Independent Auditor’s Report and Financial statements Civil Aviation Authority For the year ended June 30, 2019 e& GrantThornton | An instinct for growth” Grant Thornton Anjum Rahman Chartered AccountantsINDEPENDENT AUDITOR'S REPORT TO THE BOARD OF CIVIL AVIATION AUTHORITY Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Civil Aviation Authority (the Authority), which comprise the statement of financial position as at June 30, 2019, and the income and expenditure account, statement of comprehensive income, statement of changes in fund and reserves and statement of cash Alows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements presents fairly, in all material respects, the financial position of the Authority as at June 30, 2019 and its financial performance and its cash flows for the year then ended in accordance with approved accounting and reporting standards as applicable in Pakistan. Basis for Opinion We conducted out audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our responsibilities under those standards ate further described in the Auditor’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Authority and the management in accordance with the International Bthies Standards Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the Institute of Chartered Accountants of Pakistan (the Code) and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion, Emphasis of Matter ‘We draw attention to the following: a) Notes 29.4 and 29.5 to the financial statements whieh state that the Authority is contesting appeals pending before various appellate forums in respect of certain disallowances and other matters. The ultimate outcome of these matters cannot presently be determined with any certainty at this stage; and b) Note 22.1.3 to the financial statements which describes in detail issues related to disputes with contractors related to the Capital work in progress. The disputes are at different stages ofsettlement in accordance with the conditions of contracts and therefore ultimate outcomes of the disputes cannot be determined at this stage. Our opinion is not modified in tespect of the matters as described in paragraph a and b above. Information Other than the Financial Statements and Auditor's Report Thereon ‘The management is responsible for the other information. The other information comprises the information included in the Annual Report of the Authority for the year ended June 30, 2019, but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance or conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are requited to report that fact. We have nothing to report in this regard. Responsibilities of Management and Those Charged with Governance for the Financial Statements The management is responsible for the preparation and fair presentation of these financial statements in accordance with the approved accounting and reporting standards as applicable in Pakistan, and for such internal control as management determines is necessary to enable the preparation of financial statements that ate free from material misstatement, whether duc to fraud of extor. In preparing the financial statements, the management is responsible for assessing the Authority's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the management either intends to liquidate the Authority o to cease operations, or has no realistic alternative but to do so. ‘Those charged with governance are responsible for overseeing the Authority’s financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives ate to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to frand or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable in Pakistan will always detect 2 material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.As part of an audit in accordance with auditing standards as applicable in Pakistan, we exercise Professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The tisk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, mistepresentations, or the override of internal control, Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal control; Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management; Conclude on the appropriateness of the management's use of the going concem basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Authority’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions arc based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Authority to cease to continue as a going concern; Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. The engagement partner on the audit resulting in this independent auditor’s report is Muhammad Khalid Aziz. Grant Thornton Anjum Rahman Chartered Accountant Date: Place: KarachiCivil Aviation Authority Financial statements For the year ended June 30, 2019CIVIL AVIATION AUTHORITY STATEMENT OF FINANCIAL POSITION AS AT JUNE 30, 2019, Note 2019 2018 2017 (Restated) (Restated) ASSETS ~ NON.CURRENT ASSETS Property, plant and equipment 7 [ BaBASITS | [938775575 || —_293908,309 Intangible asset 8 34,502 22,69 29,688, 35 225,618 G58,T98244 | 290,934,057 Investment Property 9 [106,660,513 || 83,000,807 |[ 67,453,657 Long-term loans 0 44,019,707 507,474 654,071 Long-term deposits 19,126 19,066 17.746 Deferzed taxation - net ” 2,405,747 : : 710,105,093 AA2TTSIT OR IDSA ‘Total non-current assets 5330750307551 301,059,311 Current assets Stores and spares " 25a 2B351 205577 Trade debts 12 3,548,064 || 4.238,116|| 2,565,036 Loans and advances 3 493,807 342,965 394,759 Prepayments 91,858 109,181 61,999 Interest accrued 133,132 46,727 140,437 Other receivables 4 646,202 652,390 600,072 “Taxation - net 9,584,899 || 26,679,675 || 14,153,467 Cash and bank balances 15, anors,9at ||__ 25,104,258 ||__ 23,334,045. Total current assets “41,769,886 57,401,665 41,458,392 ‘TOTAL ASSETS SN 2 A ‘The annexed notes 1 to 41 form an integral pact of these financial statements. aan CHAIRMAN, DIRECTOR GENERALCIVIL AVIATION AUTHORITY STATEMENT OF FINANCIAL POSITION AS AT JUNE 30, 2019 Note FUND AND LIABILITIES Fund and reserves Civil Aviation Authority Fund Surplus on revaluation of fixed assets 16 Non-curtent liabilities Deferred taxation - net 7 Retirement and other Services benefits Government grants 18 Deferred income 19 ‘Total non-current liabilities Current liabilities ‘Trade and other payables 20 Retention money and security deposits 21 Total current liabilities Contingencies and Commitments 22 ‘TOTAL FUND AND LIABILITIES aT S80 aT Tad pee EL ‘The annexed notes 1 to 41 form an integtal part of these financial statements. CHAIRMAN, ont DIRECTOR GENERAL. 2019 2018 2017 (Restated) (Restated) (Rupees in '000) 239,694,367 |[~ 200,974,022 || 174,926,897 442,645,378 ||_ 301,122,029 ||_ 175,687,089 682,339,745 502,096,051 350,613,986 = 9032463 1,798,047 33,984,655 || 47,564,719 || 30,058,485 9,690,704 9,459,642 8,376,319 664,402, 663,755, 661,151 44,339,761 66,720,579 40,894,002, 5,358,388 3,705,608 6,423,264 5,062,703 5,955,016. 4,586,651 10,424,091 ‘11,660,624 11,009,915 34,760,852 78,381,203 51,903,017CIVIL AVIATION AUTHORITY INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED JUNE 30, 2019 Note Income Aeronautical revenue 23 THAT, 329 Non-aeronautical revenue 24 8,977,824 Inspection and other services 25 259,399 Revaluation gain on investment property 22,999,706, 109,384,258 92,944,699 Expenses General and administrative expenses 26 [ 69,032,941) (61,524,098) Exchange loss (10,948)| (16,871) Finance costs 27 (67,022) (2,960) (69,110,911) (61,543,929) Other income 28 2,761,386 1,562,950 Surplus before taxation 33,034,733 32,963,700 Income tax expense 29° (47,273,815) (6,207,232) Surplus for the year 35,760,918 27,756,488 ‘The annexed notes 1 to 41 form an integral part of these financial statements. one CHAIRMAN DIRECTOR GENERALCIVIL AVIATION AUTHORITY STATEMENT OF COMPREHENSIVE INCOME, FOR THE YEAR ENDED JUNE 30, 2019 Note 2019 2018 ‘Rupees in '000)- Surplus for the year 35,760,918 27,756,488 OTHER COMPREHENSIVE INCOME/(LOSS) Items that may be reclassified to income and expenditure account = Items that will not be reclassified subsequently to income and expenditure account Surplus on revaluation of fixed assets - net of deferred tax 16.1 [144,507,506 ][ 126,386,520 Adjustment of surplus on revaluation of fixed assets due to change in tax rate : 362,815 144,507,506 126,749,335 Remeasurement of post retirement benefit obligations 33.4 C4] [ 319,659) Impact of deferred tax 10,101 1,295,896, (24,730) (3,023,758) Other comprehensive income 144,482,776 123,725,577 ‘Total comprehensive income for the year 180,243,094 151,482,005 ‘The annexed notes 1 to 41 form an integral part of these financial statements, ori CHAIRMAN DIRECTOR GENERALivi. AVIATION AUTHORITY STATEMENT OF CHANGES IN FUND AND RESERVES FORTHE YEARENDED JUND 30,2018 ance aay 2017 scum vie “ona teed 8, net depo fr he “depose ff dag he ee Compreheieincoe othe eae "Sure er Orc sone Jane 30,2008 “Tae eto ofthe up secamultlsurn net fred 26 incremental pein fr the ee reraion of Ge re [Comprehensive income for he yor Sepa the ee Othe compres en /iacome Toa eomprcbeae nce fr ha et Balance a a June 3,219 “The anneed ares 1 A fom a ital pt hse ani eet TP ee ‘nice and and ori rr sasgse Taina r72qsa320 Taa6ANT—NSaoR ssa 1a gnaw ane) : : 96 ooo) 5 ica Ta 2 2 75n)|_u.88||_rzazs05||_rascassr PATO AAA) aa TBDSS Ista TRESS Tae AT TAT TTL” we ART 2gra0s esr, 500 0) sae ar 5 : uns seasor50s]|_ scan. = S88 1507506 — 1 20,0 ae ae re Ce ST DIRECTOR GENERAL,CIVIL AVIATION AUTHORITY STATEMENT OF CASH PLOWS FOR THE YEAR ENDED JUNE 30, 2019 (CASH FLOW FROM OPERATING ACTIVITIES Sueplus before taxation Adjustments for: Non-cash and other items Working capital and other items Financial Charges paid Contribution during the year Deposited paid-nee Long term loans Receipes for collection charges on F Income Tax paid GAT Net eash generated from operations CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditues Proceeds from disposal of propery, plant and equipment Proceeds from disposal of scrap and salvage material Payments to capital work in progeess Payment to goods in transite Payment of Intangibles Reruen on teem deposits seceived Neteash used in investing activities ‘CASH FLOWS FROM FINANCING ACTIVITIES Grant recived From Govemment of Pakistan Net eash generated {com financing activities Net increase in cash and cash equivalents Cash and cash equivalents at heginning ofthe year Cash and cash equivalents at end of the year Note au A 72 Tad 78 18 15 “The annexed notes 1 10-41 form an integral par af these financial statements CHAIRMAN, eT ihe a 29 ona Restated) (Rupees in 100) 53,084,733 32,963,720 Tams Bai a0 6,121,359) 22148965) (67022) 2900) (19,208,085) (6,623,089) en 320 085,979) 33496 a7 2,608 (14,866,321 18,163,791 40,707,351 (3.11256) 12,327,382, 19,851,284, Goo waa) 30,300 16,839 32,869) 37.783 13,128,395) (20.960,228) (151,583) (656017) 8,690) 1.023) 2,586,978, 1,567.69 0,957,700), 79,443,460) 546,047 2.389 «7 1362389) 1,918,723 arias 25,104,258 23364,015 27,019,981, 25,101 258, DIRECTOR GENERALCIVIL AVIATION AUTHORITY ‘NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2019 1 1a 2a, 22. LEGAL STATUS AND OPERATIONS Civil Aviation Authority ("the Authority”) was formed as a local authority by the Governmeit of Pakistan (GoP) on December 07, 1982 under the Pakistan Civil Aviation Authority Ordinance, 1982, The principal activities of the Authority are to provide fo the regulation and control of evil aviation aevvities and development of infastructure fo evil ai transport services in Pakistan. The Authosity also develops, ‘maintains and manages the aerodromes throughout Pakistan. The Authority is controlled and managed by the GoP through the Cabinet Secretariat (Aviation Division) and all services and facility charges are subject tothe approval ofthe GoP. Ministry of Defence vide leer No. 14-11/92-ADA dated August 22, 1992 addeessed to the Managing Dizector of Airport Development Agency (ADA), had conveyed decision for the liquidation of ADA. In pursuance of this decision, ADA bas gone into voluntary winding-up by passing a resolution in its extraordinary general meeting as provided in Article 59 of Memorandum of Association of ADA. Pinal liquidation report of ADA bas been submitted (0 the Securities and Exchange Commission of Pakistan (GECP) by the liquidator, however, the SECP has not issued the final notice of liquidation. Pending resolution of the sid matter, che assets and libilies of ADA have not been recognised in the financial statements of the Authority being the sole beneficiary of ADA. During the year ended June 30, 2012, the ‘Authority, on the insertion of Ministry of Defence, GoP, filed application with the Honourable High Court of Sindh for declaration of aforesaid liquidation process void on the basis of non-compliance of various provisions of the repealed Companies Ordinance, 1984, in rcation to liguidation and failure to ‘provide certain information and supporting documents by the liquidator. However during the year ended June 30, 2015, the GoP, chrough notification published in the official gazette of Pakistan dated May 06, 2015 directed that all the assets of the defunct ADA vested in or held by it ether on ownership bass or otherwise, shall be deemed to have been transferred to and vested in Pakistan Civil Aviation Authority on ownership basis with absolute and exclusive ttle and interest Further, Aviation division of GoP, through its leter a0. 12-1/2014-AT-II has constituted on Apsil 29, 2015 a committe for affecting transfer of the tile in respect of the immovable properties of Fx-ADA to the Authority's name, The assets however have not yet been transferred in the name of the Authonty “The assets so to be transfered consist of bungalow no. B-6 and B-22, measuring 4,395 sq. yards at KDA Scheme at main Shahrah-e-Fusal, bungalow no. 85 measuring 1,000 sq, yards at Jinagh Co-operative Housing Society and bungalow no. 15/1 measuring 528 sq. yards at Khayaban-e-Tauheed, Phase | DITA, Karachi Geographical location of Civil Aviation Authority are: + Bahawalpor + Karachi + Quera + Chit + Lahore + Rahim Yar Khan + Datbain + Hyderabad + Khuzdar + DGKhin + Mobeajodato + Sharda + Dees Ismail Khan + Molean + Sake © Gender + Newabshah + Schwan + Gilgit + Pasa + Tusbae + Islamabad + Peshawar + Zhob + Faisalabad + Bann + Jivani + Kohat + Mangia + Jacobabad + Muzaffarabad = Onmaca + Mianwali + Raseala Kor + Saidu Shasif + Paoigue + Bhagacanwala + Mipue Khas + Sshiwal + Par Chinar + Abbotabad SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING THE AUTHORITY'S FINANCIAL POSITION AND PERFORMANCE During the year, revaluation caried out on property, plant and equipment and investment property bas resulted in a revaluation gain of Rs. 147,767 smillion and Rs. 23,000 million on property, plant and ‘esuipment and investment property espectively, fr the yea ended June 30, 2019. During the year Government of Pakistan closed the airspace for all air traffic due to regional conflicts ‘which has resulted in che potential loss of Rs. 8,500 million as diselosed by the Ministry of Aviation, Government of Pakistan,CIVIL AVIATION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2019 s aa. 32. 33. 342. 343. BASIS OF PREPARATION Statement of Compliance ‘hese financial statements have been prepared in accordance with the accounting al reporting stands as applicable in Pakistan, The accounting and reporting standards as applicable in Pakistan comprise of International Financial Reporting Standard (FRS) issued by the International Accounting Standards Board (IASB) as notified under the Companies Act, 2017; and + Provisions of and ditetives issued wnder the Companies Act, 2017 Wheee the provisions of and directives issued under the Companies Act, 2017 differ with the ‘eqjirements of IFRS, the provisions of and dicectives issued under the Companies Act, 2017 have been followed in preparation ofthese financial statements, Basis of measurement ‘These financial statements have been prepated under the ‘historical cost convention’ except the revaluation of property, plant and equipment and investment property at fit value and recognition of certain reiement benefits at present vale ‘These financial statements have been prepared following the accrual basis of accounting except for the cash flow information and lace payment surcharge on overdue balance feom airlines which are recorded 0 eeceipe bass, Functional and presentation rency Items included in the financial statements are measured using the cuttency of the primary economic ‘environment in which the Authosty operates. The financial statements are presented in Pakistani Rupees, ‘which isthe Authority's functional and presentation enrrenc. Standards, Amendments and Interpretations to Approved Accounting Standards Standards, amendments and interpretations to the published standards that are relevant to the Authority and adopted in the cucrent year ‘The Authority has adopted the following new standards, amendments to published standards and interpretations of IFRSs which became effective during the curent yea. Standard or Interpretation Effective Date (Annual periods beginning ‘on or after) IFRS 15 "Revenue from Contracts with Customers! Joly 1, 2018, IFRS 9 "Financial Instruments! Joly 1, 2018 ‘Adoption of the above revisions, amendments and interpretations of the standards have no sigificant effect on the amounts forthe year ended June 30, 2018 and 2010, Standards, amendments to published standards and interpretations that are effective but not relevant ‘The other new standards, amendments to published standards and interpretations that are mandatory for the financial year beginning on July 01, 2018 are considered not to be selevant or to have any significant effect on the Authority’ financial reporting and operations and are therefore not presented ec, Standards, amendments and intespeetations to the published standacds thar are relevant but not yet effective and not early adopted by the Authority ‘The following new standards, amendments to published standards snd interpretations would be effective from the dates mentioned below against the respective standard or interpretationCIVIL AVIATION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2019 344, Standard or Interpretation, Effective Date (Annual periods beginning. ‘on or after) TERS 16 - Leases January 1, 2019 IFRIC 25 - Uncertainry over Income Tax Treatments January 1, 2019 IAS 28 - Long-term Interests in Associates and Joint Janwary 1, 2019 ‘Ventuzes (Amendiments to LAS 28) Annual Iinproverents to TFRSs 2015 - 2017 Cyele January 1, 2019 IAS 19 ‘Plan Amendment, Curtail or Settlement’ January 1, 2019 (Amendments to IAS 19) IFRS 3 ‘Definition of a business’ Amendment to TERS 3 January 1, 2020 IAS 1/IAS 8 ‘Definition of Matera! (Amendments 10 TAS 1 January 1, 2020 and IAS 8) Various Amendments to References to the Concepnual January 1, 2020 Framework in IFRS Standards ‘The Authority is in the process of assessing the impact of these Standacds, amendments and interpretations tothe published standaeds on the financial statements of the Author. Standards, amendments and inteepretations to the published standards that are not yet notified by the Secusities and Exchange Commission of Pakistan (SECP) Following new standards have been issued by the International Accounting Standards Board (LASB) ‘which are yet co be notified by the SECP for the puspose of applicability in Pakistan Standard or Interpretation, Effective Date (Annual periods beginning ‘on o¢ ates) IPRS 14 - Regulatory Deferral Accounts January 1, 2016 TERS 17 - Insurance Contracts Janvary 1, 2022 TERS 1 - lest Time Adoption of IFRS Joly 1, 2009) CRITICAL ASSUMPTIONS AND ESTIMATES ‘The sigoificant accounting policies adopted in the preparation of these Financial statements are set out below. These polices have been consistently applied to all the years unless otherwise stated ‘The preparation of financial statements in conformity with approved accounting standards requices management to make judgments, estimates and assimnptions that affect the application of policies and reported amounts of assets and lubiies, income and expenses ‘The estimates and associated assumptions are based on historical experience, industry trends, legal and technical pronouncements and various other factors that are believed to be seasonable under the circumstances, the result of which form the basis of making the judgments about carrying values of assets and liabilities thar are not readily apparent from other sources. Actual results may differ from these ‘The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised io the period in which the estimates are revised, Significant aceas requiing the tse of management estimates in these financial statements relate co the following Note 8) Staff retirement benefits 58 b) Taxation 590 ©) Useful ife of depreciable and amortisable assets 52852 8) Revaluation of aster: 512 ©) Estimates of recoverable amounts of stores and spares 55 5) Provisions 513 2) Impairment of financial assets and non financial assets 510CIVIL AVIATION AUTHORITY ‘NOTES TO THE FINANCIAL STATEMENTS FORTHE YEAR ENDED JUNE 30, 2019 5a, 5a. 542, ‘The determination of carrying amount of staff setcement benefits liabilities that are defined benefit plan libiliies vequires actuarial assumptions and estimates about financial variables such as futute salary increases, and demographic variables such as employee timover, mortality rates, ete. The Authority employs services of professional actuaries to make such estimates and assamptions using. actuatial techniques SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ‘The principal accounting policies have been applied on consistent basis except as disclosed elsewhere. These polices have been aclopted inthe preparation ofthese financial statements areas flows: Property, plant and equipment Initial eecognit An item of propery, plant and equipment is initaly recognised at cost which i equal to the fai value of| consideration paid at the time of acquisition ar construction of the asset Property, plant and equipment other than land are caried at their revalued amounts, being the fir value at the date of revaluation less any subsequent accumulated depeeciation and. subsequent accumulated impairment losses. Land is stated at its revalued amount less aay impairment losses Fair value is determined by external professional valuers with sufficient regularity such that the carrying amount does nor difer materially from that which would be determined using fair valve at year-end, In estimating the fair value ofan asset, the Authority engages third pary qualified valuers to perform the valuation, Increases in the carying amounts arising on revahuation of fixed assets are recognized, net of ta, ‘in other comprehensive income and accumulated in surplus on revaluation reserves in the starement of changes in fund and reserves. To the extent that the increase reverses a decrease previously recognized in income and expenditare account, the increase is first recognized in income and expenditure account Decreases that reverse previous increases of che same asset are first recognized in other ‘comprehensive income to the extent of the remaining surplus attributable to thae asses all her decreases are charged t0 income and expenditure account. An annval transfer from the ase ‘evaluation surplus to aecurmlated sueplus is made fos the difference between depreciation based fon the revalued caring amount of the asset and the depreciation based on asiets orignal cost. Adkltonally, accumulated depreciation as at the revaluation date is eliminated against the gost ‘carrying amount ofthe aset and the net amount is eestated 10 the revlued amount of the ast. b) Depreciation Depreciation is charged using the reducing balance method at the rates specified in note 7.1. The ‘Authority charges full month depreciation on additions in the month when the assets available for use and no depreciation is charged in the month of disposal. Depreciation methods, useful lives and residual values are reviewed, and adjusted if spproprist, at each reporting date. ©) Subsequent cost Subsequent costs are included in an asse’s canying amount or recognised as a separate astet, as appropriate, only when i is probable that furure economic benefits asnciated with the item will flow to the entity and its cost can be selably measuced, Cost incurred to replace a component of an item of property, plant and equipment is capitalised and the asset s0 replaced is desecopnised, ‘Normal repaics and! maintenance are charged ro the income and expenditure account dating the period in which they are incuttedCIVIL AVIATION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS FORTHE YEAR ENDED JUNE 30, 2019, 52. 53. 5A, 55. 56, 4) Disposal ‘The gain or loss on disposal of an item of property, plant and equipment is determined by ‘comparing the proceeds fom disposal with the earsying amount of the property, plant and equipment, and is recognised in other income/other expenses in the income and expenditure Account, When revhued assets ate sold, any related amount inchided in the “Suephse on Revaluation of Fixed Assets" is transfered to accumulated surplis Capital work in progeess Capital work-in-progress (CWIP) is stated at cost less impalement loss, i any. Il expendinares in connection with specific assets incurred during installation and construction petiod are cated to CWIP, ‘Transfers are made to relevant aset categories as and when assets ate available for intended use, Intangible assets ‘An intangible asset is initially recognised at cost which is equal to the fair value of consideration paid at the time of aequistion of the asset. Intangible assets ate subsequently stated at cost less accumulated amortisation and accumulated impairment losses. Gain or loss on disposal of antangible assets is recognised in other income/other expenses inthe income and expendiruee account, Intangible assets with finite useful lives are amortized fom the month when these assets are available for use using the zeducing balance method. Amortcation methods, useful lives and residual valves ace reviewed a each reporting date and adjusted, iF appropriate Investment property Investment properties are properties held to earn rentals and / or capital appreciation (achading property lunder construction for such purposes). Investment properties are measured initially at cost, including ‘wansaction costs. Subsequent to inital recognition, investment properties are measured at fe valve. Authoriy’s peopeny held under operating lease to eazn rentals purposes are accounted for as investment properties and are measured using the far valve model. Gains of Insses arising from changes in the fair value of investment properties are included in income and expenditure in dhe yea in which they ase. [An investment property is derecognised upon disposal or when the investment peopesty is permanently ‘withdrawn from ise and ao funute economic benefits ate expected fiom the disposal. Any gain ot lost arising on derecognition of che peopetry (calculated as the difference between the net disposal proceed and the carrying amount of the asset) is included in Income and Expenditure in the year in which the property is dereengnised Loans to employees ‘These ae initially recognised at cost being the fair value of the Joan disbursed together with the associated transaction cost. Subsequently, these are recognised at amortised cost using the effective interest rate method. Stores and spares All stores and spares ate charged to income and expenditure account when consumed and are valued at cost determined on a fiestin-fest-our basis and adjusted by provision for slow-moving stores and spares, Af any. Tems having no movement for the last five yeats are consideted as slow moving, Provision for slow-moving stores and spares is charged to income and expenditure account. ‘The Authority reviews the carrying amount of stores and spates on a regular basis and provision is made for obsolescence, if eequced, in ease there it any change in wage pattern and physical form of related stores and spares ‘Trade debts and other receivables Trace debts and other receivables ate secognised initally at fair value and subsequently measured at amortised cost lesan estimate made for expected credit loss based on the probability of defaule at reporting date. Teade debts and other receivables considered irecoverable are written offCIVIL AVIATION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS FORTHE YEAR ENDED JUNE 30, 2019 57. 58. 58. a ») 9 5.82. 59. 504, Cash and cash equivalents Cash and cash equivalents comprise cash balances, and current andl deposit account balances with banks FFor the purposes of cash flow statement, cash and cash equivalents consist of eash in hand, cash in ‘transit, balances with banks on current and deposit accounts and investment with maturity of less than three months and having insignificant risk of changes in value Staff retivement benefits Defined benefit plans Pension and geatwity fand ‘The Authority operates an approved funded defined benefit pension and gratuity fnd as contained inthe ‘compendium of pension issued by GoP from time to time for the permanent employees. The fined provides pension based on the employees last drawn salaries. Pensions are payable for life to employees and thereafter to spouse, minor beneficiaries / unmaied daughter(s). Provision is ecogaised in accordance with actuarial valuations carried out every year using the Projected Unit Credit Method. ‘Actuarial gains oF losses (e-measurements) ate immediately ecognised in ‘Other Compechensive Income” 4s they occur, The amount recognised in the stacement of financial postion represents the present vale of defined benefit obligations as reduced by the fair value of the plan assets. Past service costs are recognised immediately ia the Income and Expenditure account. Current service costs and any past service costs together with net interest cost are charged to expenses Medical scheme ‘The Authority provides unfunded post retiement medical benefits 10 its permanent employees. to cover the obligations under the scheme on the basis of actuarial recommendations. The actuarial valuations are carried out using the "Projected Unie Credit Method” ‘Actuarial gains oF losses (re-measurements) ate immetiately recognised in “Other Comprchensive Income’ as they occur. The amount recognised in the Statement of Financial Position represents the present value ‘of defined benefit obligations. Current service costs and any past service costs together with net interest cost are charged to the income and expendinse account ‘Compensated absences ‘The Authority provides for unavailed compensated absences co the extent of 365 days for all its permanent employees irespective oftheir sevice period inthe following event: = Retitement ox = Death or disability duing service Provision are made to cover the obligation under the scheme on the basis of sctuasal valuation and are charged to the income and expendiruze account. The amount recognised in the year-end represents the present value of defined benefit obligation Defined conteibution plan ‘The Authority operates a recognised non-contsbutory provident fund scheme for its employees in accordance with the General Provident Fund Act, 1925, according to which employees’ contabutions are ‘mad to the Fund, Employee contnbution ranges from 3% to 8% of basic salary, depending on employee rade ‘Taxation Current tax ‘The charge for current tax is based on taxable income a¢ current rites oF taxation after taking into account tax credits, rebates and exemptions available, if any, or in accordance with the final ax regime, where applicable, ofthe Income Tax Ordinance, 2001 (tle Ordinance) or the minimum tax under secton 113 of the Ordinance or Aleerate Corporate Tax (ACT) under section 113C of the Ordinance, whichever is higher. The charge for current tax also includes adjustments for prior years or otherwiseFORTHE YEAR ENDED JUNE 30, 2019, 592, 5.10, considered necessary for such yeats. Current tax is charged to Income and Expendinise account except to the extent it relates to items recognised dieetly in ‘Other Comprehensive Income’ in which case tis also recognised in ‘Statement of Comprchensive Income, Deferred tax: Deferred tax is accounted for using the statement of Financial postion method in respect of all taxable emporary differences arising from differences between the carrying amount of assers and liailties i the financial statements and the cozeesponding tax bases used in the compiiation of taxable profi, Defecred tax liabilities are eengnised for all taxable temporuey differences and deferred tax astes ae recognised t0 the extent that i is probable that taxable profits will be available against which the deduetible temporacy Aierences, unused tax losses and tax ereits can be wilsed, Deferced tax assets are remeasured at each reporting dave and are reduced to the extent that ics no longer probable thatthe related tax benef wil be realised Deferred taxis ealelated at the rates that are expected to apply to the petiod when the differences reverse, based on tax rates that have been enacted of substantively enacted by the reporting date Defirred te is charged or ceedited to the "Income and Expenditure account’ except tthe exten it relates {0 tems recognised directly in equity / other comprehensive income in which case ite also recognised in equity / other comprehensive income, Farther, the Authority also recognises deferred tax asset / labity on deficit / surplus on revaluation of propery and equipment which is adjusted aguinst the related deficit / surplus IPRS 9 - Financial Instruments =I ial Recognition, classification and subsequent measurement Initial recognition Al financial assets and labilties are intially measured at cost which is the fue value of the consideration given or received. These are subsequently measured at fair value, amortized east ot cost as the cate may be Classification of financial assets ‘The Authority determines the classifications of financial assets at intial recognition, The classification of instruments (other than equity instruments) i deiven by the Authorie/s business model for managing dhe financial assets and thei contractual cash flow characteristics. These ae classified in following categories: at amortised cost Financial assets that meet the following conditions are subsequently measured at amoctized cost the Financial asset is held within a business model whose objective i to hold financial asets in ‘order to collect contractual eas floes and the contractual terns of the Financial assets give rise on specified date to cash Rows dha ae solely payments of principal and interest on che principal amount outstanding ji, at fair value theough other comprehensive income (°FVTOCI") Financial asses that meet the following conditions are subsequently measuted at FVTOCL the financial asset is held within a business model whose objective is achieved by both collecting the contractual cash flows and selling the financial assets and - the contractual terms of the financial assets give tise on specified date to cash flows that ae solely payments of principal and interest on the principal amonint outstanding, i at fae value through profit or loss ("FVTPL") [By defi, all other financial assets that are nor classified above ae subsequently measured at FVTPL Classification of financial liabitties ‘The Company classifies its financial labiltis inthe following categories: at fic valve though profit or loss CPVTPL"), ofCIVIL AVIATION AUTHORITY ‘NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2019 - aramortzed cost inancial lables are measured at amortized cost, unless they are requited to be measured at FVTPL. (och as instrument held for trading or derivatives) or the Company has opted to messire them at FVIPL. Su sequent measurement {) Financial assets and liabilities at amortized cost Financial asses and Tibilties at amortized cost ate initially eecogeized at fie value, and subsequently ‘carried at amoxcized cost, and in the ease of financial asets, les any impairment. i) Financial assets at FVTOCT lected investments in eqpity instruments at FVTOCI ate initially eecognized at faie value plos ttansaction costs. Subsequently, they are measured a fir value, with gains or losses aising from changes in fae value eecognized in other comprehensive income/loss. iit) Financial assets and liabilities at FVTPL Financial assers and liabilities eared at FV'IPL. are initially recorded at fuie valve and transaction costs see expensed in the income and expenditure account . Realsed and uncealized gains and losses arising from changes in the fait valve of financial assets and lisilities held at FV'IPL. are inched i the income and expenditure account in the period in whieh they aie. Derecognition ') Financi “The Authority derecognites financial asets only when the contractual rights to cash flows from the financial assets expire or when it transfer the financial assets and substantially all the associated risks and sewatd of ownership to another entity. On dlerecognition of financial assets measured at amortized eos, the difference berween the assets caerying value and the sum of the consideration received and receivable recogrised in income and expenditure account. In aldtion, on derecognition of an investment i a debt instrament classed as ar FVTOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve reclassified to income and expenditure account, In contrast, on Aerecognition ofan investment in equity instrument which the Authority has elected on intial recognition to measure at FYTOCI, the cumulative gain or loss previously accumulated in the investments evaluation reserve s not reclassified to income and expenditure account, but is transferred to statement of changes in finds and reserve, ii) Financial abit ‘The Authosty derecognises financial liabilities only when its obligations under the financial Habis are Aischarged, cancelled or expired. The difference between the exerying amount of the financial liabilities erecognised and the consideration paid and payable, including any non-cash assets transferred or libilies assumed, is recognised in income and expenditure account. Financial assets - policy up to June 30, 2018 Trade debts and other receivable were recognised initially at fue value pls ditetlyateburable, if any and subsequendy, at amortized cost les impsitment, if any. Provision for impaiment of trade and other receivable was established when there is an objective evidence that the will aot be able to callect all amounts due according co terms of receivables. Trade receivable considered ierecoverable were written off Impairment of financial assets ‘The Authority recognises loss allowance for Expected Credit Loss (ECL) on financial assets measured at amortised cost and FVTOCI at an amount equal to life ime ECLs except for the financial assets in which there is 10 significant inereate in credit risk since inital recagnition for the financial assets which determine eo have low credit risk atthe reporting date, in which case twelve months’ ECL. is recorded ‘The following were either determine to have low or there was no ere risk since initial recognition and at reporting date:CIVIL AVIATION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2019 sat. 5.12. bank balances, long term deposits; long term loans and advances; and other receivables; Loss allowance for trade receivables are always measueed at an amount equal to ie time BCLs, Life time ECLs are the ECs that result from all possible default events over the expected life of a financial instrument. Twelve months ECLs ate portion of ECL that resule from default events that ate possible within twelve months after the reporting date, ECLs are a probability weighted estimate of credit losses. Cee losses are measured atthe prevent valve of all cash shortfalls (ce. The difference between cash flows due ro the eatity in accordance with the contract and cash flows that the company expects to receive) ‘The gross carrying amoune ofa financial asset is written off when the Authority has no seasonable expectation of recovering a financial aset in enttety ot a portion thereof ‘The Authority has determined that based on the curzent provisioning policy the impact of lifetime ECLs will not have any material impact on these financial statements Off-setting of financial assets and liabilities Financial assets and labltes are offset and the net amount is reported in the unconsolidated statement of financial position i the Company bas a legal right o set-off the transactions and also intends either ro settle on a ner basis orto realize the aset and settle the lability simaleanconsly. Foreign currency transactions and translation ‘Transactions in foreign currencies are accounted for in rupees at the rates of exchange prevailing on the date of transactions. Monetary assets and liabilities in Foteign currencies as at the year-end are expressed in rupees at rates of exchange prevailing on that date, Exchange grins and losses are included in income and expenditure account Revenue recognition (On May 28, 2014, che Intemational Accounting Standards Board ("LASB") issued International Financial Reporting Standards CTIFRS") 15 "Revenue from Contracts with Customers" which provides a unified five-step model for determining the timing, measurement and scengnition of revenue, The standard supersedes IAS 18 "Revenue", TAS 11 "Constniction Contracts" and the number of revenue related interpretations. IFRS 15 was notified by Securities and Exchange Commission of Pakistan for adoption forthe year ending June 30, 2019, “The focus of the new standaed isto secognize revenue as performance obligations are satisfied rather than based on the transfer of visk and rewards. IFRS 15 includes a comprehensive set of disclosure requitements including qualitative and quantitative information about contracts with eustomers (0 ‘understand the narute, amount, timing and uncertainty of revenu “The Authority's business is provision of aviation services to airline, Revenue from providing services is recognised in the accounting period in the which the serviees are rendered, at amonnt that reflects the consideration to which the Authority expects to be entitled in exchange for those goods The Authority has conchuded that based on the contractual arrangement control of services are transferred and performance obligations ate satisfied at» point in time when the services are rendered to the customers Revenue is recognised when the services have been rendeted by the Authority and received! by the customer and there is no unfulfilled obligation thar could affect the customer's acceptance of the service. Revenue of different streams i recognise as Fallows = Revenue feom rendering of services is recognised when services ate rendered = ecrcty charges are recognised on the basis of meter reading and at the rates approved byCIVIL AVIATION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2019 53. 5.4. 5.5. 5.6, 57, = Rerurn on bank deposits and investments is recognised on time proportion basis talking into account the effective rate of return, Rental income arising from investment properties is recognised in accordance with the tetms of agreements Other income, iFany, recognised cm acer bass Provisions Provisions ate recognised in the statement of financial position when the Authority has a legal or constructive obligation, as a result of past events, and it is probable that an economic outflow of resources will be required to setle the obligation, and a reliable estimate can be made of the amount of ‘obligation. However, provisions are reviewed at each reporting date and adjusted to reflect the curtent best estimate Civil Aviation Authority Fund Excess of assets over labiltes taken ver as on December 07, 1982 and funds released to ADA prior to December 07, 1982 and other dues from ADA represent the balances received foom defunct ADA. Accumulated surplus Accumulated surphas includes all current and prior period rettined sup. Government grants and assistance Grants ftom local and foreign government and other similar bodies are not cecagnised in the statement ‘of nancial position until there is a reasonable assurance that the Authority will comply with the ‘conditions attached to them and thatthe grant wil be received, Government grants are first recognised in the statement of financial po ton and then subsequently accounted for in the income and expenditure account on a systematic basis aver the periods in which the Authority recogaises as expense the related cost for which the grants were intended to compensate following income appeoach. Specially, government grants related to aon-deprcciable asset such as freehold land whose primary condition is that the Awthortyshovld constrict a non-curren asset on sich asset are recognised as povernment grants inthe statement of financial position and transferred to income and expenditure account on a systematic and cational basis over the useful lives of the depreciable constructed assets Government grants received as non-monetary assets, such as security equipment, are accounted for atthe fair valve of the asset granted. The government grants so received are recognised in the Tneome and [Expenditure account on a systematic basis over the petind and in the proportions in which the Authority depreciates the asset so granted Government grants that ate receivable as compensation for expenses or losses aleadlyincurted ot for the purpose of giving immediate financial support to the Authority with no future related costs are recognised in Income and Expenditure account inthe period in which they become receivable, If government grants related to assets exceed the ammount of grant utilised up to date of capitalisation of the selced assets, the amortisation of the grant is restricted to the cost of the astet so capitalise till reporting date ‘Trade and other payables Linbilies for ade and other payables are measured at cost which isthe fait value of the consideration to bbe paid in the future for goods and services received whether billed to the Authority o¢ not ‘Teansactions: elated partes All transactions involving elated parties arising in the normal couse of business ate conducted at arm's length at notmal commercial rates on the same terms and conditions as third party transactions using valuation modes, as admissible, except in extremely rare cizcumstances where, subject to the approval of the bourd of directors itis in the interest of the Authority to do x0,CIVIL AVIATION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS. FOR THE YEAR ENDED JUNE 30, 2019 6. Ga, EFFECT OF CHANGE IN ACCOUNTING POLICIES & CORRECTION OF ERROR Adoption of new standards i) IFRS 9 - Financial Instrument IFRS 9 replaces the provisions of IAS 39 that relate to the recognition, classification and measurement of Financial assets and financial liabilities, derecognition of financial instrament, impairment of financial assets and hedge accounting, The adoption of IFRS 9 from July 1, 2018 resulted in changes in accounting policies and adjustments to the amount recognised in the financial statements. The new accounting policies are set out in the note 5.10 above. In accordance with the transitional provisions in IFRS 9, corresponding figures hhave not been restated, Classifications and remeasurement On 1 July 2018 (the date of initial application of IFRS 9), the Company's management has assessed business models apply to the financial assets held by the Company and has classified its financial instruments into the appropriate IFRS 9 categories. The main effects resulting from these reclassifications and adjustments are as follows: Original Cussifcation NEW Original New Carrying under IAS 39 lesaification: Conying amount er under IFRS 9 amount, As atJume 30,2018 Financial assets Longest loans Loans and sectvsbles Amortsed cost sora sonata Longe deposits Loans and secevablesAmorised cost 18066 19,066 Tee debs ane and resales se3q6——4aseste Interest ceved Loans and reevablesAmortsed cost 46.77 4670 Otherrecenabls Loans and eceivables_ Amorased cost «52390 652390 Loans Loans and receivables Amortised cost 309,522 309,522 Cash and bank blanes Loansand receivables Amortsed cost __28,104258__25,104258 30,957 53 30 967.553 Financial liabilities ‘Trade and other payables Amortised cost Amortised cost 5,705,608, 5,705,608 Retention money and Arsortized cost Amortised cost 5,955,016 5,955,016 security deposits 11,660,624 11,660,624 IFRS 9 replaces the ‘incurred loss' model in IAS 39 with an ‘Expected credit loss’ (ECL) model. The Authority has determined that application of IFRS 9 impairment requirement have immaterial impact relating to the financial statements in light of the existing policies. ii) IFRS 15 - Revenue from contracts with customers ‘The adoption of IFRS 15 which replaced IAS 18 Revenue and IAS 11 Construction Contracts did not have any impact on the timing and amounts of revenue recognition of the Authority. Therefore, adoption of IFRS 15 at July 01, 2018 did not have an effect on the financial statements of the Authority that may require retrospective change and restatement of comparatives for the year ended June 30, 2018.NOTES TO THE FINANCIAL STATEMENTS, FOR THE YEAR ENDED JUNE 30, 2019, 6.2. Development work-in-progress During the year ended June 30, 2019 management discovered an extor regacding the treatment of Thar airport being constructed on behalf of Sindh Coal Authority, Government of Sindh (SCA). The Memorandum of Understanding between the Authority and SCA dated April 17th, 2010, states that the Thar Aisport was t0 be constructed by the Authority and was to be handed over to SCA. The related asset is property of SCA, however, the same has been capitalized in the books of Authority as Development in progress, which has resulted in the overstatement of non-current asset and non-custent liability ‘The error has been corrected by restating each of the affected financial statement line items for the prior periods as follows: As of June 30,2018 As offune 30,2017 ae Ae previously Restatement As restated previously Restatement As restated reported, reported —— Rupees in’000" Effects on Statement of Finan position Development work-in-progress 2,127,500 (2,127,500) 1,586,696 (1,546,696) Deferred Income 2,750,867 (2,086,712) 663,755 2,895,499 (1,694,348) 661,151 ‘Trade and other payables 5,705,608 = 5,705,608 6,275,612 147,652 6,423,264 Other receivables 611,602 40,788 652,390 600,072 ~ 600,072 Elects on Statement of Cash flows working capital and othec items (11,960,525) (188,440) (12,148,965) (8,311,841) (389,377) (6,701,218) Payments for development work-in-progress (580,804) 580,804 (962273) 862,273 Receipts fom coasteuction of Thar Airport 392,364 ($92,364) 472,896 (472,896) ‘The above restatement have no impact on income and expenditure account and Statement of changes in Funds and reserves.‘oppny 950 ar 99 poi ow Op ExT SOE PET « = 7 7 ca ow ss 5 (ae wonroondp ey HTT TERT og sm = ee ee ss - monsnlpy wopeesoy (esses) es) 24 of wonseansog sere jatoore ese suse _sawrien weve aia ars ia * ; oe'cze (eerteeo (wesc __onr'sor) setpovser cry [es (WLC : seis, Kone \scvecoo | [orewses eeu e'secon - ovens were etnies wan ae cara oss : ui : owes saree ssa wena seeueseor server 0 Af -sopoue paren, se Yost ny — aoe 005) por sem ayy pv sounds scared spe pry od ‘eins pam Ta — ovate ssrveres (oon, tna) soe 1 2eN “ioe WANT GONG WAR THT WOT SINSWALVIS IDNVNId 3HLOL SION ALBION NOLLVIAW-TIMD99 pam oo = me 9p Tose pT 10 som oe i) 02g 20(-soseasog powmany uae sone EL fo - sored peony 101 20a Fang rns ed ge voneneg secs. Loree scruter 0 fed sy owe — 3) spear ay Pat pur suas Yeon pry permit nnd Siemon ope ‘ioe W NTT HON WAN SHEWO SINSNSLVIS IVDNVNI THLOLSALON, ALNOHIAV NOLLVIAY IADCIVIL AVIATION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS, FOR THE YEAR ENDED JUNE 30, 2018 7a. 7A2. 713. Land includes various pieces of land acquired from the GoP whose final consideration has not yet been agreed. The value of these pieces of land has, therefore, been determined by Executive District Officer, Revenue at Rs. 228 million (2018: Rs, 228 million). ‘The Authority follows the revaluation model for operating items of "Property, Plant and Equipment. ‘The fair value measurement a8 at June 30, 2019 was performed by Anderson Consulting (Private) Limited, an independent valuer not related to the Authority, in collaboration with M/s, Riaz Alsmed & Company Chartered Accountants. The valuer is on pane! of Pakistan Bankers Association and possesses appropriate qualification and recent experience in fair value measurements in the relevant locations. The fair value of operating items of property plant and equipment was determined using, the comparable price method after performing detailed enquiries and verification from various estate agents, brokers and builders, recent market prices of assets keeping in view the location of the assets, theit condition, size, utikzation, and other relevant factors. In estimating the fair values, it was also considered that the highest and best use of assets is their current use, The fair value of the assets subject to revaluation model fall under level 2 of fair value hierarchy (ie. significant observable inputs). Had revaluation not been carried out, the book values of operating assets would have been as follows: 2019 ; ‘Kecumulated Written Cost depreciation _down value Land 5,849,934 - 5,849,934 Buildings, runways, roads, pavements and fences 84,964,275 (22,152,387) 62,811,888 Plant, equipments and accessories 40,299,638 (15,963,823) 24,335,815 Computers 664,187 (505,454) 158,733, Fornituce, fixtures and other equipment 1,894,476 (702,508) 4,191,971 Aircrafis, 754,693 (392,476) 362,217 Motor vehicles 4,022,505 (3,697,452) 325,053, 138,449,708, (BAG OTT) __ 95,035,611 2018 ‘Accumulated depreciation (Rupees in 000)— Written Cost down value Land 5,849,934 c 5,849,954 Buildings, runways, roads, pavements and fences 82,332,653 (19,023,474) 63,309,179 Plant, equipments and accessories 39,486,956 (13,461,422) 26,025,534 Compaters 519,742 (477,263) 42,479 Furnieure, fixtures and other equipment 1,857,906 (679,451) 1,278,455 Aircrafts 754,093, (873,865) 380,828 Motor vehicles 3,967,906. 3,633,608) 334,298 34,769,790 37,549,083) 97,220,7073sr9 S07 OL, 610g e203, soo, Beccl SOS ‘>t 000'00§ a Fapo2ox9 ot Jgeepipin seas 50 any nop BoE was TV 9 p>US mga sung Beng epos ais wa, ss wore 10125 roy, wrqeeny myers syouag Seouy €z okt po09 mofoy vem sy syouag GeoUY CL) oak seam rang yy bur, sgswog GeREUY (si) so eae seo) peng poses aman i yo209 noloy © me os sung sans werk poi09 mole; $99 ie su Beng sor fog ga sup of BES PEN 9s BL 6 e105 0 aD HARDY er en05 wo ey om sk tw oie ease, wooTES EV WL wo Skt mpei0g nosey 0p QI NEE a or you05 oso, 20 $y aodsang Seasmy cotter’ sodas Season PaEGY POSNER IN ol 2. oD seo rans ‘abary wears ne mses sum aan Pegs AV FES YD ze ste upg Bas to's 2adoang dency owt 66 set sodsong enor SRL¥¥O Mere) moKog, — ayeuag SomTDUY (G¥2) op ase soHe9 wag, Seay URS GY syouag UY (68) re spo109 Hokey penpeus vesbery 5 syg AoeUY OT uw seam Bens 4223 0000s“ Bepa20%9 ampeper san yo 267 wo ea) sonyan 201099 sone adorn, 209 ort sit act ust {28 000005 4 Busp2ox9 0 Sqenpesspor ur suas Jo anys uno wan, 209100 so ost use ete os pur Osavleprgn> Addins sanod yeomy $289 000'006 a Hpaoae> -wepipar usa 30 ayes wap wR, souosso20e pur ouidinba Sumig i ssning yo snap, oe Jo 290 sor | smote | ei ving 30 sermon 1Psodspp 50 2p0y4 sonny | pommenany | Fa owidinbs puv wed “xodord jo esodsi “7 Gioc OF ANI GAGN UVaA AHL WOT SLNGINALVIS TVIONVNId SHI OL SULON ‘ALRIOHLAV NOLLVIAV TAICIVIL AVIATION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS. FOR THE YEAR ENDED [UNE 30, 2019 73 Assets underlying Farah Sulake 2019 Buildings, runways, ads, Land pavements and Toss! fences Gross carrying amount -July 01, 2018, 20,715,291 19,540,430 40,255,721, ‘Transfer to operating assets 20,715.20) (49,840,430) (40,255,721) Revaluation adjustment : - : Gross carrying amount -June 30, 2019 ee Accumulated depreciation - July 01, 2018 = = 7 Depreciation forthe year 5 : Revaluation adjustment Carrying value ~June 30, 2019 See ee 2018 Trdings, anways, road . a pavements and "eel Gross eareying amount -July 01,2017 18,758,053, 11,099,555, 29,807,608 Revalsation adjustment 1,957,238 8.516354 10,473,392 Revaluation (deficit) /teversal 25,479) 25.479 Gross eneeying amount - June 30,2018 2071551 19,540,450 40,255,721 Accumulated deprecation - July 01, 2017 Depreciation forthe year : 539.989 539.980 : 339,989 539,989 Revaluation adjustment 539,989) 539,989) Careying value - June 30,2018, =a a 734. In December 2015, the GoP issued three year Iarah Sukule Bonds amounting to Rs. 314 billion through The Domestic Sukule Company Limited (IDSCL), an agent of Suleuk certificate holders. For this purpose, land measuring 1,510 acres of Jinnah International Airport Jinnah terminal level 0 to 8, runway 1 and 2, Gee-Fghting shed, old terminals CAA Head office, Cargo building, CAA flats, houses, clubs, medical centee, general ‘engineering depor, rown ship medical centre, model school, commercial centee, office building, meteorological office were the underlying aset. Under the arrangement, the Authority had sold the assets to TDSCI, and the Authority is holding che assets in trast for Sokuke certificate holders. The legal documents executed by the Authority and the relevant counter parties reveal that the said assets have been leased! out under an. Jjarah agreement to the GoP with an undertaking to resell the assets to the Authority atthe end of dhe Farah term, Although the legal documents have contemplated the overall arrangement on the model of Tarah Sukuk, the ‘management of the Authority had exercised its judgment, as required under International Accounting Standard (IAS) - 1 ‘Presensation of financial statements, chat the above transaction was, in substance, a financing rangement and therefore did not give tite to revenue on account of disposal of the underlying assets. The management had also determined that the Authority eauld not dereengnize che assets at the conditions laid down in TAS ~ 16 ‘Property, plant and rquipment’ ro drecognize the undesying assets from the books of che Authority have not been satisfied, Additionally, directive issued by the Ministey of Finance, GoP wide is letter ‘number 4@1)ER(C-IID}/2 dated February 03, 2010, stated shat the said transaction nether involved any physical ‘wansfer ofthe underlying set nor created any financial implications forthe thorityCIVIL AVIATION AUTHORITY. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2019 14, TAA. 15. In view of the above, based on substance over form and the fact that proceeds of Sukuk Bonds had been retained by the Ministry of Finance, GoP and the repayment of Tjarah rentals were the responsibility of the Ministry of Finance, GoP, the Autority did not derecognized the undelying, assets from the financial statements. However, during the year, the bonds have been matured and accordingly the underlying assets have been transferred back to the Authority Details of forced sale value of revalued property, plant and equipment Description of Assets value Rupees 1000 Land 293,568,185 Buildings, runways, roads, pavements and fences 95,367,374 Plant, equipment and accessories 22,710,398 Computers 115,980 Furniture, fixtures and other equipment 1,076,851 Aicerafts 271,891 Motor vehicles 41,770,603 1, 881,282 ‘The above forced sale value has been taken from revaluation report of Anderson Consulting: (Private) Limited on the request of Riaz Ahmed & Company, Chartered Accountants, Note 2019 2018 Capital work-in-progress Civil works 27,419,416 17,745,798 Consultancy charges 2,238,906, 2,083,471, Advances to suppliers / conteactors 438,680 ce TAA 30,097,002 20,342,728 Movement in capital work-in-progress Opening balance 20,342,728 54,854,829 Additions dusing the year 13,128,395 20,060,428 ‘Transferred to operating assets during the year 3,374,121) __ (54,572,529) Closing balance 30,097,002. _ 20,342,728, Movement in capital item in transit Opening balance 808,377 276,930 Additions during the year 151,583 356,017 ‘Transferred to operating assets during the year 24,570) Closing balance 959,960, 808,377CIVIL AVIATION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2019 8. 9a. 9.2. 9.3. 9.4, 10. 10.1. INTANGIBLE ASSET cost. AMORTIZATION Written Opening Additions Closing Opening Forte Closing owe aid specs in 1000) 2009 165,253 18,695 183,948 142,584 6,862 9,46 34,5023 2018 164,224 1,029 1 3 «134,536 8,048 142,584 22,669 30% Note 2019 2018 Rupees in '000)~ INVESTMENT PROPERTY Balance at beginning of the year 83,660,807 67,453,637 Revaluation gain on Investment Property 22,999,706 106,660.51 Investment property comprises of Land 106,560,935 83,564,362 Building 99,578. 96,445 3,660,807 ‘The fair value of the investment property ageregating to Rs. 106,660 million was arrived at on the basis of the valuation carried out by Anderson Consulting (Private) Limited, an independent valuer not related t0 the Authority, in collaboration with M/s. Riaz Ahmed & Co. Chartered Accountants. The valuee is on panel of Pakistan Bankers Association and possesses appropriate qualification and recent experience in fair value measurements in the relevant locations. The f value of items of investment property was determined using the comparable price method after performing detailed enquiries and verification from various estate agents, brokers and builders, recent market prices of assets keeping in view the location of the assets, their condition, size, utilization, and other relevant factors. In estimating the fair values, it was also considered that the highest and best use of assets is theie current use. ‘The Authority has incorporated fair values of items of investment property as of June 30, 2019 in the current year financial statements. Revaluation of investment property resulted in revaluation gain of Rs.23,000 million (2018: Rs.16,207 million). Forced sales value of land and buildings is Rs.79,921 million and Rs. 74,683 million respectively. Note 2019 2018, LONG-TERM LOANS (Rupees in '000)~ Considered good, secured Long-term loans to employees to 1,509,612 906,996 Effects of discounting 102 (53,880 - 1,455,732 906,996 Receivable within one year 13 (436,025) (309,522) 1,019,707 507,47. SS ee This represents loans for automobiles and motor cycles to employees. These are secured against General Provident Fund balances of respective employees, and are repayable in equalCIVIL AVIATION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2019 10.2. 10.3. n. a. 2. A. 12.2. 123. monthly installments over a term of seven years. ‘These carry interest at rate of 4.75% (2018: 4.75% to 5.75%) per annum, 10 5.75% ‘This represents the impact of amortization of interest free loans given to employees. Loans has been discounted @ 5.75%. ‘The maximum aggregate amount of these loans outstanding at any time during the year was Rs. 1,510 million (2018: Rs.949 million). Such maximum amount is calculated by reference to the month-end balance. Note 2019 2018 STORES AND SPARES -(Rupees in '000)- Spares 284444 279,945 Provision for slow-moving stores and spares na (32,501) 51,594) 251,943, Movement in Provision for slow moving stores and spares Opening balance 51,594 69,842 Reversal of provision for slow moving stores and spares (19,093) (18,248) Closing balance 32,501 51,594 TRADE DEBTS Trade debts aeronautical - net 124 2,934,564 3,971,821 ‘Trade debts non-aeronautical - net 122 613,500 266,295 3,548,064 Note 2019 2018, Aeronautical Rupees in '000)- Considered good 2,934,564 3,971,821 Considered doubtful 67,116,704 __ 52,104,579 Trade debs - gross 710,051,268 56,166,400 Less allowance for expected credit losses 1233 __ (67,116,704) (52,194,579) ‘Trade debs aeronautical - net 2,934,564 3,971,421 Non-aeronautical Considered good 613,500 266,295 Considered doubeful 2,076,467 1,569,492, Trade debts - gross 2,689,967 1,835, Less: allowance for expected credit losses 123.3 (2,076,467) __(1,569.492 Trade debts non-aeronautical - net 613,500 266,295, Classification of trade debts by parties: Due from (PIAC) Corporation - net 123.4 : Due from other patties - net 1232 3,548,064 3,548,064. 4,238,116CIVIL AVIATION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2019 Note 2019 12.3.1, Due from Pakistan International Airlines Corporation - net 2018 (Rupees in '000)-—— Considered good 7 Considered doubstfal 65,300,416 Write-off - Less: allowance for expected credit losses (65,300,416) 51,724,305 12.3.2. Due from other parties - net Considered good 3,548,064 4,238,116 Considered doubeful 3,892,755 |[ 2,039,746 Less: allowance for expected credit losses (3,892,755)||__(2,039,746) 3545068 DIR TG 12.3.3. Allowance for expected credit losses Opening balance eronential TAEDA 00 = Moma 169,492 ||_ 1385054 BRToROT ——4,70,539 ‘Allowance made/(covesed) daring the year = demonoid TYRE] | TORTI = Non-tronautca 505975 ||__ 184,38 429,400 11,063,517 (Cid am ~ Aeronautiel Tra | SA TDISTO “Mestaneonaed 2,076,467 ||_1,369.492 12.3.4. ‘The age analysis of trade debts due from PIAC: 2019-. Non-aeronautical Gross Impaired Gross Impaired (Rupees in 1000). Due within 30 days 1,669,628 1,669,628 99,871 99,871 30 to 60 days 625,169 625,169 135,831 135,831 Over 60 days 62,517,200 _ 62,517,200 252,717 252,717 64,811,997 64,811,997 488,419 488,419 s 2018- Aeronautical Non-aeronautical Gross Impaired Gross Impaired (Rupees in ‘000)- Due within 30 days 1,323,675 1,323,675, 75,411 75,411 30 to 60 days 471,825 471,825, 102,563 102,563 Over 60 days 49,927,407 __ 49,927,407 278,643, 278,643 51,722,907 51,722,907 456,617, 456,617 RTO 51722, 007 456,017 456.617CIVIL AVIATION AUTHORITY. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2019 1B. Te 15.1, 15.2. Note 2019 2018 LOANS AND ADVANCES. (Rupees in "000) Current maturity of long term loans 10 436,025 309,522 Considered good Advances: + for goods and services BA 1,050,763, 1,023,105, = for traveling and daily allowances 13.2 7,019 10,338 1,057,782 7,033,443, Less: Provision for doubtful advances 134 (1,000,000) (1,000,000) 493,807, 342,965, ‘This includes an amount of Rs, 500 million each paid to M/s Heavy Tasila and M/s NESCOM. as bridge finance for the purpose of upgeading security infrastructure at airports as per directives of the Aviation Division dated July 07, 2014, The amount is to be reimbursed by the Aviation Division to the Authority as soon as the requisite supplementary grant is received by them. Management is in correspondence with the Cabinet Secretariat (Aviation Division) for recovery of the amount, however due to non receipt of any response from the respective government authorities, as well as due f0 the time elapsed from the date of disbursement, ‘management has made provision in respect of the aforesaid advance, Advances for traveling and daily allowances are secured against General Provident Fund, Note 2019 2018 OTHER RECEIVABLES (Rupees in '000) Foreign travel tax receivable from airline operators 240,208 240,208 Government airport tax receivable from sitline operators 359,510 324,907 Royal receivable 13,665 13,665 Receivable from Sindh Coal Authority - 40,788 Others 32,819 32,802 652,390, CASH AND BANK BALANCES Cash in hand 2,996 3,559 Cash at bank ~ current accounts 251,167 341,85, ~ deposit accounts 154 2,723,418 7,258,824 ~ Teem Deposit receipts 152 24,042,400 17,500,000 Z7,019,981_ 25,104,258 ‘The mark-up on deposit accounts ranges from 3.75% to 11.70% (2018: 3.75% to 6.10%) per The mark-up on investments ranges from 6.8% to 13.75% (2018: 6.35% to 6.90%) per annum,CIVIL AVIATION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2019, 16, 16a. 162 n. m3, 72. 18 18. 182, SURPLUS ON REVALUATION OF FIXED ASSET ‘The Authority catres its “operating Assets” on revaluation model The surplus would be realized on disposal of revalued assets and chagge of incremental deprecation, Note 2019 2018 (Rupees in 1000)— ‘Susplas on revaluation of fixed assets 161 463,967,405 320,403,764 “Les: Impact of defereed tax ibility on the sumps 162 21,322,027) (19,281,735) 42,515,578 307,122,029, Surplus on revaluation of fixed assets ‘Surphs at the beginning ofthe year 320,403,766 186,571,543 ‘Suplas on evaluation arising during the yea 197,766,679 135 708528 Tess incremental deprecation (4194940) 1.367,788) Less: fixed acts deposed off during the year 3,097) 923) THS565, 64 733,832,221, Supls atthe end of the year 3 367,405 20 05 56 Impact of deferred tax ability om the surplus Balance a begining ofthe year (49,281,738) (103884454) tect of - surplas on revaluation arising during the yeat (6,259,173) (0,323,408) + defered tax on ineremental depreciation and disposals 1218,881 565,312 Gis22,027) Ti5044550) fect of change inapplicable tax rate 172 : 362,815 Balance at end of the year [amy DEFERRED TAXATION ‘The net balance of deferted taxation is in respect ‘of temporary differences in respect of credit balance asing on account of Property, plant and equipment (6,510,822) Trade debts 20,066,020 ~ Provision for post retirement benefits 9,855,551 Surplus on revaluation of propery, plant and eqpipment @1322,027) (19,281,735) + Deferred tx income on funre adjustable income : 28707 Loans and advances 305,625, . ‘ade and other payable 11,00. 2885, 305,747 Gbe.t6a Balance a beginning ofthe year (0,032,468) (4,798,087) Charged to income and expendicure account 114,687,283 1726,176 Adjusted against sorplus on revaluation (6,259,173) (01323,408) fect of change inapplicable rx rate ‘ 362,815 Rovted throngh OCI soo, alanee at end ofthe year 370° Ta GOVERNMENT GRANTS Opening 9.459,642 8376319, Received during the year ‘546,017 1,367,335 Released to Income and expenditure acount (314,985 784.212 Closing 3,690,708 359,642 ‘This includes an amount of Rs. 969 million disbursed inthe year 2000, being intalment paid by Go forthe setement of the long outstnding matters with the Government of France in respect of M/s. Sogea-France, Jinsah Terminal Complex, Karachi. The aggegate chim of Rs. 409 bilion acknowledged by the GoP inchales cost, «scalation, lated financial charges ad legal fe. Remaining instalments have been pak bythe Authority. he eonteietor of ‘The GoP vide eter No. M6(7)-BR 1/2000-886 dated June 30, 2001 sanctioned an amount of Rs. 1.25 bilion a loa to the Authority during the year 2000-2001 as book adjustment towasds payment of income tax lability of M/s. Sopea However, as this sanction di got involve any ash Row, it hs not been accounted For in these accountsCIVIL AVIATION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2019 w. 4. 4 a. 2 mA 224 m2. 2243, Note 2019 2018, (Rupees in '000)—— DEFERRED INCOM Collection Charges on FT & GAT 194 64,402 663,755 ‘This amount represents collection charges charged by the Authotty for the collection of Foreign Travel ‘Tax and Government Airport Tax on behalf of the Government, It is charged as 5% of the total amount collected by the ‘Authority Note 2019 2018 ‘TRADE AND OTHER PAYABLES “(Rupees i "000) Craitors 1,865,746 1,058,767 Acerued abilities 28843 2301,932 ‘Advances from aitline operators 569,936 513,795 ‘Advances from enstomer and concessioners 295,551 338751 Payable agains land Purchased 228027 228,027 Government Airport tx Payable 360,928 326201 Payable eo Sindh Coal Authority 201 32,440 . Payable to PIAC, slated party, apuinst royalty 13,668 13,655 Foreign travel ax payable 240,208, 240,208 Withholding Encome Tax Payable 12,005, 68085 Withholding Sales Tie Payable aman 491679 Others 109,617 1243528 Sl as “This test consti of Aiport in Dit Thapaar for which Memorandum of Understanding wa signed beracen Sindh Coal Athos, Government of Sindh and Gel Aviation Atontyof Takstan This amos repre the diferenceberwcen the fans rected fiom Sindh Coal Auhonty andthe funds uted for the consucom of Thar spor wepore of Note 2019 2018, (Rupees in ‘000 SECURITY DEPOSITS AND RETENTION MONEY Security deposits 2,956,108 2.950.656 Contractor retention money 2,106,598 5,004,360, 5.062.703, ___3 955016 CONTINGENCIES AND COMMITMENTS Contingencies Various chim for damages and compensation other than those disclosed in note 22.1.8 are under ligation against the Authony, aggregating to Rs 1,024 milion (2018 Rs, 1,882 milion) Various and ex-employees of the Authority have lodged claims against the Authority for thie des specifically relating to theisresinstatements and other services maters. However, no Liability can be ascertained at this stage and accoringly no provision has been made in these financial statements Contractor rated to capital work in progress at New Ishmabad Intemational Aisport has lodged different claims sgsins the Authority of various grounds, amounting fo Rs, 15,758 milion on account of principal and Rx2,082 milion ‘on account of interest, The Authority has paid Rs. 3,951 million on the basis of interim payment certificates (IPCs) cetited by the enginer in accordance with the conditions of the contracts ‘The disputes are at diferent stages for settlement in accordance with the conditions of the contract, therefore, ulimate outeome of the disputes cannot be ‘determined at this stage. Accordingly, no provision there against has been made ia these financial statementsCIVIL AVIATION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS FORTHE YEAR ENDED JUNE 50, 2019, Duis of significant legal cases agains the Civil Aviation Authority ae given below: sia 00 cour Factual Descron Date of Panty Refi Soughe Onderrrredin AAitaton isp ting wo cumncy ‘uly 11,2009 TLV CAA rasee _peparion nN Onleresewein Aton Dit freniemen fc cost July 11,2009 LTJV ys CAR 5.87069 romper OnleemsemtdinAaitmton Ref of dicot on he uy 11,2009. LTV CAA 20sast7 Sind igh Gout Dit ating toand Joy 14,2009 HajijumvsCAA 1001498 Sind igh Cour Sui (oemeovey of damages ___Jama 31,2017 M/sSvedava CAA a0gg00 Note 2019 208 (Rees in 00) 222, Commismenss eter of eet eee ee eee eee Commitment for epi expendre 3mm, 192 34510386 23, APRONAUTICAL REVENUE Lansing end bastag Be rsona asvo215 Route mvigatna ee 13369 80 aoj200.882 Enbsian foe taso.as i350 Secs changes fee sm 992 #307210 Jpfnencure deraepccar cary he Seas soutase Ave power soppy ores ‘sie Fire and ence city charge meta soe? ‘Ais cago cy Charges 500678 270.620 Grp Hands rch: 309.281 237.054 {Ground handing cares eon 523.69 Pre-Condon Ar Pay charges nat 182 Alpen Ch son. 7329, aa 24, NON-AERONAUTICAL REVENUE. Uslies 92368 ross Porter verve changes 16436 190878 Spec development project “or ‘er iP lounge income unas 232,108 Royals on me! ple D6 1308 ‘Advertisement sos wae cape ete ansoa 1517367 Ground bunting, saat ‘so urns amis 312950 Rental income 4837650 ar6318 Fe throughput 351,152 Bore, aaCIVIL AVIATION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE. 30, 2019, 25, 26. INSPECTION AND OTHER SERVICES Aieworthiness and Hrense foe CCatbeation charges Services rendered Collection charges on foreign travel tax GENERAL AND ADMINISTRATIVE EXPENSES: Sabie, allowances and benefits Advertsing and publicity Provision/Reversl for slow moving stores and spares Subseriptons Provision for pension and grainy Provision for medical benefits Provision for compensited absences leeticiy, fel and water Allowance for expected erat loses elated pati ~ other than relate partes Horticulane Depreciation Amortization of intangible asets Rent, rates and taxes Printing stationery and pesiaicals Contactor ousource manpower Rental and hiring charges for secuty gant CIP Lounge Repairs and maintenance Leal and profession) Auditor's remoneration Iasurance CCUPPS & BRS Witeoff of propety, plant & Equipment Revaluation Deficit Taavellng and conveyance Training “Telephone, postage and communication Others Repairs and maintenance Alnceateabration Bulding Consumable stores and spates omit and fixes Plant and equipment Vehicles ‘uit Fee Halt yealy review Oucof pocket expenses Other services ring the ye revaluation deficit of Rs852 milion 201 Re 5,276 milion) Note " 3a 334 331 1233, 264 264 262 263 65 2019 (Rupees in “000)-~ 2018 190,28 220596 19857 3s! ou S21 ‘an See See 16,458059 15,50998 a8 3002 9193) 328 25033, 15.082 arses 1,502 aoa 11040930 S86 ‘0287 3,385,582 aan BEET Taare 183,009 35054 7.9,100 Taes7 ine 18798 ontn83 sans ‘saa a8 1738 soe atsi0 48847 1062907 ao94 358 94859 a1 2009 1307987 sett 94955 aso? a2 2052 sess east mans " 107930 ssaan 5276290 51,607 20.802 inst 10.800 16960 so3.122 109330 e563 59,032,941 «6,524,098 z2208 8509 ions 36294 setae sages BST 2,000 1500 1000 ‘4 ss mm Zatz the valuer has eatied out a revaluation exercise on the basis of which the Authorisy hat recrdad aCIVIL AVIATION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE. 30, 2019 Note 2019 2018 264, Depreciation - net ——-(linpees in 00) Depreciation on operating aets nM 109057,138 4967789 Depreciation on assets underlying rsh Suk 2 ‘39,989 Amortization of Government grant 18 (314.985 84212) 9,742,155, 3273 66 He, 26.5. This includes amouat of Rs. 1 milion paid to A-Shih Trust as donation during the year 27, FINANCE COSTS Input interest on intrest fre oan employees wo2 53800 : Bank charges 1a ereneraas 28. OTHER INCOME Income trom financial assets Return om bank deposits 2,673,383 1473959 Interest on loans to employees 10 36,254 25.899 Tacome ftom now-faancial assets oss) / Gain on sale of fied acts 440) 6 Gain on disposal of crap and salvage material 3,869 S778 Revers of liabilities A 3028 Others 19,300 21087 aa oe 29, INCOME'TAX EXPENSE Curent 4682288 sossaan Prior 2namnit ‘rao. Deferred 44.6878 176,76 Se, 2941, Reconciliation of income tax expense for the yes Accounting surplus befose taxation 53034733 32,963,720 Enacted toe rate ‘Tax on accounting suplos at enacted rte 15,380,073, 9,889,116, Tax effect of super tax on taxable income 752,405, change n te rate - 302,880 ‘pho year charge 20,298,814 979801 ‘permanent differences (6,689,118) (4683233) temporary differences 2,294,313) - cher 40,178,050 1.831332) Tax expense charged on suplus T2735 5207352 29.2. “The Authority had been claiming tx exemption on the basis oF being a local authority up to tax year 2008, However, the taxation authorities have not accepted the claim of tax exemption, The Authoriy’s appeals against rejection of «exemption for assessment years 1990-1991 theough 2002-2008 are pending before the Honourable High Court of Sth ‘whereas appeals for tax year 2003 to 2008 are pending before the Income Tax Appellate Tribunal (TAT), Hosseve, the Authority, as matter of prudence, hss provided the accumlaed shor of 6 048 billion wp to tax year 2008 in prioe yes 293, The Additional Commissioner Inland Revenue had restarted set-aside proceedings forthe assessment year 2000-01 to 2002-03 and isued revised order under section 62/135 ereating net demaralpayable of Rs. 147 milion by disallowing all M/s, Sogea-Feance, relied issues. The matter has been deeded in favour of the Authority by the Commissioner Inkand Reverne (Appeals) [CIR(A)}. The appeal fled by dhe department with the ETAT on this matter i pending For bearingCIVIL AVIATION AUTHORITY NOTES T0 THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2019 294. The Department has issued various onders u/s 161/205 with sespect to monitoring of with-holding taxes from Tax years 2013 to 2016, creating + nct demand of Rs. $93 milion against which CAA has filed appesls. The appeal with respect to tax yeats 2013 and 2014 is pending before Appellate Tribunal Inland Revenue (ATIR) Whereas, the appeal for Tax year 2015 and 2016 is pending before CIR(Appeals). ‘The Deputy Commissioner Inland Revenue (DCIR) vide order dated August 19, 2013 held thatthe Authority ha not collected advance tax under Section 236-A of the Ondinance. The Authorty has fed an appeal de t0 which the demand has been decreased up to Rs. 219.062 millon. However, the department Ia imposed a efaul srcharge of Re 213.475 malion agsinst which the appeal has been filed, whichis pending before ATIR. The DCIR vie oder dated December 0, 2014 and May 18, 2015 has again demanded tax of Rs. $35.271 milion in sespect of ux year 2013 10 2014 on the same issue. The Authority has fled an appeal with Commissioner (Appeals) for ax year 2013 to 2014 who has remanded the ease with ideniel finding, The Authority ha fled second appeal before the Appellate Tabonal Inland Revenue for tx year 2013 and 2014, whereas Author’ reference application under section 133 of the ITO, 2001 challenging the applicability of section 236A of FTO, 2001 is pending before Honorable ITigh Court of Sindh. 29.5. For tax year 2013 to 2018 the assessments have been amended by the department by making certain adtions and isallowances. The Authority fled appeals with the CIR(A) whese pari rhe was allowed forthe said tax yeas, The appeals of the department and the Authomity for the said tax yea are now pending with che Appellate Tribunal Ilan Revenue (ATR) The management of the Authority, at wel ait tax consultant ate pleading the case before ATR and are confident that on dhe merits of the above eases, no charges on account of taxation will nse for which any provision Js vartanted. The accumulated short fall of tax asested and ta provided amounts to Re, 3420 million (2018 Re, 16303 milion). 2019 2018 30, ADJUSTMENTS FOR NON-CASH AND OTHER Note “——¢Rtupees in 1000) ———- Revaluation gain on investment property (22,999,706), (16,207,170) Provisions sou 21,003,198, 30,854,938 Depreciation - net 9,782,153 5,223,566 Amortization of intangible acts 6,362 Bos nce costs 61022 2960 Return on banle deposits and TDRs 673,383) 0.973959) Terex om loan to employees (66,254) (26399) Write off of property, plant and equipment 107.930 Gain on disposal of property, plant and eqsipment 0 46) Gain on dxposal oF serap and salvage material 62,800) 7783) Reversal of bilities : Prcchange loss 10,948 Revalation Deficit 4.882.417 9,940,828 304. PROVISIONS Provision aginst slow moving stoves and spares 09,093) 08248) Provision for doubtful debts and receivables 15,429,100, 110633517 Provision for compensated absences 38,746 (653,237 Provision for medial facies 4432927 1.040.930 Provision for pension and gratuity 3,975,168 18,115 502, 21,003,198 30,854,938 31 WORKING CAPITAL CHANGES (sre) dese in core acts Stores and spares (4499) 1526 Loans and advances 50,342) 51,798 "Trade debts (4,749,996) (02,733,468) Prepayments 17328 47.182) Otter receivables 6.188 52,318) TAs 826) 302,700) Incas i rent ities Taade and other payables @47,220) (714630) Retention money and security deposies 92383 1 368,365, 5,121,359) 72 148,565)CIVIL AVIATION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2019 32, TRANSACTIONS WITH RELATED PARTIES Related pasties comprise of teirement benefit fund, state owned / controlled entities, common dtectorship companis, GoP and it related entities, and key management petsonnel. Deis of transactions vith the lated patie during the year, other than those disclosed elnewhere in these Financial statements, ae as follows: Name of related party and [Nature of Transaction 29 ans ‘elationship with the Authority see Rupees in 1000—- Pakistan International Aisines ~ Aceonautial Services 13,544,290 103849,388 Corporation (PIAC) - GoP related entity = Non-Aeronavtial 388,507 arig74 “Transactions with key management personnel ae disclosed in the note 35 to these financial statements ‘The transactions described below are collectively but not individually significant to these financial statements and therefore thei extont i quaiaivereems have been described below (@ The Authority deducts income rx ia capacity of withholding agent on behalf of GoP on various payments. The Authority also pays various taxes and dais different regulatory authorities including Federal Board of Reverse, Sindh and Punjab Board of Revenue and Customs authorises (i) The Authority has obtained insurance cover for is spares and fxed assets from National Insurance Company Limited, a federal government controlled enti. (i) The Authority has provided properties on rent to various government controled entities including PLAC and Pakistan State Oil Company Listed, (i) The Authority obtains utility services from govennment controlled entities such ax Sui Northen Gas Pipelines Limited, Sui Southern Gas Company Limited and Pakistan Telecommunication Company Limited and other government controlled wilty entities and power distribution companies, (©) Aiport Security Forces (ASI), a law enforcement agency provides security services fice of charge at all major airports of Pakistan Note 2019 2018 (Rupees in '000)-——- 33. RETIREMENT AND OTHER SERVICE BENEFITS Pension and gravity au 404,202 35,187,487 Medical benefits 3a 12,847,851, 853,406, Compensated absences 34 3,642,602 3553856 B85 asa“coveoret Laces THOT 06 ores Lest Lorsise rE 2 OHBTT srpsve ws vo awoau sasaey ores ss4'808'e : soetiss —_gsr'tes'9 uscieso oosls zero onus plstees §——zas"6ot sumnoase aomuspundso ppue aoa uy pasruooas sued aysusg pouyop 40) ey (2 ce eeoraote cee Toe Ter OT seat amp Jo PUD v3 Tor ws9) —— Ts0's0e"6 {000'000561) 2898 21» Bump apeut onngeo9 He9'siC wasters SBE (cav'se9'2) aenonuy aasuayeidiaey 10 ‘01 sto} yousosnsnoHEay 699%608'6t she's ude as 808 1p 404 (esto) / asubdy ssv'gso0e ose'esste sow'ess's —usv'ust'se seo ojo Huwutiog we sy Sav awjouog pouyep ur imsuasoW —(q ar Wes Fae Se wT aa er Wieecrrd Leer eis tore) - Gis ors) cao'sects —_ses'ese'e suress's —izeosson——_cov'oso'as ——costets'e Iss'uss'zt—_otosstex woneSggo wgeH> uy jo anqen wean wopised yepuruy jo mamains (© ee Sa — Te aay = ar pareswodinoy PAY ue wong povesusdiog) si pur worst Te sypeaq aeotalogdeuo od 248) a ToL saysuaqauawsoydiuorsod ssxag PE _ neunmay SUI ———Saeqneaogasnop Hypaag SaNO|aUS od Pama, PapEAT papanjary =p ‘tte 610 ssmomjoy se are suejd ayousg pouysp ap jo sEEIG “Tee “Gloc 0e ANAT GAGNA NVAA ATLL Or SINAWALVIS TVIONVNId HHL O1 SALON ALTYOHLAY NOLLVIAY TIAIDL9¥*680°06 O9THIE FLO‘G6S"EL Mou Jo pus ie sy HEE arace SST Gra woneqgo wo so may (61692) (oce'ris'z) (ogo'9ste) (spe'Liz'e) o00'g€z's | - seH'808'd a e0e'F86 serves’ usz'eeo cr'cro'? ——oh'ss rusthes er'6or't ei9'0067 eso'sec'zs —_oee'esste sor'ess's ——Lzs'088'69) sea ox Jo Suruuifoq we sy ‘woneiigo wyau9q pouysp jo onjesauasoid ur wwomD.oyy (2 Bice z SLOT Tes 7 Wit ear eIO) ‘00's99 ro0's99 (cx6‘008'D) : a (cro‘00r'D z's E soe 6sZ sut's 7 esc'euo'7 TITLES = SEE LEST BLUSE : eSTELIT auroouy axgstsyazdasos 19430 wt pastaifooss wey ayouaq pougep jo we3 / sso] ususmsesusy — (P ——— —— — parsuaduoy PN parsusdwoy — MPN pur uorsuag or duel = yo, sag amiqduoned an mee Hoey emma ho Tyoog WaMTOLAUID od Popa = a PepaayELy papa sic toe Gide 0 ANTI GAGNA UVAA AHI WOd SINSWALVIS TVIDNYNIM SHL OL SALON ‘ALIMOH.LAV NOLLVIAV TAIwawer Tete DesorOT ——“toSsITeT 102 ‘og f vores SFL Teast it sise 610% ‘0g sun (000, 159980) — seo 24p 10) wnoD9e sunuypuodxo pu suoour ap 0 Bre 55586 paresuadwoy W pmeuomg ron Pepa papa, Saou Te een “ast os = = Tin FOr oe : 5 : 7 ssargeey seo'uss soc'nes't seat yseg zaceur sor‘oee sor'oss wounsanu uo pawea 901 ooo'000%E ——ooo‘easer + : 00'006'¢r (HCL) stuaxmsosur jo soueayt29 Buysonoy 2 Jo asnduoo siosse unig OR) xsooey as319154 Burpnyoxs siosse ued wo #807 TIS FOr IS 5 Tas FOr9E eaG amp Jo pua we sy The OFT Tas 00FT atuo2er ara. : Suppxs sasse und uo S807 Gre Gere'uic'd pred sisi ‘00! : ‘000°000'6t svoungaeo7 ove" : owes’ soosie ud uo woman poi O9T'SS9'8z_ OLE‘ECL'DE . OLE Eze ‘be ead atp jo Summniiag ye sy ssse ‘woyd jo anges sey w auau9KO,, ee (09,8 8924) ———— TRE = Times woWSqE eT me parsuaduioy PRN pur worsuag paresuadwog. pur worsuog sagavaq wuoussoydies sgeud mo, ssysuaq maursojduiss0d 29 NIA auowosnoy Sayouag TsO] Isoge Ppa 0 papuny Glue OF ANI GAGNA UVAA AL Wor SINAINALVIS TVIDNVNIA FHL O1 SALON ALDMOHLAY NOLLVIAV AIDour'ess'se speqnes ab : sr'vse, wondunsse ; ots wromnar | 7 o1L‘6or's 990°E1Z'OL cas on ete _ = fame oe parsusduoy = PW pup orsuog uy aBurey ‘WOREaAGO WSUS PHULSp Jo Tae auosoud ut suondusnsse w afueyo jo medwyy swopeq unoys stunowe ayp Aq uoReigge agousq pouyep ayp peIoaye aacy prom TunsoD suondunsse sompo HupIoy ‘suoRdusse pEBEMIDE IUEAD|As ay Jo avO o1 awe Bumsodas ays seduEYD ajqcod {Iqevoseay suondwnsse jo ssjeue 4 sH9K 69 10K 69 ssaipas jo a8 a 26 1 apaqi9 (-100e) TTS 2896 pea (S0-1000) OTTS aes GEHRY ~ Gnvea3 poe uopsuad 105 suondumsse apydeaSouog, wer - morn ts00 oypaw auaos wod / sase-1 Jo 26y 7 7 ore vowed pared, man : oor wernt sera Gms paradeg oF - : -ooste uyd wo tumios Jo ares porsodg 00 “0008 vec wort ayer 1un028] suondumnsse wopenyes pus “ eoueege ween ee ee Grant payestroduio7) i pur uorsuag — payesuaduroy pur worsuog Pa PERE PopeweA, Popa a0 ora “olde OF ANAT GAGNA UVAA AHL Wor SINAWALVIS TVIONVNIA SFL OL SALON ‘ALRIOH.LAY NOLLVIAV TAIN‘powansse wep aafuo] s Aousioads> ayy yrure ayp 21 patsods> Jo 14p uewp nyiy st ouondxo Aue yu erage ap ep 8B 94, SE AEHOW, (Or jad Aiypuow yo uso} wt pred Supq 226 szouog rou ‘porsods> ayn wey sow sf aseasou1 Vorsued [erude ap eK SE OK ‘sevauout worsted (it ~mpgeg 00 15edan we poroodss ayy ues soy st aseasour Aseyes peruse auf eK SB OU, SSH woRDyUE / aero Gees CH [pat 22m Jo vores Jo ou xp ae Ares yeu ypu poy ase sifuag asaya “osearoUT Aa ‘puoq wotwwaa08 /ayerodios uo paseg states nmoosip aouns ‘sre mno3stp ur saBoeyD JO 3SN IL yap arson “onmgey ued aeearur yn spa puog w 2563520 =nopq poqep are yong Jo yovogrufis sour aey syst Jo Jaqumu ¥ 0 pasodss st PY’) axp ‘umd 1goUDg pouYap sx YBnOHLL surjd ayouog pouysp ys pareposse sysny (u cuore ¢44'7 “sy 01 sumnowe 294 jerouRUG px>U ay UE papsoseH 9g 61 asuods9 suoneEnGo ayDuDG pouyap parsadys ay (WH smoipt eras, uraig, ekg soontinp und jo saa pongingy eee reps soowodieoy ROPE 09 pow wortog _paresuodion, ait aie wwoneSngo 1you2q ued ayn Jo woneamp aFesose pongo, : wrens preasoy 9s aut Aezopy sor'oet'ot : — va sues 00 pop wun 0d : wes'ero'69 tr oseaisoq, a ssearour vosted parade, £ : tes'suc'00 : vat seca Lge psd £ — suo'nest §——_ret'er's8 * >is wmooety (000, sn) nnn oe ‘mae wondumnsse tag PPP pup uojsuaa wr 98ueq, BEBO WysuS Pouap Jo ane ‘Tur suondumsse ur aueqo so xoeduay “loc 06 ANAT GAGNG UVGA GAL Wor SINAWALVIS TVIONVNId SELL OL SALON ALRIOH.LNV NOILVIAV AIDCIVIL AVIATION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS, FOR THE YEAR ENDED JUNE 30, 2019, 33.2, Defined contribution plans The Authority operates a recognized provident fund scheme for its employees in accordance with the Genera Provident Fund Act, 1928, according ta which employees contributions are made tothe scheme. NUMBER OF EMPLOYEES, 2019 2018 Number of employees at year-end 8,746 8966 Average number of employees ding the year 8.856 9,080 35, EXECUTIVE REMUNERATION, 2n9 18 Director Divector General Executives General Executives {Rupees i 1010) nena Remuneration 39,983, 1602 63540 Anal honts . 2838 3.280 Peequisives Rent : e254 n 6786 Unites : 9,916 09 123886 Enecrtsinment - 522 7 Car maintenance é 1,828 2200 Cae monetization : 29,33, Meical : 8060 288 10.430 House Hold : 5,102 Fuel 5.024 Deivess Poy : 4076 © other allowance 27,039 709 6a.g07 is a8 606 Number of persons 35.1, In addition go the above, the Diector General and Executives have been provided with free ws of care provided by the Authosy. Further, medial expenses ae eimbursed in accordance with the Authority's policies 35.2. During the year office of Disector General emained vacate, the Secretary tthe Board has been given adkitional chaege of Director Geneal the remuneration of whom is nce in the Executive 35.3. Executive means an employee who ranked higher than EG-08, but excluding Directoe General and Members ofthe Board ofthe Ahoy 36. FUND MANAGEMENT ‘The Authority teats finds transferred from ADA as the Authority's Fund. The Authority's objective when managing fund isto uelize them in the provision of world class aviation services forthe benefit of stakeholders, The Authority has suppost from the government to maintain ts sustainability. The Authority isnot subject to externally impose fund requirements 37. FINANCIAL INSTRUMENTS BY CATEGORY Nowe 2019 aoe Herc eee epee of eel ple (ftps in 000} Financial Assets at amortised cost Long em ons TT Tat Depesia 19126 9.066 Trade dees ssisoet |] azss.ti6 Inter cece 13302 46727 Ones recceables 484 1 6905 Gibtet amie anongost||__25.104258 S22BS, 336150, Financial abies at nord cout “iced ees popbls a = Retension money and security deposits 06203 ||_sossiousCIVIL AVIATION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2919 38, 38.4. 3811 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICI ‘The objective of Authority's overall financial risk management is to minimize earnings volatility, The Members of the Boatd of the Authority has overall responsibilty for the establishment and oversight of the uthorty’s risk management frame work andl policies. “The Authority has exposure to the following risks from its use of nancial instruments: ~ Credit sisk Liquidity viske Market risk ‘This note presents information about the Authority's exposure to each of the above sks, the Authority's objectives, policies and processes for measuring and managing those risks, fair value of financial instruments and the Authority's management of capital. Credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party {0 incur a financial loss, without taking into account the fair value of any collateral, Concentration of credit risk arises when a number of counter patties ate engaged in similar business activities or have similar economic features that would cause their ability to meet contract obligations to be similarly affected by changes in economic, pobiical or other conditions. Concenteation of eredit risk indicates the relative sensitivity of the Authority's pesformance to developments affecting a particular industry. ‘The maximum exposure to credit risk before any exedit enhancement at year end is the carrying amount Of the financial assets as set out below: Sarement of Taement oF Financial Maximum Financial Maxine Posi — Position pone (Rupees in '000)-———— Deposits 19,126 19,126 19,066 19,066 ‘Trade debts 3548,064 3,548,064 4,238,116 4,238,116 Long-term loans 1,019,707 1,019,707 ‘597,474 597,874 Cash and bank balances 27,019,981 27,016,985 25,108,258 25,100,704 Interest accrued 133,132 133,132 46,727 46.7 Loans «436,025 436,025 309,522 309,522 Other seceivables 46,484 46,187 46,487 Ti Tso, _3ORSR IG eR Credit Qu ty ‘The Authosity monitors the credit quality ofits financial assets with reference to historical performance of such assets and where available external credit ratings. The careying values of all financial assets wwhich are past de and impaited are given in the note 38.1.2 below: The Authority limits its exposure to credit risk by javesting in liquid securities and maintaining bank accounts only with counter-parties that have stable credit rating. Given these high credit ratings, ‘management docs aot expect that ‘of the Authority’s major bank accounts is assessed with reference to external credit ratings which are as follows uncer party will fail to meet theit obligations. The exedit qualityCIVIL AVIATION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2019, Banke Rating Agency Shor Term — Long Term National Bank of Pakistan, PACRA Alt AAA Allied Bank of Pakistan Limited PAGRA Alt AAA Bank Alfalah Limited PACRA Alt AM Standard Chartered Bank (Pakistan) Limited PACRA Alt AAA al Bank Limited PACRA, Alt AA, MCB Bank Limited PACRA, Alt AAA United Bank Limited JERVIS Alt AAA Habib Bank Limited Jervis Alt AAA Askasi Bank Limited PACRA AL AAt ‘The Bank of Panjab PACRA Alt AA Bank Al-Habib Limited PACRA Alt AAt Habib Metropolitan Bank Lin PACRA, Alt A+ Sonest Bank Limited PACRA, Alt AA JS Bank Limited PACRA Alt AA. Meezan Bank Limited JERVIS Alt AMY 38.1.2. Past due and impaired financial assets ‘The aging of trade debts at year end is as Follows: Aeronautical Non-aeronautical Gross Impaired Gross Impaired coreeeennen (Rupees in 1000) Due within 30 days 4,531,605 1,672,997 53,585 49,935 30 to 60 days 646,444 626,423 368,773 86,338 Over 60 days 64,873,220 64,816,901 _ 2,234,877 _1,940,194 70,051,269 67,116,321 2,657,235 2,076,467, ‘The Authority believes that trade debts for aeronautical revenue due up to 1 year do not require any allowance for impairment while all the balances past due moze than 1 year ate considered as fully ‘impaired. While in respect of non-aeronautical revenue all balances die mote than 1 yeat ate considered fally impaired. However in case of PLAC and some other debtors, the entite amount of trade debt is considered impaired. Credit risk on bank balances and investments is limited as they ate maintained with banks having good ) Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from price) (level 2) and ©) Inputs for the asset or lability that are not based on observable masker data (that isnobservable inputs) (level 3). Currently, there are no financial assets or financial liabilities which are measured at theie fair value in the statement of financial position, CORRESPONDING FIGURES Corresponding, figuees have been reatranged and reclassified, wherever necessaty, for the purposes of ‘comparison and to reflect the substance of the transactions. However, no significant rearrangements or reclassifications were made in these financial statements except as disclosed in note 6 10 these financial GENERAL, ‘The figures have been rounded off to nearest thousand rupee. DATE OF AUTHORISATION FOR ISSUE ‘The financial statements of the Authority have been authorized for isue by the Members of the Board of the Authority on qine | (CHAIRMAN DIRECTOR GENERAL