rate mutually agreed with the vendor. through Finance Act 2012. The minimum tax liability under section 80D of the repealed ordinance had been levied by the department Current from assessment year 1991-92 to assessment year 2002-03 after adding 10% of net turnover on estimated basis. the rate of turnover tax 38.871 (1.268 (512.897 the contract.442 million.561 477. Further.1 Mark-up on: .391 43.907 49.3 In A demand 898. 37. above.026 582.380 224.610 1.325 582. the Corporation has filed Accordingly. through Finance Act 2012. the only. The Corporation was Profit on sukuk certificates 906.37.258. the Corporation has filed department. After decision by the Sindh High Court on a few grounds in favour of the Corporation.269.529.205.018.O. the applicable rate of minimum tax rate Current .tax 898. The minimum tax liability under section 80D of the repealed ordinance had been levied by the department appeal at ITAT level which is pending adjudication.2 accordance with 10.2 The Corporation has filed tax returns for tax years up to tax year 2012 of which tax returns from tax years 2003 to 2012 have been filed under self assessment scheme.1.610 term finance certificates 1.561 (1. The Corporation is confident that this issue will ultimately be decided from assessment year 1991-92 to recovered. 2012. 38. matter is stillwithout pending.405.715 2012 2011 Note 11.325 4. appeal at ITAT level which is pending adjudication. the Officer Revenue (OIR) has issued an order section 161 / 205 of the Income Tax 38. 898.753 under section 113 was revised downward from 1% to 0.757 in '000-----------10. provision has been made in unconsolidated financial statements in this regard. FINANCE COST 3.688 1.reduced 898.R. All assessments for tax years 1991 to 2002 have been finalized by the CIT (A) level which was decided partially in favour of the Corporation.598.528 million.099.315) 15.300 Bank charges. the Additional Commissioner Inland Revenue (ACIR) has issued an order under section 122 (5A) of the Income . No numeric tax rate reconciliation is given as the Corporation is liable for turnover tax of assessment year 2000-01.for borrowings prior years .886 (1.1 Appellate Revenue (ATIR) The for department now has filedbeen appeal at the Sindh High with Court in respect of the Income Tax Ordinance. Management believes that this issue will be decided in favour of the Corporation without any additional tax liability. disallowance of depreciation claimed on leased aircraft. financing arrangement. 57 (I) / 2012 dated January 24.177by million) was raised by the Deputy Commissioner Inland Revenue under section 113 was downward from 1% to to 0.1 280.886 67.000 545.532. the Corporation and a vendor mutually agreed to terminate a contract which was short-term borrowings 4.205. 3.834. The department has now an filed appeal at the Sindh High Court in respect Further. agency and commitment fee Amortisation of prepaid exposure fee Current Bank charges.126 280.long-term financing 2. 477. 2012 whereby the addition of to Rs. Amortisation of prepaid exposure fee 211. The Corporation has filed its reply in response to these notices. 2001 pertaining to tax year 2011 and raised a demand of Rs.5% turnover. Therefore.099.107 211.550 On termination 1. unless earlier terminated.757 of the Income Tax Ordinance.329. of minimum for themillion Corporation 50%.594) 38.177 million) was raised by under the Deputy Commissioner Inland Revenue Ordinance.for prior years (512.017 for certain aircrafts according to the Fleet Management Program (FMP) offered by the vendor. The Corporation filed appeal at Management believes that these issues will be decided in favour of the Corporation without any additional tax liability.026 During the year on August 23. the Corporation any additional tax liability.962 1. guarantee commission and other related charges 49.907 224.811.1.849 285. 2001.018.268 entered in the year 2003 for a period of ten years. During the year. 38. After decision by the Sindh High Court on a few grounds in favour of the Corporation. applicable rate of minimum tax was rate (DCIR) by issuing an revised amended order in relation theoftax year 2005.25% of turnover and the provision for taxation has been made accordingly. the Federal Board of Revenue (FBR) issued an S.235 million was also recovered by FBR in this respect.532.1 Mark-up on: 3. The Corporation filed appeal at have been filed under self assessment scheme.438 Deferred 38.1.811.380 net gain of USD 19. to obtain repairs and maintenance services .071 457. agency and commitment fee 67.177 millionInland (2011: Rs. An amount of Rs.319 million.093 2.852 2.1 38.380.for the year short-term Current . provision for minimum taxation has been made in 11. Further.093 21.258. the Tax Ordinance. 2012 whereby the rate of minimum tax for the Corporation was reduced by 50%.325 70.long-term financing term finance certificates Current .032) 38.346.177 (2011:was Rs. level. guarantee commission and other related charges TAXATION FINANCE COST 2. 57 (I) / 2012 dated January 24. assessment year 2002-03 after adding 10% of net turnover on estimated basis.25% of turnover and the provision taxation has been made accordingly. Therefore.

Rupees in '000 --------------(32. 2011 Deferred tax credits: Accelerated tax depreciation Surplus on revaluation of property.153) Recognised in profit and loss account Recognised in equity Balance as at December 31.568.032 1.912.561) (177.864 (152.568.379.248) 23.855) (24.1 (19. the Officer Inland Revenue (OIR) has issued an order under section 161 / 205 of the Income Tax Ordinance.matter is still pending.832 (326.Rupees in '000 -------------------------------------------------------------23. EARNINGS PER SHARE .2.153 23. 38 38.153 39.BASIC AND DILUTED Loss for the year (Rupees in '000) Weighted average number of ordinary shares outstanding Loss per share attributable to ‘A’ class ordinary share (Rupees) ‘B’ class ordinary share (Rupees) 39.239.00) (5.032 (19.207) 2. deferred tax asset of Rs. The weighted average number of shares as at December 31.2.net 2012 2011 --------------.87) (17.379.801) 7. 43.743 (3.032 1.855) (24.270.665) (6.553. 2012 and 2011.108.179.488) (23.344 (1.233.080 (139.379.032 24.basic (class A)'. no provision has been made in these unconsolidated financial statements in this regard.032 24.248) 1.50) 2011 (26.1 39.491.009) (5.2 3.864) 22.568.189.181.491 998.329.319 million.150) (177.912. Management believes that these issues will be decided in favour of the Corporation without any additional tax liability. 2012 --------------------------------------------------------.487) (4.491 23.654) (28. 2012.751 (11.2 Deferred taxation Deferred tax credits: Accelerated tax depreciation Surplus on revaluation of property. The Corporation has also received show cause notices in respect of tax years 2007 to 2009 on account of disallowance of depreciation on leased aircraft and other provisions. plant and equipment Deferred tax debits: Unused tax losses Provisions for liabilities and to write down other assets (19. The Corporation has filed an application for rectification against this order and also filed appeal before CIR(A).839 million (2011: Rs.809) (479.032. plant and equipment Deferred tax debits: Unused tax losses Provisions for liabilities and to write down other assets (17.659.155.179.767.912.913.711 177. plant and equipment . its impact has been taken into account while calculating 'earnings per share .10).912.662 23.233 (9.341) 22.077.032) 1.116 . 2012 38.3 Since the 'advance against equity' is convertible into ordinary share capital of the Corporation.561) 998. 324.329.832 1. Accordingly. 40.678.329.273 million) has not been recognised in these unconsolidated financial statements due to uncertainty in availability of sufficient future taxable profits. 2011 Recognised in profit and loss account Recognised in equity Balance as at December 31.593) (23. In addition to above.561 Note (177.009) (5.262) (1.864) 1.017.2 39.864 2011 ------------Rupees in '000------------ In accordance with the accounting policy of the Corporation (note 4.080 (139.2 Movement in temporary differences during the year Balance as at January 1. 2001 pertaining to tax year 2011 and raised a demand of Rs. 35. CASH GENERATED FROM OPERATIONS Loss before taxation Adjustments for: Depreciation Loss / (gain) on disposal of property.784) (1.397.239.329.633) 656. There were no dilutive potential ordinary shares outstanding as at December 31.329.488) (23.080) (220.913. The Corporation has filed its reply in response to these notices.143 13.025.329.662 23.568.751.561) 2012 (33.812.73) (4.665) (6.491. exceeds the number of authorised shares of the Corporation due to the reason mentioned in note 19.127) 89 7.077.723.233.522) (969.153) 38.540) 39.678.

REMUNERATION OF MANAGING DIRECTOR AND EXECUTIVES Managing Director Unit Heads Executives 2012 2011 2012 2011 2012 2011 ---------------------------------------------------------------Rupees in '000--------------------------------------------------------------Managerial remuneration Corporation's contribution to provident fund Other perquisites Number 6.956 14 2.553.649.649. 41.Loss per share attributable to ‘A’ class ordinary share (Rupees) ‘B’ class ordinary share (Rupees) 39.1 The number of persons does not include those who left during the year but remuneration paid to them is included in the above amounts.576.318.940 3. exceeds the number of authorised shares of the Corporation due to the reason mentioned in note 19.034 2.762 (45.710) (28.580 331.50) (9.125. 2012 and 2011. plant and equipment written off Provision for doubtful advances Provision for staff retirement benefits Finance cost Unrealised exchange loss Profit on bank deposits Reversal of provision against short-term investments Working capital changes Increase in stores and spares Increase in trade debts (Increase) / decrease in advances Decrease in trade deposits and prepayments Increase in other receivables Increase in trade and other payables Cash (used in) / generated from operations 2012 2011 --------------. its impact has been taken into account while calculating 'earnings per share .770.662.046 3.997) (880) (3.basic (class A)'.242 110.281 1.524) (1.2 39.848. interest rate risk.317.072.211 4.025.986 7. 2012.278 12.952.803 123.127 1.411 42.3 (11.960 (1.87) Since the 'advance against equity' is convertible into ordinary share capital of the Corporation.492) 9.023 10.240 1 12.551 111.307. Nil). FINANCIAL RISK MANAGEMENT 42. fuel . Nil (2011: Rs.125 36.290.208 68. Managing Director and certain executives are also provided with the Corporation's maintained cars and facilities as per the Corporation's rules.864 77.723.403 303.275.003.73) (4.1 39.127) 19.347 271.777) (1.915 (1.306.654) 7. 90 The Corporation's activities expose it to a variety of financial risks: market risk (including currency risk. CASH GENERATED FROM OPERATIONS Loss before taxation Adjustments for: Depreciation Loss / (gain) on disposal of property.538) 207.220) (173.766 39 41.624 2. The weighted average number of shares as at December 31.251 9.00) (5.358 4.801) 7.625) (312.462 108.019 5.net Gain on termination of lease Gain on termination of fleet management program of leased aircraft Amortisation of intangibles Provision for slow moving and obsolete spares Provision for doubtful debts Property.668.931) 26.887 157 744 13.766 (1.987 Aggregate amount charged in the financial statements for fee to directors was Rs.293) (1.580) 97.584 2.723 70 447 7.925.032.099.505.788 1 66.985.116 (1.969 10.556.456 11.872 50.632.397.157 15 98. There were no dilutive potential ordinary shares outstanding as at December 31.541) 11.954 1.980.757 5.743 (3. 40.380.106 (51.456) (223.399) (5.143 13.249 4.042 1.Rupees in '000 --------------(32.682 110. plant and equipment .

788 1 1.496 4.987 Aggregate amount charged in the financial statements for fee to directors was Rs.281 1. 42.609. Senior management identifies. Market risk comprise three types of risk: interest rate risk. The Corporation can experience adverse or beneficial effects arising from foreign exchange rate movements. a) Fuel price risk The Corporation’s earnings are affected by changes in price of aircraft fuel.211 4. such as fuel price and equity price risk. The Corporation hedges fuel prices to a limited extent through use of derivative contracts.1 Market risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices.358 4.609. evaluates and hedges financial risks. Managing Director and certain executives are also provided with the Corporation's maintained cars and facilities as per the Corporation's rules. The Corporation's senior management carries out financial risk management under governance approved by the Board of Directors.465) (141.864 77.174.240 1 157 744 13. credit risk and liquidity risk.566) (112. available-forsale investments and derivative financial instruments.584 2.985. b) Currency risk Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.650) (152.330) ----------------+5%-------------------------------+5%-------------------------------+5%-------------------------------(5%)---------------4.1 The number of persons does not include those who left during the year but remuneration paid to them is included in the above amounts.061) (62.569) (51.551 111. wherever necessary. with all other variables held constant.174.956 14 110. interest rate risk.330 ----------------(5%)-------------------------------(5%)-------------------------------(5%)---------------- 91 .210) (5.125. on (loss) before tax: 2012 2011 2012 2011 ---------------------------Rupees in '000---------------------------Change in USD rate (Increase) / Decrease in loss before tax Change in SAR rate (Increase) / Decrease in loss before tax Change in AED rate (Increase) / Decrease in loss before tax Change in GBP rate (Increase) / Decrease in loss before tax ----------------+5%---------------(4.Corporation's contribution to provident fund Other perquisites Number 70 447 7.496) (4.278 12.566 112. United Arab Emirates Dirham (AED) and Great Britain Pound (GBP). The Corporation’s revenue streams are denominated in a number of foreign currencies resulting in exposure to foreign exchange rate fluctuations. the Corporation is not exposed to risk related to fuel price derivative contracts.157 15 1. The following table demonstrates the sensitivity of financial instruments to a reasonable possible change in the foreign currency exchange rates. In addition.034 108.624 2. bank deposits. therefore.954 1. Nil (2011: Rs. The Corporation’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Corporation’s financial performance. Saudi Riyal (SAR). the Corporation has substantial foreign currency borrowings and lease liabilities that are primarily denominated in US Dollar (USD). The Corporation manages some of its currency risk by utilising its foreign currency receipts to satisfy its foreign currency obligations.553. fuel price risk and other price risk).649.569 51.061 62. Nil).251 9. Financial instruments affected by market risk include loans and borrowings. 42. 41.465 141. currency risk and other price risk. FINANCIAL RISK MANAGEMENT The Corporation's activities expose it to a variety of financial risks: market risk (including currency risk.650 152.210 5. There are no derivative contracts outstanding as of year end.

309.726 25.381) (81.941 14. The Corporation manages its liquidity risk by maintaining sufficient cash and cash equivalents and through support of GoP either in the form of capital / loans or in the form of guarantee to obtain financing from lenders.111 79.178 989.550) (464.542 19.287.831.958 20. change in interest rates at the reporting date would not affect profit and loss account.378. The Corporation’s exposure to the risk of changes in market interest rates relates primarily to the following: 2012 2011 -----------Rupees in '000----------Variable rate instruments at carrying amount: Long-term financing Term finance and sukuk certificates Liabilities against assets subject to finance lease Advance from a subsidiary Provision for payable to employees' provident fund Short-term borrowings Long-term deposits and prepayments 23.354.396) 25.450.211 11.432) --------------(1%)------------718.721.381 81.363.403 3.589.589.404.25%)-----------157.258.576) 142. Cash flow sensitivity analysis for variable rate instruments The following table demonstrates the sensitivity to a reasonable possible change in interest rates.673 61.013.827 (179.326 ------------(0.546 -------------+1%------------(718.2 Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting 92 obligations associated with financial liabilities that are settled by delivering cash or other financial asset.760 36.432 . KIBOR LIBOR 2012 2011 2012 2011 ---------------------------------Rupees in '000------------------------------------Change in interest rate Increase in loss before tax Change in interest rate Decrease in loss before tax d) Other price risk Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from currency risk or interest rate risk).25%-----------(157.40 c) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.350) 31. or factors effecting all similar financial instruments traded in the market.425.850 66.069.944 19. with all other variables held constant. 30.760 33.530 5.550 464. whether those changes are caused by factors specific to the individual financial instrument or its issuer.795 (1.237.735 (150.135.223.382 Fixed rate instruments at carrying amount Long-term financing Liabilities against assets subject to finance lease Short-term borrowings Bank deposits 11. on the Corporation’s loss before tax.130 Fair value sensitivity analysis for fixed rate instruments The Corporation does not account for any fixed rate financial assets and liabilities at fair values through profit and loss.658 1.482. Therefore.200 116. 42.326) ------------+0.795. The Corporation is not significantly exposed to equity securities price risk as majority of its investments are in subsidiaries and associated companies which are stated at cost.

038 204.129 14.956.533. 42.845.943 8.847.326 ------------(0.096 191.748 887.530 20.131 1.237.201 21.092 27.043.918 3.092 27.166. The following table shows the Corporation's remaining contractual maturities of financial liabilities. The credit risk with regard to individual agents and airlines is relatively low. The majority of the agents are connected to the settlement systems operated by the International Air Transport Association (“IATA”) who is responsible for checking the credit worthiness of such agents and collecting bank guarantees or other monetary collateral according to local industry practice.567 11.861.397.135.050.613.956.610 2.788 9.690.289 4.547.381 81.533.497 7.550 464.902. Trade debtors mainly represent passenger and freight sales due from agents and government organizations.334 49.216 6.432 Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from currency risk or interest rate risk).403 21.679 35.133 1.020 21.213 2012 Long-term financing Term finance and sukuk certificates Liabilities against assets subject to finance lease Advance from a subsidiary Trade and other payables Accrued interest / mark-up / profit Short-term borrowings - - 42.693 20.071 11. whether those changes are caused by factors specific to the individual financial instrument or its issuer.787. 4293 Other financial assets .072 19.288 4.140.Change in interest rate Decrease in loss before tax d) Other price risk --------------(1%)------------718.069.530 56. or factors effecting all similar financial instruments traded in the market.614.136.601.690.178. The Corporation normally grants a credit term of 30 to 60 days to customers and in certain circumstances such exposure is partially protected by bank guarantees.941 62.219 5.188.354 989.657.022.811.469 10.096 90.3 Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.407.320.426 696.682 12.498.581. 2012 represents the maximum credit exposure. All financial assets except cash in hand are subject to credit risk.046.378.121.038 141.289 4. which is as follows: 2012 2011 ----------Rupees in '000---------Long-term deposits Trade debts Advances Trade deposits Other receivables Bank balances 5.396.862 84.2 Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or other financial asset.321 1.388.628 2.319 11.069. including estimated interest payments: Weighted Average effective rate of interest Less than 1 1 . Ageing of trade debts is disclosed in note 11 to these unconsolidated financial statements.652.633 41. The Corporation is not significantly exposed to equity securities price risk as majority of its investments are in subsidiaries and associated companies which are stated at cost.5 years More than 5 Total year years -------------------------------Rupees in '000----------------------------------------21.759 65.716 38.363 8.236 989.130.770.121.739.072 23.759 65.135.038.234.403 16.718. In most cases amounts due from airlines are settled on net basis via an IATA clearing house.25%)-----------157.828 50.731 580.374 39. The carrying amount of financial assets as at December 31.208 18.770. The Corporation manages its liquidity risk by maintaining sufficient cash and cash equivalents and through support of GoP either in the form of capital / loans or in the form of guarantee to obtain financing from lenders.694 16.744 Trade debts The Corporation has a credit policy in place and the exposure to credit risk is monitored on an on-going basis.481 194.109.869 2011 Long-term financing Term finance and sukuk certificates Liabilities against assets subject to finance lease Advance from a subsidiary Trade and other payables Accrued interest / mark-up / profit Short-term borrowings 14.416.383 31.148 51.216 6.987.

303 19. In most cases amounts due from airlines are settled on net basis via an IATA clearing house.Subsidiary Management fee expense Finance cost on advance Minhal France S. The transactions with related parties.017 69.918.126 84.495 260. 42.5 Capital management The Corporation’s objective when managing capital is to safeguard its ability to continue as a going concern.3 277.004.485 558 508. There is no credit risk on aircraft lease deposits because they are security against the finance lease obligation.1 43. The credit risk with regard to individual agents and airlines is relatively low.common ownership Purchase of fuel Insurance premium Finance cost GoP . 43.000 3. Details of balances held with the aforementioned related parties excluding profit oriented state-controlled entities have been disclosed in respective notes. Other deposits are not significantly exposed to credit risk as they have been paid as security deposits to receive future services. The Corporation has incurred losses in recent years and the disclosure in respect of the Corporation’s ability to continue as a going concern is disclosed in note 1.547 15. other than those relating to issuance of tickets at concessional rates to employees and directors according to the terms of employment / regulations and those not mentioned elsewhere in these unconsolidated financial statements are as follows: 2012 2011 ------------Rupees in '000-----------Skyrooms (Private) Limited – Subsidiary Payments made against in-transit passengers Advances extended PIA Investments Limited . at least "A3" or equivalent for short term and "BBB" or equivalent for long term.485. chief executive and key management personnel have been disclosed in note 41 to these unconsolidated financial statements. key management personnel and employee benefit funds.167 4.075 802.973 1.Major shareholder Finance cost Shares issued during the year Advance against equity from GoP Hajj revenue 43.928.956 3. 94 The Corporation's sales of transportation services to subsidiaries.2 to these unconsolidated financial statements.4 Fair value of financial instruments The carrying values of all financial assets and liabilities reflected in these unconsolidated financial statements approximate to their fair value.708 Transactions with the directors. There is no significant credit risk against other receivables as majority of the receivable is from GoP.427 42.410. TRANSACTIONS WITH RELATED PARTIES The related parties comprise of subsidiaries. The majority of the agents are connected to the settlement systems operated by the International Air Transport Association (“IATA”) who is responsible for checking the credit worthiness of such agents and collecting bank guarantees or other monetary collateral according to local industry practice. directors.400.558.Trade debtors mainly represent passenger and freight sales due from agents and government organizations. The Corporation in the normal course of business carries out transactions with various related parties.Subsidiary Charges in respect of courier services Retirement funds Contribution to Provident Fund and others Profit oriented state-controlled entities . Ageing of trade debts is disclosed in note 11 to these unconsolidated financial statements.000 1.287 20.676.291.Sub-subsidiary Management fee income Abacus Distribution Systems Pakistan (Private) Limited .726 4.e. directors and key management personnel are not determinable. 42.360.192 1. associates.982 21. . Advances to employees are primarily against their salaries.339 317 504. .760 7.705 1.019 80.650 800.840 59. profit oriented state-controlled entities.2 43. 42 Other financial assets The credit risk on liquid funds (cash and bank balances) is limited because the counter parties are banks with a reasonably good credit rating i.A.

BESOS provides for a cash payment to employees on retirement or termination based on the price of shares of the Corporation. 2012 would have been higher by Rs. BESOS is applicable to permanent and contractual employees who were in employment of these entities on its launch date. BENAZIR EMPLOYEE STOCK OPTION SCHEME (BESOS) On August 14. 0. The Corporation’s sales of transportation services to subsidiaries. directors and key management personnel are not determinable. BESOS which has been developed in compliance with the policy of the GoP for empowerment of employees of SOEs needs to be accounted for by the covered entities. keeping in view the difficulties that may be faced by the entities covered under BESOS. 0. if any. BESOS also provides that 50% of dividend related to shares transferred to PEET would be distributed amongst the unitholder employees. Details of balances held with the aforementioned related parties excluding profit oriented state-controlled entities have been disclosed in respective notes.02 per share (2011: Rs. chief executive and key management personnel have been disclosed in note 41 to these unconsolidated financial statements. staff costs and loss after taxation of the Corporation for the year then ended would have been higher by Rs. in PEET to meet the repurchase commitment would be met by GoP. However. 412.189 million) while earnings per share would have been lower by Rs.43. 0.05 and Rs.477 million (2011: Rs. 148. The deficit. The shares relating to the surrendered units would be transferred back to GoP. 2013. Gen Asif Yasin Malik (Retd) Chairman Syed Omar Sharif Bokhari Director 95 .03 per share) for class ‘A’ and ‘B’ shareholders respectively. Had the exemption not been granted. 0. associates. The eligible employees have been allotted units by PEET in proportion to their respective length of service and on retirement or termination such employees would be entitled to receive such amounts from PEET in exchange for the surrendered units as would be determined based on market price of shares of the Corporation. 130. including the Corporation. the Securities and Exchange Commission of Pakistan on receiving representations from some of entities covered under BESOS and after having consulted the Institute of Chartered Accountants of Pakistan has granted exemption to such entities from the application of IFRS 2 in respect of BESOS. subject to completion of five years’ vesting period by all contractual employees and by permanent employees in certain instances. AUTHORISATION OF FINANCIAL STATEMENTS These unconsolidated financial statements were authorised for issue by the Board of Directors in their meeting held on April 26. Lt.202 million (2011: Rs. 542.04 and Rs.275 million).2 43. The balance 50% dividend would be transferred by PEET to the Central Revolving Fund managed by the Privatisation Commission of Pakistan for payment to employees against surrendered units. Pakistan Employees Empowerment Trust (PEET) was formed and 12% of the shares held by the Ministry of Defence were transferred to the Trust.1 43. under the provisions of the IFRS 2. the accumulated losses as at December 31. GoP launched the BESOS for employees of certain State Owned Enterprises (SOEs) including the Corporation and Non-State Owned Enterprises (Non-SOEs) where GoP holds significant investments.3 Transactions with the directors. Under the scheme. 45. 2009. 44.

Consolidated financial statements 97 .

1997. the other joint venture partner also filed an application for nullification of the award.355 million) alongwith interest at the rate of 6% per annum from the date of the issuance of judgment. I. 1997 because. The share was recognised based on joint venture’s management accounts as of April 21. O. 2012 and the related consolidated profit and loss account. the date when that joint venture period expired. it is not possible to determine with any degree of certainty. 1-C I. Except as stated in paragraph 3 below. Because the eventual outcome of subject dispute is pending to date. Block 7 & 8. for the year then ended. the receivable aggregating USD 7. Chartered Accountants Cavish Court. consolidated cash flow statement and consolidated statement of changes in equity together with the notes forming part thereof. that court ruled that it was not authorised to approve / refute such arbitration award and decided to refer both the law suits to the other concerned court. is based solely on the report of that joint auditor. therefore. The consolidated financial statements of a subsidiary company were audited by one of the joint auditors. 2. We have also expressed a separate opinion on the financial statements of the Holding company.341. Ferguson & Co. 2012. 1997. Box 4716 Karachi – 74000 M. The auditors of PIA Investments Limited (PIAIL) .” 98 . our audit was conducted in accordance with the auditing standards as applicable in Pakistan and accordingly included such tests of accounting records and such other auditing procedures as we considered necessary in the circumstances. Yousuf Adil Saleem & Co. While PIAIL submitted an application before the court for ratification of the aforementioned award.905 (USD 6. 3.496 million) represents PIAIL’s share of net assets of its joint venture as of April 21. In this respect the amounts spent on renovation of joint venture assets and amounts set aside as renovation reserve have been added back to the net assets appearing in the aforesaid accounts prepared as of April 21. those amounts were spent without its authorisation and are. Chundrigar Road P. A-35. in so far as it relates to the amounts included for such company. consolidated statement of comprehensive income. During the year. Our responsibility is to express an opinion on the accompanying consolidated financial statements based on our audit. These consolidated financial statements are the responsibility of the Holding company’s management. whose report has been furnished to us and our opinion. the amount of joint venture assets which are available for distribution to joint venture partners and the consequential receivable that is to be recognised in the enclosed consolidated financial statements as at December 31. Chartered Accountants State Life Building No.554 million (equivalent to Rs.a subsidiary company have qualified their opinions as follows: “As more fully explained in note 8 to the consolidated financial statements. subject of a dispute with the other joint venture partner. Subsequently. F. the arbitration proceedings were concluded and the other joint venture partner was ordered to pay PIAIL a sum of AED 23.A. KCHSU Sharah-e-Faisal Karachi – 75350 AUDITORS’ REPORT TO THE MEMBERS We have audited the annexed consolidated financial statements comprising consolidated balance sheet of Pakistan International Airlines Corporation (the Holding company) and its subsidiary companies as at December 31. in view of PIAIL’s management. 734.

2 to the annexed consolidated financial statements. In our opinion. 151. 2013 Place: Karachi 99 .445. as of that date. 33. except for the possible effects of the matter stated in paragraph 3 above. Our opinion is not qualified in respect of this matter. 5. 2012. which states that the Holding company incurred a net loss of Rs.181.914. and. 2012.613 million. Chartered Accountants Audit Engagement Partner: Khurshid Hasan Chartered Accountants Audit Engagement Partner: Syed Asad Ali Shah Date: April 26. the Holding company’s current liabilities exceeded its current assets by Rs.4.479 million as of December 31. 144. the consolidated financial statements present fairly the financial position of the Holding company and its subsidiary companies as at December 31. We draw attention to note 1. resulting in accumulated losses of Rs.540 million during the year ended December 31. These conditions indicate existence of a material uncertainty which may cast significant doubt about the Holding company’s ability to continue as a going concern. 2012 and the results of their operations for the year then ended.

CONSOLIDATED BALANCE SHEET PAKISTAN INTERNATIONAL AIRLINES CORPORATION
AS AT DECEMBER 31, 2012
Note 2012 2011 2012 2011 ------------ Rupees in '000 --------------------------- US$ in '000 ---------------CONSOLIDATED BALANCE SHEET AS AT DECEMBER 31, 2012

ASSETS NON CURRENT ASSETS Fixed assets - Property, plant and equipment - Intangibles 5 6 153,662,065 3,238,045 156,900,110 Long-term investments Receivable in respect of Centre Hotel Long-term loans Long-term deposits and prepayments 7 8 9 10 94,394 734,496 12,009 6,020,026 163,761,035 CURRENT ASSETS Stores and spares Trade debts - net Short-term loans and advances Trade deposits and prepayments Other receivables Short-term investments Taxation Cash and bank balances TOTAL ASSETS 17 11 12 13 14 15 16 4,096,403 10,014,544 2,054,153 1,204,634 4,300,365 517,767 102,102 6,303,877 28,593,845 192,354,880 3,895,832 8,936,690 329,433 1,305,268 2,423,473 594,749 93,680 3,239,943 20,819,068 180,067,440 42,131 102,998 21,127 12,390 44,229 5,325 1,050 64,835 294,085 1,978,350 43,313 99,357 3,663 14,512 26,944 6,612 1,042 36,021 231,464 2,001,957 146,214,419 2,973,990 149,188,409 86,088 679,487 15,407 9,278,981 159,248,372 1,580,398 33,303 1,613,701 971 7,554 124 61,915 1,684,265 1,625,585 33,064 1,658,649 957 7,554 171 103,162 1,770,493

Lt. Gen Asif Yasin Malik (Retd) Chairman

Syed Omar Sharif Bokhari Director

100

CONSOLIDATED BALANCE SHEET
AS AT DECEMBER 31, 2012
Note 2012 2011 ------------ Rupees in '000 ------------2012 2011 --------------- US$ in '000 ----------------

EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Share capital Reserves Advance against equity from Government of Pakistan (GoP) Attributable to the Holding company's shareholders Non-controlling interest TOTAL EQUITY SURPLUS ON REVALUATION OF PROPERTY, PLANT AND EQUIPMENT - NET OF TAX NON-CURRENT LIABILITIES Long-term financing Term finance and sukuk certificates Liabilities against assets subject to finance lease Long-term deposits Advance rent Deferred taxation Deferred liabilities 26 27 22 23 24 25 28,120,287 4,394,027 38,305,557 534,767 18,314,706 13,206,159 102,875,503 CURRENT LIABILITIES Trade and other payables Accrued interest Provision for taxation Short-term borrowings Current maturities of: - Long-term financing - Term finance and sukuk certificates - Advance rent - Liabilities against assets subject to finance lease TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES CONTINGENCIES AND COMMITMENTS 31 22 23 24 20,783,496 15,195,733 4,831 9,275,195 169,390,591 272,266,094 192,354,880 11,317,288 8,664,107 4,392 9,070,002 106,993,507 234,772,452 180,067,440 213,756 156,287 50 95,395 1,742,165 2,800,228 1,978,350 125,824 96,326 49 100,839 1,189,535 2,610,158 2,001,957 30 28 29 55,313,306 6,784,356 679,144 61,354,530 46,336,731 4,727,025 1,072,935 25,801,027 568,891 69,776 6,985 631,025 515,163 52,554 11,929 286,851 44,633,808 10,925,653 47,351,568 444,817 4,831 15,189,571 9,228,697 127,778,945 289,214 45,192 393,968 5,500 188,365 135,824 1,058,063 496,231 121,469 526,446 4,945 54 168,875 102,603 1,420,623 18 19 20 28,779,674 (138,217,947) (109,438,273) 1,928,167 (107,510,106) 1,385,606 (106,124,500) 28,779,674 (107,420,680) (78,641,006) (78,641,006) 1,081,405 (77,559,601) 295,996 (1,421,557) (1,125,561) 19,831 (1,105,730) 14,251 (1,091,479) 319,967 (1,194,284) (874,317) (874,317) 12,023 (862,294)

21

26,213,286

22,854,589

269,601

254,093

The annexed notes 1 to 47 form an integral part of these consolidated financial statements. Chairman Lt. Gen Asif Yasin Malik (Retd) Chairman Director Syed Omar Sharif Bokhari Director

101

PAKISTAN INTERNATIONAL AIRLINES CORPORATION CONSOLIDATED PROFIT AND LOSS ACCOUNT CONSOLIDATED PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED DECEMBER 31, 2012
Note 2012 2011 ------------ Rupees in '000 -----------124,777,545 (61,157,291) (59,045,386) (120,202,677) 4,574,868 34 35 36 37 ` 38 7.1 39 (7,630,949) (12,298,168) (698,310) (6,703,945) 3,327,619 (24,003,753) (19,428,885) (12,169,934) (637) (31,599,456) (768,817) (32,368,273) 127,476,192 (62,965,435) (58,692,933) (121,658,368) 5,817,824 (6,830,850) (11,009,338) (652,950) (4,220,191) 525,563 (22,187,766) (16,369,942) (10,487,413) (790) (26,858,145) 934,790 (25,923,355) 2012 2011 ------------ US$ in '000 -----------1,283,324 (628,996) (607,275) (1,236,271) 47,053 (78,483) (126,485) (7,182) (68,949) 34,224 (246,875) (199,822) (125,166) (7) (324,995) (7,907) (332,902) 1,417,257 (700,038) (652,537) (1,352,575) 64,682 (75,944) (122,400) (7,259) (46,919) 5,843 (246,679) (181,997) (116,597) (9) (298,603) 10,393 (288,210)

FOR THE YEAR ENDED DECEMBER 31, 2012

REVENUE - net COST OF SERVICES Aircraft fuel Others GROSS PROFIT Distribution costs Administrative expenses Other provisions and adjustments Exchange loss - net Other operating income LOSS FROM OPERATIONS Finance costs Share of loss from associated company LOSS BEFORE TAXATION Taxation LOSS FOR THE YEAR Attributable to: Equity holders of the Holding company Non-controlling interest

32

33

(32,401,413) 33,140 (32,368,273)

(25,970,801) 47,446 (25,923,355)

(333,243) 341 (332,902)

(288,738) 528 (288,210)

---------------- Rupees ----------------EARNINGS PER SHARE - BASIC AND DILUTED Loss attributable to: 'A' class Ordinary shares of Rs 10 each 'B' class Ordinary shares of Rs 5 each 40 40 (10.74) (5.37) (9.44) (4.72)

----------------- US$ -----------------

(0.11) (0.06)

(0.10) (0.05)

The annexed notes 1 to 47 form an integral part of these consolidated financial statements.

Lt. Gen Asif Yasin Malik (Retd) Chairman Chairman

Syed Omar Sharif Bokhari Director Director

102

in a separate account below equity.923.917 (25.735 (283.352.----------------US$ in '000---------------Loss for the year Other comprehensive income Unrealised gain / (loss) on remeasurement of available for sale investments Exchange differences on translation of foreign operations Total comprehensive income (32.CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME PAKISTAN INTERNATIONAL AIRLINES CORPORATION FOR THE YEAR ENDED31. plant and equipment has been reported in accordance with the requirements of the Companies Ordinance.515 (25.071) 70.273) (25.037 1.511) 1.456) (284.643) (5.455.368. Chairman Director Lt. The annexed notes 1 to 47 form an integral part of these consolidated financial statements.593 (31.532) Attributable to: Equity holders of the Holding company Non-controlling interest (31.456) (57) 4.573.011.263) 102.055 (322.502.532) Surplus / (deficit) arising on revaluation of property. DECEMBER 31. 1984.502.352.620 (31.316) 784 (283.210) CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 4.556) 42 10. Gen Asif Yasin Malik (Retd) Chairman Syed Omar Sharif Bokhari Director 103 .404 (322.902) (288.118) 425.355) (332. 2012 FOR THE YEAR ENDED DECEMBER 2012 2012 2011 2012 2011 --------------Rupees in '000-------------.556) (323.643) (25.

025) (566.559) 773.789) (331.190) 36.561.528) (14) 7.540 (28) 102 673 (333) (95.204) (566.742 51.830) (7.131.918 (39.165) 79.251) (55.980) (8.359 (158.362) (60.606) (4.415) 15.084) 19.070 45.561) 10.831 (87.524 (29.339.190) 33.197.305 529 (104.997 (8.354.140 (4.835 (631.947.386) The annexed notes 1 to 47 form an integral part of these consolidated financial statements.877 (61.552) (1.461) (17.959 (104.360) 9.801.038) (2.653) 3.653) 3.603) (1.950 (29.344 (394.399 (10. plant and equipment Proceeds from sale of operating fixed assets Purchase of intangibles Payments against long-term loans Proceeds from sale of short-term investments Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of share capital Proceeds from advance against equity from GoP Repayment of long-term financing Proceeds from long-term financing Redemption of term finance certificates (Payment) / receipt of advance rent Proceeds from long-term deposits Payment of dividend to non-controlling interest Repayment of obligations under finance lease .027) (22.428) 500.791 (137.197.330) 9.317 (2.339) (81.943 (25.251. 2012DECEMBER 31.229) (415) (250.548.303.210.280) (45.597) (1.188) 462. Gen Asif Yasin Malik (Retd) Chairman Chairman Syed Omar Sharif Bokhari Director Director 104 .856.076 511 (98.726 (11.983) (8.313) (6.382) (32.413.805.077) 3.948) (232.868) (146.084) 64.467) 5.471.851) (250.031) (467.561.453) (5.352) 7. 2012 Note CONSOLIDATED CASH FLOW STATEMENT 2012 2011 -----------Rupees in '000----------2012 2011 ------------US$ in '000----------- CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations Profit on bank deposits received Finance costs paid Taxes paid Staff retirement benefits paid Long-term deposits and prepayments .934) 120 (1.437) (1.300) 712.547.697) (14.021 (286.680) 170.391) 89.084) (214.275.561.398 216.186) (190.736) 816 (1.223 60.879) 107.net Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property.159) (617.042) (16. Lt.879 (7.231 (80.167 (8.304.112.312) (37.311) (22.050.168 (3.406 (125.007) (12.000 (4.net Net cash used in financing activities Decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the year CASH AND CASH EQUIVALENTS Cash and bank balances Short-term borrowings 17 30 6.560) 9.239.CONSOLIDATED CASH FLOW STATEMENT PAKISTAN INTERNATIONAL AIRLINES CORPORATION FOR THE YEAR ENDED FOR THE YEAR ENDED DECEMBER 31.631.194) 5.850 (10.928.830) 1.626) 35 2.762) (5.143 (45) 925 (308) (84.110.466) (13.504.318) (22.050.272.530) (55.438) 41 904.004.

140 (32.781 1.502.038 573 (56.403.801) 47.779.466.GoP Dividend paid .355) - 573 (1.774.972) 27.021(167.3.3762.interest Balance as . Gen Asif Yasin Malik (Retd) Chairman Syed Omar Sharif Bokhari Director 105 .124. 2012 - - - .net of tax - .912) 11.559.500) (146.at January 2.930.298 (114.912) 2. Chairman Chairman Director Lt.674 2.004.601) (114.970.1.674 1.455.674 - - - - 407. 2012: .726 - 13.987.674 26.006) (1.368.726 (29.928.785 1.501.779.674 3.785 - 69.net of tax - .037 - - - - (775) - - 775 (672) 103 - - 942.401.net of tax Transactions with owners: - - - - 657.785 - .781 1.854 425.779.037 - - - (775) - 775 .899 2.527) 2.(Loss) / profit .596) 1.531.779.273) - 4.779.564 231.564 - 103 - - Surplus on revaluation of property. 2011 Balance as 1.net of tax ` 3.948 .for the year transferred Total comprehensive income to equity Surplus on -revaluation .779.004.674 (107.781 28.818 1.942.401.083 1.928.527) Total comprehensive income for the year ended December 31.Unrealised .081.996 - - - 657.980) .037 4.188) .298 22.854 (1.Transfer to other reserves .038 31.038 1.(32. and paid-up capital Advance against equity from GoP Capital reserves Revenue reserves Attributable to the Holding company's shareholders Reserves Issued.interest Balance 1.for the year .996 - - - 657.423 25.342 - (1.401.779.(25.785 (31. plant and equipment realised during the year on account of incremental depreciation charged thereon .to non-controlling .35.720) 2.570. 2011 Total comprehensive income for the year ended December 31.501.224.capital 'A' class .987.for the year ..641. 2012: . 2012 .446 (25.006 - - Surplus on revaluation of property.593 4.translation differences ` .559.231.167 as at December 2. 2011 .848) 13.(29.6063.818 28.996 - Transactions with owners: Advance against equity from GoP Dividend paid to non-controlling interest Balance as at December 31.Other comprehensive income for the year: .charged thereon .net of tax depreciation Transactions with owners: Issue of share .722. 2011: .875 - 11.118)70.(32.570.071) - (5.413) .021 - 26.674 25.674 (78. subscribed.translation differences .501. 2012 Total comprehensive income for the year ended December 31.983) 1.167 - - - .106) 26.980) - - .(25.942.004.gain on re-measurement of investments .674 2. plant and equipment realised during the year on account of incremental .928.413) (32.(25.249 1.(29.CONSOLIDATED STATEMENT OF CHANGES IN EQUITY PAKISTAN INTERNATIONAL AIRLINES CORPORATION CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31.167 (29.402.037 (32.781 28.726 51.722.069 403.515 403.118) (5.720) 11.263) - 102.733 - - - 407.674 1.643) 4.038 1.118) .038 11.307.188) - . plant and equipment realised during the year on account of incremental depreciation .Currency translation differences .charged thereon .854 - .970.loss on re-measurement of investments (5.801) .928.779.ordinary shares Dividend paid .352 1.Currency translation differences .510.186.118) .038 (114.interest Redemption .to non-controlling .854 (25.402.167 Advance against equity from.at December 2.466.983) - - .118) (5.682 - 3.996 657.1.930.006) 22.at January 2.970.480 942.167 (146.674 (89.081.4052.Currency .779.037 4.403.Other comprehensive income for the year: .848 23.779.352.722.573.501.928.928.674 (78.for the year transferred to equity Surplus on -revaluation .682 22.779.004.501.083 (106.801) (25.641.Unrealised loss on re-measurement of investments Total comprehensive income for the year transferred to equity Surplus on revaluation .779.970.038 31. plant and equipment realised during the year on account of incremental depreciation charged thereon .774.249 1.970.net of tax Transactions with owners: Issue of share capital 'A' class ordinary shares Dividend paid to non-controlling interest Redemption of non-controlling interest Balance as at December 31.(Loss) / profit for the year . against equity Unrealised Foreign Accumulated Capital OtherRevenue from GoP loss reserves reserves reserves (loss) / gainand on paid-up currency remeasurementcapital of translation investments reserves Attributable to the Holding company's shareholders NonTotal Total Reserves controllingForeign Unrealised Accumulated (loss) / gain interest on currency loss remeasurement of translation investments reserves Other reserves ----------------------------------------------------------------------------------------------------------------Rupees ----------------------------------------------------------------------------------------------------------------Rupees in '000------------------------------------------------------------------------------------------------------------in '000---------------------------------------------------Balance as at January 1.923.899 1.(31.of non-controlling . 2011 Balance as at January 1.674 27.to other reserves .987.501. The annexed notes 1 to 47 form an integral part of these consolidated financial statements.Currency . 2012 PAKISTAN INTERNATIONAL AIRLINES CORPORATION CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31.006 - (5.037 (672 - .601) (114.987.298 (77.556) (25.Transfer .(89.342 35.578 - - .720) 11.(Loss) / profit .722.779.167 - - - - - 1.249 Total comprehensive income for the year ended December 31.Unrealised gain on re-measurement of investments Total comprehensive income for the year transferred to equity Surplus on revaluation .(25. 2011: .Other comprehensive income for the year: .733 407.270) 26.413) 33.011.423 (55.726 28.Unrealised .(32.501.298 (77.Other comprehensive income for the year: .249 11.4052.674 28. Advance subscribed.779.875 11. 2012 FOR THE YEAR ENDED DECEMBER 31..(Loss) / profit for the year .720) 2.186.733 - - - 407.801) - .801) .352 The annexed notes 1 to 47 form an integral part of these consolidated financial statements.006) 22.113 4.733 - .917 (5.385. 2012 28.620 942.118) Total comprehensive income .net of tax Surplus on revaluation of property.948 Balance as 1.038 11.3.(218. 2012 Issued.501.net of tax Surplus on revaluation of property.006) 402.

United Arab Emirates. the Ruler of Sharjah. 2012 1. the Holding company. i.a. which was subsequently repealed and replaced by the Pakistan International Airlines Corporation Act. USA Luxembourg Netherlands France See note (B) below Owner of Roosevelt Hotel. to comply with the requirements of certain loans. Jinnah International Airport. development and operation of hotels. Subsidiaries PIA Investments Limited (PIAIL) was incorporated on September 10. Other activities of the Holding company include provision of engineering and allied services. N. The principal activity of PIAIL is to carry on business as promoters of and investors in projects related to construction. New York See note (A) See note (A) Owner of Scribe Hotel. Paris See note (A) ● ● ● Minhal France S. The shares of the Holding company are quoted on all stock exchanges of Pakistan.NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31. Karachi. (RHC) RHC Operating LLC Netherlands Antilles State of Delaware. Following are the details of PIAIL’s subsidiaries: Location Nature of business Effective ownership and voting power of PIAIL (%) 100 100 Effective ownership and voting power of the Holding company (%) 100 100 ● ● Roosevelt Hotel Corporation. as a limited liability company under a decree issued by H. 2004) as a company limited by shares.r. (RHC) is the intermediary holding company and a sole member of RHC Operating LLC.1 THE GROUP AND ITS OPERATIONS The ‘Group’ consists of Pakistan International Airlines Corporation.A.R. 1. which is a dormant company. 106 . The Holding company’s controlling interest in PIAIL is 100% (2011: 100%). 1955 under the Pakistan International Airlines Corporation Ordinance. 1956 (the Act). 1955. Minhal France B. cargo and postal carriage services. Minhal France S. 1984 (now BVI Business Companies Act.V. Pakistan International Airlines Corporation Pakistan International Airlines Corporation (the Holding company) was incorporated on January 10. The head office of the Holding company is situated at PIA Building. The principal activity of the Holding company is to provide commercial air transportation. a company which owns the Roosevelt Hotel New York. RHC transferred the net operating assets of the Hotel to RHC Operating LLC.H.V. In 2004.e. which includes passenger.l.V. In 1986 PIAIL was registered in British Virgin Islands under International Business Companies Ordinance. (MFSA) PIA Fuel Management Limited 100 100 90 100 100 90 ● British Virgin Islands 100 100 Note (A): These companies are intermediary holding companies except PIA Fuel Management Limited. Note (B): Roosevelt Hotel Corporation N. 1977 in Sharjah. motels and restaurants throughout the world. its subsidiaries and an associate.

181. 2009 and 2010. as disclosed in notes 23.1. SRL is a wholly owned subsidiary of the Holding company. car and hotel services. SRL has been consolidated on the basis of its unaudited financial statements for the year ended December 31. 2012. 2012 as the same is not considered to be material to these consolidated financial statements. Sharjah was incorporated on January 1. The Special Purpose Entities (SPE) formed for acquiring aircrafts have not been consolidated in these financial statements as the shareholding and controlling interest and risk and rewards of SPE rests with the trustees’ representing foreign banks. 1975 in Pakistan as a private limited company under the Companies Act.1. sukuk certificates and other borrowings.207 million) resulting in accumulated loss of Rs 151.16 and 30.445. PIAIL has been consolidated in these consolidated financial statements on the basis of its audited consolidated financial statements for the year ended December 31. 2004 as a private company limited by shares.914. as of December 31.790 million along with conversion of certain short term loans amounting to Rs 20.613 million (2011: Rs 88. Skyrooms (Private) Limited (SRL) was incorporated on May 20.727 million). under the Companies Ordinance. so as to enable the Holding company to raise / rollover funds. During the years ended December 31.2 ● ● ● 107 . Issuance / renewal of guarantees to financial institutions. accordingly. In this respect. 2012 as the same is not considered to be material to these consolidated financial statements. PIA Shaver Poultry Breeding Farms (Private) Limited and PIA Hotels Limited. 1977 in Sharjah.700 million into long term loans (refer note 23.403 million). 23. United Arab Emirates as a limited liability company and is currently registered in British Virgin Islands.3. Further.2. The principal activities of Minhal are to carry on business as promoters and the managers of projects related to construction. 2008 communicated that it would extend all maximum support to maintain the Holding company’s going concern status.000 million to meet working capital requirements of the Holding company. The Government of Pakistan (GoP). had applied under the ‘Easy Exit Scheme’ announced by the Securities and Exchange Commission of Pakistan (the SECP) for voluntary winding up. both local and foreign. The Holding company’s interest in Abacus is 70%. The other subsidiaries of the Holding company. 2008 to 2012. the Holding company has not been able to pay interest and principal amount of term finance.540 million (2011: Rs 26. Abacus has been consolidated on the basis of its unaudited financial statements for the year ended December 31.830 million have been provided to the Holding company towards equity during the years ended December 31. Karachi. 1. under a sub-distribution agreement with Abacus International (Pte) Limited Singapore (an associated Company and joint venture partner). Abacus markets and distributes a computer reservation system to subscribers in Pakistan. automated ticketing and fare displays. bookings for a variety of air. since then it has been extending support to the Holding company through the following measures to ensure that it (the Holding company) continues and sustains in the long-term as a viable business entity: ● Reimbursement of financial charges on term finance and sukuk certificates payable by the Holding company.221. the Holding company incurred a net loss of Rs 33. had through its finance division’s letter dated September 2.1). the Economic Coordination Committee (ECC) of the Cabinet accorded approval for extending the repayment period of the term finance certificates aggregating Rs 12.767. 1913 (now Companies Ordinance. Assets and liabilities of these subsidiaries were taken over by the Holding company. 1984). The Holding company’s interest in the Minhal is 40%. 2012. 1984. being the majority shareholder of the Holding company. PIA Holding (Private) Limited. the GoP has provided long-term financing aggregating Rs 8.479 million as of December 31. 2012. development and operation of hotels. that incorporates a software package which performs various functions including real-time airlines seat reservations. 2012 (2011: Rs 119. During the current year. 22. which were overdue as at December 31. Furthermore. restaurants and clubs throughout the world. schedules. SRL owns and manages ‘Airport Hotel’. Associate Minhal Incorporated (Minhal). amounts aggregating Rs 9. Accordingly. and. 2012 current liabilities of the Holding company exceeded its current assets by Rs 144. have not been consolidated in these financial statements.016. Abacus Distribution Systems Pakistan (Private) Limited (Abacus) was incorporated in Pakistan on October 12. and On July 3.

and defined benefit obligations are stated at present value in accordance with International Accounting Standard (IAS) . prepared these consolidated financial statements on a going concern basis. 2013. 1984 shall prevail. as such. 2. which among other things should also be marketable. liability on account of frequent flyer programme is recognised at fair value. The Holding company continued to pursue approval of its business plan (the plan) with the GoP at various levels and in this respect it (the Holding company) presented the plan to the President and the Prime Minister of Pakistan.1 billion becoming due in year 2013. 1984. The ECC approved the following financing support proposal subject to the condition that the timeline will be fixed for repayment of loans and there will be quarterly monitoring of the Holding company’s Business Plan by the Ministry of Finance. New guarantees against loans already taken on the basis of letter of comfort amounting to Rs 13. certain financial assets are carried at fair value. among other measures. Economic Reforms Unit of the Ministry of Finance and the Economic Coordination Committee (ECC) in current and previous years.5 billion.2 108 .16 billion. provisions of and directives issued under the Companies Ordinance. Further. Approved accounting standards comprise of such International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board as are notified under the Companies Ordinance. On their advice. the plan was amended and the amended version was submitted to the Board of Directors of the Holding company for their approval in their meeting held on January 21. include attaining fuel efficiency through fleet modernisation and optimum fleet deployment on network. enhancing revenues through additional frequencies on high demand high yield routes. However. The Board while considering the plan as an interim plan asked the management to hire services of a reputable international aviation consultant for the preparation of five year strategic business plan. Additional funding to provide fiscal space to the Holding company amounting to Rs 12 billion. restructuring of existing loans to reduce finance cost and issuance of GoP guarantees. the management believes that considering the mitigating factors set out in the preceding paragraphs. 2013. the going concern assumption is appropriate and has. the requirements of the Act or the provisions or directives of the Companies Ordinance. material uncertainty exists that may cast significant doubt on the Holding company’s ability to continue as a going concern and. 2. therefore. The business plan includes GoP’s support in terms of providing necessary funding for recapitalisation. ● ● ● ● ● New loans / guarantees for repayment of loans amounting to Rs 11.1 BASIS OF PREPARATION Statement of compliance These consolidated financial statements have been prepared in accordance with the requirements of the Act and approved accounting standards as applicable in Pakistan. In case requirements differ. In view of the situation described above. Rollover / Extension of GOP guarantees amounting to approximately Rs 51. The objectives of the business plan. separation of the core airline business from non-core activities and controlling costs. Basis of measurement These consolidated financial statements have been prepared under the historical cost convention except that: ● ● ● ● certain items of property. and Funds of US$ 46 million for acquisition of narrow body aircraft on dry lease. the Holding company presented a proposal for financing support required along with its interim business plan to the ECC at its meeting held on February 26.19 ‘Employee Benefits’. 1984. 2. plant and equipment are stated at revalued amount. it may be unable to realise its assets and discharge its liabilities in the normal course of business.

2.3

Functional and presentation currency Items included in the consolidated financial statements are measured using the currency of the primary economic environment in which the Holding company operates. The consolidated financial statements are presented in Pakistani Rupees, which is the Holding company’s functional and presentation currency. The US Dollar amounts reported in the consolidated balance sheet, consolidated profit and loss account, consolidated statement of comprehensive income and consolidated cash flow statement are stated as additional information, solely for the convenience of the users of these consolidated financial statements. The US Dollar amounts in the consolidated balance sheet, consolidated profit and loss account, consolidated statement of comprehensive income and consolidated cash flow statement have been translated into US Dollar at the rate of Rs 97.23 = US $ 1 (2011: Rs 89.9457 = US $ 1). Basis of Consolidation The consolidated financial statements comprise the financial statements of the Holding company and its subsidiaries and its associate as at December 31 each year. Subsidiaries Subsidiaries are those entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which the control is transferred to the Group. They are derecognised from the date control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries. The consideration transferred for the acquisition is the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of exchange. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The group recognises any non-controlling interest in the acquiree on an acquisitionby-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets. The excess of the consideration transferred and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in case of a bargain purchase, the difference is recognised in profit and loss account. The assets and liabilities of subsidiary companies have been consolidated on a line by line basis and the carrying value of investments held by the Holding company is eliminated against the subsidiaries’ shareholders’ equity in the consolidated financial statements. All material intra-group transactions and balances are eliminated in full. The financial statements of the subsidiaries are prepared for the same reporting year as the Holding company. The accounting policies for subsidiary companies have been changed to ensure consistency with the policies adopted by the Holding company, where necessary. Non-controlling interests represent the portion of profit or loss and net assets that is not held by the Group and are presented separately in the consolidated profit and loss account and within equity in the consolidated balance sheet, separately from Holding company shareholders’ equity. Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity.

2.4 2.4.1

109

2.4.2

Associates Associated companies are those entities in which the Group has significant influence, but, not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting rights of another entity. The associate of the Group is accounted for using the equity method (equity accounted investees) and is recognised initially at cost. The Group’s investment includes goodwill identified on acquisition, net of any accumulated impairment loss. The consolidated financial statements include the Group’s share of the income and expenses and equity movements of equity accounted investees, after adjustments to align with the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. When the Group’s share of loss exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further loss is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee. Amendments to the approved accounting standards that became applicable during the year ended December 31, 2012 During the year, amendments to the following approved accounting standards became effective, however, their application did not have material impact on these financial statements. ● ● IFRS 7 ‘Financial Instruments: Disclosures’ IAS 12 ‘Income Taxes’

2.5 2.6

Amendments to published standards and new interpretations to existing standards that are not yet effective and have not been early adopted by the Group The following amendments to published standards and new interpretation to existing standard are effective for accounting periods, beginning on or after the date mentioned herein: ● IFRS 7 - ‘Financial Instruments: Disclosures’ - (effective for annual periods beginning on or after January 1, 2013) - These amendments require an entity to disclose information about rights to set-off and related arrangements (e.g., collateral agreements). The disclosures would provide users with information that is useful in evaluating the effect of netting arrangements on an entity’s financial position. The new disclosures are required for all recognised financial instruments that are set off in accordance with IAS 32 ‘Financial Instruments: Presentation’. The disclosures also apply to recognised financial instruments that are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are set off in accordance with IAS 32. IAS 1 - ‘Presentation of Financial Statements’ (effective for annual periods beginning on or after July 1, 2012) - retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements. However, the amendments to IAS 1 require additional disclosures to be made in the other comprehensive income section such that items of other comprehensive income are grouped into two categories: (a) items that will not be reclassified subsequently to profit or loss; and (b) items that will be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis. IAS 19, ‘Employee benefits’, (effective for annual periods beginning on or after January 1, 2013) - The amendments require actuarial gains and losses to be recognised immediately in other comprehensive income; to immediately recognise all past service costs; and to replace interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability / asset. This change will remove the corridor method and eliminate the ability for entities to recognise all changes in the defined benefit obligation and in plan assets in profit or loss, which currently is allowed under IAS 19. As a result of adoption of this amendment, the Group will recognise the actuarial gains and losses in other comprehensive income, which are currently being recognised in the profit and loss account. However, there would not be any impact on Group’s equity. IAS 32 - ‘Financial Instruments: Presentation’ - (effective for annual periods beginning on or after January 1, 2014) - These amendments clarify the meaning of “currently has a legally enforceable right to set-off”. The amendments also clarify the application of the IAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous.

110

IFRIC 20 - ‘Stripping Costs in the Production Phase of a Surface Mine’ - (effective for annual periods beginning on or after January 1, 2013) – This interpretation applies to all types of natural resources that are extracted using a surface mine activity process, and addresses the issues pertaining to the recognition of production stripping cost as an asset, initial measurement of stripping activity at cost and subsequent measurement of stripping activity asset at depreciated or amortised cost based on a systematic basis over the expected useful life of the identified component of ore body.

The above mentioned amendments to published standards and new interpretation to existing standard are either not relevant to the Group’s operations (except for the impact of IAS 19 as described above) or are not expected to have significant impact on the Group’s financial statements other than increase in disclosure in certain cases. Other standards issued by IASB but not adopted by Securities and Exchange Commission of Pakistan (SECP): The IASB has also issued following standards that have not been adopted in Pakistan by the SECP. - - - - - - - IFRS 1 – First Time Adoption of International Financial Reporting Standards IFRS 9 – Financial Instruments IFRS 10 – Consolidated Financial Statements IFRS 11 – Joint Arrangements IFRS 12 – Disclosure of Interests in Other Entities IFRS 13 – Fair Value Measurement IAS 27 (Revised 2011) – Separate Financial Statements due to non-adoption of IFRS 10 and IFRS 11 IAS 28 (Revised 2011) – Investments in Associates and Joint Ventures due to non- adoption of IFRS 10 and IFRS 11

2.7

3.

-

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of consolidated financial statements in conformity with approved accounting standards, as applicable in Pakistan, requires management to make estimates, assumptions and use judgments that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates underlying the assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. In the process of applying the Group’s accounting policies, management has made the following estimates and judgments which are significant to these consolidated financial statements: Property, plant and equipment The Group reviews appropriateness of the rates of depreciation / useful lives and residual values used in the calculation of depreciation at each financial year end. Further, the Group estimates revalued amounts and useful life of aircraft fleet, leasehold land and buildings and hotel property based on the periodic valuations carried out by independent professional valuers. Any change in estimate in future might affect the carrying amounts of the respective item of operating fixed assets with a corresponding effect on the depreciation charge and impairment, surplus on revaluation and annual transfer of incremental depreciation from ‘surplus on revaluation of property, plant and equipment’ account to ‘accumulated loss’. Change in accounting estimate As a result of revaluation exercise conducted by an independent valuer as of December 31, 2011, the useful lives of aircraft fleet of the Holding company had been reassessed. In addition, the management has reassessed the residual values of aircraft and related capital spares. These changes in accounting estimates have an impact on depreciation expense for the current year.

3.1

111

The fair value of credits awarded is estimated by reference to the fair value of the services for which the award credits may be redeemed. based on the average of air fares. depreciation expense pertaining to aircraft fleet and capital spares for the year would have been lower by an aggregate amount of Rs. the Group takes into account the applicable tax laws. The Holding company accounts for award credits as separately identifiable component of the sales transaction in which they are granted. unless otherwise stated. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principle accounting policies applied in the preparation of these consolidated financial statements are set out below. and estimating the expected award credit redemption rate. are recognised as unearned revenue on the basis of estimated number of days delay between the date of sale of ticket / airway bills and the date of actual travel / lift. Due to the long-term nature of these benefits.5 3.Had there been no change in useful lives and residual values of aircrafts and related spares. 3. Trade debts The Group reviews doubtful trade debts at each balance sheet date to assess the adequacy of the provision thereagainst. The consideration in respect of initial sale is allocated to award credits based on their fair value and is accounted for as a liability in these consolidated financial statements. such estimates are subject to certain uncertainties. Stores and spares The Group at each balance sheet date reviews the net realisable values of stores and spares related to aircraft to assess any diminution in their respective carrying values. Deferred tax asset is recognised for all unused tax losses and available credits to the extent that it is probable that sufficient taxable temporary differences and taxable profits will be available against which such losses and credits can be utilised. Significant assumptions used to carry out the actuarial valuation have been disclosed in note 26 to these consolidated financial statements. These polices have been applied to all the years presented. whereas the effect on future periods is impracticable to ascertain considering subsequent measurement of aircraft fleet and hotel properties under the revaluation model and inherent uncertainties attached thereto.4 3. Tickets / airway bills that are un-utilised. the value of each award credit assuming a 100% redemption rate. future salary increases. judgment is required in the estimation of the amount and timing of future cash flows when determining the level of provision required. future increase in medical costs and future pension increases.7 4.6 3. Liability on account of frequent flyer programme The Holding company operates a frequent flyer programme that provides travel awards to members of the programme based on accumulated mileage. Such estimates are based on assumptions about a number of factors and actual results may differ. Due to the complex nature and huge quantum of the items of stores and spares.2 Employee benefits The liabilities of defined benefit plans are determined through actuarial valuation using the Projected Unit Credit Method. 112 . resulting in future changes to the provision. the net realisable value is arrived at by estimating the provision against slow moving stores and spares.896 million. expected rates of return on pension plan assets. These estimates are reviewed as and when a significant change in the assumptions used is observed and the liability is adjusted annually as appropriate. 3. 411. which is made in proportion to the estimated utilised life of the relevant category of the aircraft attained up to the balance sheet date. Revenue recognition Revenue for passenger tickets and cargo airway bills is recognised when the transportation services are provided. The provision for frequent flyer programme is determined based on the valuation carried out by an independent professional valuer. Determination of the fair value of the award credit involves estimations. Taxation In making the estimate for income tax payable by the Group. In particular.3 3. mortality rates. The method involves making assumptions about discount rates. Significant judgment is exercised to determine the amount of deferred tax asset to be recognised.

owned Lands classified as ‘others’ in note 5. expected physical wear and tear. up to the month preceding the disposal. Gains and losses on disposal of assets are taken to profit and loss account. as appropriate. i. Revaluation is carried out with sufficient regularity to ensure that the carrying amount of assets does not differ materially from the fair value. Depreciation is charged to the consolidated profit and loss account. is written down over their expected useful lives. if any. Useful lives (except for aircraft fleet) are determined by the management based on expected usage of asset. plant and equipment Operating fixed assets . An item of operating fixed assets is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. leasehold land and buildings and hotel property is credited to the surplus on revaluation account and is shown in the consolidated balance sheet below share capital and reserves. recognised subsequent to the date of revaluation. if appropriate.e. The rates of depreciation are disclosed in note 5.1. 113 . less their residual values. depreciation is charged from the month in which the asset is available for use until it is derecognised. Leasehold land and buildings thereon. which are the fair values at the date of revaluation less accumulated depreciation and impairment. plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. technical and commercial obsolescence and other similar factors. applying the straight-line method whereby the cost or revalued amount of assets. Surplus on revaluation of aircraft fleet.1 are stated at cost. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated profit and loss account in the year the asset is derecognised. The assets’ residual values. improvements and overhauls to aircraft are capitalised and depreciated over the period to the next major overhaul. Cost incurred to replace a component of an item of operating fixed assets is capitalised and the asset so replaced is derecognised. Accumulated depreciation at the date of the revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. if any.1 Fixed assets Property. only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.4. Proportionate depreciation on aircraft fleet is charged from the date of acquisition till the date of disposal. In respect of additions and disposals of assets. useful lives and methods are reviewed. the related surplus on revaluation of operating fixed assets (net of deferred taxation) is transferred directly to accumulated loss. Aircraft and related equipment acquired on an exchange basis are stated at amounts paid plus the fair value of the fixed asset traded-in. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset.1 4. if any. Major renewals. All other repairs and maintenance including cost incurred under ‘power-by-the-hour’ contracts in relation to aircraft are charged to the consolidated profit and loss account during the financial period in which they are incurred. and adjusted.1. The useful lives of aircraft fleet are determined by an independent valuer. the relevant remaining surplus is transferred directly to retained earnings (unappropriated profits / accumulated loss). When revalued assets are sold. whereas buildings classified as ‘others’ in the aforesaid note are stated at cost less accumulated depreciation and accumulated impairment losses. at each financial year end. The cost of an item of property. hotel properties and aircraft fleet are measured at revalued amounts. To the extent of the incremental depreciation charged on the revalued assets. Other items of operating fixed assets are stated at cost less accumulated depreciation and impairment losses.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the consolidated profit and loss account when the asset is derecognised. Initial direct costs are added to the amount of the asset. if any. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. 4. Finance charges are allocated to accounting periods in a manner so as to provide a constant periodic rate of charge on the outstanding liability. Capital work-in-progress These are stated at cost less impairment. Goodwill on acquisitions of subsidiaries is included in ‘intangible assets’. intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses. Other leases are classified as operating leases. if any. Leased Leased assets under which the Holding company assumes substantially all the risks and benefits of ownership are classified as finance leases.1. The assets are transferred to relevant category of operating fixed assets when they are available for intended use. The impairment loss. and consist of expenditure incurred and advances made in respect of assets in the course of their acquisition. Goodwill is reviewed for impairment. resulting from such review is charged to the consolidated profit and loss account. identified according to operating segment. Goodwill is allocated to cash-generating units for the purpose of impairment testing. annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Costs that are directly associated with identifiable software products / licenses controlled by the Group and that have probable economic benefit beyond one year are recognised as intangible assets.2 114 . Other intangible assets Other intangible assets are measured on initial recognition at cost. Impairment losses on goodwill are not reversed. construction and installation. Following initial recognition. Intangible assets with finite lives are amortised on a straight line basis over their estimated useful lives as specified in note 6. if any. Capital spares Rotable and repairable stores are stated at cost and treated as operating fixed assets and are depreciated based on the average useful remaining life of the related aircraft. Depreciation is charged on leased assets on a basis similar to that of owned assets. Operating lease Payments made under operating leases (net of any incentives received from the lessor) are charged to the profit and loss account on a straight-line basis over the lease term. Capital spares which are not useable are treated as scrap and charged to the consolidated profit and loss account. Intangibles Goodwill Goodwill represents the difference between the consideration paid for acquiring interests in a company and the value of the Group’s share of its net assets at the date of acquisition. Finance lease Assets held under finance lease are accounted for by recording the assets and related liabilities at the amounts determined on the basis of the lower of fair value of assets and the present value of minimum lease payments. The allocation is made to those cashgenerating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose.

Goods-in-transit are valued at cost plus other charges incurred thereon. Trade debts and other receivables These are recognised initially at fair value (i. if any is taken to the consolidated profit and loss account. cash and cash equivalents comprise of cash in hand. Net realisable value is the estimated selling price in the ordinary course of business. These are carried at market value.5 115 . These investments are initially recognised at fair value plus transaction costs and subsequently measured at amortised cost using effective interest method. All investments categorised under held to maturity are subject to annual review for impairment. Provisions for impairment in value. if any is taken to the consolidated profit and loss account.original invoice / ticket amount) plus directly attributable transaction costs (if any) and subsequently measured at amortised cost less provision for impairment. These investments are initially recognised at fair value plus transaction costs and subsequently measured at amortised cost using effective interest method. 4. less impairment. When these investments are sold or impaired. less the estimated costs of completion and selling expenses. All investments categorised under held to maturity are subject to annual review for impairment. Cost is determined as follows: - - Fuel and medical inventories first-in-first-out basis weighted moving average cost basis 4. other than those classified as ‘at fair value through profit or loss’. are classified as held to maturity investments. with the related surplus / (deficit) being taken to the consolidated profit and loss account. Trade debts and other receivables considered irrecoverable are written off.2 Investments At fair value through profit or loss . Held to maturity Investments with fixed or determinable payments and fixed maturity (other than those that meet the definition of ‘loans and receivables’) and for which the Group has the ability to hold them till maturity. at cost. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Any resultant gain / loss is recognised in other comprehensive income.4 Other stores and spares including food and beverages Provision against slow moving stores and spares related to aircraft fleet is made in proportion to the estimated utilised life of the relevant category of the aircraft attained up to the balance sheet date.3 4. Provisions for impairment in value. A provision for impairment is established if there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Cash and cash equivalents also include bank overdrafts / short-term borrowings that are repayable on demand and form an integral part of the Group’s cash management. plus transaction costs and are subsequently marked to market using year end bid prices from stock exchange quotations and quotations from brokers and in case of unquoted investments. the accumulated fair value adjustments recognised in other comprehensive income are reclassified in the consolidated profit and loss account.e. Cash and cash equivalents For the purposes of cash flow statement. if any.held for trading These are securities which are acquired with the intention to trade by taking advantage of short-term market / interest rate movements. Stores and spares These are stated at lower of cost and net realisable value. balances with banks and other short-term highly liquid investments with original maturity of three months or less. Available for sale Investments classified as available for sale are initially recognised at fair value.4.

2008 in lieu of the pension funds as described above. if any.8 Trade and other payables Liabilities for trade creditors and other amounts payable are recognised initially at fair value plus directly attributable transaction cost. Employee benefits The Holding company Provident fund The Holding company operates a defined contribution provident fund scheme for all its permanent employees. Under PALPA and FENA. 2008 the Holding company operates a funded benefit pension scheme for its three categories of employees. employees are entitled to basic salary and flight allowance whereas under Employees’ Pension Fund. the Holding company operates a defined contribution pension fund whereby a contribution of 5% of the pensionable benefits is made to the Fund in accordance with the relevant rules. Skyrooms (Private) Limited (SRL) Defined benefit plan .6 4. Provision for gratuity is made in accordance with actuarial valuation to cover obligation under the scheme in respect of employees who have completed the minimum qualifying period. these are measured at amortised cost using the effective interest method.4.gratuity SRL operates an unfunded defined benefit gratuity scheme for all its permanent employees who have completed the prescribed qualifying period of service.7 4. employees are entitled to basic salary and certain other allowances. 116 . Pension scheme is a final salary pension scheme and is invested through three funds namely Pakistan Airline Pilot Association (PALPA). Flight Engineering Association (FENA) and Employees’ Pension Funds. Equal monthly contributions are made to the Fund by the Holding company and the employees in accordance with the Fund’s Rules. Loans and borrowings Loans and borrowings are initially recognised at fair value of the consideration received less directly attributable transaction costs. Compensated absences The Holding company accounts for all accumulated compensated absences when the employees render service that increases their entitlement to future compensated absences on the basis of actuarial valuation that is carried out annually. For all the permanent employees hired on or after July 1. Pension funds For all the permanent employees hired prior to July 1. and subsequently measured at amortised cost. if any. Post-retirement medical benefits The Holding company operates an unfunded defined benefit medical scheme and provides medical allowances and free hospitalisation benefits to all its retired employees and their spouses in accordance with their service regulations. The postretirement medical benefit is accounted for on the basis of actuarial valuation that is carried out annually. Subsequently. Contributions are made to the scheme on the basis of actuarial valuation that is carried out annually. Actuarial gains and losses on employee benefits Actuarial gains and losses (if any) on all employee benefits are recognised immediately in the profit and loss account.

to the provident fund at the rate of 10% of basic salary. Defined contribution plan . The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Holding company and its subsidiaries operate and generate taxable income. Income tax expense is recognised in the consolidated profit and loss account except to the extent that it relates to items recognised in other comprehensive income or directly in equity. all RHC staff. which provides a Union sponsored Multi-employer Pension Plan. Further. Minhal France S. Management periodically re-evalutes positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. PIA Investments Limited (PIAIL) PIAIL operates a funded gratuity scheme for its permanent employees who have completed one year of service. to the Fund in accordance with Fund’s rules. Inc. Taxation Income tax expense comprises current and deferred tax. the tax is also recognised in other comprehensive income directly in equity. In this case. both union and non-union. Provision is made for the liability at the reporting date in accordance with the agreements. The Multi-employer Pension Plan Amendments Act of 1980 imposes certain liabilities upon employers associated with a plan who withdraw from such a plan or upon termination of said plan. Compensated absences Abacus accounts for compensated absences on the basis of unavailed earned leave balance of each employee at the end of the year. MFSA’s employees are entitled to an indemnity under the law and in accordance with hotel industry labour agreements of the country. Equal monthly contributions are made. as the amount in the overall context of the finanacial statements is not considered material. On retirement..provident fund SRL also operates a recognised provident fund scheme for its employees.V. PIAIL also operates a provident fund scheme as a contribution plan for its permanent employees. both by PIAIL and the employees to the provident fund at the rate of 10% of basic salary. Deferred taxation Deferred income tax is recognised using the balance sheet method on temporary differences at the balance sheet date between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes. Equal monthly contributions are made. are employees of RHC’s management company. respectively. IHC. Roosevelt Hotel Corporation N.A. RHC reimburses the management company for matching contributions it makes on behalf of the Hotel’s non-union staff to the management company’s 401(k) pension plan. both by SRL and employees. (RHC) RHC is a party to the Industry wide Collective Bargaining Agreement between the Union and the Hotel Association of New York City. Equal contributions are made. An accrual is made for maximum benefit that is payable to employees based on their number of years of service as at reporting date.9 117 . both by Abacus and employees. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. 4. Abacus Distribution Systems Pakistan (Private) Limited (Abacus) Provident Fund Abacus operates an approved contributory provident fund for its employees.

The estimates involved in recognising revenue from frequent flyer programme are disclosed in note 3. food and beverages Revenue from room and shop. air charters. primarily free travel. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled. Engineering and other services Revenue from repair and maintenance and overhaul services of engine and component to other airlines is recognised when such services are rendered. income from shop rentals is recognised on a straight line basis over the lease term. Room. The carrying amount of deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Frequent flyer programme revenue The Holding company operates two principal loyalty programmes. cargo and mail. The fair value attributed to the awarded mileage credits is deferred as a liability and recognised as revenue on redemption of the miles by the participants to whom the miles are issued. Passenger and cargo revenue Passenger and cargo revenue is recognised when the transportation service is provided. 4. Dividend income is recognised when the Group’s right to receive dividend is established. carry forward of unused tax credits and unused tax losses. distribution of a computer reservation system and related activities. miles are sold to commercial partner to use in promotional activity. if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relates to the same taxable entity and the same taxation authority. The airline’s ‘frequent flyer programme’ allows frequent travellers to accumulate travel miles that entitle them to a choice of various awards. In addition. Revenue recognition The Group principally earns revenue from the carriage of passengers. The fair value of the miles sold is deferred and recognised as revenue on redemption of the miles by the participants to whom the miles are issued. provision of handling services to other airlines. In relation to PIAIL.10 118 . food. based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Unrecognised deferred tax asset is reassessed at each balance sheet date and recognised to the extent that it has become probable that future taxable profits or taxable temporary differences will allow the deferred tax asset to be recovered. The value of unused tickets and airway bills is included in current liabilities as ‘advance against transportation’ until recognised as revenue. engineering services. Deferred tax asset is recognised for all deductible temporary differences. The estimates involved in revenue recognition are disclosed in note 3. carriage of excess baggage. hotel operations. Deferred tax assets and deferred tax liabilities are offset. when the miles expire or when they are not expected to be redeemed.7. The cost of redemption of miles is recognised when miles are redeemed. beverages and other related services is recognised as and when services are rendered. Interest / mark-up and dividend income The Group recognises interest income / mark-up on short-term bank deposits.6. interest bearing advances and held to maturity investments on a time proportion basis using effective interest method. to the extent that it is probable that taxable profits or taxable temporary differences will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised.

the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating). Non-financial assets The carrying amounts of non-financial assets are assessed at each balance sheet date to ascertain whether there is any indication of impairment.13 119 .e. except the borrowing costs directly attributable to the acquisition. Provisions Provisions are recognised in the consolidated balance sheet when the Group has a legal or constructive obligation as a result of a past event. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty. If any such evidence exists for available for sale financial assets. and where observable data indicate that there is a measurable decrease in the estimated future cash flows. a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. the cumulative loss – measured as the difference between the acquisition cost and the current fair value.12 4. such as changes in arrears or economic conditions that correlate with defaults. an asset that necessarily takes a substantial period of time to get ready for its intended use or sale) are capitalised as part of the cost of that asset.11 Borrowing Costs The Group recognises the borrowing costs as an expense in the period in which these costs are incurred. the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. Impairment losses recognised in the consolidated profit and loss account on equity instruments are not reversed through the consolidated profit and loss account. Value in use is ascertained through discounting of the estimated future cash flows using a discount rate that reflects current market assessments of the time value of money and the risk specific to the assets. in a subsequent period.. less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in profit or loss. As a practical expedient. Impairment Financial assets The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. default or delinquency in interest or principal payments. assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). the impairment loss is reversed through the consolidated profit and loss account. the probability that they will enter bankruptcy or other financial reorganisation. construction or production of a qualifying asset (i. If. for the amount by which the asset’s carrying amount exceeds its recoverable amount.4. it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. For loans and receivables category. the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. the reversal of the previously recognised impairment loss is recognised in the consolidated income statement. the group may measure impairment on the basis of an instrument’s fair value using an observable market price. In the case of equity investments classified as available for sale. The recoverable amount is the higher of an asset’s fair value less cost to sell and value in use. 4. An impairment loss is recognised. the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss. If. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated income statement. as an expense in the consolidated profit and loss account. Provisions are reviewed at each balance sheet date and adjusted to reflect current best estimate. in a subsequent period. If any such indication exists then the asset’s recoverable amount is estimated. For the purpose of assessing impairment. If a loan or held-to-maturity investment has a variable interest rate.

if no impairment loss had been recognised.15 4. when the obligation specified in the contract is discharged. Non-monetary items. Monetary assets and liabilities in foreign currencies are translated at the rates using the average spot rate on the balance sheet date. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined. cancelled. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares. Derivative financial instruments are carried as assets when fair value is positive and as liabilities when fair value is negative. Financial assets are de-recognised at the time when the Group loses control of the contractual rights that comprise the financial assets. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Differences in exchange rates are recognised as foreign currency translation reserve and are included in other comprehensive income. are translated using the exchange rates at the date when the fair value was determined. measured at fair value in a foreign currency. that is. Any gains or losses on de-recognition of the financial assets and financial liabilities are taken to the consolidated profit and loss account immediately. or expired. Offsetting of financial assets and financial liabilities Financial assets and financial liabilities are offset and the net amount is reported in the consolidated balance sheet only when there is a legally enforceable right to set-off the recognised amounts and the Group intends either to settle on a net basis or to realise the assets and settle the liabilities simultaneously. Financial instruments Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value and subsequently at fair value or amortised cost as the case may be.14 4. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Derivative financial instruments Derivatives that do not qualify for hedge accounting are recognised in the consolidated balance sheet at estimated fair value with corresponding effect to the consolidated profit and loss account. Financial liabilities are de-recognised at the time when they are extinguished.16 4.18 120 . Gains and losses on translation are taken to consolidated profit and loss account currently. 4. Earnings per share The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Income and expense items are translated at exchange rates approximating the rates of exchange at the dates of the transactions. Foreign operations Assets and liabilities of foreign entities are translated into Pakistan Rupees at year-end exchange rates. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Holding company by the weighted average number of ordinary shares outstanding during the year. Items of equity are carried at their historical values. Foreign currency Foreign currency transactions Foreign currency transactions during the year are recorded at the exchange rates approximating those ruling on the date of the transactions.17 4. net of depreciation or amortisation.

191 68.1 5.154.560 1.9 2012 2011 ----------.233. who is responsible for allocating resources and assessing performance of the operating segments. has been identified as the steering committee that makes strategic decisions.19 Segment Reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decisionmaker.419 121 . The chief operating decision-maker.214.2 5. PLANT AND EQUIPMENT Operating fixed assets: .leased Capital work-in-progress 5.396. PROPERTY.4. 5.274.706 146.644.173.153 69.owned .662.065 75.Rupees in '000 -------------83.428 2.446 153.

1 5.749 1.690 (21.197) 442.097) 136.952 537.463 54.964) (51.828) (152.5 840.50 899.163) 14.307) 2.730) 68.855 232.261 (291.369) 68. Cannibalisation refers to the practice of obtaining the spare parts necessary to repair an aircraft by removing them from another similar aircraft.5) Workshops and hangars Renovation and improvements Aircraft fleet (note 5.439 2.100) 499.435) 232.410.695) 1.150 19.239. catering.364 2.700 (82.1.745.2) Buildings on: Leasehold land (notes 5.898 (673.529 20 33.830 427.224 (1.830 10 1.374.271) 47.629.964) 5.317 722.000 24.854 1.749 26.388.312.109.001 (507) 462 (45) (46.911 (748.123 * 5.owned Land Leasehold (notes 5.841 (855.472 ** * Represents adjustments in respect of cannibalisation of aircraft.187) 359.700 352.874 (545.4) Operating ground equipment.461.owned assets .964 22.400 24.866) 527.854 22.937) 47.5 55.855 7.383. 2010 Cost or revalued amount Accumulated depreciation Net book value Year ended December 31.714 (65. communication and meteorological equipment Engineering equipment and tools 18 Traffic equipment -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------As at December 31.885 777.566 (6.491.691) 136.1 Operating Operating fixed assets fixed .979.123 4 .439 1.538) 187.594) 150.646 (1.453.572 (606) (2.360 (762.250.375.317 449 (14.048 (19.599.897) 427.938 30 .1 and 5.796 (218) 218 (95.400 1.463 10.028 (312.546 24.1.387) (1.964 5.139 (932.151.572.021) (855.097) 442.708.629 13.100 779.866) 359.20 5.767 (20.021) (155. 2011 Opening net book value Additions / transfers Reclassifications Cost Accumulated depreciation Revaluation Cost or revalued amount Accumulated depreciation Translation adjustments Cost or revalued amount Accumulated depreciation Adjustments / transfer Cost or revalued amount Accumulated depreciation Disposals Cost or revalued amount Accumulated depreciation Write off Cost or revalued amount Accumulated depreciation Depreciation charge for the year Net book value As at December 31.639) 109.109 (59.900.178) 154.952 2.354.638) 980.976) 11.565) 187.1.000 22.955 (1. 2011 Cost or revalued amount Accumulated depreciation Closing net book value Annual depreciation rate (%) 5.20 1.947 829.461.446 (264.567) 11.083 (237.669 5 741.964 (51.488.410.789 (613.461.250.144.150 34.629 898.938 150.895.664) 527.947 352.798) 537.410.585 (132.472 10 .048.3) Others (note 5.383.358 499. 122 .058) 2.400 980.196.529 14.1.900.058) (1.885 154.585 (402.887.708.2) Hotel property (note 5.5.052.669 109.374.209 (7.000 5.368 (591.745.364 47.3) Other land (note 5.559) (390.633) 1.669 (1.1 and 5.358 10 .468) 47.854 1.109.

692.226.129) 1.866) 12.855 7.314 (1.855.183 (71) (71.163 (81.060 (222.897) 427.765 83.004.835 5 .525 (4.133) 17.761 (2.660) (491.20 6.213) (328.753 8.523 (2.352 36.749 26.616 (1.472 10 .441.145 1.157) 83.663.896 (2.399.739 819.358 10 .106 (809.887.145) 269.660 114.221 (31.372.530 1.714 (65.908 (11.226.040) 28.550 (8.908 4.835 6.868 28.914) 4.868 (7.908 (11.324 10 . fixtures and fittings Motor transport Office equipment Computer and office automation Precision engineering equipment Printing press equipment Reservation equipment Heat ventilation and air conditioning Kitchen and bar equipment Television / dish / stand Other equipment Capital spares Total -----------------------------------------------Rupees in ‘000---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------1.710.671) 4.505) 100.908 10 8.100) 499.892.683) 1.485.206) 4.039) 11.663. 123 .549) 76.222.173.517) (153.469.996 - - 3.823.840 2.753 952.990) 222.165 (7.441.153 1.515 (420.823.187) 359.982 (181.253 28.245 (5.453.435) 75.153 milar aircraft.278 (269) 232 (37) (155) 155 (1.596) 78.572.258 (421.037 (448.734.666) 95 522.996 10 15.341.020) 3.117) 75.955 (1.789.408 1.309 (80.388.280) 14.868 (5.573 95 38 (79) 54 100.530 10 5.866) 359.239.509 (311.065.25 411.827 682 (979) 3.921 1.682.480 15 1.982) 5.738 (3.18 Engineering equipment and tools Traffic equipment Furniture.590) 1.097) 442.892.224 (1.906) 5.908) 10.827 5.043) 352.865) 1.440 (285) 429 144 (19.825) 50.035) (38.100 122.011) 2.387 173.066) 76.358 499.270 (46.039 (15.324 12.765 3 .824 87.504 28.925 (4.799 (2.472 1.739 25.041) 3.354 (156.004 (42.667.855.259 (4.660 394.646 (1.618) 113.749 1.164) 6.700 (1.355 (4.855 6.197) 442.039 (15.871) 1.057) 1.910.110) 11.085) (4.868 28.319 (2.053 78.039) 20 11.559 390.868 (57.213) 268.25 87.480 268.397 (68.831.796 (218) 218 (95.573 10 2.599.908) 10 11.016.895.254) 1.828 152.921 15.683) 5.669 (1.599.838 (59) 59 (26.026.384 (334.952 (1.897 (4.20 821.173.455.787 (806.145 1.026.098 237.352 86.475.053 4 .144.343) 2.221) (430.352) 1.408 427.824 120.20 1.485.840 28 (295) 1.244) 11.960) 222.745) 54 20 1.410) 197 (153.

228) 1.430) 151.982 (638.920.400 24.594.704.400 24.1.1.691) 136.1 (note and 5.396 (3.364) 299. communication and meteorological equipment Engineering equipment and tools Traffic equipment ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------As at December 31.659) 3.979.861) 1.3 5.410.793.633.224 (1.669 741.364 47.028 (312. 2011 Cost or revalued amount Accumulated depreciation Net book value Year ended December 31.622 (65.472 24.2) 5.100 (649) 649 (77.952 3.337.000 24.921 (2.369) 68.196.057) 401.954) 4.787) (3.447 30 .787) 5.875 68.250.354.400 (133.748 (5.5) Workshops and hangars Renovation and improvements Aircraft fleet (notes 5.369 136.010) 126.1 5.853 2.779) 58.163) 11.123 779.239.100 (114.368 (591.830 10.410.20 These represent leasehold land and buildings owned by the Holding company that are freely transferable and can be disposed off as and when required. 2012 Opening net book value Additions / transfers Revaluation Cost or revalued amount Accumulated depreciation Translation adjustments Cost or revalued amount Accumulated depreciation Adjustments / transfer Cost or revalued amount Accumulated depreciation Disposals Cost or revalued amount Accumulated depreciation Write off Cost or revalued amount Accumulated depreciation Depreciation charge for the year Closing net book value As at December 31.225 5 780.266 187.794 2.921 20 41.171 11.235 (776.938 5.286) 55.700 359.123 1.585 (132.374.120.386.879) 58.529 39.400 1. the lease term of an engine and propulsor expired (note 23.250.800 (721.898 (673.866) 359.853 (1.319) 126.000 24.938 899.681 (1.175) 506.733 (9.708.602.358 1.410.410.4) Operating ground.3 and 5.690 (21.570 5 .594.234 1.000 24.882) 151.291 (1.230 (86.234 10 .5 65.410.1 and 5.3.1.599.615. During the year.860) 401.400 1.100 10 1.488.519.993.638.1) and these have been transferred from leased assets.358 17.602.383.3) Hotel property (note 5.1.986.669 (1.708.120.794 (20.410.000 5.472 442.1.2 5.000 5.2) Buildings on: Leasehold Other land land (notes (note 5.374.249.551) 11.570 (86) 86 (47.225 (269) 269 (48. 2012 Cost or revalued amount Accumulated depreciation Net book value Annual depreciation rate (%) 5.655 (265.360 (762.567) 11.633.273. 2012.028 (333.396 5. 124 .197) 442.271) 47.50 902. due to certain formalities required to be fulfilled.1.100 789.581) 299.759 (681.100 10.453.952 840.209 (7.733 (29.669 2.664) 527.106 5.793.010. These are non-transferable as these were allotted at below market price.19 Land Leasehold Others (notes 5.473 5.400 1.529 33.364 55.538) 187. catering.356) 55.1.830 1.895.069. Land and buildings classified as 'Others' are amenity plots licensed from Civil Aviation Authority (CAA). However.275) 4.633) 1.511) 506.20 5.1.319.3) 5.447 (13.100 10 .000 24.979.184) 27.316.5 840.671. the title was not transferred in the name of the Corporation as at December 31.070 527.

663.018 (5.609 - - 532.447 5.054) 14.765 893.348) 9.352) 1.550 (8.207) 4.358 17.929 (9.581) 299.178 - - - - - - - - - - - - - - 1.212 (4.355 (4.278 (36.639) 178.151 2.862 (811.750 (581) 529 (52) (61.765 411.599.615.348) (649) 649 (77.582) 969.016 10.453.476.664.622 1.325 10 2.925 (4.358 1.296 (28.306 (385.785.234 10 .800.331) (362) 309 (53) (15.222. fixtures and fittings Motor transport Office equipment Computer and office automation Precision engineering equipment Printing press equipment Reservation equipment Heat ventilation and air conditioning Kitchen and bar equipment Television / dish / stand Other equipment Capital spares Total -----------------------------------------------------.144.486 - (178.335 - (109) 109 - (1.692.917 (137) - - - - - - - (18.473) 5.201) 2.296 10 432.426.530 5.057) 401.923.541) 85.843 10 5.118) 75.597 (82.789 75.549) 76.173.000 76.039) 20 11.417) 12.411 25 88.051 122.191 1.026.234 (873) (14.892.335 10 15.913 (184.925 (4.486) 18.681 (1.701) 146.935 11.100 10 .234 (376) 376 (505.039 (15.519.039) - 11.801.590.902 5 .799 (2.934 (507.066) 3.682) 77.039 (15.750 15 1.682.996 15.086) 3.516.20 823.609 1.441.129) 1.20 1.689) 98.224 (1.384 (334.619) 96.239.799) 10 12.866) 359.614 (1.431 10 .768) 31 20 1.091.799 (2.106 442.446.683) 5.107) 15.573 - 54 - 1.100 (65.301.316.154.590) 1.469.573 2.20 8.472 6.379 1.359) (263.817) 4.990) 222.178 (5.897 4.19 Engineering equipment and tools Traffic equipment Furniture.530 1.480 1.789.324 821.852.223 10 8.426.851) 77.173.110) 11.796 222.843 (248) 1.154.694.020) 3.800.659) 3.527) 12.895.411) (4.191 125 .656 - - (16.269 (46.902 (134.480 1.291 (1.037 (448.144.163 (81.669 (1.762) 4.835 34.364) 299.093 (354.472 24.017 (5.908) - 11.193 (93.411 (1.106 (809.675 (1.835 87.324 17.920.908 1.051 188.711) 969.660) 83.908 8.325 (23) 31 (59.730) 69.260 (36.882) 2.431 (2.441.223 (132.725.328) 83.310) 4.475.197) 442.756 - - 3.100 141.860) 401.605 - 610 (299) 311 - - - - - - - - - - (254.Rupees in ' 000 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ 1.258 (4.067.908 (11.026.314.519 (58.151 359.314 (1.745) 54 1.799 (11.229.847) 5.892.996 2.831.362) 4.183) 178.600) 1.383.004.

based in Pakistan.383) 69.833.845) 69.303.560 70.445.20 5.779. The current market value represents the value that an aircraft could best achieve under today’s open market conditions and.833.135.943 (3. covering ‘open’ market and financial sales.560 5 . 2011.644. 2012. 2011: ● ● ● ● ● Arif Evaluators.564. It additionally considers the perceived demand for each type.779.135.748) 5.785) 66. Ascend .leased Aircraft fleet As at the beginning of the year Revalued amount Accumulated depreciation Net book value Movement during the year Opening net book value Additions Revaluation adjustment Revalued amount Accumulated depreciation Transfer to owned Cost or revalued amount Accumulated depreciation Depreciation charge for the year Net book value As at the end of the year Revalued amount Accumulated depreciation Net book value Annual depreciation rate (%) 69.736 million as at December 31.275 (4.part of Reed Business Information Limited.371.968.286.247 3.233.383) 69.979. Narender Consultants and Subhash Shah and Associates.560 72.4 126 .838 (3.644.538.053 2.609 1. its availability in the market and further takes into account the expressed views of informed industry sources.644.986. based in Tashkent.233. on the basis of professional assessment of current market values as of December 31. Olimp – Baholash Va Ekspertiza Markazi LLC.470 (10. takes into account a thorough review of market activity and known transaction data involving the subject aircraft types.247 (3. Eastern Appraisal Co.20 66.105 3.2 Operating fixed assets .840.13 2012 2011 ----------.592.408. INC. location or condition of specific property and resulted in a revaluation surplus of Rs 300. The valuation was carried out on the basis of professional assessment of fair values with reference to market based evidence.428 68.861 3.968. based in USA. Aircraft fleet The aircraft fleet of the Holding company was revalued by an independent valuer.943 (3. based in India. and Lankhorst Vastgoed.473) (4.993. based on active market prices.3 Revaluation of leasehold land and buildings The leasehold land and buildings were revalued by the following independent professional valuers as of December 31.Rupees in '000 ------------72. therefore.624 1.644. and adjusted for any difference in nature.428 68.233.560 4.428 5 .053 5. based in Netherlands. 5.753) 68.

574.064) has been credited to ‘surplus on revaluation of property. engine.540. buildings and improvements and furniture and equipment.073 56.690) has been credited to ‘surplus on revaluation of property.752 million (US$ 185. buildings and improvements and furniture and equipment. Before revaluation the carrying value of lands.766 176.382) and accordingly a surplus of Rs 2.A.6 Cost Accumulated Depreciation Book value December 31.055.640.746 million (US$ 35.542 92. buildings and improvements. V. engine. fair value of furniture and equipment approximates its carrying value resulting in the entire revaluation surplus allocated to lands. This does not include an inspection of the aircraft or engines nor their records.450) and accordingly a surplus of Rs 3.511 146. the written down value of the revalued assets in the balance sheet would have been as follows: 5.875. fair value of furniture and equipment approximates its carrying value resulting in the entire revaluation surplus allocated to lands. The latest valuation of the Scribe Hotel was carried out as at December 31.538. buildings and improvements at December 31.301.701.200) using Discounted Cash flow method with an exit cap of 5.498.5 Roosevelt Hotel Corporation N. CMHLV has then been adjusted to account for the maintenance status of the aircraft in accordance with the information supplied.548.062 121.809.459. Half life or mid-time assumes that the airframe.25%. plant and equipment’.339 122.271 15. Hotel property 5.8 million (US$ 360. The latest valuation of Roosevelt Hotel was carried as at December 31.346.078.380.388 73. accrued hours and cycles of the aircraft and produced Current Market Half Life Values (CMHLV). 2012 by an independent appraiser. Before revaluation the carrying value of lands.284.737 7. buildings and improvements. specification.078. 2011 Leasehold land Buildings on leasehold land Hotel property Aircraft fleet -------------------. Minhal France S.738. The appraisal has taken into account the age.166 348. 2012 by an independent appraiser who has determined that the market value of the combined fee simple and leased fee interest in Roosevelt Hotel (excluding any unused development air rights) is Rs 35.147 million (US$ 22.394. The appraiser has determined that the market value of the freehold interest in Scribe Hotel as on December 31.287 8.050 143.438 89.488 21. 2012 Leasehold land Buildings on leasehold land Hotel property Aircraft fleet December 31.190. This valuation includes lands.000.Rupees in '000 -------------------44. Such estimate was based primarily on arm’s length market transactions in New York city. Had there been no revaluation.166 180. auxiliary power units (APUs) and engine limited life parts (LLPs). This valuation includes lands. landing gears. 2012 amounted to Rs 18.000).853.166 351.311 167. However. The determination of such values involves a multiplicity of variables and some variation in perceived value must be expected. plant and equipment’. However.558 23.166 175.938. 2012 amounted to Rs 22.263 44.574 44.447. The valuer has conducted an extended desktop appraisal of the aircraft and engines.508 51.195 78.935.751 million (US$ 331.8% and discount rate of 7.834.178.751 13.951 48. but does take into account the maintenance status of the airframe.654 127 . 2012 amounted to Rs 32.112 44. buildings and improvements at December 31.777 million (US$ 234.002.117. landing gears and all major components are half way between major overhauls or in the mid point of their useful lives for the life limited parts.867 43.

398 2.446 1. Mansoor A Khan Mr.936 (664.944.701 1.011 -------.000 .165 85 85 85 22 38 38 159 667 757 972 1.313.847 162.411.659 69.23 5.965.396.434 57. 2011 Additions during the year Transfer to operating assets Balance as at December 31.749 1.275.Various Total 2012 2011 Mr.680 114.280 Cost of services .184 20. Sale of fixed assets of the Holding company is made through disposal committee in accordance with the prescribed procedures. Jawed Sardar Mr.570 27.821 94.274.660 85 85 85 85 85 85 150 548 645 669 1.Rupees in '000 ---------------------------846 846 846 854 854 854 746 1.110 86.957 618.205 41.Rupees in '000 -------8.690.282) 1.972.504) 618. having NBV above Rs 50. In view of large number of items.706 2. Mamoon Rashid Ms.146 633.others Distribution costs Administrative expenses 5.745 777.698 8.435. Asghar M Wardag Mr.990 8. Iftikhar Jawed As per Group policy -------do-------------do-------------do-------------do-------------do-------------do-------------do-------------do-------------do-------------do-------------do------Exchange Accumulated Net Sale depreciation book value proceeds ---------------------------.200 11.8 Following fixed assets were disposed off during the year: Description Sold to Method of disposal Motor vehicles to employees Honda City Honda City Honda City Honda City Honda City Honda City Honda City Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Aircraft fleet Aggregate value of other items where NBV is above Rs 50.070 (770.114 1. Hasan Jamil Alvi Mr. 5.129.9 Capital work-in-progress Year ended December 31.085 229.144 1. 2011 Aircraft fleet Others Total --------------------------Rupees in '000-------------------777.672 72.984) 301.006 (1.450 700 4.266) 2.230 20. the management considers it impracticable to disclose the particulars of all items. Amin Ullah Mr.143.146 1.290 8.311 1.396.000.957 777.088 5.749 347.068 1.107 (1.791 Cost * This includes various operating fixed assets.Various* Aggregate value of items where NBV is less than Rs 50.957 1.504) 1. 2012 Balance as at January 1.706 128 . 2012 Year ended December 31.129.143.391 217.017 37.475 7.004. Irshad Ghani Mr. Ejaz Latif Mr. 2011 Balance as at January 1.111 1. 2012 Additions during the year Transfer to operating assets Balance as at December 31. Tariq Farooq Mr.959 50.172 14.7 Depreciation charge for the year has been allocated as under: Note 33 34 35 2012 2.000 . Maheen Fatima Mr.064 (1.825 761 761 761 832 816 816 587 401 354 172 197 112 6.723 15. Nazir Hussain Mr.500 15.063 10.954 223 188 92.

933 2.157.809 19.735 26.490.933 53.452 1.826) 2.057 236. 2010 Cost Less: accumulated amortisation Net book value Year ended December 31.786.057 3.990 53.238.990 69.045 279.934 2.967 50 17.620 2.057 2.973.990 6.944 236.786. 2012 Opening net book value Additions during the year Translation adjustment Amortisation charge for the year Net book value As at December 31.826) 52.123 (19.826 2012 2011 ----------Rupees in '000 --------3.786.534) 3.others Distribution costs Administrative expenses 33 34 35 1.973.200.238.934 134.856.072 (226.973.057 2.314 (19.1 129 .379 As at December 31.563 3.701 (206.082) 2. 2011 Opening net book value Additions during the year Translation adjustment Amortisation charge for the year Net book value As at December 31.157.452) 80.425 2.921.1 6.314 134.123 2. 2012 Cost Less: accumulated amortisation Net book value Useful Life 332.379 3.534) 80.921.062.445 3.425 5-10 years Note 6.856.256) 2.944 (26.082) 52.1 Amortisation charge for the year has been allocated as under: Cost of services .452) 3.157.959 (252.667 50 24.045 52.921.620 3.933 2. INTANGIBLES Note Computer Goodwill Total software ---------------------Rupees in '000 -------------------275.934 3.256) 69.620 3.015 (226.579 (252.921.24 6.445 2. 2011 Cost Less: accumulated amortisation Net book value Year ended December 31.563 (26.635 (206.

253 (790) 59. LONG-TERM INVESTMENTS Associate Other investments 7.344 130 .281 61.913) ordinary shares of Rs 10 each having market value per ordinary share of Rs 162 (2011: Rs 138.3.65) each Unquoted Pakistan Tourism Development Corporation Limited 10.744 24.Rupees in '000 ----------66.012 23.975 100 100 269 28.381 94.unquoted Summarised financial information of the associate of the Group along with its respective share is as follows: Name of associate Country of incorporation Total assets Total liabilities Revenue Loss Interest held by the Group (%) 40% 40% 61.913 (2011: 172.365 3.393 3.013 28.512 (2011: 87.1 1 (1.unquoted As at January 1 Share of loss during the year Translation adjustment As at December 31 7.3 2012 2011 -----------.129 165.744 61.381 24.344 86.Rupees in '000 -------------------2012 2011 Minhal Incorporated Minhal Incorporated British Virgin Islands British Virgin Islands 177.Pakistan 87.088 -------------------.609) 2012 2011 -----------.2 7.381 269 24.028 Note 7.344 28.744 (637) 61.3.394 7.Rupees in '000 -----------28.591) (1.013 60.906 66.3 Other investments Available for sale 7.25 Note 7.463 2.1 & 7.000 (2011: 10.2 Associate .512) ordinary shares of Rs 100 each 7.1 Movement in investment in Associate .000) ordinary shares of Rs 10 each Duty Free Shops (Private) Limited .1 Available for sale Quoted Pakistan Services Limited 172.107 4.

1977 entered in a Joint Venture Agreement on the same day to construct and operate a hotel on a land owned by Sheikh Hamdan. under a Supplemental Agreement dated January 12. In accordance withgrounds the terms of the agreement. ofDhabi. 82. Subsequently an application was submitted to the Abu Dhabi Courts for an order to appoint based on the reports submitted by a panel of three experts from the Ministry of Justice. PIAIL won the case at various courts in Abu Dhabi and finally in March 2010.407 9.407 15.342 million) along with interest at the rate of 6% from the date of the issuance of advised the Federal Supreme Judicial Council to appoint one of its judges as an Arbitrator in the subject dispute. to be known as Centre Hotel. current assets ofwas the not jointregistered. thenet assignment to PIAIL agreement. has Sheikh Khalifa to PIAIL a sum of Rs million (AED 23.476 (82.496 8.407 131 .487 January 12. the rights and obligations of Shaikh Hamdan and the Holding company under both the agreements were assigned 8. which expired on April 21. Abu a joint venture between the Holding Sheikh Hamdan Bin Mohammed Al Nahyan. The arbitration proceedings Judicial Council to appoint one of its judges as an Arbitrator in the subject dispute. 1997. three Notice expertsof from the Ministry The parties could amicable agreement the above and on February 23. good Employees Note 9.692) 12. Justice.057 ----------. of Justice.476) (8. Theadvances maximum aggregate balance due from employees at the end of any month during the year was Rs 22. the assignment to PIAIL was notaregistered. under Supplemental Agreement dated January of Shaikh Hamdan and company under both the Subsequently. 1997 has been calculated on the basis of unaudited management accounts of considered the joint venture. under Agreement dated 679. PIAIL. 1977 8. However. Abu concluded during the year. However.1 to Shaikh Khalifa and PIAIL respectively. The Court of First However. filed a ratification claim with the Court of First Instance. Arbitration was Sharjah Court was appointed as the Judge Arbitrator. The parties entered in a Partnership Agreement on June 8. 9. 1978. 1997. Subsequently. The parties could not reach an amicable agreement as to above to and on February 23.Rupees in '000 -----------(8. arbitrator. an application submitted to the Abu Dhabi Courts for an order to appoint arbitrator. and matter be referred to the accounts of the joint venture. and the Arbitrator. In August the case at various courts in Abu Dhabi and finally in March 2010.1 This represents PIAIL’s share ofof net current assets ofthe Centre Hotel. the rights and obligations owned by Sheikh Hamdan. and matter referred to Abu the Dhabi that it did of not have the jurisdiction to decide in the matter. in order to have the Arbitrator’s aforesaid award ratified. basedas onto the reports submitted by a panel of1997. Abu Dhabi. arbitration proceedings PIAIL. RECEIVABLE RESPECT OF CENTRE HOTEL 8. Judge Ahmed Al Mulla of Al concluded duringnot thereach year. appointed the Judge Arbitrator. a 1997.701 82. The summon from Abu Dhabi Court of First Instance to the Competent Court for the Competent Court for carrying out further proceedings is awaited. venture at the end of the term were to be distributed to joint venture partners in to the Shaikh PIAIL respectively. Abu aDhabi. However. The arbitration proceedings concluded during the year. 12. an and the Arbitrator. However. and matter be referred to the competent court at the the rate adjudicated of 6% from the the issuance of judgment. In August 2010.660 million).26 Note 8. ratioKhalifa of theirand investment. Supreme Court of Abu Dhabi PIAIL a sum of Rs 617.1 Unsecured.476) (7.476) of disbursement.407 23. assignment to Dhabi. 1997 calculated of management Instance.1 a Supplemental owned by Sheikh Hamdan. agreements were assigned toIn Shaikh Khalifa and PIAIL respectively. The summon from Abu Dhabi Court of First Instance to Abu Dhabi judicial department for a decision.1 short-term loans and advances 13 9. Note 2012 2011 ----------. 1997 has has been been calculated on onthe thebasis basis ofunaudited unaudited management The amount amount for PIAIL’s PIAIL's share of net assets at 21. PIAIL was not registered.009 12.476 the date (82.897 Arbitrator’s aforesaid Court of be First Instance.1 2012 2011 ----------. Sheikh Khalifa also filed a claim for nullification of Arbitrator’s aforesaid Award. The amount for PIAIL's of net assets as at April 21.as PIAIL disputed theon said renovation on the grounds that there was no The parties reach amicable agreement to the above and February 23. 1978. The parties entered in a Partnership Agreement on June 8. matter. carrying out further proceedings is awaited. however.057 82. has ordered Sheikh Khalifa to pay the rate of 6% from the date of the issuance of judgment.487 26 8. joint venture between the Holding company and 8.650) 15. PIAIL won advised the Federal Supreme Judicial Council to appoint one of its judges as an Arbitrator in the subject dispute. which expired on April 21. RECEIVABLE IN IN RESPECT OF HOTEL and simultaneously entered in CENTRE a Joint Venture Agreement on the same day to construct and operate a hotel on a land 734. 1997.009 20. considered doubtful This represents loans given by SRL to its employees which are secured against gratuity fund balances of respective employees.701 23. to and simultaneously entered in a Joint Venture Agreement on the same day to construct and operate a hotel on a land be known as Centre Hotel. considered doubtful Employees Midway House (Private) Limited Provision for doubtful Current maturity shown advances under 2012 2011 20. LONG-TERM LOANS AND ADVANCES Current maturity shown under short-term loans and advances Secured. Abu PIAIL. Abu Dhabi adjudicated that it did not have the jurisdiction to decide in the matter. net current assets ofthe the jointpremises venture at theto end of the term were to be distributed to joint venture partners in venture to renovate or reinstate Hotel prior itsthe reversion Shaikh Hamdan. Sheikh Khalifa also filed a claim for nullification of617.009 (7. a dispute arose between the parties over a renovation program initiated by Sheikh Khalifa prior to the The joint venture was for a period of 17½ years. Subsequently an application was submitted to the Abu Dhabi Courts for an order to appoint Khalifa prior could to thenot expiry ofan the joint venture term.692) 12. 2010.476) Provision for doubtful (82. Subsequently. accordance with the terms of the 12. Judge Ahmed Al Mulla of Al Sharjah Court was appointed as the Judge Arbitrator. Notice of Arbitration was sent to arbitrator. in order to have Arbitrator’s aforesaid award filed as a ratification claim with theThe Court of First Instance.897 million (AED 23.476 (82.1 Note 2011 This represents PIAIL's share of net current assets of Centre Hotel. the rights and obligations of Shaikh Hamdan and the Holding company under both the agreements were assigned however. This represents PIAIL's share net current assets of Centre Hotel.650) 15. The Court of First The for of net assets as at April April 21. a joint 2012 venture between the Holding ----------Rupees in '000 ---------company and Sheikh Hamdan Bin Mohammed Al Nahyan. Sheikh Khalifa. Sheikhshare Khalifa also filed as a claim for nullification of Arbitrator’s aforesaid Award. Notice of Arbitration was the ratio of their investment. The summon from Abu Dhabi Court of First Instance to the Competent Court for carrying out further proceedings is awaited. Abuordered Dhabi adjudicated that it pay did not have the jurisdiction to decide in the Award. Judge Ahmed Al the Mulla of Al Sharjah Court wasratified. The parties entered in a Partnership Agreement on June 8. and the Arbitrator. filed a ratification claim with the Court of First Instance.009 15.342 million) along with interest at sent to Sheikh Khalifa. competent court at thedate Abu Dhabi judicial department for a decision. based on the reports submitted by a panel of three experts from the Ministry Dhabi. competent court at the Abu Dhabi judicial department for a decision.1 13 9.539 million (2011: Rs 24. 1977 and simultaneously company and Sheikh Hamdan Bin Mohammed Al Nahyan. PIAIL disputed the said renovation on the grounds that there was no obligation on the joint agreement. has ordered Sheikh Khalifa to pay PIAIL a sum of Rs 617. a dispute arose between the parties over a renovation program initiated by Sheikh sent to Sheikh Khalifa. considered good Unsecured. 1997. to be known as Centre Hotel. accounts of the joint venture. PIAIL disputed the said renovation on the that there was no net current assets of the joint venture at the end of the term were to be distributed to joint venture partners in the ratio of their obligation on the joint venture to renovate or reinstate the Hotel premises prior to its reversion to Shaikh Hamdan. in order to have the Arbitrator’s aforesaid award ratified. a dispute arose between the parties over renovation program initiated by Sheikh The joint venture was for a period of 17½ years. The joint venture wasthe forHolding a period of 17½ years. However. RECEIVABLE IN RESPECT OF CENTRE HOTEL 8. Abu Dhabi.Rupees in '000 -----------LONG-TERM LOANSshare AND ADVANCES 9. Secured. 1978.897 million (AED 23. Supreme Court of Abu Dhabi advised the Federal Supreme 2010.342The million) along with interest at Instance. however. which expired on April 21. investment. Khalifa prior to the expiry of the joint venture term. In accordance with the terms of the expiry of the joint venture term.2010.476 Midway House (Private) The loans carry interest Limited at the rate of 8% to 20% (2011: 8% to 20%) per annum and is receivable within four years from82. PIAIL won the case at various courts in Abu Dhabi and finally in March Supreme Court of Abu Dhabi obligation on the Subsequently joint venture to renovate or was reinstate the Hotel premises prior to its reversion to Shaikh Hamdan. In August judgment.Rupees in '000 ---------734.496 679.

2 This lease rentals prepaid prepaid by SRL SRLto toCivil CivilAviation Aviation Authority.466 32.026 9. The maximum aggregate balance due from employees at the end of any month during ----------.414 12. lessor under terms which of the is lease agreement has been the year.741 81.547 23.608 of the This represents consideration paid to Ex-Im Bank for the purpose of 12 years guarantees issued by it in favour of the Holding 85 Administrative expenses 35 85 Holding company.693 Rupees in '000 ----------- 33 35 Note 10.500 13.Rupees in '000 ----------the year was Rs 22.816 8.170.587 12.9. 2008.1 10.851 177.608 1.741 81.1 the year.2 This represents lease rentals prepaid by to Civil Aviation Authority.1 (224.948 81.482 3.730 21.693 This represents consideration paid to Ex-Im Bank for the purpose of 12 years guarantees issued by it in favour of the Holding company. completion of certain legal formalities.482 3. 2001. the lease agreement will be registered. Lease 10.1 2012 2011 3.Rupees in '000 ----------1.724 1.100 50.608 Cost represents of services others 33 guarantees issued This consideration paid to Ex-Im Bank for the purpose of 12 years by it in favour 1. Deposits 10.724 154.342.547 8.577 23.479. 10. 1981 for a period of 20 years which expired on June 2. the lease agreement will be registered.278. land and hotel building which is amortised over a period of 30 years on a straight line basis. The (224.576 4.587 ----------. balance will be utilised fora land and hotelthe building amortised over that a period of 30terminated years on aduring straight line basis.322. as disclosed in note 24.020. arrangement for further years has been finalised between SRL and Pakistan CAA in their meeting held on January 7. 10.619) 30.831 23. the subject agreement has not yet been registered due to disagreement between the parties over the Initial lease of agreement was effective fromSRL Juneis 3.414 3.482.231 5.576 4.3 10.069.660 177. as disclosed in note 24.948 81.026 9.300) future purchases from lessor.015.216 57.660 million).681 by the Holding company with 1.608 85 2012 2011 85 1.981 Premium on acquisition of leased land Prepayments Less: amortisation to date 10. Initial lease agreement was effective from June 3.755) Current portion shown under short-term prepayments 14. The loans carry interest at the rate of 8% to 20% (2011: 8% to 20%) per annum and is receivable within four years from the date of disbursement.278.180. SRL is currently pursuing the subject matter with relevant government authorities and is confident that following resolution ofallocated the dispute.100 8.751 50. 1981 for Authority. SRL is currently pursuing the subject matter with relevant government authorities and is confident that following 2008.1 (20.069.539 million (2011: Rs 24.2.Rupees in '000 ----------1. the lease agreement will be registered.619) 6. Lease the subject agreement has not yet been registered due to disagreement between the parties over the completion of certain arrangement for further 30 years has been finalised between SRL and Pakistan CAA in their meeting held on January 7.816 1.2. However.693 ------------1.530 a lessor portion under the terms of the lease agreement that has been terminated during balance will be utilised for (219.others Administrative expenses 2012 2011 -----------.015.3 1. company.900 154.3 132 .300) (20. Pakistan acquisition of the right to use of and hotel building which 30 is amortised over a period of 30 years on a straight line basis.479. the subject agreement has not yet been registered due to disagreement between the parties over the resolution of the dispute. Amortisation charge for the year has been as under: Amortisation charge for the year has been allocated as under: Note Amortisation charge for the year has been allocated as under: Cost of services . a period of 20 years which expired on right June 2001.466 32.291 5.159 1.539 million (2011: Rs 24. 2001.342. 2008. and is confident that following resolution of the dispute. The balance will be utilised for future future purchases from lessor. Lease arrangement completion certain legal formalities.227.291 Rental commission 13. forbe acquisition of Holding the rightcompany to use plot of 10.227. which is being amortised over lease term.577 11. LONG-TERM DEPOSITS AND PREPAYMENTS 9.1 10. theyears subject matter with government authorities for further 30 years has been finalised between SRL and Pakistan CAA in their meeting held on January 7.2 11.891 48.660 21.924 Exposure fee to support financing 10.660 million). purchases from lessor.730 1. The loans carry interest at the rate of 8% to 20% (2011: 8% toNote 20%) per annum and is receivable 2011 within four 2012 years from the date of disbursement.778 Premium on acquisition of leased land 10.482.3 1.831 This represents the remaining balance of maintenance reserve which was required to be kept1.231 42.981 30. Initial lease agreement was effective by from June 3.159 Finance charges 48.1 This represents the remaining balance of maintenance reserve which was required to be kept by the Holding company with 10.900 23.778 10.751 42.851 79.2 50.2 This represents represents lease rentals Pakistan forfor acquisition of the to2.2.530 50.778 (219. However.312) (18. 6.322. The maximum aggregate balance due from employees at the end of any month during 27 the year was Rs 22. currently 1981 for apursuing period of 20 which expired onrelevant June 2.292.292.3 1. This represents loans given by SRL to its employees which are secured against gratuity fund balances of respective employees.891 8.312) Less: amortisation to date (18. Aircraft fleet lease deposits Maintenance reserve LONG-TERM DEPOSITS AND PREPAYMENTS Engine maintenance Deposits Rent Other lease utilities Aircraft fleet and lease deposits Aircraft fuel Maintenance reserve Guarantee deposit Engine maintenance Others Rent Other lease and utilities Prepayments Aircraft fuel Guarantee deposit Finance charges Others Rental commission Note 10.1 This represents the remaining of SRL maintenance reserve was Pakistan required to keptThe by the with a lessor under the terms of thebalance lease agreement that has beenwhich terminated during the year.020. use plot plot of land 10.170.755) Current shown under short-term prepayments 14.216 57.180. However. 1. as disclosed in note 24. legal formalities.681 1.924 Exposure fee to support financing 10.778 10.500 79. being amortised over lease term. which is which being is amortised over lease term.693 1.1 This represents loans given by SRL to its employees which are secured against gratuity fund balances of respective employees.

215 11.301 (961.535) 3.535 303.28 Note 11.1 10.544 8.814 (115.014.666) 279.835 5.2 8.690 961.333 74.959.238.043 252.188.691 199.191 942.192 155.535 11.818 20.630 3.482 961.421) 132.859 6. STORES AND SPARES Stores Spare parts Inventory held for disposal .242 2.197 107.405 322.adjusted to net realisable value Provision for slow moving and obsolete spares Stores and spares-in-transit 11. 133 .897.959.707.1 Movement in provision is as follows: Balance at the beginning of the year Written off during the year Provision for the year .014.202.474 1.882) 4.191) 10.065 418.202 4.830 561.096.082 3.486 265.656 512.Rupees in '000 -----------793.301 2012 2011 ------------.690 2.659.832 36 The ageing analysis of these trade debts are as follows: 2012 2011 Impaired Impaired Trade debts Trade debts gross gross ---------------------------------Rupees in '000----------------------------------Within current year 1 year old 2 years old Over 3 years old General provision 9.1 2012 2011 -----------.Rupees in '000 -----------961. TRADE DEBTS Considered good Considered doubtful Less: provision for doubtful debts 12.774 327.850.581 440.636.262.991 43.930 6.191 Note 12.864 520.070 4.262.426 1.301 36 Certain portion of trade debt of the Holding company is secured by cash and bank guarantees received from agents however due to very large number of agents all over the world the amount of secured trade debts is not determinable.959.735 250.859 7.936.657 9.895.403 890.836.net Exchange translation Balance at the end of the year 12.022.301 (55.347 3.188.301) 8.165 775.426 252.660 1.1 Movement in provision is as follows: Balance at the beginning of the year Provision for the year Balance at the end of the year 12.188.882 2.215 (3.615 961.936.544 1.188.737 (2.191 (1.891.293 123.347 32.285.

188 116.854 125.775 148.268 36 55.260.Rupees in '000 ------------ 134 .339) 2.047 5.634 14.311 1.339 (55.secured Due from related parties 8.1 178.142 1.433 4.692 Others Employees Fuel suppliers Other suppliers Others Considered doubtful Suppliers Provision for doubtful advances 13.339 31.650 2012 2011 -----------.152 1.397.287 88.1 52.482 1.957 1.employees Advances .unsecured Current maturity of long-term loans .965 9 8.260.815 317.424 55.401 5.838 1.152.468 55.957 44.204.511 317.1 Prepayments Current portion of long-term prepayments Real estate taxes Commission Interest on leased aircraft Insurance Rent Others 10 219.952 34.29 Note 13.089 69.152.339 178.915 23.339) 329.364 122.045.305.339 55.428 132.888 10.1 Movement in provision is as follows: Balance at the beginning of the year Provision for the year Balance at the end of the year 14. SHORT-TERM LOANS AND ADVANCES Loans .153 13. TRADE DEPOSITS AND PREPAYMENTS Trade deposits Prepayments 14.976 17.713 2.054.692 7.544 1.300 350.339 (55.461 55.344 184.755 383.315 11.482 224.157 464.

it was agreed that PCB would transfer a parcel of land measuring 5.1 (a) 2012 2011 -----------.814 15.595.000 3. on February 14. 135 . PCB and PIAIL.077) 4.5% to be held by PIAIL and PCB respectively.131.423.077 (177.300.968 100. In order to settle PIAIL’s aforesaid outstanding amount.000 1.8 acres to a new company with ownership ratio of 62.567 646.938 2. as lessor under the various net leases at the Hotel.30 Note 15. and thereafter as follows: 2012 2011 ------------.404. had entered into a Joint Venture Agreement.090 66.154.297 96. OTHER RECEIVABLES Considered good Claims receivable Excise duty Sales tax receivable Receivables from PCB Rental income Receivables from GoP Others 15. These include taxes recoverable. Subsequent to December 31. The rental income receivable represents pro-rata future receipts.002 61. supplier rebates and deposit on CVAE in respect of MFSA. credits on value added tax.246 332. Based on the foregoing. whereby.1 This represents receivable from Pakistan Cricket Board (PCB) on account of various payments made during the calendar years 1980.720 71.2 RHC's commercial leases provide for scheduled rent increases and free rent periods.809 202.473 177. 1981.276.3 15.300.Rupees in '000 -----------Not later than 1 year Later than 1 year but not later than 5 years Later than 5 years 330.3 15. 1980 and October 11.8 acres plot to Avant. during the year 2007.427 300. the management considers that PIAIL’s share of fair value of assets in Avant shall sufficiently cover the amount presently receivable from PCB. 15. 2008 and 2009 in terms of agreements dated October 7.4 31.5% and 37.365 15. will receive rental income over the next five years. 2013 representatives of PCB and Avant have signed the sub-lease agreement before the registrar for transfer of 5.473 Considered doubtful Provision for doubtful other receivables 177.077 (177. a separate company was formed with the name of Avant Hotels (Private) Limited (Avant).077) 2.365 71.423. 2007 signed between PIAIL and PCB for commercial development of a land owned by PCB.2 15.301 2.Rupees in '000 ----------- 92.325 4.4 This represents maintenance and other charges incurred in respect of aircraft owned by the GoP. which is owned by PIAIL and PCB in the aforesaid agreed ratio. 2012.1 15.820 1.321 1.555 814. RHC. during the year 2008.520 332.809 196. Accordingly.814 207.751 100.

2 5.369 1.146 117.491 (2011: 325.159.814 97. 325.078 3.877 21.917 6..767 16. 136 .049. N.in deposit accounts 17.185. These certificates carry a mark-up rate of 0.843).327 157.644. subject to certain specified conditions. CASH AND BANK BALANCES In hand In transit With banks: .447 3.unquoted SITA Inc.383.220 16.099 594. N. 2013. SHORT-TERM INVESTMENTS At fair value through profit or loss Bred Institution 58 (2011: 34) Ordinary shares Available for sale .2 These carry interest ranging from 0.491) ordinary shares Loans and receivables Certificate of deposits 16.960 17.742.V.1% to 7% (2011: 0.Rupees in '000 ---------20.1 16.1 17.. .220 517.2 16. The cost of these securities was US $ 3. Note 2012 2011 ----------.496 1.31 Note 16.001 59.733 6.943 17.430 2012 2011 ----------.703 million) maintained in escrow accounts by RHC against the loans of RHC.Rupees in '000 ----------- This represents 58 (2011: 34) Bred Institution Shares held by MFSA.2 19.184 802.3 418.37% per annum and shall mature on July 1. These include restricted balances aggregating Rs 706.220 19.3 201.407 (2011: US $ 1.515.V.495 80.in current accounts . on behalf of the Holding company and are transferable.2 17. These shares are held by SITA INC.640 million (2011: Rs 700.749 16.1 297.1 & 17.125% to 5%) per annum.239.303.

947) 1.472.217.310 2.818 (146.625 494.467 2.957 931.3 18.680) Unrealised gain on remeasurement of investments Accumulated loss Foreign exchange translation reserve Other reserves 137 . of shares -------18. 2012.038 1.351.467 26. the GoP held 2.339.208.2 18.for acquisition of shares Issued as bonus shares 2012 2011 -------------.000 500.779 250.for acquisition of shares Issued as bonus shares 5.000 29.250.877.519 9.500.000 1.877.781 (114. Note 2012 2011 -------------.374 2.32 18.500 28. This represents shares issued to GoP against reimbursement of mark-up payments on term finance and sukuk certificates.659) (138.000.435.625 494.949. RESERVES Capital reserves Reserve for replacement of fixed assets Capital redemption reserve fund Others Revenue reserve 1.Rupees in '000 ------------- 19.000 500.174 26.249 (111.499.501.352 (142.966.987.217.515 'B' class ordinary shares respectively (2011: 2.000 3.339.500 7.492.744.423.000.912) 3.750.208.439 'A' class ordinary shares and 1.000 50.435.950.083 11.772.701.259 2.750.298 11.462.No.674 5.877.462.1 Reconciliation of number of 'A' class Ordinary shares of Rs 10 each: Shares at the beginning of the year Issued during the year for cash Shares at the end of the year 18.000.351.500.000 30.750. of shares --------------2.482 2.017 13 2.000 284.000 2.250.674 4.000 1.779.310 2.750.000.028 233.934.003.000 Note Authorised capital Ordinary share capital 'A' class shares of Rs 10 each 'B' class shares of Rs 5 each Preference share capital Preference shares of Rs 10 each Issued.000.500 29.934.779.966. During the year.499.217.028 233.470 7.500 29.000 50.877.999 'B' class shares of Rs 5 each Issued for consideration in cash Issued for consideration other than cash .259 2.877.467 2. the Holding company has not issued the shares to GoP due to the reasons as set out in note 20.500.712 26.712 22.000 1.000 30.392) (107.492.217.828 300.000 284.3 2.280.439 and 1.642.519 9.999 1.772.000 1.000.420.957 931.482 2.950.Rupees in '000 -------------29.467 At December 31.280.779 250.498.345 28.722.038 1.467 2.217. SHARE CAPITAL 2012 2011 -------------.576.174 18.003.674 4.720) 2.500 7.000 2.No.949.515 'A' class ordinary shares and 'B' class ordinary shares respectively).500 28.639 2.017 13 2.217.345 28.466.000 3.500.000 2.501.642.674 2012 2011 -------.423.000 2.930.779.470 7.1 1.374 2.779. subscribed and paid-up share capital Ordinary share capital 'A' class shares of Rs 10 each Issued for consideration in cash Issued for consideration other than cash .

854. plant and equipment during the year .286 138 .NET OF TAX 2012 2011 ----------------Rupees in '000--------------As at January 1 Surplus arising on property.721) (609.612 1. ADVANCE AGAINST EQUITY FROM GOVERNMENT OF PAKISTAN 20.308 42.270 22.922 16.Surplus arising on property.1 Upto June 1988.505 (657.Surplus on revaluation of property.035.763 (407.544.612 22.304 41.590.742.997 (377.589 Acquisition of non controlling interest As at December 31 26. depreciation on fully depreciated aircraft was charged and credited to the reserve for replacement of fixed assets and excess of sale proceeds over cost of fixed assets disposed off was also credited to the aforesaid account. SURPLUS ON REVALUATION OF PROPERTY.802.634.454) 1.net of tax .844.net of tax .Related deferred tax liability Translation and other adjustments Less: related deferred tax liability on: .099 (201. plant and equipment realised during the year on account of incremental depreciation charged thereon .319 167.718) 12.718) (1.733) (377. 21.714) 2. PLANT AND EQUIPMENT . The Holding company is currently in the process of increasing its authorised share capital. the Holding company changed this policy to comply with the IFRSs and the depreciation and excess proceeds over cost of relevant assets are recorded in the consolidated profit and loss account.667 36.947.784.213.376.928.081.90.597 (201.Translation and other adjustments 13. With effect from 1989 .213.065 13.Revaluation as at January 1 .671 759. plant and equipment during the year Less: transferred to accumulated loss: .947. The Holding company has not issued shares to GoP as the authorised share capital of the Holding company was insufficient to cover the amount of ordinary shares to be issued in lieu of advance against equity.Surplus on revaluation of property.085.254. 2012 2011 ---------------Rupees in '000---------------1.096 2.813 26.622 36.201 4.687. plant and equipment realised during the year on account of incremental depreciation charged thereon .286 545.996) 33.021.33 19.721) 36.158.931 1.904.167 - This represents advance received from the Government of Pakistan (GoP) for mark-up payments on term finance and sukuk certificates.

496) 28.17 Finance 22.589 17.8 & Demand 22.5 & Term 22.2013 2. Citibank.273 National Bank of Pakistan .25% & 3 month EIBOR + 3.25% 3 month LIBOR +1.4 2013 .Rupees in '000 ---------- 3.5 USD 28.2016 2013 2010 .GoP 59.793.000 11.Bahrain National Bank of Pakistan .851 2.779.Netherlands KASB Bank Limited PIAIL JP Morgan Chase JP Morgan Chase Hong Kong Banking Shanghai Corporation Abacus Abacus International (Pte) Ltd (AIPL) Unsecured.75% 6 month KIBOR + 1.16 Term Finance 8.2013 2012 . N.476 2. Faysal Bank Limited 22.5 USD 500 PKR 2009 .Bahrain National Bank of Pakistan .60% 3 month KIBOR +2.2014 20 Half-yearly 30 Monthly 36 Monthly Bullet 24 Monthly 24 Monthly 24 Monthly 19 Quarterly 36 Fortnightly 5.821 1.783 (20.10 22.808 Current maturity shown under current liabilities 139 .50% 1 month LIBOR + 5.9 to Loan 22.2013 1.5 & Demand 22.25% & 1 month SIBOR + 5.A.85% 1 month LIBOR + 5.667.14 75 USD 56.309.979.941 7.600 259.50% 1 month LIBOR +5.34 22.282.405 186.197.6 & Demand 22.570 2.Holding Company Long-term loan .120.2013 Monthly - 8.2 Demand Finance Islamic Finance Term Finance Syndicate Finance 82 USD 75 USD & 91.17 Finance 22.122.000.867 Euro 2011-2014 2011-2014 2004-2017 Variable Variable Variable 1 month LIBOR + 5.098.2012 2011 .7 Demand Finance Royal Bank of Scotland .15% 7.1 22.131.15 Loan 0.Bahrain 22.288) 44.287 8.795.903.9 to Mezzanine 22.951.317.844 - 22.000.17 Finance 22.120.958 8.321 3.10 Finance 22.2017 2011 .924 4.3 22.2012 2010 . LONG-TERM FINANCING Financier Note Type of facility Facility amount (million) Repayment period Number of installments / mode Mark-up 2012 2011 Secured Holding Company Citibank.733 1.107 5.5% ----------.096 (11.2020 16 Half-yearly 10% fixed 8.994.000 48.124.609.952.17 Finance 22.000 PKR 2011 .75 USD 2006 .421.413 3.783 6.75% Note 22.000.783.000 55.11 to Loan 22.4 1 month LIBOR +5.28% fixed 3 month LIBOR + 4.85% 3 months EURIBOR + 1.Bahrain National Bank of Pakistan .371 22.825 AED 2.A.992 22.000 10.633.423 22. N.000 PKR 120 USD 70 USD 30 USD 40 USD & 75 SAR 2006 .000.484 2.

500.000 and Euro 16. the finance was renegotiated for additional three years at following mark-up rates: - - NBP .40% per annum. expires on November 15.22.660 million.325 %. amongst other things.Bahrain.4 22.5 22. The cost of the interest rate cap was US$ 186. Interest amounting to Rs 138.9 The finance is secured against all the present and future receivables of the Holding company generated through sale of tickets in United Arab Emirates and United States of America. aggregating to US$ 131. 2012 was paid by the Holding company subsequent to the year end on February 21. The finance is secured against all the present and future receivables generated from the sale of tickets in United Kingdom and Kingdom of Saudi Arabia. 2014. 22. The loan amount of Euro 12.60%.353. The first instalment of principal is due in June 2013. 22.85% for 2011).000. The Holding company has entered into an arrangement with the bank to finance 15% of the purchase price of two B 777-300 aircraft acquired from Boeing Company.25% The payment of full amount was due subsequent to year end on January 16.2 22. 2013. This interest rate cap agreement.6 22. The following are the participating banks: - - National Bank of Pakistan (NBP) . The finance is secured by GoP Guarantee. and HBL . 2017 and carry interest at a variable rate indexed on three month EURIBOR plus 1. All loans shall mature on November 9. and European Credit Agencies / GoP Guarantee.8 22. 2011.000.000 and US$ 56.500. 2011. 2004 for renovation works whereas loan amount of Euro 16. On November 9. with an aggregate notional amount of US$ 131.500.000. Initially it was carrying mark-up at the rate of 3 months LIBOR + 1.3 22.120.85% for 2012 and 5. which has not been made.000. The above loans shall mature on May 13. RHC entered into a loan agreement and two mezzanine loan agreements amounting to US$ 75. 2014. The finance is secured by way of 1st Pari Passu charge over the Holding company’s receivables amounting to Rs 666. 22.267. The finance is secured against all the present and future receivables generated from the sale of tickets in United Kingdom.1 The finance is secured by way of: - - Mortgage over each of the seven ATR aircraft purchased.3 months LIBOR + 3.e.353 was refinanced on March 20. which caps the variable rate debt at a rate of 4.7 22. RHC’s property and equipment and require payments of interest at the annual rate of 1 month LIBOR plus a spread as defined in the agreement (5. The finance is secured by way of GoP guarantee.10 140 . i. This finance is secured by way of GoP Guarantee. RHC entered into an interest rate cap agreement on its loan with the intent to manage interest rate exposure. The Holding company is in the process of renewing this loan. and Habib Bank Limited (HBL). These loans are secured by. November 9.000 obtained at that date.15%.000 was obtained on March 8. 2013.000.832 million due on November 15. On January 15. On the same date.267. The proceeds of these loans were primarily used to settle the then outstanding loans.3 months LIBOR + 3. 2008 with an additional loan of Euro 600. The refinanced loan was initially obtained to partially finance the acquisition of Scribe Gestion and Canadian National France.11 This includes original loan amounts of Euro 12.000 respectively. 2010.

The overdue principal and mark-up as atpaid December 31.2 GoP Guarantee 2012 .760 (8.e.. Abacus shall not be entitled to declare any dividend.12 The loans loans stated in note 22.353 for plus costs.16 The Holding company has not paid any instalment since the due date of first instalment. 22.394. MFSA entered into this contract with a large financial institution and considers the risk of non-performance to be remote.000 plusEuro 10% 12.15 22. The loan is repayable in monthly repaid.733) 4. the however the Holding default company was rectified before year end. The cost expire on May 13.867.789. The cost of interest rate cap The cost ofon interest rate cap was Euro 151.85% 6 month KIBOR +1.14 with the intent of year managing its exposure to interest rate risk. entered into this contract with a large financial institution and considers was Euroof 151.000.11 This includes original loan amounts of Euro 12.027 19.e.062.13 22. overdue The Holding company has not any instalment sinceis the due date of million first instalment. 2. for pooled-receivables guarantees for rental policies relation to building loss of earnings and damage to properties) also been granted.806. i. with the same notional amount covered by the loan shall the loan shall expire on May 13.000. 23.072.867.000 given by AIPL.5 million and Rs.789. There is a first ranking pledge of is MFSA’s Commerce’ for a total amount of Euro 12.800. 2012 Rs.806. the has not paidthe some installments of principal and/or mark-up of these financings on the due dates. There a first goodwill ranking ‘Fonds pledgede of 10% for associated costs and Euro 12.14 22. This represents balance amount of interest free loan amounting to US$ 750.589.867. Further during the year 2008. This rate caps cap agreement. 2011. The cost of interest rate cap was of interest rate cap was Euro 160. bank-factoring guarantees rental of all or partbank-factoring of the building and general insurance costs.353 22. MFSA had entered into another interest rate cap agreement the loan amount of Euro 16.17 dates. with the same notional amount covered by managing its exposure to interest rate risk. During the year 2007.11 above are secured by mortgage on the building at 1 rue Scribe amounting to Euro The stated in note 22.000 obtained at that date.107) 10. 2008 with an additional loan of Euro 600.267. until the loan is fully This represents balance amount of interest free loan amounting to US$ 750. MFSA had entered into another interest rate cap agreement for the loan amount of Euro 16. MFSA entered into this contract withentered a large financial the risk of non-performance to be remote.000.000 associated costs a related third ranking pledge ofcosts MFSA’s goodwill MFSA’s goodwill ‘Fonds de Commerce’ for a total amount of Euro plus and 10% to associated and a third ‘Fonds de Commerce’ for a goodwill total amount of Euro 16. 2017 and effectively caps the MFSA variable rate debt at a maximum rate of 5% per annum..925.000 given by AIPL.267. The loan is repayable in monthly installments commenced from October 2006. The above loans shall mature on May 13.760 Term finance certificates 23.195. October 23. 2017 and carry interest at a variable rate indexed on three month EURIBOR plus 1. 1. 2017 and effectively caps the variable rate debt at a maximum rate of 5% per annum. TERM FINANCE AND SUKUK CERTIFICATES Note Security Repayment period 2009.000.867.353 plus 16. 22. 2. During year. 2017 and effectively caps the variable rate debt at a maximum rate of 5% per annum. mark-up at December 31.1 GoP Guarantee 6 month KIBOR +0.800.2014 Number of installments 10 half yearly Mark-up 2012 2011 ------------Rupees in '000-----------12.15 22. MFSA into thisinstitution contract and withconsiders a large financial institution and considers the risk of Euro 160.16 22.000 19. installments commenced from October 2006.000. Further.000.13 During the year 2007.062.5 and Rs. with the same amount covered by the loan covered by the loan expire May rate 13.15%.760 12.267.267. Further.653 141 . MFSA had entered into an interest rate cap agreement for the loan amount of Euro 12. The Banks hold pledge on ranking pledge of MFSA’s ‘Fonds de Commerce’ a 10% total related amountto ofassociated Euro 16. however the default was rectified before the year end. shall expire May 13.055 million respectively. non-performance to be remote.000 with the 22.000 and Euro 16.2014 6 half yearly 6.000 6. This interest rate capfor agreement.000 was obtained on March 8. During the year.12 22. the risk non-performance to be remote. 2004 for renovation works whereas loan amount of Euro 16.000 for associated costs. Abacus shall not be entitled to declare any dividend. with the same notional with amount Further during the 2008.760 Less: current maturity 23.353 plus 10% for associated costs and plus 10% for associated costs.452.055 million respectively. 2017 andinterest effectively the variable rate debt at notional a maximum rate of 5% per annum.75% Sukuk certificates 23. The overdueThe principal and principalas amount is included in current maturity. of all or(in part of the and general insurance policies have (in relation to loss of earnings and damage to properties) have also been granted.664. The Banks also hold apooled-receivables pledge on MFSA’s cash account.072. The overdue principal amount is included in current maturity.353 plus 10% also related toaassociated MFSA’s cash account.000 with the intent of intent of managing its exposure to interest rate risk. until the loan is fully repaid.000 plus 10% related to 12. 22. This interest rate cap agreement.589.000.000. the Holding company has not paid some installments of principal and/or mark-up of these financings on the due 23.11 above are secured by mortgage on the building located at 1located rue Scribe amounting to Euro 16. This interest rate cap agreement.3 (15.353 the intent of managing its shall exposure to on interest risk.353.36 22. 2011.353 was refinanced on March 20.17 22. 1. MFSA had entered into an interest rate cap agreement for the loan amount of Euro 12. October 23. The refinanced loan was initially obtained to partially finance the acquisition of Scribe Gestion and Canadian National France. 2012 is Rs. i.452. The loan amount of Euro 12.

Management applied for restructuring of TFCs prior to the due date of first of the TFC investors has not notified any event of default to the Holding company.2 24. 142 . 23.060.aircraft fleet A-310-300 B-777 -200 ER B-777 -200 LR B-777 -300 ER Present value of minimum lease payments on equipment Less: current maturity 24.922 47. The delivery dates were between July 24 to 27. The overdue principal amount as at December 31.440 million due on various dates until December 31. The transaction has resulted in net gain of Rs 1.557 4.354 62.802 315.3 24.252 56.957 2.849.544 4.570 2012 Finance cost 24. revised The proposal is with the assistance of theof Ministry ofCertificates Finance.307. 2012.2) into a new term finance Committee certificates for a period of decided 6 years with 2 years grace period on the terms andfinance conditions to be approved various banks alongwith restructuring certain short-term borrowings (refer note 30.580.632.244 47. The remaining balance of the maintenance reserve will be available to the Holding company as a credit for future purchases from the lessor and will bear annual interest at LIBID rate. the Economic Coordination Committee (ECC) redemption the Trustee on behalf thefinance TFC investors has not notified any event ofrestructuring default to the Holding company.338.168 million). During the year.289 28.1 The Holding company has not made payments of principal redemptions aggregating Rs 6.1. Thewith approval of revised proposal is currently from theapproval Ministry of overdue principal amount is included in current maturity.195) 38. which has been recorded as other income (refer note 37).752 11.580.37 23.153.741.497 51.244. note 23.546 12. 2012.570 (9.397 39. The Sukuk investors were requested to re-profile the principal repayment schedule December 31. 24.1.524 million. i.266. the date at which the title of relevant aircraft was transferred to the Holding company and a bill of sale was executed by the lessor.637 13.211.527 75.040 26. 2012 is included in current maturity.953 47.787.1).e.742 2. the Holding company has also signed lease amendment and termination agreement by virtue of which the original lease agreement of A310-300 aircraft has been terminated upon delivery of aircraft and the lease liability has been extinguished. 2012 as per repayment schedule. The overdue principal amount at December 2012 is included in current for a period of as 6 years with 231.206 11. 23.726. This includes current maturity of the TFC and Sukuk certificates related to the principal redemption including overdue installments as disclosed in as disclosed in note 23.421.320. Economic Coordination (ECC) has / approved the restructuring of term certificates from (refer note the 30.305.1 and 23. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE Present value of minimum lease payments . 2012.266. years grace period on thematurity. The ofDefence. the Holding company entered into an agreement with the lessor for early purchase of six A310-300 leased aircraft at a price of US$ 5.275.943 27.070.421.667 million which became on various dates until various dates until December 31.4 24. The overdue principal amount is included in current maturity.457 11.397.2. currently awaited from the Ministry of Defence.5 9.002 36.752 (9. Further.2) into term finance certificates by Ministry of Finance.001.071.937 35.002) 47.652.565 2012 2011 ---------.508 2.667 milliondue which became due on The company has has not made payments of principal redemption amount of Rs 2.1 23.1 The amount of future payments and the year in which they will become due are: Minimum lease payments Not later than one year Later than one year and not later than five years Later than five years 10. terms and conditions to be approved by Ministry of Finance.275. In accordance with the agreement.578. Presently.3 This includes current maturity of the TFC and Sukuk certificates related to the principal redemption including overdue installments Note 24.909.195 33.404 11.2 23. Management applied for restructuring of TFCs prior to the due date of first redemption and the Trustee on behalf until December 31.281 56.393.397.327.148.351. finalisation of of the restructuring process with a consortium of TFC investors is a at new an advanced stage.Rupees in '000 ----------- 24.440 million due on various dates 2012 as per repayment schedule.337.164 56.606.190 6.070.1 and 23. The Holding company has not made payments of principal redemptions aggregating Rs 6.387 9.813 9.568 2011 Present value of Minimum Finance cost Present value of minimum lease lease minimum lease payments payments payments ----------------------------------------------Rupees in '000---------------------------------------------1.604 5.014.2 TheHolding Holding company not made payments of principal redemption amount of Rs 2. During has decided / and approved the restructuring of of term certificates from various banks alongwith of certain short-term borrowings the year.268. which has been adjusted against the maintenance reserve (refer note 10.028 million per aircraft (aggregating to US$ 30.1 24.2. finalisation of the restructuring process with a consortium of TFC investors is at an advanced stage.894.3 23.097.395 3.466. the transaction for relevant aircraft was executed on the delivery date.299. The Sukuk investors were requested to re-profile the principal repayment schedule alongwith other terms of Sukuk Certificates alongwith other terms Sukuk the assistance of the Ministry of awaited Finance.2 During the year. Presently.131 5.

In accordance with the agreement.spare engine and propulsor Security deposits (Rupees in '000) Contingent rent (Rupees in '000) 2012 4. Further.081 (36.3.0.1 24.two aircraft Discount rate .0.375 (638. 2012.65% Three month LIBOR 144 months 96 months 853.25% Three month LIBOR .spare engine Security deposits (Rupees in '000) Contingent rent (Rupees in '000) 24. the transaction for relevant aircraft was executed on the delivery date. a special purpose entity incorporated in Cayman Islands. The guaranteed lender is Royal Bank of Scotland. Netherlands.3. The remaining balance of the maintenance reserve will be available to the Holding company as a credit for future purchases from the lessor and will bear annual interest at LIBID rate.000 (138.04% 1. a special purpose entity incorporated in Cayman Islands. 39 143 . 24. one spare engine and one propulsor.25% Three month LIBOR . The guaranteed lender is Citibank N.2).aircraft Lease period .02% 144 months 96 months 688.159) The Holding company has an option to acquire the ownership of the aircraft and engines mentioned in notes 24. hence the related security deposit was received during the year and the assets were transferred from leased assets to owned assets (notes 5. the Holding company arranged an Ex-Im Bank guaranteed financing of US$ 472 million to acquire three Boeing B 777-300 ER aircraft and one engine from White Crescent Limited.two aircraft Discount rate . The guaranteed lender is Citibank N.0. at the end of lease term.12% 144 months 96 months 1. The salient features of the lease are as follows: Note Discount rate .496.335) 2011 Three month LIBOR .1 24. The salient features of the lease are as under: 2012 Discount rate .775) 2011 5.aircrafts Lease period .0.924) 2011 4.one aircraft Discount rate .524 million.aircraft Lease period .2 Limited.65% Three month LIBOR 144 months 96 months 818.1).e.314) 24.02% 144 months 96 months 744. from Taxila Limited. the Holding company arranged an Ex-Im Bank guaranteed financing of US$ 266 million to acquire two Boeing B 777-200 LR aircraft and one propulsor from Taxila . The salient features of the lease are as follows: 2012 Discount rate . During the year 2006. The delivery dates were between July 24 to 27.3 In 2004. the date at which the title of relevant aircraft was transferred to the Holding company and a bill of sale was executed by the lessor.059) During the year 2006. the Holding company has also signed lease amendment and termination agreement by virtue of which the original lease agreement of A310-300 aircraft has been terminated upon delivery of aircraft and the lease liability has been extinguished.12% 144 months 96 months 1.3 to 24. the Holding company arranged an Ex-Im Bank guaranteed financing of US$ 345 million to acquire three Boeing 777-200 ER aircraft.6 5.3.1 24.spare engine Lease period .292 (23. i.307.383.one aircraft and propulsor Lease period . The transaction has resulted in net gain of Rs 1.1 and 5.A.propulsor Security deposits (Rupees in '000) Contingent rent (Rupees in '000) 24.04% 1.5 Three month LIBOR . a special purpose entity incorporated in Amsterdam.A.5.608 (702.reserve (refer note 10.4 The lease term of spare engine and propulsor expired in January 2012 and April 2012 respectively. which has been recorded as other income (refer note 37).923 (182.aircraft and propulsor Lease period .

189 2. Skyrooms (Private) Limited Abacus Distribution Systems Pakistan (Private) Limited .008 (232.3 2012 2011 -------------.486 4.959.974.965.965.142 7.109 19.A.219 12.740 348.987) (21.290 141 15.219 2. LONG-TERM DEPOSITS Deposits from agents Retention money Others 26.314.A.440.V.908 9.455 21.4 11. Deferred tax credit: Revaluation of hotel property Deferred tax debits: Excess of tax over book depreciation Allowance for doubtful debts Accrued vacation Net deferred tax liability 26.337 3.585 5.584) 10.337) (106.3 Skyrooms (Private) Limited Deferred tax credits: Accelerated tax depreciation Lease land acquisition premium Deferred tax debits: Provision against trade debts Provision for gratuity 26.V.668) (226.100 (732) (19.584) 93 18.921 2.613) (353.121) (117.Note 25.251 (848) (20.accelerated depreciation The Holding company The components of the net deferred tax liability are as follows: 26.575.561.767 182.256 22.Rupees in '000 -------------185.250 262.810) 2.817 10.2 26.078) (19.529 (16.1 Roosevelt Hotel Corporation N.2 Minhal France S.221. Deferred tax credits: Excess of book value over tax depreciation Revaluation of hotel property Provision for major repairs Deferred tax debit: Employees pension plan Net deferred tax liability 26.008 7.706 9.817) (14. DEFERRED TAXATION Roosevelt Hotel Corporation N.189 (2.767) 9.327) 5.189.374. Minhal France S.688 (100.221.900) 10.290 144 .546 (9.844 11.1 26.111) (9.921 5.571 26.835) (2.959.624 19.514.185.588 7.415 152 444.358.772 255 534.791.340) 7.358.

648.864) (1.208 25.883 4.855) (24.100 16.942) (24.571 1.648.5 Movement in temporary differences during the year Balance as at Recognised Translation Recognised Balance as at Recognised Translation Recognised in Balance as at January 1.208 (17.410) (5.464 774.991) 1.823 27.1 Post retirement medical benefits .154) 23.718.844) (591) (368.954) 212.678.387 1.003 1.056 1. plant and equipment Deferred tax debits: Unused tax losses Provisions for liabilities and to write down other assets 22.006.297 88.159.879) 15.825 (26.164 11.492 25.643.912.898.344 (1.912.617 (363.452) (24.532 292 620.580.665) (6.392) (23.110 21.489) (23.4.467 million (2011: Rs.077.777.556.522) (991.671 65.SRL 27.864) 2012 2011 --------.206.344 11.337 14.40 26.230.025 7.3 2012 2011 ------------Rupees in '000-----------5.643.678.189.508 9.455 1.777.492 (19.491.883 4.321.116) (4.10).671 (514.293 38.600 13.270.904 (152.690.256 19.706 25.117) 18.368.212.588 42.315 59.864 (19.381.692) (391.314. 26.812.707) 4.025 (220.077.898.847 19. 43.492 774.648.107 1.264.665) (6.908.951) 15.522 (283.777.648. 2011 loss adjustment 2011 loss adjustments 2012 s ---------------------------------------------------------------------------------------------Rupees in '000 ---------------------------------------------------------------------------------------Deferred tax credits: Accelerated tax depreciation Surplus on revaluation of operating fixed assets Amortisation of leasehold land acquisition premium Provision for major repairs Deferred tax debits: Unused tax losses Provisions for liabilities and to write down other assets (19.519) 652.047 1.076 548.617 145 .883 7. DEFERRED LIABILITIES Post retirement medical benefits Pension obligation Unfunded staff retirement gratuity .2 27.Holding company Liability recognised in the consolidated balance sheet Present value of defined benefit obligation Movement in liability during the year Balance at the beginning of the year Expense recognised Payments made during the year Balance at the end of the year Expense recognised in the consolidated profit and loss account Current service cost Interest cost Net actuarial loss recognised 5.663 23.297 3.398.150 774. deferred tax asset of Rs.146) (678.129) (10.386) (1.913.458.898.688 1.686) (5.832 1.297 1.1 In accordance with the accounting policy of the Holding company (note 4.991) (10.228.253.487) (4.049. in profit and and other equity December 31.858 473.387.032 24.491.208 1.892 54.961 13.881.553 million) has not been recognised in these consolidated financial statements due to uncertainty in availability of sufficient future taxable profits.976.500.154 (17.085) 5.009) (5.4 Holding company Deferred tax credits: Accelerated tax depreciation Surplus on revaluation of property.491 998.233.589 2.294.589) (214.683.159 4.568.686) 614.239.525.419.652 782.391. in profit and and other in equity December 31.Rupees in '000 -------- 26.024) 54.227.907 1.326 565.329.568.321.009) (5.1 27.697 27.585 39. 35.297 4.

418 355.995) (434.165 3.786 (1.279.018.329 9.402) 61.279.641.491 (14.00% Actual return on plan assets 193.174 2.388 146.640 1.624.064 123.096.290 14.186.435 17.17% 100.81% 61.289) 929.525.472 355.809 (1.975 202.954.932 2.488) 69.825 14.681) (358.698 15.568 20.064) 4.473 1.687) 257.378 (3.995 (64.000 (1.00% 1.775.073.780.635 (228.849.58% 62.768) 1.00% 1.669.678 1.849.953.00% 12.525.892 1.352 (97.706 326.809 569.479 37.863 1.955 (943.789.00% 38.029.315) (16.686 (1.207 116.076 (223.388 (449.958) 302.640 1.00% 174.529 13.433 20.064.155 439.525.923.980 (1.315 17.529 (10.00% 37.342) 12.421) 125.74% 100.307 0.733 569.250.Rupees in '000 ---------------------------------------------------------------------------------------Liability / (Asset) recognised Present value of defined benefit obligation Fair value of plan assets 2.85% 87.904) 680.00% 39.624.809 40.840) 1.028) 1.142 1.421 1.991 238.323 0.707.000 4.073.net 40.383) 7.365 (12.986.530.2 Pension obligation .315 2.923.289 79.937 37.018.786) 4.244.051 (1.819 67.988 1.789.215.861.261 10.19% 100.453 (1.488 3.907 67.786 (943.840 97.796 Movement in the defined benefit obligation Obligation as at January 1 Service cost Interest cost Benefits paid Actuarial loss Obligation as at December 31 Movement in fair value of plan assets Fair value as at January 1 Expected return on plan assets Employer contributions Benefits paid Actuarial (loss) / gain Fair value as at December 31 Movement in liability / (asset) during the year Opening liability / (asset) Expense recognised Employer contributions Closing liability / (asset) Expense recognised in profit and loss account Current service cost Interest cost Expected return on plan assets Actuarial loss / (gain) recognised .294) (3.520 1.162.955 (1.854 18.980) 4.907 67.607 (14.105 (123.388 629.294) 394.473 1.00% 39.958) (12.062 79.200 3.892 146 .352 125.787.483 1.378 6.186.199 (164.01% 12.034 1.123.367) (434.45% 44.155 (79.273 1.064.935.485) 108.861.315) 52.393 14.165) (44.995) (449.25% 91.461 (37.923.307) 996.714.213.064) (449.980 (1.568 2.049.714.479.940.904) (249.42% 100.01% 8.558.Holding company The details of three different categories of plans are as follows: PALPA 2012 2011 2012 FENA 2011 MAIN PENSION 2012 2011 2012 TOTAL 2011 ---------------------------------------------------------------------------------------.904.556 (10.403 (97.485) 2.953.15% 100.479.272 (1.213.62% 87.491 4.096.064) 18.745.698 (13.434 1.568 4.479.825) 314.55% 100.199 1.980) 7.368.064) 17.062) 1.50% 60.545.420.341.975 202.991 238.940.445) 58.383 228.989 629.483 (1.290) 90.009 2.064 10.575 13.775) (86.581.865) 1.986.830 146.461 (116.635 (114.421 223.453 (1.797 0.432 6.804 17.000 14.904.403 400.279 97.904) 326.00% 106.368.200 14.307) (203.681) 569.707.37% 100.556 394.092.978.051 (1.200.365 1.469 0.409) (86.953.858 2.978.775.532.41 27.279) 1.787.849 1.146 1.105 (64.50% 100.434 1.018.607 The plan assets comprise of: Equity instruments Debt instruments Others including cash and cash equivalents 0.00% 1.833 0.456) 10.545.995 (37.83% 60.908.00% 1.473) 4.687 1.200.076 (164.00% 216.786) 7.986.532.244.861.383 12.932 2.821) 1.581.073.199) 257.272 (1.623 0.479.988) 4.418 (79.162.768) 155.365 439.796 (186.329) 7.556 17.479.819 67.940.849.00% 55.892 2.445) 13.402) (29.954.988 12.034 1.686 518.415 0.383 400.250.199 (114.199) 125.092.367 877.

222 million and Rs.2)% (4)% 6% Actuarial valuations of pension funds.479. The expected amount of Pension fund is the amount which the Holding company has to contribute for the next one year.045 11.200.2.50% 2011 12. 737.473) 4.8)% 1.387 28.2. 2012.743.530.297 16.681 million (2011: Rs 1.00% 10.4 27.540) 1. post retirement medical benefit scheme and compensated absences (Note 28) were carried out at December 31.383 (12.365 (12.288.581. 2012 2011 -----------------Number--------------13.2.206.000 10. therefore detailed disclosures have not been presented.648.50% 3.425.383 million (2011: Rs 797. The scheme provides for post employee benefits for all permanent employees who complete qualifying period of five years of service with the company and are entitled to one months' last drawn basic salary for each completed year of service.50% 10.000) 6.3 The fair value of plan assets of pension fund includes investment in the Holding company's shares.50% 3.3% 16% - (0.2.684.954 27.60% (0.00% 11. 2013 amounts to Rs 1.698 (13.883 17.520 13.00% 12.00% 11.690. Rs 587.000 (11.50% 10.777.1 Number of employees covered by the various scheme are as follows: Pension scheme Post retirement medical benefit scheme 27.2% 1.70% 3.315 17. The total expense relating to Holding company's post retirement medical benefit and pension obligation has been allocated to cost of services.42 Historical Information 2012 2011 2010 2009 2008 --------------------------------------------------Rupees in '000-------------------------------------------------Pension Funds Present value of defined benefit obligation Fair value of plan assets Deficit / (surplus) Experience adjustments arising on plan liabilities Experience adjustments arising on plan assets Medical Scheme Present value of defined benefit obligation Experience adjustments arising on plan liabilities 5.987 million) and Rs 1.790.770 million (2011: Rs 11.226 14. distribution expenses and administrative expenses in the amount of Rs 2.368.282 39.213.383) 7.50% Expected rate of return on plan assets is based on the return earned on the market expectations and depends upon the asset portfolio of the Funds. The valuations have been carried out using Projected Unit Credit method and the following significant financial assumptions have been used: 2012 Valuation discount rate Salary increase rate Pension indexation rate Medical inflation rate Expected rate of return on plan assets 11.675.068.4)% 20. The expense recognised in consolidated profit and loss account amounts to Rs 11. The expected pension and medical expense for the next one year from January 1.458 million).489 million respectively. amounting to Rs 2.863) 2.4% 4.724 16.117 million).437.776 million) 27.524 million) respectively.000 (5.585 (12.8% 3.291.287 million (2011: Rs 1.953.892 15.0% 5.3 147 .4% 2.294.2 27.799 16.01 million (2011: Rs 793.525. Since the amount is not considered material to these consolidated financial statements.669.

535 2. are valued on aggregate cost of redeemed points.390.3 28. ACCRUED INTEREST Mark-up / profit payable on: . 28.517 954.1.394 3.Sukuk certificates .4 28.000 are valued on aggregate cost of points.650 384.005 million).5% (2011: - accumulated points rate above 11.677 45.417 million (2011: Rs 161.689 186.978.507 683.1 Number of employees covered by the compensated absences are 16.2 for compensated absences are disclosed in note 27.306 2011 ----------.610.547 2.secured Running finance under mark-up arrangements 30.134 15.027 148 .2 expenses The total in expense relating to compensated absences has been allocated of services. TRADE AND OTHER PAYABLES Trade creditors Goods Services Airport related charges Others Other liabilities Accrued liabilities Advance against transportation (unearned revenue) Obligation for compensated absences .619.010.1 30.177 15.407 515.494 4.431.067 million) Rs 99.793 347. ticket inflation and discount rate at the rate of 11.727.929 156.188 million (2011: Rsamount 192.947) 4.796. Significant assumptions include: 28.094 5. and This amount payable to Minhal Incorporated by PIAIL. The amount is payable to Pakistan International Airlines Corporation Provident Fund and carries mark-up based on the discount rate .Long-term financing .902 332.307. Significant assumptions The liability for frequent flyer programme is based on the valuation The amount is payable to Pakistan International Airlines Corporation Provident Fund and carries mark-up based on the discount rate announced by the State Bank of Pakistan.665 713.432 447 321.535 1.190.2 The liability for frequent flyer programme is based on the valuation carried out by an independent professional valuer.740 468 326.955 169.Rupees in '000 ----------6.067 million) and Rs 99.000 can be used for purchase of tickets.954). include: represents expiry of unavailed points after three years.412.594 7. to Rscost 81. The assumptions used to determine the 28.289 4. Rs 81.Holding company Liability recognised in the balance sheet Balance at the beginning of the year Expense recognised during the year Benefits paid during the year 3.144 3.824 4. and announced by the State Bank of Pakistan.5%).2 28.349.541 6.801.407 1.506.565.1. distribution expenses and administrative 28.accumulated points above 11.1 28.506.506.000 be used for 12.731 28.102.557.417 million (2011: Rs 161.555. This represents amount payable to Minhal Incorporated by PIAIL.Holding company Unredeemed frequent flyer liabilities Advance from customers Amount due to associated undertaking Advances and deposits Earnest money Payable to Holding company's employees' provident fund Unclaimed dividend . Points lower than 11. ticket inflation and discount at the rate can of 11.848 164.1 obligation Number offor employees covered by the compensated are 16.036 respectively.151 6.1 Obligation for compensated absences .726 8.062.738.5% (2011: 12.1.Term finance certificates .728 614.476 4.672 4.125 7.2 The total expense relating to compensated absences has been allocated to cost of services.033 1. .2 28. expenses in the of million) Rs 334.010.3 28.835 625. purchase of tickets.1.953 1.483 152.Short-term borrowings .226 (2011: 16.937 4.981 55. SHORT-TERM BORROWINGS Short-term loans .075 (10.354.836 25.188 million (2011: Rs 192.025 30.076 2.508 1.442 2.2 56.109 (18.336.706 61.530 21.390 5.303.493.331 177.832.784.964 8.743 6.283 244.865.Provident fund Note 2012 2011 ------------Rupees in '000----------3.4 29.317 314.5%).356 2.433 5.032.954).036 million) respectively.735) 3.4 28.expiry redeemed of unavailed points after three years.2 28.133.43 28.407 28.191 4. Points lower than 11.493 8.643.944.470 million (2011: Rs 679.118.preference shares Collection on behalf of others Customs and central excise duty Capital value tax Income tax deducted at source Sales tax payable Bed tax Payable to EOBI/SESSI Short-term deposits Others Note 2012 1.378.187. distribution expenses andand administrative the amount of Rs 334.226 (2011: 16.748 4.419 667.313.846 2.344 6.005 million).516 7.410.665.470 million (2011: Rs 679.887 24.961 62.683.000 44carried out by an independent professional valuer.923 46.3 28.903 3. The assumptions used to determine the obligation compensated absences are disclosedabsences in note 27.

125 4.2 30.000.000 3. lien and specific right to set-off over all receivables in connection with sales routed through collection account in NBP Airport Branch.000.000 - National Bank of Pakistan .500.667 million and lien / specific right to set-off over receivables in connection with sales routed through collection account in NBP Airport Branch.600. Karachi.000 - National Bank Of Pakistan 3.1 Short-term loans .000 - National Bank Of Pakistan 2.000 KASB Bank Limited National Bank of Pakistan .600.360.000 PKR 1.secured Financier From Banking Companies Askari Bank Limited KASB Bank Limited Habib Bank Limited Habib Bank Limited Habib Bank Limited Habib Bank Limited Habib Allied International Bank Limited . assignments of ticket sales collection for UK sector through IATA. Karachi.1. Karachi. lien and specific right to set-off over all receivables in connection with sales routed through collection account in NBP Airport Branch.000 - National Bank Of Pakistan 2.1.511 1.000 500.000 PKR 15-Mar-13 2.000 3. lien and specific right to set-off over all receivables in connection with sales routed through collection account in NBP Airport Branch.500.000.372.000 2.000 PKR 4 USD 5 USD 2.000 PKR Expiry date 2012 2011 ------------Rupees in '000---------- 31-Dec-12 30-Sep-13 8-Sep-13 16-Aug-13 12-Dec-13 30-Dec-13 02-Apr-13 31-Dec-12 13-Mar-13 1. lien / specific right to set-off over all receivables in connection with sales routed through collection account in NBP Airport Branch.1.2 30.360 PKR 30-Sep-13 30-Jan-13 24-May-13 1.2 30. lien / specific right to set-off over all receivables in connection with sales routed through collection account in NBP Airport Branch. stocks and spares amounting to PKR 2.1. lien and specific right to set-off over all receivables in connection with sales routed through collection account in NBP Airport Branch.2 30. lien and specific right to set-off over all receivables in connection with sales routed through collection account in NBP Airport Branch.000.000. ranking charge over movable current and fixed assets amounting to PKR 4.000. GoP Guarantee.000 405.500. ranking hypothecation charge over current and fixed assets amounting to PKR 2.000 PKR 13-Aug-13 3. Karachi GoP Guarantee Lien over Saudi Arabia and UK collection and receivables.667 million inclusive of 25% margin.000.2 GoP Guarantee GoP Guarantee GoP Guarantee GoP Guarantee GoP Guarantee GoP Guarantee EURO receivables Hypothecation of entire receivables. ranking hypothecation charge over current and fixed assets amounting to PKR 2.2 30. Karachi.Bahrain 65 USD 27-Jun-13 6.000 1.000 PKR 25 USD 4. Sultanate of Oman and Bangladesh.000. GoP Guarantee. 30.000 1.London National Bank of Pakistan 30.000 PKR 1. Karachi.000 875.024. Lien over collection proceeds from Kingdom of Saudi Arabia. GoP Guarantee.2 30.000 million inclusive of 25% margin. GoP Guarantee.500 PKR 3-Oct-13 3.000 PKR 28-Jun-13 3.600 PKR 15-Jun-13 30-Sep-13 28-Oct-13 19-Aug-13 30-Dec-13 5. ranking hypothecation charge over current and fixed assets amounting to PKR 5.000.933 - National Bank Of Pakistan 20-Dec-13 5.000 - National Bank Of Pakistan 3. Karachi.800 million inclusive of 25% margin.000 2. GoP Guarantee.390.2 1.070 1.813 million inclusive of 25% margin.1.000 1.191 149 .1.000.000.319.500.1. ranking charge over current and fixed assets amounting to PKR 4.000 1.746 1.557.000 PKR 1.Bahrain National Bank Of Pakistan 1.667 million inclusive of 25% margin. lien and specific right to set-off over all receivables in connection with sales routed through collection account in NBP Airport Branch.2 5.667 million inclusive of 25% margin.680 National Bank of Pakistan 30. Karachi GoP Guarantee.000 PKR 13-Nov-13 5.45 30.600. book debts. GoP Guarantee.000 2. Karachi.3 GoP Guarantee.500 PKR 500 PKR 2.000 - National Bank Of Pakistan 5. Charge over assets to the extent of facility amount with 25% margin.500.000 National Bank of Pakistan National Bank of Pakistan 30.500 PKR 3.000 1.000.1.000 500.000 - Standard Chartered Bank 35 USD 5. lien / specific right to set-off over all receivables in connection with sales routed through collection account in NBP Airport Branch.000 809.880. ranking charge over movable current and fixed assets amounting to PKR 6.1.000 2. Karachi. Note Security Facility amount (million) 1. GoP Guarantee GoP Guarantee.2 30.667 million inclusive of 25% margin.1.600 PKR 2.000 PKR 28-Jun-13 2.000.950 56.600. ranking hypothecation charge over current and fixed assets amounting to PKR 4.000.1. ranking charge over movable current and fixed assets amounting to PKR 6.824 21.000 5.667 million inclusive of 25% margin. First prior security over collection and facility service reserve account.

150 .083 million).570 PKR 25 PKR 31-Jul-13 2. At present the finalisation of the restructuring process is at advanced stage (refer note 23.796.530 million (USD 2.036 2.25% (2011: 3. The borrowings in foreign currency carry mark-up of 2.1.1.0% to 2. Karachi. 30.220 Habib Bank Limited Hypothecation charge on all present and future spare parts.836 - 30. 2012.168 397. the Economic Coordination Committee (ECC) has approved the conversion of short-term loans amounting to Rs. irrevocable undertaking to route all collection in Mirpur. 30.1 The borrowings in PKR carry mark-up with a spread of 2.837 4.2 Running finance under mark-up arrangements Banks Security Facility amount (million) Unavaile d credit (million) Expiry date 2012 2011 Secured The Bank of Punjab Ranking charge on present and future stocks and book debts of Mirpur Azad Jammu Kashmir (AJK) for PKR 1.700 million into term finance certificate for a period of 6 years with 2 years grace period on the terms and conditions to be approved by the Ministry of Finance.768 National Bank of Pakistan 31-Jul-13 449.25% over 3 months LIBOR).009 Un-secured Habib American Bank Citibank N. Fixed rate borrowing carries mark-up at the rate of 3.750 United Bank Limited .410.London KASB Bank Limited EURO receivables 3 USD 155 PKR (2011: 400 PKR) 575 PKR - On Demand 292.257 First pari passu charge on certain specific receivables amounting to PKR 533.690 4. the overdue balances of principal amounts of these shortterm loans aggregate to Rs 202.85% to 2% over 1 month and 3 months KIBOR).2.25% to 5.017. AJK from BOP counter. 2012.168 Habib Allied International Bank Limited . lien and specific right to set-off over receivables in connection with sales routed through collection account in NBP Airport Branch.5 USD 3 USD 0.666 546.85% to 2% over 1 month and 3 months KIBOR (2011: spread of 0.1 The borrowings in PKR carry mark-up with a spread of 0.33 million First pari passu hypothecation charge of PKR 766.2. 20.827 269.667 million on all present and future current assets with a margin of 25%. Borrowings in USD comprise of fixed and variable rate borrowings.75% over 1 month LIBOR and 3 months LIBOR (2011: a spread of 2.25% per annum) whereas variable rate borrowings carry mark-up with a spread of 3.2 Unavailed credit represents the difference between the facility amount and the balance as per bank statement as at December 31.5% over 1 month and 3 months KIBOR (2011: 2. Hypothecation charge of PKR 3.A.000 million including 25% margin.1.3 The Holding company has not paid the balances of the short-term loans that became due during the year.5% over 1 month and 3 months KIBOR).0% to 2. 24 PKR - 30-Jun-13 146.991 256.5% over 1 month LIBOR and 4% over USD Prime Rate (2011: spread of 3% over 1 month LIBOR and 4% over USD Prime Rate). 30. 30. As at December 31.706 79.Karachi 2.761 572.8 USD - On Demand On Demand 66. accessories of aircraft assets and on domestic receivables 350 PKR - 9-Feb-13 460.2 During the year.30. - 1. 550 PKR 6 PKR 1-Jan-14 ------------Rupees in '000---------543.659 271.545.735 291.427 million on all present and future stocks and spares and assignment of receivables from Karachi and Lahore.1).

000 million (2011: Rs. 87. 1. 87. the Holding company has filed an application for rectification.025. Accordingly. For the months of January . the Commissioner Inland Revenue (Appeals) .804 million (2011: Rs. 79. the Holding company has received an order from CIR(A) deleting all penalties and default surcharges. which are pending adjudication. 2. 74 million and Rs. The Holding company has paid Rs. no provision has been made in these consolidated financial statements in this regard. The Holding company has paid an amount of Rs. 5. c) The tax department has also raised demands of Rs 2.270 million (2011: 7.065 million) and Rs 1. Management believes that the case will be decided in the favour of the Holding company. Rs.88 million.025.December 2008 before Federal Board of Revenue on which the decision is pending.110 million and Rs.679. 5. the Holding company has filed appeal against this at ATIR level and a rectification application with CIR(A) both of which are pending adjudication. 25 million) in this regard which is considered fully recoverable.270 million respectively through its orders in 2011.412 million) during the audit of the Holding company for the period 2007-2008. however.025.101 million (2011: Rs 1. 2. 5.058 million (2011: Rs 66. no provision has been made in these consolidated financial statements in respect of the subject orders / show cause notices.319. e) 151 . therefore. 566.91 million) during the audit of the Holding company for the periods 2004-2005 and 2005-2006. 12. incorrect apportionment of input tax and failure to collect FED on carriage of goods / mail of Pakistan Post. This case is currently under adjudication before Appellate Tribunal Inland Revenue (ATIR).679.319. 566. 38.969 million. 2. The Holding company has filed application for waiver of penalty for the months of November .877. The Holding company filed appeal at Commissioner Inland Revenue (Appeals) level.351 million). 6.31.91 million (2011: Rs. Management believes that the case will be decided in its favour. The Holding company and the department have filed appeal with the Tribunal. 6.648 million respectively.926 million (2011: Rs. Rs. These demands were raised on the issues of late payment of FED. partially against it and partially remanded back. 25 million (2011: Rs. Further. which was decided in favour of the department.CIR(A) has deleted the penalties of Rs.270 million) and Rs. 17. Management is confident that all the above appeals will be decided in favour of the Holding company. collection of FED at incorrect rate. The Holding company has filed an appeal before the Appellate Tribunal which is pending adjudication. 7.621 million) as FED and sales tax respectively along with penalty of Rs. Rs. Accordingly. for the months of January March 2010. which is still pending before ACIR. no provision has been made in these consolidated financial statements. The Holding company filed an appeal with the Collector of Customs.110 million (2011: Rs. Management believes that the case will be decided in its favour.065 million (2011: Rs 2. Rs.877.March 2010 and November 2010 .923. no provision has been made in these consolidated financial statements in this regard. In addition to this. A show cause notice was issued to the Holding company by the Collector of Customs demanding payment of Rs. 100 million (note 14) against the subject demand which is considered fully recoverable from the department.351 million (2011: Rs. 1 million (2011: Rs.804 million) and Rs. default surcharge and 5% penalty on the unpaid sales tax and FED were maintained.March 2010.205 million (2011: Rs. 1 million) and additional duty of Rs. the tax department has also levied default surcharge and 5% penalty on the unpaid sales tax and FED amounting to Rs.1 CONTINGENCIES AND COMMITMENTS Contingencies a) The tax department had raised demand of Rs. 5.110 million). These demands have been raised mainly on the issues of collection of FED at incorrect rate and incorrect apportionment of input tax. November 2010 . Management believes that the case will be decided in the favour of the Holding company. Accordingly. 2.412 million (2011: Rs 534. Sales Tax and Federal Excise (Appeals). 5. 17.205 million) and additional duty / default surcharge of Rs.679. The Holding company and the department both have filed appeals at the ATIR level which are pending adjudication. 277.058 million) and additional duty / default surcharge of Rs 534. 31. 1. Accordingly. which has been decided partially in its favour. b) The tax department has also raised demands of Rs.December 2008. 7.923.544 million) as Federal Excise Duty (FED) along with penalty of Rs.926 million) in respect of custom duties and other taxes levied on the import of simulator.000 million) on account of delayed payment of sales tax and FED for the months of November . January .005 million) on the contention that the Holding company had not collected FED on tickets provided to its employees either free of cost or at concessional rates. no provision has been made in these unconsolidated financial statements in this regard.621 million (2011: Rs.544 million (2011: Rs.January 2011 and April 2011 respectively. In respect to April 2011.101 million) as FED and Sales Tax respectively along with penalty of Rs 66. d) The tax department has levied penalties of Rs.005 million (2011: Rs. 277.January 2011. Currently.

d) Financial guarantee .282. According to the terms of the agreement.129 million (2011: Rs. 274. 531. Accordingly.Minhal France S. no provision has been made in these consolidated financial statements against these claims amounting to Rs. 10 million on account of unreasonable increase in Hajj fare during the year 2008 as compared to Hajj season 2007. which is pending adjudication. The Holding company filed an application to the FBR at Alternate Dispute Resolution Committee (ADRC) for review of the demands. breach of contractual rights and obligations. 4. f) 152 . 130. Management believes that the case will be decided in its favour. Accordingly. no provision has been made in these consolidated financial statements. 95.413 million) equivalent to Rs.904 million (2011: USD 1.172 million) as a result of the decision of ADRC. 27. 5.824 million (2011: Rs.700 million).807 million) e) The Holding company has entered into an agreement with a vendor for supply of spare parts.259 million (2011: Rs 1. 226. chemicals and repair / overhaul of rotables for a period of 5 years. The Holding company has filed appeals simultaneously in Lahore High Court and the Supreme Court of Pakistan. The total demand raised by the custom authorities was reduced to Rs. 226. the Holding company has paid an amount of Rs.326 million (2011: Rs. Management is of the view that these cases have no sound legal footing and it does not expect these contingencies to materialise. Management believes that both appeals will be decided in its favour.172 million (2011: Rs. The total amount of refund estimated by the Holding company is Rs. Contingencies relating to income tax matters are disclosed in note 39. the remaining commitments of which aggregate to USD 1. 138.f) The custom authorities raised demands aggregating Rs. in the opinion of management based upon available insurance coverage and the assessment of the merits of such actions by legal counsel. Claims against the Holding company not acknowledged as debt amount to Rs 1.172 million. 508.1. Certain lawsuits which arose in the normal course of business are pending against RHC. no provision has been made in these consolidated financial statements in this regard. j) k) l) 31.690. Against the amount of Rs. 402. no provision has been made in these consolidated financial statements in this regard.473 million (2011: Rs. h) Various ex-employees of the Holding company have lodged claims against the Holding company for their dues specifically relating to their reinstatements.184 million).609 million) based on catalogue prices. b) Outstanding letters of credit amounted to Rs.824 million) on re-import of aircraft engines after repair. 417 million.2 Commitments a) Commitments for capital expenditure amounted to Rs. The eventual disposition of these legal actions.372 million (2011: Rs. materials. i) The Holding company is contesting several litigations mainly relating to suits filed against it for unlawful termination of contracts.245 million and filed a petition in the High Court of Sindh. will not have a material adverse effect on the financial position of RHC. c) Outstanding letters of guarantee amounted to Rs. 274. 2009 has imposed a token penalty of Rs. the liability that may arise in these cases cannot be determined and consequently. non-performance of servicing stipulations due to negligence or otherwise. 54.852 million (2011: Rs 1. Accordingly. g) Competition Commission of Pakistan (CCP) vide its order dated November 20.527. 226.163. the Holding company is committed to buy goods and/or services in the amount of US$ 40 million annually. 148.525 million).193.120 million (2011: Rs. 63.536.095 million (2011: Rs.A amounted to Rs 1.311 million).558. The appeals are pending for hearing and accordingly stay order has not been granted to the Holding company till date. sales tax and income tax and penalty of Rs. Further. 54. consumables.120 million) in total of 44 cases of identical nature by imposing custom duty. The Holding company has entered into an agreement for purchase of aircraft. However. on account of discrimination between Hajj passengers and regular passengers the Holding company was directed to work out an amount of refund to be paid back to Hajis based on the difference of fare between regular passenger and short duration Hajis who flew during Hajj season 2008.210 million).

609 million) based on catalogue prices. the Holding company is committed to buy goods and/or services in the amount of US$ 40 million annually.136 5.591 i) Abacus has entered into an operating lease agreement in respect of vehicles. chemicals and repair / overhaul of rotables for a period of 5 years.076.193.657 299.806 6.815 124.412. f) The Holding company has entered into an agreement for purchase of aircraft. According to the terms of the agreement.295.192 153 .508. 148.578 9.063 710.326 187.562 983.519 415.260 4.100 674.218.359 3.016 471. The amount of future lease payments and the period during which they fall due are as follows: 2012 2011 -------------Rupees in '000-----------Not later than one year Later than one year but not later than five years 284 284 426 284 710 32.847 5.527.129 million (2011: Rs.476. REVENUE .338 10. the remaining commitments of which aggregate to USD 1.917.676 6.778 238.245 507.962 2. materials.156 50.311 81.782 609.142 11. consumables.642.378 127.067 738.558.653 1.147.805.634 952. g) The amount of future payments in operating lease arrangement relating to Aircraft 777-200 ER and the period in which these payments will become due is as follows: 2012 2011 ---------Rupees in '000--------Not later than one year Later than one year but not later than five years Later than five years 1.495 1. 138. food and beverages sales Others 100.413 million) equivalent to Rs.e) The Holding company has entered into an agreement with a vendor for supply of spare parts.609 667. Rentals are payable in equal monthly installments whereas repair and insurance costs are borne by the lessor.752.483.904 million (2011: USD 1.net Passenger Cargo Excess baggage Charter services Engineering services Handling and related services Mail Room.777.858.237 2.677.536.433 h) The amount of future payments in lease arrangement relating to leasehold land of SRL and the period in which these payments will become due is as follows: 2012 2011 ------------Rupees in '000-----------Not later than one year Later than one year but not later than five years Later than five years 20.132.920 1.505.828.545 103.

630.521 3.1 & 10.478 679.238. wages and allowances Welfare and social security costs Retirement benefits Compensated absences Distribution and advertising expenses Legal and professional charges Repairs and maintenance Insurance Printing and stationery Communication Staff training Rent.988 121.081 30.441.507 6.1 5.051 53.662.337.162 81.850 13.352 2.731 647.296.960.851 188.074 143.576 2.214 54.932 630.744 137.7 6.923 58.345 36.804 3.104 5.470 17.401 48.202.662 50 37.073. rates and taxes Utilities Amortisation of intangibles Depreciation Others 1.752 70.085 388.690.129.607 24.067 2.474.190 59.409 341. wages and allowances Welfare and social security costs Retirement benefits Compensated absences Legal and professional charges Stores and spares consumed Maintenance and overhaul Flight equipment rental Landing and handling Passenger services Crew layover Food and beverages Staff training Food cost Utilities Communication Insurance Rent.795 121.541 135.692.417 3.225 37.997.799 33.312.367 3.831.441 87.others Salaries.795.728 50 41.788 7.391 403.812 26.905.2 6.697 63.454 633.134 1.543 2.468 22.830.386 34.362 5.215 493.790 1.275 947.364 161.724 8.045.51 Note 33.152.497.428.213 68.951 3.004.933 2012 2011 ------------Rupees in '000------------- 5.005 59.435 13.623 1. DISTRIBUTION COSTS Salaries.791 8. rates and taxes Printing and stationery Depreciation Amortisation of intangibles and prepayment Others 14.832.653 118.301 515.186 12.833 2.564 311.949 1.958.886 1.575 506.7 154 .170 845.255 127.065 38.497.575 704. COST OF SERVICES .334 215.994 334.970 26.017 3.205 3.224 95.782 489.072.

247 600.764 260.260 71.824 70.223. F.898 369.52 Note 35.1.772 4.254 1.298.266 436 10.734 24.283.625% of Scribe Hotel’s turnover less lease rentals plus an incentive fee of 9% of gross operating profit subject to a cap of 4.980 211.471 17.670 211.188 307.550 1.243 955.843. The agreement provides for a base management fee calculated at 1. Co. MFSA entered into a management agreement with ACCOR whereby ACCOR is entitled to a basic fee of 2. Yousuf A.685 14.1 & 10.342 17.275 633 218 10.009.873 1.1.867 1.968 875.2 6.547 658.126 3.517 3.402 122.072 70.254 1. Ferguson Total M.595 2.1.314 731.290 8.2 35.2 2012 2011 --------------------------------------------------------------.072 2012 2011 -------------Rupees in '000-----------3.221 662.867 1.077.734 2.7 35.623 824 24.105 413 8.275 633 218 392 6.217 260.023 1.136.1 The breakup of management fee expense incurred during the year is set forth below: Note (i) Interstate Hotels and Resorts Corporation (IHC) (ii) ACCOR 35.1 35.150 396 2.894 229.928 652.820 217.925 986.338 35.20% of gross operating revenues per year and an incentive management fee calculated at 14.317 7.735 107. F.357 12.023 1.245 721.359 28.168 2.735 88. Co.745 8. Adil Saleem & Co.106.318 1.5% of net operating income as defined in the agreement. wages and allowances Welfare and social security costs Retirement benefits Compensated absences Legal and professional charges Repairs and maintenance Insurance Printing and stationery Management fee Staff training Municipal taxes Rent. Ferguson & Total Adil Saleem & & Co.Rupees in '000 --------------------------------------------------------------M.517 1.443 1.159 575 198 2.285 11.1.1 35.2 2012 2011 -------------Rupees in '000-----------109.443 Audit fee Fee for review of condensed interim financial statements Consolidated financial statements Code of Corporate Governance Tax and other services Out of pocket expenses 155 .990 3.036 229.340 11. 4.764 1.3 RHC entered into a contract for management of day-to-day operations of Roosevelt Hotel with IHC.971 150.105 740 14.272 21.159 575 198 327 6. Yousuf A.225 99.879 24.25% of turnover less lease rentals.1 35.383 356.841.508 2. Auditors' remuneration 35. rates and taxes Utilities Remuneration of subsidiaries’ auditors Auditors' remuneration Communication Amortisation of intangibles and prepayment Depreciation Donations Others 35. ADMINISTRATIVE EXPENSES Salaries.2 5.769 192.

688 986.197 million (2011: Rs.347 279.986 652.931 1.811.325 million) to Al-Shifa Trust.778 10.487.018.026 1.399 6.1 12. Besides this.380 224. Pakistan in which the Managing Director of the Holding company acts as a Trustee. FINANCE COSTS Mark-up on long-term financing Mark-up on term finance certificates Profit on sukuk certificates Interest on liabilities against assets subject to finance lease Mark-up on short-term borrowings Interest on provident fund Arrangement.563 51.310 68.082 15.219 477. Road. 2012.107 211.413 156 .907 49.934 2.882 1. 3. OTHER PROVISIONS AND ADJUSTMENTS Loss on disposal of fixed assets written off Provision for slow moving and obsolete spares Provision for doubtful debts Derivative expense Provision against doubtful advances Loss on exchange of fixed assets Others 11.1 37. 4.871 2. situated at Terminal-2.966 698.071 67.528 million .997 213.529 million (2011: Rs. guarantee commission and other related charges 3.462 261.268 342. Nil) to Pakistan Airline Pilots' Association (PALPA) which is an association of and run by Holding company's pilots.962 1. Karachi Airport.588 523 1.321 152. agency and commitment fee Amortisation of prepaid exposure fee Bank charges.35.1 13.524 1.848. to obtain repair and maintenance services for certain aircraft according to the Fleet Management Program (FMP) offered by the vendor.318.1 During the year on August 23.987 1.300 43. OTHER OPERATING INCOME Income from financial assets Profit on bank deposits Derivative income Interest on maintenance reserve Others Income from assets other than financial assets Gain on disposal of operating fixed assets Insurance claims Gain on termination of lease Income on settlement of fleet management program liability Others 1. the Holding company and a vendor mutually agreed to terminate a contract which was entered in the year 2003 by the Holding company for a period of ten years unless earlier terminated.151 45.433 12.598. which resulted in a net gain of USD 19.411 303.897 333.931 110.550 4.242 132.169.770 525.902 3.553. On termination of the contract.426 23.834.327.341 37.3 Donations include payments aggregating Rs. and Rs.972 906. Note 2012 2011 -------------Rupees in '000-----------36. 2012 2011 -------------Rupees in '000------------ 38.950 36.307. none of the directors or their spouse have any interest in the donees. 3.872 123.556 48.424 304.752 58.619 3.269.948 14. The Holding company was required to make monthly payments in accordance with the FMP rate mutually agreed with the vendor.608.1 37.131 108. a reconciliation of FMP services vis-à-vis FMP billings to the Holding company has been made.

amount of Rs. The department 39.480.129) 768. 2001. the Holding company has filed appeal at ITAT level which is pending adjudication.R. The Holding company is confident Further.149.442 million.189) 645. the Additional Commissioner Inland Revenue (ACIR) hasAn issued an of order under section 122also (5A) of the Income this contention and disallowed depreciation expense as inadmissible.2 The Holding company has filed tax returns for tax years up to tax year 2012 of which tax returns from tax years 2003 to 2012 have been filed under self assessment scheme. After decision by the Sindh High Management believes that this issue will be decided in favour of the Holding company without any additional tax liability. 39. 898.235 million was also recovered by FBR in this in respect.809 (504. The Holding company has also received show cause notices in respect tax years 2007 to 2009 on account of disallowance depreciation leased aircraft and 122 other(5A) provisions. further aggrieved. In view of available tax tax losses for 39. 2012 2012 whereby wherebythe the rate rate of of minimum Holding company was reduced by 50%. The Holding hadThe filed appeals tax liability 80D of the repealed been by thecompany department from assessment 1991-92 to against the under abovesection demands which have been ordinance decided inhad favour of levied the Holding at Appellate Tribunal year Inland Revenue assessment afterhas adding net turnover on estimated basis.1 39. 898. the Officer Inland Revenue (OIR) has issued an order under section 161 / 205 of the Income Tax Ordinance. After decision above demands which have decided in in favour favour of of the the Holding Holding company. provision for minimum taxation been made in accordance section of Income the Income Ordinance.2 The company has filed tax returns80D for tax years up to tax year 2012had of which returns from tax years 2003 toassessment 2012 have been The Holding minimum tax liability under section of the repealed ordinance beentax levied by the department from year filed under assessment scheme. amount Rs. provision for minimum taxation has has been made in accordance with with section 113 113 of the Tax Tax Ordinance.for the year . Being further aggrieved. theany matter is still pending. All assessments for tax years 1991 to 2002 have been finalized by the department.1.325milion milionin inrespect respect of minimum tax expense related the Holding company. this respect. numeric tax rate is given as theas Holding company is liableis for turnover tax only. No numeric tax reconciliation rate reconciliation is given the Holding company liable for turnover During the Federal Federal Board Board of Revenue (FBR) During the the year. the department has filed appeal in the Supreme Court. company for tax year 2013 became 0. through Finance Act 2012.946 794.5 39. In addition to above.580. 2001. the Officer Inland Revenue (OIR) has issued an order under section 161 / 205 of the Income Tax Ordinance. 3. the of turnover tax under 113 was113 revised from 1% to 0. 2001 pertaining to tax year 2011 and raised a demand of Rs. the of Revenue (FBR) issued issued an an S. Management believes Ordinance.1.817 1. 157 Management believes that these issues will be decided in favour of the Holding company without any additional tax liability. through Finance Act 2012. 48. No for the year.for prior year Deferred 39.177 million (2011: Rs. The main contention others was disallowance of depreciation claimed Holding company.319 million.54 Note 39. The Holding company had filed appeals against the (ATIR) level. that this issue will ultimately be decided in its favour and the amount will be recovered. In addition to above.946 (26.3 did A demand of Rs.1. Therefore.1. turnover. The Holding company filed appeal at CIT (A) before level which wasagainst decided partially in favour of thethe Holding company.year The 2002-03 department now 10% filed of appeal at the Sindh High Court in respect of assessment year 2000-01. Further. Holding company filed appeal at CITamong (A) level which was decided partially in favour of the issuing an amended order relationThe to the tax year 2005.25% of turnover and the provision for taxation has been made accordingly.1 This of minimum tax expense related to to the Holding company. The Holding company has filed an application for rectification against this order and also filed appeal before CIR(A). 39.442 million.O. however. S. the applicable of minimum tax rate for the Holding for section was downward revised downward from 1% 0.R. 39. year. 48. Management believes that these issues be decided in CIR favour the Holding without additional tax liability.1 794. The Holding company claimed the depreciation on the contention that those aircraft were obtained under hire Holding company is confident that this issue will ultimately be decided in its favour and the amount will be recovered. this issue will be decided in favour of the Holding company any additional tax liability.480.O. The main contention among others was disallowance of depreciation claimed on leased aircraft.235 million was recovered by FBRTax in purchase arrangement which has been approved by Ministry of Finance as a financing arrangement.177 million)without was raised by the Deputy Commissioner Inland Revenue (DCIR) by issuing an amended order in relation to the tax year 2005. minimum 1991-92 toself assessment year 2002-03 adding 10% of net turnover on2002 estimated basis. The Holding company has also received show cause notices in respect of tax years 2007 to 2009 on account of disallowance of depreciation on leased aircraft and other provisions. 57 57 (I)/ (I)/ 2012 2012 dated dated January January 24.325 280.177 million (2011: Rs. of the Additional Commissioner Inland Revenue (ACIR)of has issued anon order under section of the Income Tax company has filed its reply in response to these notices. The by the Sindh High Court on abeen few grounds the department has filed appeal in the Supreme Court. Allafter assessments for tax years 1991 to have been finalized by thecompany department. department has now filed appeal at the Sindh High Court in respect of assessment year 2000-01.1.410) (934.620 (1.25% of turnover and the provision for taxation has been made accordingly. The Holding company has filed an application for rectification against this order and also filed appeal before CIR(A). 2001 in respect of tax year 2006 disallowing the depreciation claimed on leased aircrafts and other provisions of Rs. 898.5% ofTherefore.1. The Holding company haswill filed appeal before (A) of against the said company order. tax only. Ordinance. The Holding company claimed the depreciation on the contention that those aircraft were obtained under hire purchase arrangement which has been approved by Ministry of Finance as a financing arrangement. however. The department did not accept Accordingly. The on leased aircraft. In view of available losses the year.3 that A demand of Rs. 324. 898. 2001 pertaining to tax year 2011 and raised a demand of Rs.319 million. The Holding company has filed appeal CIR (A) the said order. the rate of rate turnover tax under section minimum tax taxfor forthe the Holding company was reduced by 50%.1 This includes includes Rs Rs 280. The Holding Further. the rate applicable rate of minimum tax rate forcompany the Holding tax year 2013 became 0. 24. . Court on a few grounds in favour of the Holding company. 324.1 Current Current 39. The Holding company has filed its reply in response to these notices. 2001 in respect of tax year 2006 disallowing the depreciation claimed on leased aircrafts and other provisions of Rs. matter is still pending.790) 2012 2011 -------------Rupees in '000------------ 26.177 million)expense was raised by the DeputyAn Commissioner Inland Revenue (DCIR) by not accept this contention and disallowed depreciation as inadmissible. company at Appellate Tribunal Inland Revenue (ATIR) level.5% ofto turnover. Being 3. Further. no provision has been made in these unconsolidated financial statements in this regard. the Holding company has filed appeal at ITAT level which is pending adjudication. TAXATION Current .

944.1 Earnings per share has no dilution effect.999 10.586.399) (1.466) 11.631.581 904.287.169.931) (3.751 9.934 637 (51.751 2011 (25.280 (3.742 (26.902) 103.131) 68.44) (4.082 5.360.017.505.829.179. EARNINGS PER SHARE .599.524) (1.876.411 13.858.897) 36.269) (280. 2012 Loss for the year (Rupees in '000) Weighted average number of ordinary shares outstanding Earnings per share ‘A’ class Ordinary share (Rupees) ‘B’ class Ordinary share (Rupees) (10.734.751.840) (319.BASIC AND DILUTED The calculation of earnings per share at December 31 is based on loss attributed to owners of ordinary shares of the Holding company.943.848.424 3.487.005) 10.915.275.233 40.72) (32.145) 8.826 123.376.745 (365.872 3.801) 2.347 279.997) (880) (1. 158 .267.37) (9.74) (5.070 41.532 (985.426 23.643 (1. 2012 2011 --------------Rupees in '000------------CASH GENERATED FROM OPERATIONS Loss before tax Adjustments for: Depreciation Fair value change through profit and loss Gain on disposal of operating fixed assets Loss on disposal of fixed assets written off Loss on disposal of fixed assets .307.724.456) 8.397) 12.903) 9.413 790 (45.970.55 40.401.459 19.179.net Unrealised exchange loss Amortisation of intangibles Provision for slow moving stores and obsolete spares Provision for doubtful debts Provision for doubtful other receivables Arrears of mandatory retirement Provision against doubtful advances Advance given to CAA written off Reversal of provision no longer required in respect of CAA Provision for staff retirement benefits Currency translation difference Finance cost Share of loss from associates Profit on bank deposits Reversal of provision against short term investments Gain on termination of lease liability Income on settlement of fleet management liability Working capital changes Increase in stores and spares Increase in trade debts Decrease in short-term loans and advances Decrease in trade deposits and prepayments Increase in other receivables Increase in trade and other payables Cash generated from operations (31.698 (139.898.413) 3.242 132.720) 100.938 28.410) (1.072 4.101) (1.857 291.116 4.456 (540.145 303.681) (174.

SEGMENT INFORMATION The primary segment reporting format is determined to be business segments as the Group’s risks and rates of return are affected predominantly by differences in the services provided.032. 43.962) Consolidated 2012 2011 192.440 The major revenue earning assets comprise the aircraft fleet.561.788 1 67.826 55.180 United States 17.673.by area of original sale Pakistan Segment revenue Carrying amount of assets 53.143) (26.772.577 396 3.348 (1.403) 116.878 United States 16.148 Pakistan 58.398 Others 28.452) 127.982 1.828.927 (809.476.755) (10.449.693 10.484) 10.475 7.707 31.943 396 7.132.594 (7.821.556 126.758.413) 45.887.800 12.952 (260.966) 316.192 (16.575 4.094 180.894. segment expenses and segment results include transaction between business segments. The operating businesses are organised and managed separately according to the nature of services provided.358.971 18.347 15.254 4.775 473.743) (19. United States and Europe.046 Others 27.498 897. REMUNERATION OF MANAGING DIRECTOR AND EXECUTIVES Key management personnel Managing Director 2012 2011 2012 Unit heads 2011 2012 Others Executives 2011 -------------------------------------------------------------Rupees in '000---------------------------------------------------------Managerial remuneration Contribution to provident fund Other perquisites Number 6.056) (1.608.337 11.520 117.879. Transaction between business segments are set on arm’s length basis at price determined under permissible method as allowed under Companies Ordinance.581.887 157 744 13.926.421.415) (26.770 (2) (33.067.129) (2.942) (10.428.185 2.571) (23) (277.248 124.887.760) 127.864 78.997 (7) (32.352. Secondary information is reported geographically.924 1.008 272.127.2 Geographical segments .123.826) Revenue External sales Intersegment sales Total Revenue Results Segment results Interest expense Interest income Share of associate's loss Income taxes Depreciation Amortisation Assets and Liabilities Segment assets Investment in Associates Capital expenditure Segment liabilities 7030743 Airlines operations Hotel operations Others Eliminations / adjustments 2012 2011 2012 2011 2012 2011 2012 2011 ------------------------------------------------------------------------Rupees in '000----------------------------------------------------------------128.744 4.558 263.990.993) (1.828.088) 20.760) 16.130.617 (1.054.865) (278.127.687.487. Hotel operation segment provides accommodation and related services in Pakistan.291 35. Managing Director and certain executives are also provided with the Holding company's maintained cars and facilities as per the Holding company's rules.354.972 (277.090 2.312 63.346.693 1. 43.576 116.169.390. 1984.397.736.898) 65.966.452 43.683.665 1.013.476.683 298.645.683 90.737 16 98.56 42.578.440 61.653 Total 124. Since the fleet of the Holding company is deployed flexibly across its worldwide route network.387) 61.810.046) 45.608.542 204.777. there is no suitable basis of allocating such assets and related liabilities to geographical segments.550 2011 Europe 24.880 66.067.342.395.099.106 93.280) (19.399 (637) (768.561 234.756 (2.258.811) (9.966 Total 127.107 125.757) 51.1 Revenue Analysis Airlines operations Hotel operations Others Eliminations Consolidated 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 ---------------------------------------------------------------------------------------------------Rupees in '000-------------------------------------------------------------------------------------------112.803) 12.427) (14. 159 .760) (260.790 (8.240 1 12.121 34.608.774.399 (637) (457.928.278 12.682.049 35. The Group’s geographical segments are based on the location of the Group’s assets.545 (19.709.472) (289. 42.003 115.040 2.550.860.805.232.100 66.800 1. Sales to external customers disclosed in geographical segments are based on the geographical location of its customers.266.013 8.788) (49) 298. all of which are registered in Pakistan.652.192 180.841 231.696 (403.214. The airlines operations segment provides air transport and other allied services.695 (260.387 116.024 1.1 The number of persons does not include those who left during the year but remuneration paid to them is included in the above amounts. Segment revenue.817) (8.897) (11.500 15 2.886) (7.486.777.130.917 2012 Europe 24.066 (21. with each segment representing a strategic business unit that serves different markets.550.275.997 (790) 934.380.687.885) (12.596 238.797 40.650.551 112.763 21.723 70 447 7.106 316.671 1.970.066 112.028.993 Aggregate amount charged in the financial statements for fee to directors was Rs Nil (2011: Rs Nil).251 9.576 (17.997 (790) 1.934) 51.427) 124.427) (277.875) (10.369.622 1.545 179.131.

263 78. Senior management identifies. management carries out financial management under policyinstrument approved will by fluctuate the Board of Directors.1 Market risk of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. The Group's senior management carries out financial risk management under policy approved by the Board of Directors. bank deposits. on (loss) before tax. Saudi Riyal (SAR). The Holding company hedges fuel prices to a limited extent through use of derivative contracts. such as fuel price and Fuel price risk equity price risk. with other variables heldinstruments constant.566) ----------------------+5%---------------------(140. exchange rates. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.363 113. fuel price risk and other price risk). necessary. United Arab Emirates Dirham (AED) and Great Britain Pound (GBP).363) (113. therefore. with all other variables held constant. Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.352 5. In addition. credit risk and liquidity risk. the a) Fuel price risk Holding company is not exposed to risk related to fuel price derivative contracts.236) ----------------------+5%---------------------(1. FINANCIAL RISK MANAGEMENT The Group's activities expose it to a variety of financial risks: market risk (including currency risk. available-for-sale investments and derivative financial The Holding company’s earnings are instruments. The Group’s activities expose it to a variety of financial risks: market risk (including currency risk. interest rate risk. Market risk comprise three types of risk: interest rate risk. the Group has substantial foreign currency borrowings and lease liabilities that are primarily denominated in US Dollar Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. bank deposits.459) (51. currency risk and other price risk. Senior management Market risk comprise three types of risk: interest rate wherever risk. The Group can experience adverse or beneficial effects arising from foreign exchange rate movements. Saudi Riyal (SAR). 2012 2011 ---------Rupees in '000--------Change in USD rate (Increase) / Decrease in loss before tax Change in GBP rate (Increase) / Decrease in loss before tax Change in SAR rate (Increase) / Decrease in loss before tax Change in AED rate (Increase) / Decrease in loss before tax Change in Euro rate (Increase) / Decrease in loss before tax c) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. There are no derivative contracts outstanding as of year end. credit risk and liquidity risk.459 51. therefore. The Holding company hedges fuel prices to a limited extent through use of derivative contracts. fuel price risk and other price risk). on before tax. Financial instruments affected by market risk include loans and borrowings. b) Currency risk the Holding company is not exposed to risk related to fuel price derivative contracts. the Group has substantial foreign currency borrowings and lease liabilities that are primarily foreign currency receipts to satisfy its foreign currency obligations. wherever necessary. Financial instruments affected by market risk include loans and borrowings. available-for-sale investments and derivative instruments. denominated in US Dollar (USD).263) (78.426.330 ----------------------(5%)---------------------62.173. interest rate risk. There are no derivative contracts outstanding as of year end.330) ----------------------+5%---------------------(62. The (USD). The Group can experience adverse Group’s revenue streams are denominated in a number of foreign currencies resulting in exposure to foreign exchange or beneficial effects arising from foreign exchange rate movements. currency risk and other price risk. In addition. The Group’s senior Market risk is the risk that the fair value ofrisk future cash flows of a financial because of changes in market prices. The Holding company’s earnings are affected by changes in price of aircraft fuel. The Group manages some of its currency risk by utilising its rate fluctuations. The Group's exposure to the risk of changes in market interest rates relates primarily to the following: ----------------------+5%---------------------(4.617 4. The following table demonstrates the sensitivity of financial instruments to a reasonably possible change in the foreign The following table demonstrates theall sensitivity of financial to(loss) a reasonably possible change in the foreign currency currency exchange rates. affected by changes in price of aircraft fuel.930) ----------------------+5%---------------------(100.352) (5.57 44.133 160 . evaluates and hedges 44.930 ----------------------(5%)---------------------100.566 ----------------------(5%)---------------------140. evaluates and hedges financial risks.1 financial Market risk a) Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. financial FINANCIAL RISK MANAGEMENT risks. The Group manages some of its currency risk by utilising its foreign currency receipts to satisfy its foreign currency obligations. The Group’s b) Currency revenue streamsrisk are denominated in a number of foreign currencies resulting in exposure to foreign exchange rate fluctuations. 44.133) 2012 2011 ---------Rupees in '000------------------------------(5%)---------------------4. such as fuel price and equity price risk. United Arab Emirates Dirham (AED) and Great Britain Pound (GBP).236 ----------------------(5%)---------------------1.617) (4. identifies.426. The Group’s overall risk management programme focuses on the unpredictability 44.173.

whether those changes are caused by factors individual financial instrument or its issuer.365 44.312.024.c) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.234 11.550 464.460 1. The Group is not significantly exposed to equity securities price risk.085. or factors effecting all similar financial instruments traded in the market. with all other variables held constant.795 156.654 11.701 1.459 25. significantly exposed to equity securities price risk.112) (110.827 32.660.760 38.896 37. The Group’s exposure to the risk of changes in market interest rates relates primarily to the following: 58 2012 2011 ---------------Rupees in '000--------------Variable rate instruments at carrying amount: Long-term financing Term finance and sukuk certificates Liabilities against assets subject to finance lease Short-term borrowings Fixed rate instruments at carrying amount Financial Assets Bank balances Short-term investments Long term loans Financial Liabilities Long-term financing Liabilities against assets subject to finance lease Short-term borrowings Fair value sensitivity analysis for fixed rate instruments The Group does not account for any fixed rate financial assets and liabilities at fair values through profit and loss.099 23.287. Therefore.958 20.305.112 110. or factors effecting all similar financial instruments traded in the market.589.25%)-------------------3.318.286.550) (464.135. Cash flow sensitivity analysis for variable rate instruments The following table demonstrates the sensitivity to a reasonably possible change in interest rates.585.312.220 20.078 418.057 2.644. 161 .326 d) Other price risk d) Other price risk Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other Other than pricethose risk isarising the risk thatcurrency the fair value orinterest future cash flowswhether of a financial willcaused fluctuate of changes in from risk or rate risk).715 19.195 66.137.721.530 9. change in interest rates at the reporting date would not affect profit and loss account.200 125. on the Group loss before tax.557 61.25%-------------------(3.111 79.326) --------------------(1%)-------------------718. 2012 Change in interest rate Increase in loss before tax Change in interest rate Decrease in loss before tax LIBOR 2011 2012 2011 -----------------------------Rupees in '000---------------------------------------------+0.275.010.795.253 19.760 36.405) --------------------(0.405 KIBOR 802. The Group is not specific to the individual financial instrument or its issuer. those instrument changes are by because factors specific to the market prices (other than those arising from currency risk or interest rate risk).735.768.735 20.134 --------------------+1%-------------------(718.733 201.589.

44.2

Liquidity risk Liquidity risk 44.2 59 Liquidity risk is the that the will Group will encounter difficulty in meeting obligations associated financial liabilities that are Liquidity risk is the risk risk that the Group encounter difficulty in meeting obligations associated with financial liabilitieswith that are settled by delivering cash or settled by delivering cash or other financial asset. The Group manages its liquidity risk by maintaining sufficient cash and cash other financial asset. The Group manages its liquidity risk by maintaining sufficient cash and cash equivalents and through support of GoP either in the Liquidity risk 44.2 equivalents through of GoP to either the form oflenders. capital / loans or in the form of guarantee to obtain financing from form of capital and / loans or in thesupport form of guarantee obtainin financing from lenders. Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or other financial asset. The Group manages its liquidity risk by maintaining sufficient cash and cash equivalents and through support of GoP either in the form capital / loans orshows in the form guarantee to obtain financing frommaturities lenders. of financial liabilities, including estimated interest payments: Theof following table the of Group’s remaining contractual
The following table shows the Group's remaining contractual maturities of financial liabilities, including estimated interest payments:

59

The following table shows the Group's remaining contractual maturities of financial liabilities, year including estimated interest payments: years

Less than 1

1 - 5 years

More than 5

Total

2012 Long-term financing Term finance and sukuk certificates 2012 Liabilities against assets subject to finance lease Long-term financing Trade and other payables Term finance and sukuk certificates Accrued interest / mark-up / profit Liabilities against assets subject to finance lease Short-term borrowings Trade and other payables Long term deposit Accrued interest / mark-up / profit Short-term borrowings 2011term deposit Long Long-term financing 2011 Term finance and sukuk certificates Liabilities against assets subject to finance lease Long-term financing Trade and other payables Term finance and sukuk certificates Accrued interest / mark-up / profit Liabilities against assets subject to finance lease Short-term borrowings Trade and other payables Long term deposit Accrued interest / mark-up / profit Short-term borrowings 44.3 Long Credit risk term deposit

--------------------------------------Rupees in '000----------------------------------Less than 1 1 - 5 years More than 5 Total year years 15,944,356 46,044,499 in '000----------------------------------2,178,219 64,167,074 --------------------------------------Rupees 16,388,469 12,614,374 29,002,843 10,741,937 35,787,131 5,320,497 51,849,565 15,944,356 46,044,499 2,178,219 64,167,074 23,605,794 23,605,794 16,388,469 12,614,374 29,002,843 6,784,356 6,784,356 10,741,937 35,787,131 5,320,497 51,849,565 61,354,530 61,354,530 23,605,794 23,605,794 6,784,356 6,784,356 134,819,442 94,446,004 7,498,716 236,764,162 61,354,530 61,354,530 -

44.3
44.3

assets except cash in hand are subject to credit risk. The carrying amount of financial assets as at December 31, 2012 represents the maximum credit Credit risk exposure, which is as follows: Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge Credit risk is the risk one party to a financial will cause financial to loss for therisk. otherThe partycarrying by failing amount to discharge obligation. All financial an obligation. All that financial assets exceptinstrument cash in hand areasubject credit of an financial assets as at assets except cash in hand are subject to credit risk. The carrying amount of financial assets as at December 31, 2012 represents the maximum credit December 31, 2012 represents the maximum credit exposure, which is as follows: 2012 2011 exposure, which is as follows:

134,819,442 94,446,004 7,498,716 236,764,162 15,944,356 46,044,499 3,547,071 65,535,926 11,043,567 12,614,374 23,657,941 11,071,397 39,909,206 11,652,354 62,632,957 15,944,356 46,044,499 3,547,071 65,535,926 22,864,196 22,864,196 11,043,567 12,614,374 23,657,941 4,727,025 4,727,025 11,071,397 39,909,206 11,652,354 62,632,957 27,956,096 27,956,096 22,864,196 22,864,196 132 132 4,727,025 4,727,025 93,606,637 98,568,211 15,199,425 207,374,273 27,956,096 27,956,096 132 132 93,606,637 98,568,211 15,199,425 207,374,273 Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. All financial Credit risk

-----------Rupees in '000-----------

Long-term investments Receivable in respect of Centre Hotel Long-term loans and advances Long-term Long-terminvestments deposits Receivable in respect of Centre Hotel Trade debts Long-term loans and advances Short-term loans and advances Long-term deposits Trade deposits Trade Otherdebts receivables Short-term and advances Short-termloans investments Trade deposits Bank balances Other receivables Short-term investments Bank balances Trade debts

28,381 24,344 2012 2011 734,496 in '000----------679,487 -----------Rupees 12,009 15,407 28,381 24,344 5,170,100 8,180,751 734,496 679,487 10,014,544 8,936,690 12,009 15,407 2,054,153 329,433 5,170,100 8,180,751 52,152 44,311 10,014,544 8,936,690 795,645 728,383 2,054,153 329,433 517,767 594,749 52,152 44,311 6,283,063 3,218,942 795,645 728,383 25,662,310 22,752,497 517,767 594,749 6,283,063 3,218,942 25,662,310 22,752,497

The Group has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. The Holding company normally grants a credit Trade debts term of 30 to 60 days to customers and in certain circumstances such exposure is partially protected by bank guarantees. Trade debtors mainly represent passenger and freight sales due from agents and government organizations. The majority of the agents are connected to the settlement systems operated by the International Air Transport Association (“IATA”) whoto iscredit responsible checking the worthiness of such agents and collecting bank guarantees The Group has a credit policy in place and the exposure risk is for monitored on ancredit ongoing basis. The Holding company normally grants a credit 162 or other collateral according to certain local industry practice. In most casesisamounts from airlines are settled onTrade net basis via an IATA clearing term of 30monetary to 60 days to customers and in circumstances such exposure partially due protected by bank guarantees. debtors mainly represent house. The credit risksales with regard to individual agents and airlines is relativelyThe low.majority of the agents are connected to the settlement systems operated passenger and freight due from agents and government organizations. by the International Air Transport Association (“IATA”) who is responsible for checking the credit worthiness of such agents and collecting bank guarantees or other monetary collateral according to local industry practice. In most cases amounts due from airlines are settled on net basis via an IATA clearing

Trade debts The Group has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. The Holding company normally grants a credit term of 30 to 60 days to customers and in certain circumstances such exposure is partially protected by bank guarantees. Trade debtors mainly represent passenger and freight sales due from agents and government organizations. The majority of the agents are connected to the settlement systems operated by the International Air Transport Association (“IATA”) who is responsible for checking the credit worthiness of such agents and collecting bank guarantees or other monetary collateral according to local industry practice. In most cases amounts due from airlines are settled on net basis via an IATA clearing house. The credit risk with regard to individual agents and airlines is relatively low. 60 Ageing of past due and impaired trade debts is disclosed in note 12 to the consolidated financial statements. There no creditassets risk on aircraft lease deposits because they are security against the finance lease obligation. Other deposits Other is financial are not significantly exposed to credit risk as they have been paid as security deposits to receive future services. Advances to employees are primarily their salaries. The credit risk on liquid against funds (cash and bank balances) is limited because the counter parties are banks with a reasonably good credit rating i.e. at least “A3” or equivalent for short term and “BBB” or equivalent for long term. There is no significant credit risk against other receivables as majority of the receivable is from GoP. There is no credit risk on aircraft lease deposits because they are security against the finance lease obligation. Other deposits 44.4 Fair are not significantly exposed to credit risk as they have been paid as security deposits to receive future services. Advances to value of financial instruments employees are primarily against their salaries. The carrying values of all financial assets and liabilities reflected in the consolidated financial statements approximate their There is no significant credit risk against other receivables as majority of the receivable is from GoP. fair value. 44.4 Fair value of financial instruments 44.5 Capital management The carrying values of all financial assets and liabilities reflected in the consolidated financial statements approximate their fair The Holding company's objective when managing capital is to safeguard its ability to continue as a going concern. The value. Holding company has incurred losses in recent years and the disclosure in respect of the Holding company's ability to 44.5 Capital management continue as a going concern is disclosed in note 1.2 to the consolidated financial statements. The Holding company’s objective when managing capital is to safeguard its ability to continue as a going concern. The Holding company has incurred losses in recent years and the disclosure in respect of the Holding company’s ability to continue as a 45. TRANSACTIONS WITH RELATED PARTY going concern is disclosed in note 1.2 to the consolidated financial statements.

45.

The related parties of the Group comprises associates, employee retirement benefit plans, directors and key management TRANSACTIONS WITH RELATED PARTY personnel. Transactions with related parties essentially entail sale and purchase of goods and services and expenses charged between these companies. Amounts due from and to related parties, amounts due from executives and remuneration The relatedand parties of the Group comprises associates, employee retirement benefit directors and key management of directors executives are disclosed in the relevant notes. Transactions with relatedplans, parties are as follows: personnel. Transactions with related parties essentially entail sale and purchase of goods and services and expenses charged between these companies. Amounts due from and to related parties, amounts due from executives and remuneration of directors and executives are disclosed in the relevant notes. Transactions with related parties are as follows: Note Retirement funds Contribution to Provident Fund and others Profit oriented state-controlled entities - common ownership Purchase of fuel Insurance premium Mark-up paid GoP - Major shareholder Finance cost Shares issued during the year Hajj revenue Advance against equity from GoP 2012 2011 ------------Rupees in '000----------511,053 695,806

20,360,973 1,291,956 3,897,380 802,192 4,410,495 1,928,167

19,676,705 1,400,000 1,485,650 800,000 3,004,726 4,558,708 -

45.1

One of the hotels owned by PIAIL, Hotel Scribe Paris, is managed by a related party, ACCOR. The amount of management 163 fee is based on the agreement with the related party.

45.1

One of the hotels owned by PIAIL, Hotel Scribe Paris, is managed by a related party, ACCOR. The amount of management fee is based on the agreement with the related party. Transactions with the directors, chief executives and key management personnel have been disclosed in note 42 to these consolidated financial statements. The Holding company’s sales of transportation services to subsidiaries, associates, directors and key management personnel are not determinable.

45.2

45.3

46.

BENAZIR EMPLOYEE STOCK OPTION SCHEME (BESOS)
On August 14, 2009, GoP launched the BESOS for employees of certain State Owned Enterprises (SOEs) including the Corporation and Non-State Owned Enterprises (Non-SOEs) where GoP holds significant investments. BESOS is applicable to permanent and contractual employees who were in employment of these entities on its launch date, subject to completion of five years’ vesting period by all contractual employees and by permanent employees in certain instances. BESOS provides for a cash payment to employees on retirement or termination based on the price of shares of the Holding company. Under the scheme, Pakistan Employees Empowerment Trust (PEET) was formed and 12% of the shares held by the Ministry of Defence were transferred to the Trust. The eligible employees have been allotted units by PEET in proportion to their respective length of service and on retirement or termination such employees would be entitled to receive such amounts from PEET in exchange for the surrendered units as would be determined based on market price of shares of the Holding company. The shares relating to the surrendered units would be transferred back to GoP. BESOS also provides that 50% of dividend related to shares transferred to PEET would be distributed amongst the unitholder employees. The balance 50% dividend would be transferred by PEET to the Central Revolving Fund managed by the Privatisation Commission of Pakistan for payment to employees against surrendered units. The deficit, if any, in PEET to meet the repurchase commitment would be met by GoP. BESOS which has been developed in compliance with the policy of the GoP for empowerment of employees of SOEs needs to be accounted for by the covered entities, including the Holding company, under the provisions of the IFRS 2. However, keeping in view the difficulties that may be faced by the entities covered under BESOS, the Securities and Exchange Commission of Pakistan on receiving representations from some of entities covered under BESOS and after having consulted the Institute of Chartered Accountants of Pakistan has granted exemption to such entities from the application of IFRS 2 in respect of BESOS. Had the exemption not been granted, the accumulated losses as at December 31, 2012 would have been higher by Rs. 542.477 million (2011: Rs. 412.275 million), staff costs and loss after taxation of the Holding company for the year then ended would have been higher by Rs. 130.202 million (2011: Rs. 148.189 million) while earnings per share would have been lower by Rs. 0.04 and Rs. 0.02 per share (2011: Rs. 0.05 and Rs. 0.03 per share) for class ‘A’ and ‘B’ shareholders respectively.

47.

AUTHORISATION OF CONSOLIDATED FINANCIAL STATEMENTS
These consolidated financial statements were authorised for issue by the Board of Directors of the Holding company in their meeting held on April 26, 2013.

Lt. Gen Asif Yasin Malik (Retd) Chairman

Syed Omar Sharif Bokhari Director

164

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