neon 2013 * BAF rSELYModel of New Control Tower at Multan AiroortTable of Contents 02 03 04 05 14 17 24 25 26 27 28 29 Our Vision Our Mission Core Values About Pakistan Civil Aviation Authority Corporate Information CAA Board Member's Profile Director General’s Review Authority's Performance Review Five Years at a Glance Vertical Analysis of Financial Statement Horizontal Analysis of Financial Statement Key Operating and Financial Data Statement of Value Added and its Distribution Audited Financial Statements AnnualReport 2013 fay |eee Apatt no SRN -" success Weas, SS , g pusigags Us IX busing, VISION. ee “Be aworld-class'service provider. inthe aviation industry?Core Yate Ss ommitment// £ [ Si a les i eee Sis gue ai i eae“Provide safe secure and efficient best-in-class aviation services to _ the stakeholders?” . aAbout Pakistan Civil Aviation Authority Pakistan Civil Aviation Authority (CAA) is a public sector autonomous body working uncer the Federal Government of Pakistan through Aviation Division Cabinet Secretariat. CAA was established on 7th December, 1982 through Pakistan Civil Aviation Authority ordinance 1982. Prior to creation of CAA,a Civil Aviation Department (CAD) in the Minisiry of Defence (MoD) used to manage the Civil Aviation related activities. Ministry of Defence (MoD) continued to be the controlling Ministry even after cteation of CAA on 7th December, 1982. However, in June, 2013, Government of Pakistan assigned this responsibility co Cabinet Secretariat (Aviation Division) The purpose of establishing CAA is to provide for the promotion and regulations of Civil Aviation activities and to develop an infrastructure for safe, efficient, adequate, economical and properly coordinated Civil Air Transport Service in Pakistan. The day of 7th December has significance, as it coincides with the date of creation of International Civil Aviation Organization (ICAO) in 1944 as a result of the famous Chicago Convention. Incidentally, the United Nations have declared 7th December as the International il Aviation day and celebrated as such every yearall aver the world. CAA not only plays the role of the aviation regulator of the country but at the same time performs the service provider functions of Air Navigation Services and Airport Services. The core functions of CAA are therefore, ‘Regulatory, Air Navigation Services’ and ‘Airport Services. These core functions are fully supported by various corporate functions of the organization. The Headquarters of CAA is located at Karachi. The restructuring process undertaken in CAA between 2006, and 2010 has enabled the Organization to meet the requirements of International Civil Aviation Organization (ICAQ). During the Universal Safety Oversight Audit Program (USOAP) ICAO audited Pakistan in June, 2011 and rated Pakistan as about 83% compliant against the world average of 65% ‘The general direction and administration of CAA and its affairs vest in CAA Board which exercises all powers, performs all functions and does all acts and things that need to be exercised, performed or Gone by the Authority. The Chairman CAA Board is the Secretary of the Division to which the affairs of the Authority are allocated. Presently, itis the Secretary Aviation. CAA Executive Committee is the highest decision making body of the Organization. It exercises such administrative, executive, financial and technical powers as delegated to it by the Authority. DGCAA is the Chairman of CAR Executive Committee. The Federal Government appoints the Director General who is the Executive head of CAA and exercises such powers and performs such functions as may be specified in CAA ordinance or delegated to him by the CAA Board from time to time. The CAA Board is assisted by CAA HR Committee and CAA Audit Committee. CAA Quality Council headed by DGCAA and comprising of Dy. DGCAA, all Principal Directors and Directors sets the macro level objectives and tasks/targets of the organization and cversees the organizational drive in pursuit of its vision and mission, adherence to the core values and CAA’s Endeavour to achieve the International Management System Standards. Pakistan Civil Aviation Authority would continue to ensure distinct separation of regulatory functions from the service provider functions, strengthen all the three core functions and achieve, comply and exceed the requirements/standards set by ICAO and International Management System Standards through continued focus on the change process to enable achievement of the transformation as envisaged o AnnualReport 2013 fey |Corporate Information CAA Board Members Mr. Muhammad Ali Gardezi Secretary Aviation / Chairman CAA Board Air Marshal Sohail Gul Khan, HI(M) Vice Chief of the Air Staff / Member CAA Board Mr. Hassan Nawaz Tarar Secretary Planning & Development Division / Member CAA Board Air Marshal (Retd) Muhammad Yousaf Director General CAA / Member CAA Board Mr. Amjad AliToor Additional Secretary, Aviation Division / Member CAA Board Additional Secretary, Finance Di Member CAA Board ion/ Mr. Nisar Muhammad Member (Customs), Federal Board of Revenue / Member CAA Board Lt. Gen. (Retd) Salahuddin Tirmizi Member CAA Board Air Marshal (Retd) Najeeb Akhtar Member CAA Board » Qazi Azmatisa CEO/MD Pakistan Poverty Alleviation Fund / Member CAA Board . Mr.M. Bashir Janmohammed Chairman Westbury Group of Companies / Member CAA Board | Mr.Zahid Ageel Secretary CAA Board CAA Audit Committee Mr. M. Bashir Jan Mohammed Chairman Westbury Group of Companies / Chairman CAA Audit Committee Mr. Hassan Nawaz Tarar Secretary Planning & Development Division / Member CAA Audit Committee Mr. Nisar Muhammad Member (Customs), Federal Board of Revenue / Member CAA Audit Committee Additional Secretary, Finance Division / Member CAA Audit Committee Mr. Zahid Agee! Secretary CAA Audit Committee CAAHR Committee Lt. Gen. (Retd) Salahuddin Tirmizi Chairman CAA HR Committee Air Marshal (Retd) Muhammad Yousaf Director General CAA / Member CAA HR Committee Mr. Qazi Azmat Isa Member CAA HR Committee Mr. Amjad Ali Toor Member CAA HR Committee Mr. Zahid Ageel Secretary CAA HR CommitteeCorporate Information CAA Executive Committee Air Marshal (Retd) Muhammad Yousaf Director General CAA/ Chairman CAA Executive Committee AirVice Marshal Khawar Hussain Dy. Director General CAA / CAA Executive Committee Member Mr. Amer Habib Sikander Chief Financial Officers / CAA Executive Committee Member Mr.Danish Qaseem D.CNS/ CAA Executive Committee Member Mr. Sumair Saeed Chief Human Resource / CAA Executive Committee Member Mr, Javaid Iqbal PSO to DGCAA / Secretary Executive Committee Auditor Ernst & Young Ford Rhodes Sidat Hyder Chartered Accountants AnnualReport2013_ fig)CAA Board Member's Profile _ Mr. Muhammad Ali Gardezi Secretary Aviation / Chairman CAA Board Mr. Muhammad Ali Gardezi assumed the charge as Secretary Aviation / Chairman CAA Board on Ist July, 2013. After graduation and passing CSS exam, he joined the Government Service (OMG Group) in 1981 and has served in the provinces of Sindh, Balochistan and Punjab.He has served as Assistant Commissioner KAMBER, Administrator Afghan Refugees, Municipal ‘Commissioner Karachi (East), Deputy Commissioner Shikarpur in the province of Sindh, He has served as Commercial Secretary Budapest in Hungary. He has served as Additional Secretary Home, Commissioner Sibi and Principal Secretary to Governorin the province of Balochistan. He has served as Director Finance MDA, Director General Katchi Abadi Project Coordinator South Punjab Urban Improvement Project, Managing Director PSIC, Secretary Labour and Commissioner Multan Division in the province of Punjab. He has served as Chairman NHA Islamabad and Secretary Ministry of Climate Change. He has special skills in Time Management, Motivation & Leadership, Decision Making, Target Achieving, Excellent Communication Skills and Self Grooming. Air Marshal Sohail Gul Khan, HI[M) Vice Chief of the Air Staff / Member CAA Board Air Marshal Sohail Gul Khan assumed the charge as Vice Chief of Air Staff on 8th August, 2014. He graduated in GD (P) Branch of PAF with the distinction of Sword of Honour in April 1979. After doing his Flight and Operational Conversion Courses, he flew all types of Chinese and French fighter aircraft on PAFS inventory, He is an accomplished fighter pilot with rich experience ‘on F-16. He has been an instructor at Combat Commanders’ School and has commanded a Fighter Squadron, a Fighter Flying Wing and a Fighter Base. He hes attended various professional courses, which include National Defence Course (NDC], Command & Staff Course (UK), Combat Commander Course (F-16), Centrifuge Course (USA), Electronic Warfare Officers Course (USA) and Fighter Integration Course. He has a Master's degree in defence studies from King's College, London and Master’s degree in Strategic Studies from National Defence University, Islamabad. He has served as Chief Inspector (Operations) at the Inspector General's Branch, Deputy Director Plans (Operations), Director of Operations, Director General Air Force Strategic Command, Inspector General Air Force, Air Headquarters Islamabad, Air Officer Commanding Northem Air Command, PAF Peshawar and Director General Logistics at Joint Staff Headquarters, Chaklala. He has also served in the China as Leader JF-17 Development Team.He was serving as Chairman PAC Board, Kamra prior toassuming charge as Vice Chief of the Air Staff. In recognition of his meritorious services, he has been decorated with awards of Tamgha-imtiaz (Military), Sitara-itmtiaz (Military) and Hilal-i-imtiaz (Military).CAA Board Member's Profile Mr. Hassan Nawaz Tarar Secretary Planning & Development Division / Member CAA Board Mr. Hassan Nawaz Tarar was appointed as Federal Secretary Planning Division on 01.02.2013. Before his promotion and appointment as Federal Secretary, he was Additional Secretary in the Prime Minister's Secretariat looking after, amongst others, the economic issues raised at the level of the Prime Minister. MrTararisa career civil servant of the Pakistan Administrative Service (formerly DMG) who has brought in 32 years of rich administrative experience ina broad range of public services. He has held key assignments in the arees of international economic cooperation, finance, excise and taxation, labour and human resource development, education, urban management, accountability of public servants and sub regional management. He holds Masters Degrees in Political Science and Journalism in addition to his Bachelors in Law from the University of Punjab. He also obtained a Masters in Social Sciences (Development Administration) from Birmingham University, United Kingdom. Air Marshal (Retd) Muhammad Yousaf Director General CAA / Member CAA Board, Air Marshal (Retd) Muharnmad Yousaf assumed the charge as Director General Pakistan Civil Aviation Authority on 5th November, 2013.He joined Pakistan Air Force in 1972 and commissioned in GD(P) Branch in June, 1975. He hada distinguished career in PAF asa Fighter Pilot. During his flying career he flew most of the fighter aircraft including F-86, F-6, F-7 & F-16. His command assignments included, command of a fighter squadron, flying wing and a flying Base. He also commanded Central Air Command, served as Chief Project Director Falcon (F-16), Director General (Log) JSHQ and Deputy Chief of the Air Staff (Support) at AHO. He is a graduate of Air War College and NDC course. He has also done Senior Executive Course from USA. For his meritorious services the Government of Pakistan conferred on the Air Marshal the Hilal in Order of Imtiaz (Military), and Tamgha-e-Basalat. Mr. Amjad Ali Toor Additional Secretary, Aviation Division / Member CAA Board Mr Amjad AliToor, after graduation joined Pakistan Air Force in 1977 as Fighter Pilot, He has served as ADC to Prime Minister of Pakistan from 1990 to 1991 Thereafter he joined Civil Service in 1991 as Assistant Commissioner. He has served as Deputy Secretary Home, Balochistan, Deputy Commissioner Qalat, Deputy Director (Food) Punjab, Deputy Commissioner Jhelum, EDO (Finance & Planning) Rawalpindi and DCO Rawalpinci.He also served as Project Director (Barani Village Project) Rawalpindi ~ a project of International Donors for poverty alleviation and conducted workshops at Syria, Bangkok and Pakistan. Before taking over the charge as Additional Secretary, Aviation Division, he remained Joint Secretary (Aviation) Ministry of Defence for the last four years. : AnnualReport 2013 fay |CAA Board Member's Profile Mr. Nisar Muhammad Member (Customs), Federal Board of Revenue / Member CAA Board Mr. Nisar Muhammad has been appointed as Member Pakistan Civil Aviation Authority Board on 1st January, 2014, He is MBA and M.Sc (Defence & Strategic Studies). He has got foreign training in Executive Leadership Programme from Harvard University, USA Uan-Feb, 2005), He has also attended Foreign Conferences/Workshops, which include Workshops / Conferences at WCO Regional Centres in South Korea, Malaysia & China, IMF Regional Conference at Tokyo and Workshops at Madrid, Hong Kong & Morocco. His career profile includes Member (Strategic Planning, Reforms and Statics) FBR, Chief Collector of Customs (North) Islamabad, Collector of Customs Karachi and Chief, FBR, Lt. Gen, (Retd) Salahuddin Tirmizi Member CAA Board Lt. Gen, (Retd) Salahuddin Tirmizi has been appointed as Member Pakistan Civil Aviation Authority Board on 1st January, 2014. He is BSc Honours - Balochistan University Quetta andl M.Sc War studies ~ Quaid-i-Azam University Islamabad. He was commissioned in Pakistan Army, Armoured Corps in October, 1964 and retired from Pak Army as Lieutenant General on 2nd March, 2000 after completing full colour service (35 ¥5 years). His major assignments in Pak Army are instructor at National Defence College, Commander 3 Independent Armoured Brigade Group, Chief of Staff 4 Corps, General Officer Commanding First Armoured Division, Director General Armoured Corps, GHQ, Director General Anti Narcotics Task Force (ANTE), Chairman Pakistan Narcotics Board (PNCB) and later, on merger of the two departments and creation of Anti Narcotics Force (ANF), its first Director General (also held additional appointment of Secretary Narcotics Control Division during the period of merger of ANTF and PNCB, raising of the force and framing of laws), Commander 2 Carps and Commandant National Defence College, Islamabad. He has visited various countries of Asia, Europe, North America, South America and Australia as Leader / Member of Pakistani Delegation on Study Tours, Conferences and Courses. In recognition of his meritorious services, has been honoured and awarded Imtiazi Sanad in 1965 War, Tamgha-i-Basalat, Hilal-iImtiaz Military and Sitara-i-Basalat. Ey 0 Mee ERSPie ccarce’ Segoe CAA Board Member's Profile Air Marshal (Retd) Najeeb Akhtar Member CAA Board Air Marshal (Retd) Najeeb Akhtar has been app: ed as Member Pakistan Civil Aviation Authority Board on 1st January, 2014. He joined Pakistan Air Force in the flying branch In 1964 and was commissioned in 1966 as a pilot. He flew all major combat aircrafts (F-86, F-6, Mirage and F-16) over a flying career of over 32 years. He participated in the 1971 Indo-Pak war asa Mirage Pilot from Sergodha. During his flying career he held the appointments of a fighter Squadron Commander, Command of a Fighter Base, Assistant Chief of Air Staff Operation, Air officer Commanding of Central air command and Air officer Commanding of Air Defence Command during Kargil operation. He retired in the rank of Air Marshal in 2000 after 34 years of service. He conceived and oversaw the setting up of a major defence production facility at the Air Weapon Complex. He was decorated with HI (M), SI (M), $Bt and T! (M) for meritorious contribution to the PAF. He was deputed abroad as a flying instructor to Libya for 2 years. He participated in the 1973 Arab-Israeli war from a forward air base in Egypt as operation advisor and coordinator. He was deputed asecond time to Saudi Air force as an operations and plans advisor for 3 years from 1985-88. After retirement from the service in 2000 he was selected as the ambassador to Brazil. Qazi Azmat isa CEO/MD Pakistan Poverty Alleviation Fund / Member CAA Board Qazi Azmat Isa has been appointed as Member Pakistan Civil Aviation Authority Board on Ist January, 2014. He has 25 years of experience in development. He is currently the CEO of the Pakistan Poverty Alleviation Fund which is a multipurpose autonomous development institution with interventions in Energy, Infrastructure, Disaster Management, Institutional Development, Livelinood Enhancement and Protection, Health, Education and Disability. Priorto this he was with the World Bank working in the rural and social sectors for the last 12 years. His last posting with the bank was in Kabul where he managed the largest community driven development program in the Banks portfolio as well as initiated a nationwide rural enterprise development program. Before that he was head of an NGO in his province of Balochistan. He has a passionate commitment to improve the lives of poor and marginalized people:He has serviced ‘on many Boards in a voluntary capacity, including as Chaitman of the Society for the Projection of Child Rights (SPAR), Board Member with the World Wide Fund for Nature (WWF), LEAD and President of Aurat Foundation. He is presently Member of Economic Advisory Council ETC 17 ACAA Board Member's Profile Mr. M. Bashir Janmohammed Chairman Westbury Group of Companies / Member CAA Board | | | Mr. Muhammad Bashir Janmohammed has been appointed as Member Pakistan Civil Aviation Authority Board on Ist January, 2014. He is 8.Com, LLB,,and FCA (Chartered Accountant). He is Chairman / Director Pak ~ Malaysia Business Council of the Federation of Pakistan Chambers of Commerce & Industry, Westbury Group of Companies, Dalla Foods Pvt.Ltd, Bulk Management (Pakistan) Pvt. Ltd, Mapak Edible Oils Pvt. Ltd. (Joint Venture of Pakistan / ~ Malaysia), FWQ Enterprises Pvt. Ltd. Joint Venture of Pakistan / Malaysia), Mapak Qasim Bulkers Pvt. Ltd. (Joint Venture of Pakistan / Malaysia) and WazirAli Industries Ltd. He is past Chairman / Director Karachi Stock Exchange (Guarantee) Ltd (1980 for 6 years), Pakistan Industrial Credit & Investment Company (PICIC), Muslim Commercial Bank Limited and Central Depository Company (2008). He has been Official Member of various Trade Delegations, entourage with Prime Minister and President of Pakistan. He is a Life Member of Federation of Pakistan Chambers of Commerce & Industry (FPCC!) and Council Member of International Seed Crushers Association [ISA] UK. He leaded delegation of NASDAQ & PORTAL to USA & UK in 2007 and Exporters of Pakistan to Malaysia in the year 2013. His Social Contribution includes Janmohammed Dawood Trust, Kharadar General Hospital (running 4200 bedded full-fledged hospital in poor jocality of Kharadar, Mithadar and Lyari) Mr. Zahid Ageel Secretary CAA Board Mr. Zahid Agee! is working as the Secretary to the CAA Board since October 2012. Earlier, he has also worked as A/CFO and Secy Board in 2010. After graduating from Karachi University in 1975, he started his professional career at a world reputed Chartered Accountancy firm in Karachi. He gathered diversified experience in the private sector as well as at government organizations. After joining CAA he worked at HO CAA, Mega Projects and major airports. Over the years he has attended a number of courses end seminars all over the world such as at the World Trade Center in New York (USA), Dublin (Iraland), Singapore, Malaysia and Sri Lanka. He is a member of various professional bodies in Pakistan and abroad.= = —o pl lM ee EWieMMAd eM Aan estesItis my honor to present the 30th Annual Audited Financial Statements along with the Auditor's Report thereon for the year ended June 30th, 2013. The year 201 2-13 was yet another year of sustained progress across key business areas. Overview: Due to the measures of macroeconomic stability achieved over the past years, Pakistan's macroeconomic environment has achieved a moderate recovery in the economy, despite on going economic crises in the country’s recent history. In 2013, the economy grew to 3.6% as compared to 4.4% in the previous fiscal year 2012, During FY12 and FY13 the power shortage became so severe that it wiped out 2% from our GDP. Agriculture, Manufacturing as well as Services sector performed below their capacity. Though economy has the growth trajectory of more than 6%, but the worst energy crises, bleeding public sector enterprises, economic mismanagement and menace of informal economy hemorthaged the system. Despite the difficult economic conditions, the CAA's revenues demonstrated a growth of 46% 2013 key financial highlights: [The Authority Revenue grew by 46% to Rs 39.7 billion (the highest ever in the history of CAA) during the current year as compared to Rs 27.1 billion in the last yeer. The Surplus before taxation 2012-2013 is Rs. 18.4 billion as compared to Rs 11.7 billion in 2011- 12.The increase in revenues is due to revision of aeronautical charges during FY 2012-13 BE The provision of bad debts is Rs 4.7 billion in 2012-13 against PIAC, the main defaulter of CAA for last few years, Mash reserves of the Authority are Rs.4.9 billion ‘The Surplus before taxation amounting to Rs 18.4 billion has been achieved, by the grace of Almighty Allah and also through the dedicated efforts of the employees of the Authority under the ble guidance ‘of Management and CAA Board Members, Going forward considering the results achieved during the year under review, we are confident of the CA's sustainable growth in the future. Liquidity Position: ‘The Authority has been enjoying good liquidity position over the year. As of the Balance sheet date, the Authority has Rs 4.97 billion of liquid assets. Despite the availability of the sufficient liquid assets, itis expected that the Authority would require external borrowing to finance the several mega projects vital for its qrowth in the years to come. Summary of Major Projects: Ongoing Projects Construction of New Benazir Bhutto International Aiport at Islamabad. ™® Construction of New Gwadar International Airport. | Up-gradation of Multan Intemational Airport o ‘AnnualReport2013_ By |ms, Installation of new ILS at runway 25-Lat JIAP Karachi and BKIAP. Runway Sweepers & Runway Rubber Deposits removing machine for CAA Airports Installation of new DVORs/DMES at Karachi, Peshawar & Quetta Airports. Nationwide connectivity of all PCAA aitports/enroute lacations for voice & data communication. Establishment of Controller Pilot Data Link Communication (CPDLC) & Automatic Dependent Surveillance Contract (ADS-C). Automation of Als & Procedure Design Functions. Establishment of Automatic Dependent Surveillance-B (ADS-B) Capability for increase surveillance coverage & redundancy. Future Major Projects Passenger Boarding Bridges, Nircraft docking system & Aircraft Power Supply at JIAP, Karachi. Expansion of Lahore, Peshawar & Quetta Airport Terminal Building. Reconstruction of Main Runway& Recarpeting of parallel Taxi Track at Quetta Airport. Latest Radars at Karachi & Lahore Area Control Centers (ACCS). New Radar & establishment of Air Traffic Management (ATM) system at Islamabad Airport. ILS & DVORs/DMEs at all and enroute Locations. Infrastructural upgrade of AAP, Lahore for category-IIl B operations. Extension of VHF station at Karimabad for coverage of northern areas. Implementation of ICAO directives on Performance Based Navigation and Seamless Skies. Keeping in view, the strict measures taken for the safety and security of airports, and also the improving security situation, the Authority expects that the passenger and aircraft movement will increase in future resulting in the conresponding increase in Revenues. The achievements of the Authority are impressive and will form the basis for stronger and more prosperous future. The financial will surely get better, year after year. The Authority has an important role to play in strengthening the economy of Pakistan Air Marshal (Retd) Muhammad Yousaf Director General Pakistan Civil Aviation Authority PalAuthority's Performance Review Overview: Due to the measures of macroeconomic stability achieved over the past four years, Pakistan's macroeconomic environment has kindled a moderate recovery in the economy, despite one of the most serious economic crises in the country’s recent history. The economy grew by a provisional 4.4% in the outgoing year, after a modest growth of 3.6 % in 2012-13, However, the recovery is still fragile and the stabilizetion needs to be consolidated so that the gains over the past difficult years are not lost. However, the overall economic environment did not adversely affect the financial health and growth of CAA. There was no significant change in the passenger movernents and flight movement. Despite the deteriorating economic conditions, this year's revenues are 46% from the last year. All sources of revenue showed improvement from the last year. 2013 key financial highlights: | The Authority Revenue grew by 46% to Rs 39.7 billion (the highest ever in the history of CAA} during the current year as compared to Rs 27.1 billion in the last year |S The Surplus before taxation 2012-2013 is Rs. 18.4 billion as compared to Rs1 1.7 billion in 2011-12. The increase in revenues is due to revision of aeronautical charges during F.¥ 2012-13 The provision of bad debts is Rs 4.7 billior last few years. 2012-13 against PIAC, the main defaulter of CAA for | Cash reserves of the Authority are Rs. 4.9 billion. Summary of financial results for the year: EET cance Amount in Rs million Aeronautical revenue 12,431 Non-aeronautical revenue 507 Inspection and services 73 Return on bank deposits (482) (Other income 10 | Total income 39,716 2777 12,539 Administrative expenses 17,887 12,142 5,745 Repairs and maintenance 519 393 126 Finance cost 2 2 20 Depreciation 2,896 2,981 (85) 21,324 15,428 5,896 Surplus before taxation 18,392 11,749 6,643 Taxation 5,960 5,095 865 Surplus after taxation 12,432 6.654 5,778 CN AnnualReport 2013 Bie |Aeronautical Revenue: Aeronautical revenue for the year ended June 30, 2013 is Rs 39,716 billion as compared to Rs 27,177 billion last year. 40,000 — 35,000 30,000 25,000 20,000 15,000 10,000 5,000 Source of Revenue Landing and housing fee Route navigational fee Embarkation fee Aircraft power supply Other Airport services ‘seam Lending and housing fee “2% Route navigational fee ‘soma Embarkatinn feo So Aircraft powar supply EEE Other Airport serviess Aeronautical Revenue 2013 LAL Pakistan Civil Aviation Authorit - - Aeronautical Revenue 2011 2009 2010 2012 2013 Eo Increase /(Decrease) Amount in Rs million %age 5,616 5,350 266 4.97 15,784 10,265 5,519 53.77 12,176 5,981 6,195 103.58 (286 (240 46 19.17 685 281 404 143.77 34,547 22,117 12,430 325.25 35%, Ss Landing end housing fee es Route navigational fee ‘semis Embarkation fee Aircraft power supply ‘mE Other Aitport servicesAirports Jinnah International Airport Benazir Bhutto Int! Airport Allama lqbal int'l Airport Baccha Khan Int.! Airport Quetta Airport Other Airports, Airports Jinnah international Airport Benazir Bhutto Int'l Airport Allama Iqbal Int'l Airport Baccha Khan Int Airport Quetta Airport Other Airports Non-Aeronautical Revenue: The authority also achieved the highest ever Non-aeronautical revenue i2.Rs 5,168 billion. As compared Aircraft Movements (No. of Flights) Tino Pores Pia 11,339 12,228 6,769 6,739 8,119 7579 3,774 3,898 203 1,230 1409 1,360_ 31,623 32,968 Domestic PE 2012 12,531 13,292 7,615 8,214 7,325 7,861 1,657 1,750 1446 1515 1588 _10316_ 38,162 41,348 Passenger Movements (No. of Passengers) nce 2013 2012 1,698,037 1,779,904 1,320,778 1,273,994 1,522,299 1,369,061 547,121 474,005 10.870 12,728 51,759 52,665 57 to the last year, non-aeronautical revenue increased by Rs 107 million. 5,200 4200 2010 2011 Non-Aeronautical Revenue 2012 Pee Prog 2013 EP 1,373,180 1,298,838 680,980 614,693 640,827 614,021 100,501 113,052 142,847 136,670 _ 305,665 __ 368,536 3,244,000 3,182, 10 5,000 4300 4600 4400 2013 0 =Source of Revenue Rent,electricity and water charges Porter Service charges CIP lounge income Airworthiness and license fee Advertisement Cargo throughput Ground handling Return on bank deposits Other 6% Be 53% 2% 2% By ee Rent. electricity anclwater charges EEE Ground handling ‘Gm Cargo throughput SSE Aovertisement EE 1? fosnge income ‘SEA Porter Service charges Non-Aeronautical Revenue 2013 Expenditures (ET BETIEME increase (Decrease) ‘Amount in Rs million %age 2576 -2,203-««373.00 16.93 116 114 2.00 175 98 134 (36.00) (26.87) 163 87 76.00 87.36 102 113 (11,00) (9.73) 957 825 132.00 16.00 233 187 46.00 24.60 615 1,097 (482.00) 5% 23% 62% a6 46 24 SEE Ront olectricity and water chargos EEE Ground handling ‘mama Cargo throughout ee Advertisement MERE CP lounge income ‘BERNE Porter Service charges Non-Aeronautical Revenue 2012 The expenditures of the Authority also increased to Rs 21,324 billion as compared to RS 15,428 billion which is Rs 5,896 billion higher than last year.The increase is mainly due to Provision for doubtful debts receivables by more than Rs.5 billion. 25.000 ao SSS 15,000 TIAA e ela Expenditures 10,009 ” ' fi | at 2008 2009 2010 2012 2013Expenditures Salaries, Wages and Other benefits Utilities Repairs and maintenance Provision for Doubtful Debts Depreciation Others 2 149%, i 24s 78% 29 ‘mmm Salaries Wages ancl Othe: benefits ‘mmm tities mmm Repai's and maintenance ‘Suiits Frovision for Doubtful Debts umm Depreciation mmm Others Expenditures 2013 Liquidity Position (SEWEN BETIEME increase | (Decrease) ‘Amount in Rs million %age 10678 8023 2,655 33.09 1613, 1457 156 10.71 519 393 126 32.06 5,091 2,240 2,851 127.28 2,296 2,801 5 0.17 504 424 80 18.87 5,873 38.07 sm Series Wi ges and Other benefits soot Uiies mmm ears anc maintenance ‘Gan Provision for DoubtlulDebrs sama Deprecation thors — Expenditures 2012 ‘The Authority has been enjoying good liquidity position over the year. As of the Balance sheet date, the Authority has Rs 4.97 billion of liquid assets. Despite the availability of the sufficient liquid assets, 14,000. 12,000 10,000 6,009 4.000 2,000 ° 2008 2009 2,000 By iS i expected that the Authority would require external borrowing to finance the several mega projects vital for its qrowth in the years to come.Surplus before tax 42,000 eae 900 * tl Expenditure 35,000 ae Surplus betore tax | | | 30,000 25,000 20,000 15,000 110,000 — | 5,000 ———ee—EE a 2018 2012 2011 2010 2009 2008 Business Risks And Future Outlook The aeronautical revenue is wholly dependent upon the level of activities of the airlines using the services of the Authority. The Authority may face significant loss of revenue if these airlines decrease their operations in Pakistan, One of the major causes of such decline in their operations is the security threats. Also, the financial and liquidity position of Pakistan International Airlines is getting worse day by day.Since PIA is the largest airline in Pakistan so the discontinuance of its operation will significantly effect the future revenues and the recoverability of the existing receivable. However, keeping in view the improving situation of the security and strict measures taken for the safety and security of airports, the Authority expects the passenger and aircraft movement will increase in the future resulting in the corresponding increase in Revenues. The achievements of the Authority are impressive end will form the basis for an even stronger and more prosperous future. The financial will surely get better, year after year, The Authority has an important role to play in strengthening the economy of Pakistan.we oN nneuwn ez oOeVvourunes Emirates Qatar Airways Singapore Airlines ANA alll Nippon Airways Asiana Airlines Cathay Pacific Airways Etihad Airways Garuda Indonesia Turkish Airlines Airways The World's Top Airports in 2013 Singapore Changi Airport Incheon international Airport Amsterdam Schiphol Airport Hong Kong Intemational Airport Beijing Capital International Airport Munich Airport Zurich Airport ery anes Vancouver International Airport Tokyo international Airport (Haneda) London Heathrow Airport ‘Annual Report 2013 pay |Five Years at a Glance Income and Expenditure summary Revenues Aeronautical revenue Non-aeronautical revenue Inspection and services Return on bank deposits Other income Total Expenditures General and administrative expenditure Provision for pension and gratuity Provision for medical benefits Provision for compensated absences Provision / (reversal) for doubtful receivables Depreciation Finance Cost Total Surplus before taxation Taxation Net Surplus after taxation Balance Sheet summary Property, plant and equipment Other non-current assets Total non-current assets Cash & bank balances Other current assets Total current assets Civil Aviation Authority fund Surplus on revaluation of operating fixed assets Non-current liabilities Current liabilities HEQEME 2012 2011 2010 2009 {Rs in million) 34,548/ 22,117|| 13,863]/ 12,794]/ 11,139 | 4,094 | 3,587| 3333) 3,032 3,108 381 308 qa] 183 102 616 1,097] 1461 1,640 1,597 2B. 68 _é 84) 61 39,716 = 27,178 18,897 17,733 16,007 10625 || 2903 | 7,989][ 65e4]/ 5,523 | (2,242 978 811 298 157 141 13 8 85 2 306, 301 177 a 69 5,091 2,240 2,452 308 (59) 2,896 2,891 1,920 1,614 1,584 22 2 2 z 7 21,324 15,428 13,443 8,983 7,354 18,392 11,749 5,454 8,750 8,653 5960 5,095 1.640 2.690 569 12,432 6,654 3,814 6,060, 4,084 242536 || 228,075 | 220,651 | 186,920) 182,275 | 64) 8a m3) 35) 203 242,600 228,159 220,764 186,956 182,478 4g71|/ 7818 |) 8756 | 12.347 [ 11,405 13,673 9,819 7,774 | 7,080 (4844 18,644 __17,637 16,529 19,426 16,250 261,244 245,796 237,294 206,382 198,728 67,969] 54116 || 46868 | 42,433) 35,820 173,545 || 174,288 174,771 153,538 153,871 13,581 11,935 11,345 6,665 6,147 6149] 5.457 4309, 3,746 2,889 261,244 245,796 237,294 206,382 198,728 OP 2s META ALANVertical Analysis of Financial Statement Income and Expenditure summary Revenues Aeronautical revenue Non-aeronautical revenue Inspection and services Return on bank deposits Other income Total General and administrative expenditure Finance Cost Total Surplus before taxation Taxation Net Surplus after taxation Balance Sheet summary Property, plant and equipment Other nan-current assets Cash & bank balances Other current assets Civil Aviation Authority fund Surpluson revaluation of operating fixed assets Non-current liabilities Current liabilities ENEME 2012 2011 =. 2010—— 2009 %age 81.38 73.36 71S. 69.59 66.89 ] 13.20 17.65 17.10 19.41 23.45 113 0.94 1.03 | 0.63 0.64 4.04 IB 9.25 9.97 6.65 0.25 0.32 | oa7| 039 2:37 100.00 100.00 100.00 100.00 100.00 71.13|/ 50.64 | 45.90 || 49.12 0. 3] 0.01 a4 || 0.03 71.14 50.66 45.94 49.15 28.86 49.34 54.06 50.85 868 15.17 2854 20.35 20.18 34.17 25.51 30.50 9172 © 9266 O10 0.13 91.82 92.79 574 | 480 244 241 818 21 100.00 100.00 92.79] 9299) 90.57 03} 0050.02 92.82 93.04 90.59 3.19 3.09, 5.98 399] 3.28 3.43 718 6.96 9.41 100.00 _ 100, 22.02] 1975 2056 7o.01| 73.66 74.40 485 478) 3.23 181182 100.00 18.02 77.43 3.09 1.45, 00,00 _ 100.00 16.17 81.82 0.49 152 Pe 2Horizontal Analysis of Financial Statement EXE 20122011 2010 = 2009 % age Income and Expenditure summary Revenues Aeronautical revenue 395.74 || 25336|/ 158.81] 149.56 || 127.60 Non-aeronautical revenue 159.53] 139.79|| 129.90] 118.16 |) 121.10 Inspection and services 500.08 || 453.46] 262.56] 269.36 || 149.43 Return on bank deposits 8205 |) 146.19|/ 19465) 21852) 212.79 Other income 25564 || 223.12|| 200.52) 276.38 || 203.06 Total 32702 223.78 155.60 146.02 131.80 General and administrative expenditure 364.78 || 264.16 || 230.17|| 153.80] 125.81 | Finance Cost 22933 || 2612), 2180] 2561] 7477 | Total 364.58 263.78 229.84 153.59 125.73 Surplus before taxation 20213 18662-8663 «138.98 137.45 Taxation 981539 8300.49 2,701.15 442958 7,524.48 Net Surplus after taxation 199.38 Balance Sheet summary © 105.95 17.90 105.85 142.56 216.91, Property, plant and equipment 137.47 | 129.27|| 125.06 | Other non-current assets 32.42 42.67 57.50 | 137.35 129.18 124.99 Cash & bank balances 5739] 90.26 101.10 Other current assets 418.92 300.85, 238.17 156.35, 138,55 Civil Aviation Authority fund 258.73 206,00 178.41 Surplus on revaluation of operating fixed assets 109.75 110.22 110.53, Non-current liabilities 1,91355 | 1,681.60 1,598.51 Current liabilities 178.28) 15821 124.95, 161.53 97.10 939.07 108.62 138.55 130.36 125.85 MY 26 MET NNN “103.31. 103.17 103.31 131.69 148.43Key Operating and Financial Data EGE 2012 Surplus position (Rs in million) Revenues 39,716 27,178 Surplus before taxation 16392 11,749 Net surplus after taxation 12432 6,654 Profitability Surplus before taxation rate Mage 4631 43.23 Net surplus after taxation rat “eage 31.30 24.48 Performance Fixedassets turnover (revalued amounts) Times 0.164. (0.119. Fixed assets turnover (cost) Times 0.594 0.530 Total asset turnover(revalued amounts) Times 0.152, 0.111 Total asset turnover (cost) Times 0.464 0.394 Debtors turnover (times) Times 4.92 5.24 Avergage collection period (days) 74.23 69.64 Return on equity age = 18.29 12.30 Retum on assets (revalued amount) %age 4.76 271 Retum on assets (cost) age 14.52 9.64 Liquidity Current ratio 3.03 3.23 Quick ratio 3.02 3.21 Cash Flows (Rs in millions) Net cash flow from operating activities 13,223 8,514 Net cash flow from investing activities (15,048) (9,299) Net cash flow from financing activities 278 (149) Net change in cash and cash equivalents (547) __(624) Other Cash flows: (Rs in millions) Capital expenditure 17,367 10,269 Contribution to the national exchequer 6410 3,803 2011 18,897 5,454 3914 28.86 20.18 0.086 0.494 0.080 0344 5.19 70.26 8.14 1.61 6.95 3.84 3.82 4,050 7,208) 143 (3,009) 9354 2617 2010 17,733 8,750 6,060 49.34 34.17 0.095 0.582 0.086 0.355 6.66 54.81 14.28 2.94 12.14 5,699 (5,332) 40 407 6,285 2,254 2009 16,007 8,653 4084 54.06 25.51 0.088 0.632 0.081 0.383 13.39 27.26 11.40 2.06 9.78 5.62 5.60 6,160 (1,394) 50 4816 5,492 1,836 i ‘Annual Report 2013 kay)Statement of Value Added and its Distribution (Rupees in thousands) VALUE ADDED. Aeronautical revenue 34,547,831 22,117,478 Non-aeronautical revenue 5,167,923 5,060,226 Material and services (7,626,939) (4,511,853) 32,088,815 22,665,851 DISTRIBUTION % % EMPLOYEES AS REMUNERATION Salaries, wages and other staff retirement benefits 10,778,766 34 8,023,390 35, FINANCIAL CHARGES TO THE PROVIDER OF FINANCE Financial charges 22,272 0 2430 0 GOVERNMENT AS TAXES Taxation 5,960,300 19 5,095,041 22 RETAINED WITHIN THE BUSINESS Depreciation 2,895,844| 9 2,800,713| 13 Retained surplus 12,431,633| 39 6,654,277| 29 15,327,477 48 9,544,990 42 32,088,815 22,66 red Retained within Retained within cei ca Eee ETIIndependent Auditor's Report to the Civil Aviation Authority Board Members We have audited the accompanying financial statements of Civil Aviation Authority (the Authority), which comprises the statement of financial position as at 30 June 2013, and the income and expenditure account, statement of comprehensive income, statement of changes in fund and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the approved accounting standard as applicable in Pakistan, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing, Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An Audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on auditor's judgment, including the assessment of the risks of material misstatement of the financial Statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis, for our audit opinion. Opinion In our opinion the financial statements give a true and fair view of the financial position of the Authority as of 30 June 2013, and of its financial performance and its cash flows for the year then ended in accordance with approved accounting standards as applicable in Pakistan. | EY Pakistan Civil Aviation Authorit eEmphasis of Matter We draw attention to the following: ~ note 26.5 to the financial statements which states that the Authority is contesting appeals pending before the Income Tax Appreciate Tribunal inland Revenue (AMR} in respect of certain disallowances made by the department. he ultimate outcome of the aforesaid matters cannot presently be determined, and provision for the additional lability relating to prior years aporoximating to Rs. 3.374 billion that may result, has not been made in the financial statements:and note 4.1.5 to the financial statements which states that the Authority has not derecognized its, land at Jinnah Intemational Airport, Karachi fram its fixed assets in view of the reasons stated in the said note. Our opinion is not qualified in respect of the aforesaid matters sty FA hed LA Mae Chartered Accountants Audit Engagement Partner: Khurram Jameel Date:29 May 2014 Place: Karachi a ‘AnmualReport 2013 AaCivil Aviation Authority Balance Steet As at 30 June 2013 Note RETIER (Rupees in 000) NON-CURRENT ASSETS Property, plant and equipment 4 242,536,237 228,075,031 Intangible asset si 60,642 82,171 Long term loans 6 527,426 361,720 Long term deposits 3,117 1.740 Long term other receivables 7 243,127,422 228,520,662 CURRENT ASSETS Stores and spares 8 96,978 100,014 Trade debts 9 9,435,879 6,717,776 Loans and advances 10 215,663 176,426 Prepayments 44,308 56,606 Other receivables n 697,612 684,692 Interest accrued 89,149 480,083 Taxation 2,565,878 1,241,865 Investments, 12 3,342,000 6,342,000 Cash and bank balances 13 1,628,797 | |___ 1,475,624 18,116,264 17,275,086 261,243,686 245,795,748 CIVIL AVIATION AUTHORITY FUND. 4 67,968,703 54,116,143 Surplus on revaluation of property,plant and equipment 15 173,545,058 174,288,048 NON-CURRENT LIABILITIES Deferred tax liability 16 10,003,514 9,529,091 Defetred liabilities v7 3,577,788 2,405,954 13,581,302 11,935,045 CURRENT LIABILITIES Security deposits and retention money 18 2,872,769 2,030,442 Trade and other payables 19 3,475,854 3,426,070 6,148,623 5,456,512 CONTINGENCIES AND COMMITMENTS 20 261,243,686 245,795,748 The annexed notes 1 to 32 form an integral part of these financial statements. Se Director General NYCivil Aviation Authority Income and Expenditure Account For the year ended 30 June 2013 (Rupees in '000) Note ETE Era INCOME Aeronautical revenue 21 34,547,831 22,117,478 Non aeronautical revenue 2 4,093,887 3,587,262 Inspection and services B 380,616 308,156 Return on bank deposits and investments 615,624 1,096,907 Other income 24 77,196 67,901 39,715,754 27,177,104 EXPENDITURE General and edministrative expenses 25 | 21,201,549 15,425,056 Finance costs - bank charges 22,272 2.430 Total expen 21,323,821 15,428,386 Surplus before taxation 18,301,933 11,749,318 Taxation 6 5,960,300 5,095,041 Net surplus for the year 72,431,633 6,654,277. The annexed notes 1 to 32 form an integral part of these financial statements. Chairman Director General ve EEL crCivil Aviation Authority Statement of Comprehensive Income For the year ended 30 June 2013 (Rupees in'000) Net surplus for the year 12,431,633 6,654,277 Other comprehensive income Total comprehensive income for the year 12,431,633 6,654,277 The annexed notes | to 32 form an integral part of these financial statements. ay 3: AaCivil Aviation Authority Statement of Movement in CAA Fund For the year ended 30 June 2013 Excess of Funds leased Government Accumulated Total assets ver toADApriorto —grantand surplus lilies taken 7December Assistance ‘overas on 1982and other ‘TDecomber —duss remADA Be (Rupees in'000) Balance as on 30 June 2011 1,332,988 731,789 2,435,301 42,367,585 46,867,663 Total comprehensive income for the year 7 - ~ |[6,654,277|| 6,654,277 Transfer from surplus on revaluation of fixed assets realised through incremental depreciation - - ~ || 742,897 || 742,897 Surplus on revaluation of fixed assets realised on disposal : - - 505 506| Total recognised surplus for the year - - - 7,397,680 7,397,680 Grant from GoP utilized during the year : = (149,200) - (149,200) Balance as on 30 June 2012 1,332,988 731,789 2,286,101 49,765,265 54,116,143 Total comprehensive income for the year : = = |/12,431,633 || 12,437,633) Transfer from surplus on revaluation of fixed assets realised through incremental depreciation - - ~ |/1,138,056]] 1,138,056 Surplus on revaluation of fixed assets realised on disposal : : : 5,006 5,006 Total recognised surplus for the year - - 13,574,695 13,574,695 Grant from Government of Oman “ - 277,865 = 277,865 Balance as on 30 June 2013 Chairman Director General CTICivil Aviation Authority Cash Flow Statement For the year ended 30 June 2013 (Rupees in '000) (CASH FLOW FROM OPERATING ACTIVITIES: Surplus before taxation 18,391,933 11,749,318 Adjustments for: Depreciation 2,895,844 2,890,713 Amortisation 21,529 29,171 Provision for staff retirement benefits 2,688,984 1,392,146 Gain on sale of property, plant and equipment (2,455) (2,763) Finance costs 22,272 2430 Return on bank deposits and investments (615,624) (1,096,907) Inventory accrual a 52,388 Exchange loss - 21443 Provision for slow moving stores and spares 1,959 4,131 Provision for doubtful debts 5,091,300 2,240,108 10,103,809 5,532,860 Operating surplus before working capital changes 728,495,742 17,262,178 (Increase) / decrease in current assets = Stores and spares 1,077 (35,058) Trade debts (7,809,403) (5,305,364) Loans and advances (39,237) (58,514). Prepayments 12,298 (15,144) Other receivables (12,920) (7,040) Inctease / (decrease) in current liabilities | Secutity deposits and retention money 642,327 301,696 Trade and other payables 49,784 845,448 (7,156,074) 4,273,976) Cash generated from operations 21,339,668 13,008,202 Finance costs paid (22,272) (2,430) Staff retirement benefits peid (1,517,159) (543,532) Taxes paid (6,409,818) (3,803,174) Long term loans, deposits and other receivables (167,083) (144,985), (8,116,323) (4,494,121) Net cash generated from operating activities 13,223,345 8,514,081Civil Aviation Authority Cash Flow Statement For the year ended 30 June 2013 Note ETE ET (Rupees in '000) CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures incurred (17,366,842) (10,269,454) Investments matured during the year 1,300,000 3,885, Proceeds from sale of property, plant and equipment 12,247 9,207 Return on bank deposits and investments 1,006,558 957.177, Net cash used in investing activities (15,048,037) (9,299,185) CASH FLOWS FROM FINANCING ACTIVITIES, Grant from GoP used - (149,200) Grant received from Government of Oman 277,865 | : Net cash generated from / (used in) financing activities 277,865 (749,200) Net decrease in cash and cash equivalents (1,546,827) (934,304) Cash and cash equivalents at beginning of the year 3,175,624 4,109,928 Cash and cash equivalents at end of the year 27 1,628,797 3,175,624 Sag Chairman Director General MITEL 37Civil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 WwW 12 an 2.2 STATUS AND NATURE OF BUSINESS Civil Aviation Authority (the Authority) was formed as a local authority by the Government of Pakistan (GoP) on 7 December 1982 under the Pakistan Civil Aviation Authority Ordinance, 1982. The principal activities of the Authority are to provide for the promotion and regulation of civil aviation activities and development of an infrastructure for civil air transport services in Pakistan. The Authority also develops, maintains and manages the aerodromes throughout Pakistan. The Authority is controlled and managed by the GoP through the Ministry of Defence and all services and facility charges are subject to the approval of the GoP. Airport Development Agency (Private Limited (ADA) was formed under the administrative control of Pakistan International Airline Corporation (PIAC) in April 1965.ADA was wholly owned by the GoP through Ministry of Defence and was registered as a Private Limited Company in December 1969. Ministry of Defence vide letter No.14-11/92-ADA dated 22 August 1992 addressed to the Managing Director of ADA had conveyed decision for the liquidation of ADA.In pursuance of this decision, ADA has 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. Final liquidation report of ADA has been submitted to the Securities and Exchange Commission of Pakistan (SECP) by the liquidator, however, the SECP has not issued the final notice of liquidation. Pending resolution of the said matter, the assets and liabilities of ADA have not been recognized in the financial statements of the Authority being the sole beneficiary of ADA. During the year ended 30 June 2012, the Authority, on the instruction 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 Companies Ordinance, 1984 in relation to liquidation and feilure to provide certain information and supporting documents by the liquiclator. The said application is pending for hearing BASIS OF PREPARATION Statement of compliance These financial statements have been prepared in accordance with the approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB) as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance,1984, the provisions of Pakistan Civil Aviation Authority Ordinance,1982 and the ditectives of the Ministry of Defence and Ministry of Finance. In case requirements differ, the provisions of the Pakistan Civil Aviation Authority Ordinance,1982 and directives of the Ministry of Defence and Ministry of Finance shall prevail Accounting convention These financial statements have been prepared on historical cost basis except for property, plant and equipment which are stated at revalued amounts. my, LENT MET ETY. PTS saCivil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 23 24 New and amended standards and interpretations The Authority has adopted the following amendments to IFRSs which became effective for the current year: IAS 1 ~ Presentation of Financial Statements ~ Presentation of items of other comprehensive Income (Amendment) IAS 12 - Income Taxes - Recovery of Underlying Assets (Amendment) The adoption of the above amendments did not have any effect on the financial statements. Standards, interpretations and amendments to approved accounting standards that are not yet effective. ‘The following revised standards, amendments and interpretations with respect to the approved accounting standards as applicable in Pakistan would he effective from the dates mentioned below acainst the respective standard or Interpretation: Effective date (eccounting periods beginning on or after) IFRS 7- Financial instruments : Disclosures - Amendments - Amendments enhancing disclosures about offsetting of financial assets and financial liabilities 01 Januray 2013 IAS 19- Employee benefits - (Revised) 01 Januray 2013 IAS 32- Offsetting Financial Assets and Financial liabilities — (Amendment) 01 Jenuray 2014 IFRIC 20 - Stripping Costs in the Production Phase ofa Surface Mine 01 Januray 2013 The Authority expects that the adoption of the above revision amendments and interpretations of the stendards will not affect the Authority's financial statements in the period of initial application other than the amendments to IAS 19 Employees Benefits’ as described below. Such amendments range from fundamental changes to simple clarification and re-wording. The significant changes include the following: - For defined benefit plans, the ability to defer recognition of actuarial gains and losses (ie, the corridor approach) has been removed. As revised, actuarial gains and losses are recognized in other comprehensive income when they occur. Amounts recorded in profit and loss are limited to current and past service costs, gains or losses an settlements, and net interest income (expense), All other changes in the net defined benefit asset (liability) are recognized in other comprehensive income with no subsequent recycling to profit and lass. ~ The distinction between short-term and other long-term employee benefits will be based on the expected timing of settlement rather than the employee's entitlement to the benefits. a CEL 39 ACivil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 25 2.6 + Objectives for disclosures of defined benefit plans are explicitly stated in the revised standard, along with new or revised disclosure requirements. These new disclosures include quantitative information of the sensitivity of the defined benefit obligation to a reasonably possible change in each significant actuarial assumption. While the Authority is currently assessing the full impact of the above amendments which are effective from 01 January 2013 on the financial statements, tis expected that the adoption of the said amendments will result in change in the Authority's accounting policy related to recognition of actuarial gain / (loss) to recognize actuatial gain / (loss) in total in other comprehensive income in the period in which they occur. The potential impact of the said changes for the year 2014 is estimated as under: Rupees in million Net increase in employees’ benefit liability 11,966 Net decrease in other comprehensive income 11,966 In addition to the above amendments,improvements to various accounting standards have also been issued by the IASB. Such improvements are generally effective for accounting periods beginning on or after 01 January 2013. The Authority expects that such improvements to the standards will not have any impact on the Authority's financial statements in the period of initial application. Further, following new standards have been issued by IASB which are yet to be notified by the SECP for the purpose of applicability in Pakistan. Effective date (accounting periods beginning on or after) IFRS9- Financial Instruments 01 Januray 2015 IFRS 10- Consolidated Financial Statements 01 Januray 2013 IFRS 11- Joint Arrangements 01 Januray 2013 IFRS 12- Disclosures of Interests in Other Entities 01 Januray 2013 IFRS 13- Fair Yalue Measurement 01 Januray 2013 Functional and presentation currency ‘These financial statements are presented in Pakistan Rupees, which is the Authority's functional and presentation currency. Use of estimates and judgements The preparation of the Authority's financial statements requires management to make judgments and estimates that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these judgements and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods, LL Pakistan Civil Aviation Authorit LOCivil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 34 The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. In preparing these financial statements, the significant judgements and estimates made by the management include: ~ Determining the residual values, useful lives and impairment of fixed assets (note 3.1, 3.2.4.1 &5); - Provision against slow moving stores and spares (note 3.5 & 8); - Provision against doubtful debts and other receivables (note 3.6, 7 & 9); - Actuarial assumptions for staff retirement benefits [note 3.9 & 17.1.1); ~ Provision for current and deferred tax (note 3.11, 16 & 26); ~ Contingencies (note 3.15 & 20.1);and - Judgement in respect of sale of Airport Land which in substance is a financing arrangement and therefore does not give rise to revenue (note 4.1.5). SIGNIFICANT ACCOUNTING POLICES Property, plant and equipment Property, plant and equipment are statad at revalued amounts less accumulated depreciation and accumulated impairment losses, if any. Depreciation is charged using the reducing balance method at the rates specified in note 4.1.The Authority charges full month depreciation on additions in the month of purchase and no depreciation is charged in the month of disposal. Incremental depreciation charge for the year on revalued assets Is transferred from surplus on revaluation of property, plant and equipment to accumulated surplus. ‘Maintenance and normal repairs are charged to income and expenditure account. Major renewals and improvements are capitalized and the assets so replaced, if any, are retired, Gain or loss on disposal of property, plant and equipment is included in income currently. Capital items-in-tansit are stated at cost accumulated upto the balance sheet date. ‘The carrying value of the Authority's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment If any such indication exists, the assets recoverable amounts estimated and impaitment losses are recognized in the income and expenditure account, EE 2 ACivil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 3.2 33 24 35 36 37 3.8 Intangible asset An intangible asset is an identifiable non monetory asset without physical substance. Intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses, if any. Intangible assets are amortised from the month when these assets are available for use using the reducing balance method whereby the cost of intangible asset is amortised over the period which takes into account the economic benefits that will be available to the Authority. Capital work-in-progress Capital work-in-progress is stated at cost less impairment losses, if any. Advances, deposits and other receivables Advances, deposits and other receivables are recognised initially at cost which represents the fair value and are subsequently measured at amortised cost less provisions for any uncollectible amount. Stores and spares Stores and spares are stated at cost.The cost is based on first-in-first-out (FIFO) method. Provision for impairment is made against the cost of items which are slow moving or are likely to become obsolete.|tems having no movernent for the last five years are considered as slow moving. Obsolete items are cartied at nil values. Trade debts Trade debts are recognised at fair value and subsequently measured at amortised cost less provision for doubtful debts. Debts considered irrecoverable are written off Investments Investments with fixed maturity where management has both the intent and ebility to hold to maturity are classified as held-to-matutity. These investments are initially recognised at fair value and subsequently measured at amortised cost. Cash and cash equivalents For the purposes of cash flow statement, cash and cash equivalents cansist af cash in hand, cash in transit, balances with banks on current and deposit accounts and investment with maturity of less than three months. [Le Pakistan Civil Aviation Authority ACYCivil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 3.9 Staff retirement benefits Pension and gratuity scheme The Authority operates an approved funded non-contributory defined benefit pension and gratuity scheme as contained in the compendium of pension issued by GoP from time to time for the permanent employees, The scheme provides pension based on the employees’ last drawn salaries. Pensions are payable for life to employees and thereafter to beneficiaries. Contributions are made to the scheme on the basis of actuarial valuation and charged to income. The valuation was carried out as at 30 June 2013, using the "Projected Unit Credit Method’. The amount recognized in the balance sheet represents the present value of defined benefit obligation as adjusted for un-recognized actuarial gains and losses and as reduced by the fair value of plan assets, if any. Cumulative net unrecognized actuarial gains and losses at the end of previous year which exceed 10% of the greater of the present value of the Authority's pension obligation and the fair value of pian assets are amortized over the expected future service life of the employees. Medical scheme The Authority provides unfunded post retirement medical benefits to its permanent employees. Provisions are made to cover the obligations under the scheme on the basis of actuarial valuation and are charged to income. The valuation was carried out as at 30 June 2013 using the "Projected Unit Credit Method". The amount recognised in the balance sheet represents the present value of defined benefit obligation as adjusted for un-recognised actuarial gains and losses. Employees accurmuleting compensated absences The Authority provides for unavailed compensated absences to the extent of 180 days for all its permanent employees irrespective of their service period in the following event: + Retirement; or - Death or disability during service. Provision are made to cover the obligation under the scheme on the basis of ectuarial valuation and are charged to income. The most recent valuation was carried out as at June 30, 2013 using the "Projected Unit Credit Method". The amount recognized in the balance sheet represents the present value of defined benefit obligation Provident fund The Authority operates a provident fund scheme for its employeesin accordance with the General Provident Fund Act, 1925, according to which employees' contributions are made to the Fund. IRN AnnualReport 2013 feyCivil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 3.10 Trade and other payables Trade and other payable are recognized and carried at cost, which is the fair value of the consideration to be paid in the future for goods and services received. 3.11 Taxation Current Provision for current taxation is based on taxable income at the applicable rates of taxation after taking into account tax credits and tax rebates, if any. The tax charge as calculated above is ‘compared with turnover tax under section 113 of the Income Tax Ordinance 2001, and whichever is higher is provided in the financial statements, Deferred Deferred tax is recognised using the balance sheet liability method providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation ar settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax liabilities are recognised for all taxable temporary difference. A deferred tax asset is recognised only to the extent that itis probable that future taxable profits will be available against which credits can be utilised. Deferred tax assets are reduced to the extent thet itis no longer probable that the related tax benefits will be realised. 3.12 Foreign currency transactions Foreign currency transactions are translated into Pak Rupees at the exchange rates prevailing on the date of transactions. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange prevailing at the balance sheet date. Exchange differences are included in income and expenditure account. 3.13 Revenue recognition Revenue from rendering of services is recognised when services are rendered. Electricity revenue is recognised on the basis of meter reading and et the rates approved by revenue section. Return on bank deposits and investments is recognised on time proportion basis taking into account the effective rate of return. 3.14 Provisions Provisions are recognised when the Authority has a present legal or constructive obligation as a result of past events, it is probable that an out‘low of resources embodying economic benefits My 64 MTT aayCivil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 3.15) 3.16 will be required to settle the obligation and a reliable estimate of the obligation can be made. However, provisions are reviewed at each balance sheet date and adjusted to reflect current best estimate. Contingencies Contingent liabilities are not recognised in the financial statements. These are disclosed unless the possibility of an outflow of resources embodying economic benefits is emote. A contingent asset Is not recognised in the financial statements but disclosed when an inflow of economic benefit is probable. ‘inancial instruments Financial assets and financial liabilities are recognized when the Authority becomes a party to the contractual provisions of the instrument. Financial assets are derecognized when the Authority loses control of the contractual rights that comprise the financial assets. Financial liabilities are derecognized when they are extinguished that is, when the obligation specified in the contract is discharged, cancelled or expires, Any gain or lass on detecognition of the financial assets and financial liabilities are taken to income and expenditure account, 3.17. Off-setting Financial assets and financial liabilities are only off-set and the net amount is reported in the financial statements when there is a legally enforceable right to set-off the recognized amount and the Authority intends either to settle on a net basis, or to realise the asset and to settle the liability simultaneously. Noto ETE MEETIH (Rupees in ‘000) 4. PROPERTY, PLANT AND EQUIPMENT Operating assets 41 151,211,628 142,046,989 Aiport Land underlying ljarah Sukuk 4.15 62,977,000 62,977,000 Capital work-in-progress 42 28,263,052 23,009,880 Capital items in transit 84,557 41,162 242,536,237 228,075,031 i Ene 4SCivil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 4.1 Operating assets sus Fant, tang MRS Oe FAL SHEOIS anon unind Ai odes eid piers and an acest raed mes a sata Cos Ren wisi aig sasaae are AT we asec Acundedeeiaen -_fme geri congs) agen tan samy aaa Aetioae aos — shi ata eae nes Yes edd 8. 012 Operate ae wos saruime nous aemn ear? ato zastte seatos mes SAS uOT ase he Zanes diosa boa Ti 78 Ta ld een : 78 = : ei 115 ine = 3 : a a8 Reclatin Aine cat we 7 wr a secant eet 28 : 2 98 Lt : ; $ : #1 se cain ote Sia aes ae et ie emia taza egmy 2s sn aise <——sses ers Sar|_a1g ——ahee st ng ota Toa ass bist — Bl —Zriss ———aeas Att ay 212 5 ean ots amsiwe wen ano ae rat seuradetdoeiatoe tawny pean mio sess uso easy oes Hate a Tou — aegis se a aed tas rae Yes edd 3 in 18 Open ett vate owsiss soos remo arses net cam ‘a nam Suen ero: “tee a5 Diss cos a 3 Tae 1s Aes een a : a saa nate : at = a2 ae estan sian cos 3a 7137] scrwansdexecten : 0 sun) : va fis Dever acer Tie aaa ern die sus ig ass pone gst iss er Cline ke Tame Tiga) 9a apa et ohdeston 9g aime t 3 2Civil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 aad 4.4.2 AAA als Land includes various pieces of land having value of s. 375 million (2012:Rs. 375 million) acquired from the GoP whose final consideration has not yet been agreed. The value of these lands, hes, therefore, been determined by Executive District Officer, Revenue. Pursuant to the section 11 of the Pakistan Civil Aviation Authority Ordinance, 1982, all the land and buildings transferred to the Authority upon its incorporation and vested in the Federal Government at that time are now under possession and conttol of the Authority in accordance with the Federal Government Land and Buildings (Recovery of Possession) Ordinance, 1965. However, in certain cases the ownership of the land and buildings is disputed, the ultimate decision in respect of which is dependent upon the outcome of the settlements made and/or suits filed. Operating assets had been revalued by M/s Zafar Iqbal & Co. (an independent valuer) based on present market value method after consideration of variable factors in each category of operating assets as at 30 June 2005 resulting in surplus of Rs.160 billion. The revaluation adjustments hac been taken in the books of account as on 30 June 2007. The Authority had initiated another exercise of revaluation of operating assets by M/s Riaz Ahmed, Saqib, Gohar & Co, (an independent valuer) based on present market value method efter consideration of variable factors in each category of operating assets as at 30 June 2009 resulting in surplus of Rs.26.437 billion. The revaluation adjustment had been taken in the books of account a5 on 30 June 2011, Had the aforesaid revaluations not been carried out, the cost, accumulated depreciation and written down value of these assets would have been 2s follows Cost Accumulated Written depreciation down value (Rupees in '000) Land 2,803,570 - 2,843,570 Buildings, runways, roads, pavements and fences 33,288,224 10,461,486 22,826,738 Plant, equipments and accessories 14,079,238 9,085,919 4,993,319 Computers 314,004 246,909 67,095 Furniture, fixtures and equipments 675,229 326,011 289,218 Aircratt 756,025, 169,264 586,061, Vehicles 4,149,102 2,086,587 2,062,515 6,105,392 22,436,876 33,668,516 Airport Land underlying ljarah Sukuk During the year ended 30 June 2011,GoP issued ljarah Sukuk Bonds amounting to Rs. 181.804 billion through Pakistan Domestic Sukuk Company Limited (PDSCL) - a wholly owned company of GoP. For this purpose, land measuring 1479 Acres of Jinnah Intemational Airport [JIAP), Karachi (the Airport Land), having an approximate carrying value of Rs.62.977 billion, is the underlying asset. Under the arrangement, the Authority has sold the Airport Land to PDSCL, an agent of Sukuk holders and the Authority is holding the Airport Land in trust for Sukuk certificate holders. The ‘AnnualReport 2013 ig |Civil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 42 51 61 My $0 MET legal documents executed by the Authority and the relevant counter parties revealed that the seid Airport Land has been leased out under an jarah agreement to the GoP with an undertaking to resell the Airport Land to the Authority at the end of the Ijarah term. In this respect, the management of the Authority has exercised its judgment, as required under IAS. 1 “Presentation of financial statements,” that the above transaction in substance isa financing arrangement and therefore does not give rise to revenue on account of disposal of the Airport Land. The management has also determined that the Authority cannot derecognise the Airport Land as the conditions laid down in IAS ~ 18 Revenue’ to recognise revenue on the sale of Airport Land have not been satisfied. Additionally, according to the directive issued by the Ministry of Finance, GoP vide it's letter number 4(21]EF(C-II)/2 dated 03 February 2010, the said transaction would neither involve any physical transfer of the underlying asset nor create any financial implications for the Authority. In view of the above, based on substance over form and the fact that proceeds of Sukuk Bonds have been retained by the Ministry of Finance, GoP and the repayment of ljarah Sukuk and ljarah rentals are the responsibility of the Ministry of Finance, GoP, the Authority has not derecognised the Airport Land in these financial statements. Noe ETE Ty (Rupees in '000) Capital work-in-progress Civil works. 23,531,194 17,908,003 Consultancy charoes 863,559 796,777 Advances to suppliers / contractors 3,868,299 4,305,100 28,263,052 23,009,880 INTANGIBLE ASSET Opening written down value 82,171 111,342 Amortisation for the year (21,529) (29,171) 60,642 82,171 These represent cost of a software "Oracle", LONG-TERM LOANS - considered good Long-term loans to employees 61 700,899 515,758 Receivable within one year 10 (173,473) (154,038) 527,426 361,720, These carry interest at the rate of 8.25% to 9% (2012: 8.25% to 9%) per annumCivil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 7 LONG TERM OTHER RECEIVABLES Other receivables Provision against doubtful receivables Note ETE EE (Rupees in '000) 156,274 (156,274) 153,237 (153,237) Represents receivable from Aero Asia International (Put) Limited outstanding since 2007. STORES AND SPARES Stores Spares Spares-in-tansit Provision for slow-moving stores and spares, ‘TRADE DEBTS - considered good Aeronauti Landing and housing fee Route navigational fee Embarkation fee Aircraft power supply Air traffic services Provision for doubtful debts Non-aeronautical Provision for doubtful debts aE ‘AnnualReport2013__ fay _ | 94 94 19,660 2,862 188,504 205,526 : 853 208,164 209,241 (111,186) (109,227) 96,978 100,014 7,314,552 5,473,059 2,485,019 1,459,140 6,916,588 3,451,165, 816,444 585,801 18,680,649 11,091,074 (9,463,452) (4,741,482) 9,217,197 6,349,592 3,204,717 2,987,927 (2,986,035)| | (2,619,743) 218,682 368,184 "9,435,879 6,717,776Civil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 91. 92 10. Mn Opening Provisionmade Closing balance during the year_—_ balance Provision for doubtful debts (Rupees in'000) Aeronautical 4,741,482 4,721,970 9,463,452 Non-aeronautical 2,619,743 366,292 2,986,035 Total 7,361,225 5,088,262 12,449,487 Opening Provisionmade Closing balance during the year_—_balanca (Rupees in ‘000) Aeronautical 2.724729 2.016.753 4741482 Non-aeronautical 15,362 204,381 2,619,743 2,221,134 7,361,225 Total The above includes Rs. 17.993 billion (2012: Rs.1 1.271 billion) due from PIAC - a related party. Out of these Rs. 2.317 billion (2012: Rs. 2.298 billion) relates to non-aeronautical receivable against which a provision of Rs, 2.317 billion (2012: Rs.2.298 billion) has been made, Balance of Rs. 15.676 billion (2012: Rs.8.973 billion) represents aeronautical receivables and a provision of Rs. 8.973 billion (2012:Rs. 4.308 billion] has been made there against. Nove SETTER LETT (Rupees in '000) a 11365] 10,423 LOANS AND ADVANCES - considered good Advances - for goods and services + for traveling and daily allowances , 22,388 Current maturity of long term loans 6 173,473, 154,038 215,663 176,426 OTHER RECEIVABLES - considered good Foreign travel tax receivable from airline operators 11.1 398,538 422,986 Government alrport tax receivable from airline operators 196,493 160,128 Royalty receivable 18,945 20,382 Others 83,636 81,196 697,612 684,692 MAECivil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 1141 12. 12.1 13. 13.1 This includes Rs. 141.761 (2012: Rs. 141.761) million and Rs. 158.322 (2012: Rs.182.741) million due from Aero Asia Airline and Shaheen Air Intemational respectively on account of foreign tax to be collected by the Authority on behall of the Ministry of Finance. Note ETFS (Rupees in'000) INVESTMENTS, Held to maturity Teim deposit receipts and certificates of investment having maturity of: - more than three months 3,342,000 4,642,000 ~ three months or less: = 1,700,000 3,342,000 6,342,000 The return on investments ranges from 9.40% to 13.48% (2012: 11.90% to 15% } per annum. CASH AND BANK BALANCES Cash in hand 2,081 Cash in transit 12,745 14,826 Cash at banks: ~ current accounts 384,849 64,990 ~ deposit accounts Bt 1,229,122 1,370,210 1,613,971 1,435,200 1,628,797 1,475,624 These carry profit at the rates ranging from 4.25% to 10 % (201 2: 4.25% to 10 5 9%) per annum. a ITT ae S|Civil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 Note [ETENN SETTER (Rupees in‘000) 14, CIVIL AVIATION AUTHORITY FUND Excess of assets over liabilities taken over as on 07 December 1982 142 1,332,988 1,332,988 Funds released to ADA prior to 07 December 1982 and other dues from ADA 731,789 731,789 Government assistance and grants Government assistance 354,625 354,625 Grants GoP - for AIIAP 689,999 689,999 - GoP - for Gwadar Airport 90,000 90,000 ~ Government of Oman - for Gwadar Airport 277,865 : ~ Kingdom of Saudi Arabia and United Arab Emirates 43,730 43,730 British Government 138,513 138,513 ~ Sogea related settlement 143 969,234 969,234 2,563,966 2,286,101 Accumulated surplus ——— —— at beginning of the year 49,765,265 492,367,585 ~ surplus for the year 12,431,633 6,654,277 transfer from surplus on revaluation 1,138,056 742,897 - surplus realised on disposal 5,006 506 63,339,960 49,765,265 67,968,703 54,116,143 14.1. The Civil Aviation Authority Fund has been established under Section 16 of the Pakistan Civil Aviation Authority Ordinance, 1982 14.2. This represents excess of the assets over liabilities taken over by the Authority from the Civil Aviation Department of GoP as on 7 December 1982. Profits for the periods from 7 December 1982 10 30 June 1983 were also credited to this account 14.3. Inthe year 2000, the GoP negotiated and settled the long outstanding matters with the Government EP: MT of France in respect of the Sogea-France, the contractor of Jinnah Terminal Complex, Karachi. The aggregate claim of Rs. 4.09 billion acknowledged by the GoP includes cost escalation, related financial charges and legal fee. The amount represents the first two installments of Bs. 969 million paid by GoP. Remaining installments has been paid by the Authority, ‘The GoP vide letter No. F6(7)-BR 1/2000-886 dated 30 June 2001 has sanctioned an amount of Rs. 1.23 billion as loan to the Authority during the year 2000-2001 as book adjustment towards payment of income tax liability of M/s. Sogea. However, as this sanction did not involve any cash flow, therefore, it has not been accounted for in these financial staternentsCivil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 15. 16. 17. Note EE (Rupees in'000) SURPLUS ON REVALUATION OF PROPERTY, PLANT AND EQUIPMENT Operating fixed assets Balance at the beginning of the year 176,770,764 177,514,167 Transferred to accumulated surplus in respect of incremental depreciation charged during the year (1,143,062) (743,403) 175,627,702 176,770,764 Related deferred tax liability Balance at the beginning of the year 2,482,716 2,742,907 Transferred to accumulated surplus in respect of incremental depreciation charged during the year (400,072) (260,191) 2,082,644 2,482,716 173,545,058 174,288,048 DEFERRED TAX LIABILITY Arising in respect of accelerated tax depreciation DEFERRED LIABILITIES For land 411 375,005 375,005 For staff retirement benefits 7A 3,202,783 2,030,949 3,577,788 2,405,954 ‘AnnualReport 2013 key |Civil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 17.1 Staff retirement benefits Tasso?) s16758 Unecoavis ose ciistez25) 76226) Shaaessipaasrer ave otsemee ‘suas aon DBigaioncithesdt sever “BRSROSA0 BST orange snr ones Opening balance a925 siogre Shang rth oa anurans Slee sesce coe auaoe Lamar arses etlietts on lan ues 265550 755550 tio iavaeai o eas 7366309 sani? V.sisere —toaazese ian eH ae orans) nasari7 2030889 3200 Sosse2 286361 s7as) 505582 1.252269 anos oe Yoseaea —yasact cores) niearo%) ‘erase ‘Savor ae ants ens ora ase2 Tne: Sonus "aaa aa sis 1007928 1313599) sco sae 8 Ms: MT ree nsCivil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 17.1.1 Significant actuarial assumptions 18. 19. 19.1 20. Discount rate Expected rate of retum on plan assets Expected rate of salary increase Indexation in pension per annum Medical inflation rate per annum Exposure inflation rate per nnum SECURITY DEPOSITS AND RETENTION MONEY Security deposits Contractors’ retention money ‘TRADE AND OTHER PAYABLES Creditors Accrued liabilities Foreign travel tax payable Government airport tax payable Royalty payable to PIAC Payable to Government of Sindh Payable to airport security force ‘Advances from airline operators ‘Advances irom customers and concessioners Others %age 11.50% 12.50% 11.50% 12.50% 11.50% 12.50% 8% 8% 7% 7% 3.50% 400% Note ETE Tra (Rupees in'000) 925,096 852,366 1,797,673 1,178,076 2,672,769 2,030.42 1,059,551 349,315 uv 398,538 198,024 71,132 194 626,311 89,990 279,035 343,983 59,975 3,475,854 3, 952,646 906,088 422,986 161,357 62,882 221,815 88,222 299,837 231,571 78,666 426,070 Represents amount received from the Government of Sindh in respect of the development of Thar Airport. CONTINGENCIES AND COMMITMENTS Contingencies ‘Various claims for damages and compensation under litigation against the Authority aggregating to Rs.999 million (2012: Rs. 458 million ) have not been acknowledged as debts. Various present and ex-employees of the Authority have lodged claims against the Authority for their dues specifically relating to their re-instatements and other service matters. However, no y can be ascertained at this stage Annual Report 2013 fy |21. 22. 23. 24, Civil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 Commitments Aggregate commitments for capital expenditure contracted for, but remaining to be executed as at 30 June 2013 amounting to Rs, 29.810 billion (2012: Rs. 32.33 billion). AERONAUTICAL REVENUE Landing and housing fee Route navigational fee Embarkation fee Aircraft power supply Other Airport services NON-AERONAUTICAL REVENUE Rent, electricity and water charges Porter service charges Special development project CIP lounge income Royalties on meal uplift Advertisement Cargo throughput Ground handling INSPECTION AND SERVICES Airworthiness and license fee Calibration charges Services rendered Collection charges on foreign travel tax OTHER INCOME Interest on loans to employees Gain on sale of operating assets Disposal of scrap and salvage material Others Pakistan Civil Aviation Authority ‘oe EA LETT (Rupees in 000) 5,616,331 15,783,896 12,175,789 286,376 685,439 34,547,831 2,576,090 116,983 667 97,993 9,426 102,321 956,933 233,474 4,093,887 5,349,928 10,265,342 5,980,668 240,240, 281,300 22,117,478 2,203,078 113571 667 134517 9,192 113,510 825,527 187,200 3,587,262 163,423 137,737 78,856 600 380,616 87,210 116,614 103,732 600 308,156 33,985 2,455 18,199 31,438, 2,763 10,333 LENCivil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 2015 (Rupees in '000) 25. GENERAL AND ADMINISTRATIVE EXPENSES Salaties, allowances and benefits 25.1 8,089,782 6,63 1,244 Provision for pension and gratuity 2,242,377 978,453 Provision for medical benefits 141,045 113,114 Provision for compensated absences 305,562 300,579 Traveling and conveyance 146,843 125,805 Training 8,569 10,688 Telephone, postage and communication 78,369 83,641 Electricity, fuel and water 1,534,370 1,373,304 Depreciation 44 2,895,844 2,890,713 ‘Amortization 5 21,529 29,171 Rent. rates and taxes 1,504 7.683 Repairs and maintenance 25.2 519,433 392,966 Legal and professional 28,055 20,568 Auditors! remuneration 825 825 Printing, stationery and periodicals 47,146 41,685 Insurance 53,585 46,930 Rental and Hiring charges for Security Guards 21,468 22,473 Advertising and publicity 20,212 47,979 Provision for doubtful debts 5,088,262 2,221,134 Provision for doubtful other receivables 3,038 18,974 Provision for slow moving stores and spares 1,959 4,131 Subscriptions 12,898 10,934 Horticulture 18,654 10,545 CIP Lounge expense 4,288 2,426 Others 15,932 39,991 21,301,549 15,425,956 25.1. Includes remuneration of key management personnel amounting to Rs. 425.428 million (2012: Fs.263.164 million). 25.2. Repairs and maintenance Building 123,911 65,421 Plant and equipment 146,035, 118,307 Vehicles 159,998 128,146 Aircraft calibration 46,190 35,526 Furniture and fixtures 8,001 4579 Consumable stores and spares 35,298 40,987 519,433 392,966 ‘AnnualReport2013_ Ag __|Civil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 (Rupees in'000) 26. TAXATION Current for the year 5,085,805 3,791,626 for prior years - 1,427,465 5,085,805 5,219,081 Deferred 874,495 (124,050) 5,960,300 5,095,041 26.1 Reconciliation of income tax expense for the year Accounting surplus before taxation 18,391,933 11,749,318 Enacted tax rate 35% 35% Tax on accounting surplus at enacted rate 6,437,177 4,112,261 Prior year tax effects : 1,427,465 Tax effect of income taxed at reduced rate (476,877) (444,685) 5,960,300 5,095,041 26.2. The Authority had been claiming tax exemption on the basis of being a local authority upto tex year 2008. However, the taxation authorities have not accepted the claim of tax exemption. [he Authority's appeals against rejection of exemption for assessment years 1990-1991 through 2002- 2003 are pending before the Honourable High Court of Sindh whereas appeals for tax years 2003 to 2008 are pending before the Income Tax Appellate Tribunal (ITAT). However, the Authority, as matter of prucience has provided the accumulated shortfall of Rs.6.048 billion upto tax year 2008 in prior years. 26.3. The Additional Commissioner Inland Revenue had restarted set-aside proceedings for the assessment year 2000-01 ta 2002-03 and issued revised order under section 62/135 creating net demand payable of Rs.147 million by disallowing all SOGEA - France related issues. The matter has been decided in favour of the Authority by the Commissioner Inland Revenue (Appeals) (CIR(A)].The appeal filed by the department with the ITAT on such matier is pending for hearing. 26.4 During the year the Deputy Commissioner inland Revenue (DCIRI vide order dated 19 August 2013 held that the Authority had not collected advance tax under Section 236A of the Ordinance. The order resulted in 2 tax cemand of Rs. 583.868 million in respect of tax year 2010 to 2012. The Authority had filed an appeal with Commissioner (Appeals) which vide order dated 04 October 2013 confirmed the action of the DCIR in holding the Authority in default. However, the Commissioner (Appeels| is of the view that the provision of Section 151(1)(B) of the Ordinance has observed that no tax is required to be recovered by the department where itis proved that the relevant parties have filed their respective incame tax returns. The Authority is in the pracess of filing and appeal before the Tribunal against the order of the Commissioner (Appeals). MW 5s MTTCivil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 26.5 27. 28. 29. 29.1 For tax years, 2003 to 2012, the assessments have heen amended by the department by making certain additions and disallowances resulting in additional tax demand of Rs.3.374 billion. The Authority filed appeals with the CIRIA) where partial relief was allowed. The appeals of the department and the Authority are now pending with the Appellate Tribunal Inland Revenue (ATIR). ‘The management based on the tax advise, is confident that no charges on account of taxation will arise for which any provision is warranted. =r (Rupees in 000) ‘CASH AND CASH EQUIVALENTS Investments having maturity of 3 months or less - 1,700,000 Cash and bank balances 1,628,797 1,475,624 1,628,797 3,175,624 ‘TRANSACTIONS WITH RELATED PARTIES ‘As the Authority is controlled by the GoP through the Ministry of Defence, all entities owned or controlled by the GoP are deemed to be the related parties of the Authority. Other related parties comprise of staff retirement funds and key management personnel. Transactions with PIAC, staff retirement funds and key management personnel are disclosed in the respective notes to the financial statements. Transactions with all other entities owned or controlled by the GoP are not disclosed asit is impracticable. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Authority's activities expases it to a variety of financial risks. The Board of Members of the Authority has the overall responsibility for the establishment and oversight of the Authority's risk management framework and reviews and agrees policies for managing risks which are summarised below: Market risk Market risk is the risk that fair value of future cash flows will fluctuate because of changes in market prices. Market prices comprise three types of risk: currency risks, interest rate risk and equity price risk, The Authority is exposed to currency risk and interest rate risk only. i) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instruments will luctuate because of changes in market interest rates. The Authority is managing exposure to such riskin respect of investments ang bank balances ii) Foreign currency risk Foreign currency riskis the risk that the fair value or future cash flows of a financial instrument will fluctuate because of the changes in foreign exchange rates. t arises where receivables and payables exist due to transactions in foreign currency. As of the balance sheet date, the Authority is not materially exposed to such risk CTE 59 aCivil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 29.2 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 to incur financial loss. The Authority is mainly exposed to credit risk in respect of the following: or] 2012 (Rupees in‘000) Bank balances 1,613,971 1,435,200 Trade debts 9,435,879 6,717,176 Investments 3,342,000 4,642,000 The aging of trade debts at the balance sheet date is as follows: ‘Aeronautical Non-aeronautical Gross Impaired Gross Impaired (Rupees in '000) Due 1-365 days 9,211,194 = 279,792 102,749 Due 1 to 2 years 4,736,685 4,596,420 234828 247,828 Due 2to 3 years 2,130,557 2,130,587 295,097 295,097 Due more than 3 years 2,758,487 _ 2,892,749 2,395,000 _2,340,361 18,836,923 9,619,726 3,204,717 2,986,035 The Authority believes that trade debts for aeronautical revenue due upto 1 year do not require any provision for impairment while all the balances past due more than | year are considered as fully impaired. While in respect of non-aeronautical revenue balances due upto | year are considered impaired only in respect of PIAC and all balances due more than 1 year are considered fully impaired, Credit risk on bank balances and investments is limited as they are maintained with banks having good credit ratings assigned by credit rating agencies. 29.3. Liquidity risk Liquidity risk is the risk that the Authority will not be able to meetits financial obligations as they fall due. The Authority applies prudent liquidity risk management policy by maintaining sufficient cash and bank balances. i 60 METETMaMe ee HYCivil Aviation Authority Notes to the Financial Statements For the year ended 30 June 2013 29.4 Fair value of financial assets and liabilit 30. 31. 32. s The carrying amount of all financial assets and liabilities reflected in the financial statements approximates their fair values. FUND MANAGEMENT The Authority treats government grants, assistance and funds transferred from ADA as the Authority's Fund. The Authority's objective when managing funds is to utilize them in the provision of world class aviation services for the benefit of stakeholders. The Authority has support from the GoP to maintain its sustainability. The Authority is not subject to externally imposed fund requirements. AUTHORIZATION OF FINANCIAL STATEMENTS. The financial statements of the Authority have been authorized for issue by the CAA Board on 29th May, 2014. GENERAL Figures have been rounded off to the nearest Rupees in thousand. hing Chairman Director General we AnnualReport 2013 fay __|= TE ee* Qi Fi Sri ele SAAN E Vere) arie-lamaelii ie) 4 posed tessredy:Aacaunaneh nec cANEWYISON 62132629404