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| Pakistan
International Airlines (PIA) |
|
|
(Annual Report 1995-96) |
|
|
|
| CONTENTS |
|
| Notice
of 40th Annual General Meeting |
|
2 |
|
| Board
of Directors and Management |
|
3 |
|
| Directors'
Report |
|
4 |
|
| Highlights |
|
5 |
|
| Chairman's
Review |
|
6 |
|
| Auditors'
Report to the Members |
|
8 |
|
| Balance
Sheet |
|
9 |
|
| Profit
& Loss Account |
|
10 |
|
| Statement
of Changes in Financial Position |
|
11 |
|
| Notes
to the Accounts |
|
12 |
|
| Statement
Under Section 237 of the Companies Ordinance, 1984 |
28 |
|
| Five-year
Summary |
|
29 |
|
| Pattern
of Shareholding |
|
30 |
|
|
|
|
|
|
NOTICE OF 40TH ANNUAL
GENERAL MEETING |
|
| NOTICE
IS HEREBY GIVEN that the 40th Annual General Meeting of the Shareholders of
Pakistan |
|
| International
Airlines Corporation will be held at 1500 Hours on Tuesday, 31st December,
1996, behind |
|
| Airport
Hotel, Quaid-e-Azam International Airport Karachi, to transact the following
business: |
|
|
| 1.
To confirm the minutes of the 39th Annual General Meeting held on 9th
December, 1995. |
|
|
| 2.
To receive and adopt the Audited Accounts for the year ended 30th June, 1996,
together with |
|
| the
Auditors' and Directors' reports. |
|
|
| 3.
To transact any other business which may legally be transacted at any AGM. |
|
|
| Notes: |
|
| a)
The Share Transfer Books of the Corporation will remain closed from 25th
December, 1996, to |
|
| 7th
January, 1997, both days inclusive. Transfer documents received in order
during the office |
|
| hours
by Tuesday, 24th December, 1996, will be in time for registration of transfer
of shares. |
|
|
| b)
A Shareholder entitled to attend and vote at the General Meeting is entitled
to appoint another |
|
| Shareholder
as proxy. Proxies and Powers of Attorney in order to be effective, must be |
|
| deposited
at the Head Office of the Corporation not less than 48 hours before the time
fixed |
|
| for
holding the Meeting unless the Power of Attorney has already been registered
in the |
|
| Corporation
books, and must be duly stamped, signed and witnessed. |
|
|
| c)
Shareholders are requested to promptly notify the Corporation of any change
in their |
|
| addresses. |
|
|
| d)
Entry at the Meeting place will start at 1400 hours and close at 1500 hours.
Shareholders |
|
| cooperation
in this regard will be appreciated. |
|
|
|
|
Board of Directors |
|
|
As on 25th November, 1996 |
|
|
| Hasan
Raza Pasha |
|
| Secretary
Defence & Chairman - PIAC |
|
|
| Air Marshal |
|
| Parvaiz
Mehdi Qureshi |
|
| Dy.
Chief of Air Staff (Ops) |
|
|
| Mueen Afzal |
|
| Secretary
Finance |
|
| Government
of Pakistan |
|
|
| Shuja-ul-Hasan |
|
| President,
Habib Bank Limited |
|
|
| Hafeezullah
Ishaq |
|
| Chairman,
Central Board of Revenue |
|
| Government
of Pakistan |
|
|
| Lt.
Gen. (Retd) |
|
| Alam
Jan Mahsud |
|
|
| S.
Abdur Rehman |
|
|
| Abubakr
I. Chundrigar |
|
|
| M.B. Abbasi |
|
|
| Muhammad
Younus Dalia |
|
|
| M.
Nawaz Tiwana |
|
| Managing
Director |
|
|
| Ghazanfar
Mashkoor |
|
| Secretary-
PIAC |
|
|
| Registered
Office |
|
| PIA
Building |
|
| Quaid-e-Azam
International Airport |
|
| Karachi-
Pakistan |
|
|
|
Management |
|
|
As on 25th November, 1996 |
|
|
| M.
Nawaz Tiwana |
|
| Managing
Director |
|
|
| Arshad
Mahmud |
|
| Deputy
Managing Director (Finance) |
|
|
| Khursheed
Artwar |
|
| Deputy
Managing Director (Marketing) |
|
|
| Dr.
S. Mir Muhammad Shah |
|
| Deputy
Managing Director (PM&C) |
|
|
| M.
Jalaluddin |
|
| Director
Finance |
|
|
| Badshah Gul |
|
| Director
Administration |
|
|
| Jawaid
Akhtar Khan |
|
| Director
Information System |
|
|
| S.M. Tarin |
|
| Director
Marketing |
|
|
| Kaleem
Malik |
|
| Director
Airport Services |
|
|
| Anwar
ul Hassan |
|
| Director
Corporate Planning |
|
|
| Shahid
Islam |
|
| Director
Subsidiaries |
|
|
| Capt.
S.S. Zaman |
|
| Director
Flight Operations |
|
|
| Ali
Abbas Brohi |
|
| Director
Inspection |
|
|
| Ghulam
Shabbir Pechuho |
|
| Director
Flight Services |
|
|
| Imran
A. Khan |
|
| Director
Stores & Purchases |
|
|
| Capt.
Nadeem Yousufzai |
|
| Director
General Services |
|
|
| S.U. Zaman |
|
| Director
Engineering & Maintenance |
|
|
| DIRECTORS'
REPORT |
|
| The
Directors have pleasure in placing before you their report together with the
Audited Annual |
|
| Accounts
for the year ended June 30, 1996. |
|
|
| ACCOUNTS |
|
(Rupees in thousand) |
|
|
| Profit
before taxation |
|
207,705 |
|
| Provision
for taxation |
|
(142,532) |
|
|
|
|
| Profit
after taxation |
|
65,173 |
|
| Profit
brought forward |
|
602,564 |
|
|
-------- |
|
| Unappropriated
profit carried forward |
667,737 |
|
|
========= |
|
|
|
| CHAIRMAN'S
REVIEW |
|
| The Directors endorse the Chairman's
Review. |
|
|
|
| DIRECTORS |
|
| Since the last Annual General Meeting
held on 9th December, 1995 changes have occurred in |
|
| the
Board of Directors of the Corporation. Mr. Hasan Raza Pasha, Secretary
Defence, Government of |
|
| Pakistan,
joined as Chairman PIAC Board and Sardar Noor Ilahi Leghari, relinquished
charge as |
|
| Chairman
PIAC Board. Air Marshal Parvaiz Mehdi Qureshi, Dy. Chief of Air Staff (Ops);
Mr. Mueen |
|
| Afzal,
Secretary Finance, Government of Pakistan; Mr. Shuja-uI-Hasan, President,
Habib Bank Limited; |
|
| Mr.
Hafeezullah Ishaq, Chairman, Central Board of Revenue, Government of
Pakistan; Lt. Gen. (Retd.) |
|
| Alam
Jan Mahsud; Mr. S. Abdur Rehman; Mr. Abubakr I. Chundrigar; and Mr. M. Nawaz
Tiwana, |
|
| Managing
Director, PIA, joined as Board Members, whereas Air Chief Marshal Mohammad
Abbas |
|
| Khattak;
Mr. Altaf Ali Bhayo; Mr. Dinshaw H. Anklesaria; Mr. Javed Hasan Aly; Mr.
Mohammad |
|
| Mubeen
Jumani; and AVM (Retd.) Farooq Umar, relinquished charge as Board Members.
The Board |
|
| welcomes
the new Directors and wishes to place on record its appreciation of the
valuable services |
|
| rendered
by the outgoing Chairman and Members of the Board. |
|
|
|
| PATTERN
OF SHAREHOLDING |
|
| The pattern of shareholding is available
at last of this report. |
|
|
|
|
|
HIGHLIGHTS |
|
|
|
|
1995-96 |
1994-95 |
|
|
|
|
|
|
| Revenues |
|
(Rs. in million) |
27,747 |
25,417 |
|
|
|
| Cost
and expenditure |
|
(Rs. in million) |
26,473 |
24,198 |
|
|
|
| Profit
before taxation |
|
(Rs in million) |
208 |
434 |
|
|
| Net worth |
|
(Rs. in million) |
8,683 |
8,618 |
|
|
|
|
| Revenue
passenger kilometres |
(000) |
|
10,592,323 |
10,382,398 |
|
|
| Passenger
load factor |
|
63.90% |
65.50% |
|
|
| Revenue
tonne kilometres |
|
(000) |
|
1,402,311 |
1,408,345 |
|
|
| Revenue
load factor |
|
55.50% |
57.4% |
|
|
| Earning
per ordinary share |
Rs. 10 each |
(Re.) |
|
0.18 |
0.74 |
|
|
Rs. 5 each |
(Re.) |
|
0.09 |
0.37 |
|
|
|
|
|
|
|
|
CHAIRMAN'S REVIEW |
|
|
|
|
| Dear
Shareholders, |
|
|
| It is my privilege to present the
Corporation's Annual Report for the financial year 1995.96. |
|
| I
take this opportunity to update you on the state of the national airline, its
performance during the |
|
| year
as well as the future prospects and plans. |
|
|
|
| The financial results are summarised
below: |
|
|
|
|
1995-96 |
1994-95 |
|
|
|
(Rupees in million) |
|
|
| Revenues |
|
27,747 |
25,417 |
|
|
|
| Costs
and expenditure |
26,473 |
24,198 |
|
|
|
| Profit
before Taxation |
208 |
434 |
|
|
|
| Provision
for Taxation |
143 |
141 |
|
|
|
| Profit
after Taxation |
65 |
293 |
|
|
|
|
| Despite constraints, the airline
maintained a steady expansion of its revenue base, |
|
| registering
a growth of 9.17% in revenue amounting to Rs. 27,747 million for the year.
Costs and |
|
| expenditure
which amounted to Rs. 26,473 million recorded a higher increase of 9.40%
owing to |
|
| worldwide
surge in fuel prices which was not compensated by tariff increases during the
year. Thus |
|
| profit
before tax for the year was lower at Rs. 208 million. |
|
|
| The year under review was not without its
bout of stresses and strains emanating from the |
|
| impact
of wage revisions, domestic competition, grounding of one of the freighter
aircraft and |
|
| Government's
Open Sky policy for cargo besides the fuel price increases. These adverse
factors |
|
| exerted
considerable pressure on the airline's cost structure on one hand and
hampered attainment |
|
| of
higher revenue growth on the other. |
|
|
| To protect profitability, the management
initiated various measures during the year for |
|
| revenue
enhancement and cost control. |
|
|
| It is a matter of satisfaction that the
airline was able to absorb the diverse economic |
|
| pressures
and has maintained the path of profitability and growth. It is against this
background |
|
| that
the results for the financial year 1995-96 should be examined and analysed. |
|
|
| During most of the year, the airline
operated with considerable cash constraints following |
|
| liquidation
of certain old liabilities, advance tax deductions by Government,
disbursement of wage |
|
| revision
arrears etc. The cash problem, specially in Rupee funds, could not be
mitigated due to |
|
| paucity
of the rupee credit lines as a result of the State Bank restriction on
Commercial Banks for |
|
| limiting
monetary expansion. |
|
|
| To foster further growth in both, traffic
and revenue, the airline Js looking for new markets, |
|
| whereas
capacity deployment on existing international routes is also being reviewed.
The number |
|
| of
flights to Kathmandu have recently been raised from two to four, while two
additional flights |
|
| have
been introduced to Saudi Arabia to take care of the traffic growth on this
route. Beirut and |
|
| Yangon
(Rangoon) have been added on PIA's network while service to Johannesburg may
be |
|
| started
in the near future upon availability of requisite approval from an-route
point. |
|
|
| Likewise, capacity on major domestic
trunk routes has lately increased substantially, whereas |
|
| services
to other smaller destinations are also being strengthened. Two new points,
Dera Ghazi |
|
| Khan
and Sehwan Sharif were added to PIA's domestic network in June 96. Earlier,
in March 96, |
|
| PIA
introduced Boeing flights to Moenjodaro, linking it with Karachi and Sukkur. |
|
|
| To strengthen cargo operations, the
airline is looking into the possibility of acquiring a |
|
| freighter
aircraft on lease. |
|
|
| Recently, after successful conclusion of
bilaterals with USA, seven additional points have |
|
| become
available to PIA for its operation into USA. Services to Chicago and
Washington are on |
|
| the
anvil. Bilateral agreement for operation to Australia has also been concluded
while earlier, |
|
| substantial
increase in both passenger and freight capacity was negotiated with U.K. From
a long- |
|
| term
perspective, these openings offer a considerable potential for growth. |
|
|
| To harness the above growth, the airline
is looking at its existing fleet and various options |
|
| for
replacement/expansion of fleet are under evaluation. |
|
|
| We are aware that the demands of the
current severe competition calls for greater |
|
| imagination
and vision. To promote growth in this highly competitive environment,
attention is |
|
| increasingly
being focussed on improving service, maintaining high standards of safety and |
|
| maintenance,
while at the same time, becoming more cost effective and proficient. The
airline is, |
|
| therefore,
investing substantially in the customer services area and in augmenting the
engineering |
|
| capability. |
|
|
| While the economic pressures highlighted
earlier still persist, the airline, is now better |
|
| equipped
to face the vicissitudes and is poised to take on the challenges that lie
ahead. With the |
|
| continued
patronage of our valuable customers and the enhanced dedication of the
employees, |
|
| I
look forward to 1996-97 with renewed enthusiasm, determination and
confidence. |
|
|
| May
Allah bless us all in our efforts. |
|
|
|
Yours sincerely, |
|
|
|
|
|
|
|
|
(HASAN RAZA PASHA) |
|
|
|
|
CHAIRMAN |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
|
| We have audited the annexed balance sheet
of Pakistan International Airlines Corporation as at June 30, |
|
| 1996
and the related profit and loss account and statement of changes in financial
position, together with the notes |
|
| forming
part thereof, for the year than ended and we state that we have obtained all
the information and |
|
| explanations
which to the best of our knowledge and belief were necessary for the purposes
of our audit and, |
|
| after
due verification thereof, we report that: |
|
|
| (a)
in our opinion, proper books of account have been kept by the Corporation as
required by the |
|
| Pakistan
International Airlines Corporation Act, 1956 and rules made thereunder and
the Companies |
|
| Ordinance,
1984; |
|
|
| (b)
in our opinion, the balance sheet and profit and loss account together with
the notes thereon have |
|
| been
drawn up: |
|
|
| (i)
in conformity with the Pakistan International Airlines Corporation Act, 1956; |
|
|
| (ii)
in conformity with the Companies Ordinance, 1984 and are in agreement with
the books of |
|
| account
and are further in accordance with accounting policies consistently applied
except for |
|
| the
change in accounting policy stated in note 2.11 with which we concur; |
|
|
|
| (c)
in our opinion: |
|
|
| (i)
the expenditure incurred during the year was for the purpose of the
Corporation's business; |
|
| and |
|
|
|
| (ii)
the business conducted, investment made and the expenditure incurred during
the year were |
|
| in
accordance with the objects of the Corporation; |
|
|
| (d)
in our opinion, and to the best of our information and according to the
explanations given to us, the |
|
| balance
sheet, profit and loss account and the statement of changes in financial
position, together |
|
| with
the notes forming part thereof, give the information required by the
Companies Ordinance, 1984 |
|
| in
the manner so required and respectively give a true and fair view of the
state of the Corporation's |
|
| affairs
as at June 30, 1996 and of the profit and the changes in financial position
for the year then |
|
| ended; and |
|
|
| (e)
in our opinion, no zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
| SlDAT
HYDER QAMAR MAQBOOL & CO. |
|
FORD, RHODES, ROBSON,
MORROW |
|
| Chartered
Accountants |
|
Chartered Accountants |
|
|
| Karachi:
December 09, 1996 |
|
|
|
|
|
BALANCE SHEET AS AT JUNE
30, 1996 |
|
|
|
|
|
1996 |
1995 |
1996 |
|
|
|
Note |
(Rupees in thousand) |
(US$ in thousand} |
|
|
|
(note 31.3) |
|
| SHAREHOLDERS'
FUNDS |
|
|
|
| Share
Capital |
|
3 |
3,884,618 |
3,884,618 |
110,397 |
|
| Reserves |
|
4 |
4,130,712 |
4,130,712 |
117,391 |
|
| Unappropriated
profit |
|
667,737 |
602,564 |
18,976 |
|
|
|
---------- |
---------- |
---------- |
|
|
|
8,683,067 |
8,617,894 |
246,764 |
|
|
|
|
|
|
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
5 |
10,640 |
10,640 |
302 |
|
| REDEEMABLE
CAPITAL |
|
6 |
400,000 |
400,000 |
11,368 |
|
| LONG-TERM
LOANS |
|
7 |
817,703 |
865,573 |
23,238 |
|
| OBLIGATIONS
UNDER HIRE PURCHASE |
8 |
9,859,422 |
9,893,770 |
280,195 |
|
| LONG-TERM
DEPOSITS AND OTHER LIABILITIES |
9 |
442,713 |
1,639,355 |
12,581 |
|
|
| CURRENT
LIABILITIES |
|
| Current
maturity of long-term loans/ |
|
|
|
| obligations
under hire purchase |
7-8 |
1,501,290 |
1,546,566 |
42,665 |
|
| Short-term
loans |
|
10 |
2,667,698 |
1,235,846 |
75,813 |
|
| Creditors,
accrued expenses |
|
|
|
| and
other liabilities |
|
11 |
5,117,724 |
4,584,143 |
145,441 |
|
|
---------- |
---------- |
---------- |
|
|
|
9,286,712 |
7,366,555 |
263,919 |
|
| CONTINGENT
LIABILITIES AND COMMITMENTS |
12 |
- |
- |
- |
|
|
|
---------- |
---------- |
---------- |
|
|
|
29,500,257 |
28,793,787 |
838,367 |
|
|
========== |
========== |
========== |
|
| FIXED
ASSETS |
|
| Operating
assets |
|
13 |
19,987,177 |
19,502,437 |
568,015 |
|
| Capital
work-in-progress |
|
14 |
47,895 |
34,171 |
1,361 |
|
|
---------- |
---------- |
---------- |
|
|
|
20,035,072 |
19,536,608 |
569,376 |
|
| LONG-TERM
INVESTMENTS |
|
15 |
290,969 |
290,969 |
8,269 |
|
| LONG-TERM
ADVANCES |
|
16 |
1,337,631 |
1,334,896 |
38,014 |
|
| LONG-TERM
DEPOSITS AND OTHER |
|
|
|
|
|
| RECEIVABLES |
|
|
17 |
207,171 |
192,048 |
5,888 |
|
|
|
| CURRENT
ASSETS |
|
|
| Stores
and spares |
|
18 |
3,271,487 |
2,998,904 |
92,972 |
|
| Trade debts |
|
19 |
2,526,660 |
2,049,395 |
71,805 |
|
| Advances,
deposits and prepayments |
20 |
576,064 |
467,341 |
16,371 |
|
| Other
receivables |
|
21 |
1,011,227 |
1,133,768 |
28,738 |
|
| Cash
and bank balances |
|
22 |
243,976 |
789,858 |
6,934 |
|
|
---------- |
---------- |
---------- |
|
|
|
7,629,414 |
7,439,266 |
216,820 |
|
|
|
---------- |
---------- |
---------- |
|
|
|
29,500,257 |
28,793,787 |
838,367 |
|
|
|
========== |
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 1996 |
|
|
|
|
|
1996 |
1995 |
1996 |
|
|
Note |
(Rupees in thousand) |
(US$ in thousand} |
|
|
|
(note 31.3) |
|
|
|
| Revenues |
|
23 |
27,746,507 |
25,417,356 |
788,527 |
|
| Costs
and expenditure |
|
24 |
26,472,750 |
24,198,740 |
752,328 |
|
|
|
---------- |
---------- |
---------- |
|
|
1,273,757 |
1,218,616 |
36,199 |
|
|
|
| Financial
charges |
|
25 |
(1,167,778) |
(1,190,291) |
(33,197) |
|
| Provision
for doubtful debts |
|
35,000 |
(90,000) |
994 |
|
|
|
| Interest
and other income |
|
26 |
57,170 |
184,370 |
1,625 |
|
| Provision
for diminution in value of |
|
|
|
|
|
| investments and advances reversed |
|
- |
134,455 |
- |
|
| Profit
on disposal of fixed assets |
27 |
9,556 |
63,863 |
272 |
|
|
|
|
|
---------- |
---------- |
---------- |
|
|
|
|
|
(1,066,052) |
(897,603) |
(30,296) |
|
|
|
---------- |
---------- |
---------- |
|
|
|
| PROFIT
FOR THE YEAR |
|
207,705 |
321,013 |
5,903 |
|
| Effect
due to change in accounting estimates |
- |
113,862 |
- |
|
|
|
|
---------- |
---------- |
---------- |
|
| PROFIT
BEFORE TAXATION |
|
207,705 |
434,875 |
5,903 |
|
|
|
|
|
|
|
|
| PROVISION
FOR TAXATION |
|
28 |
|
|
|
|
|
|
|
|
| Current
year |
|
138,733 |
127,087 |
3,943 |
|
| Prior years |
|
3,799 |
14,323 |
108 |
|
|
|
|
|
---------- |
---------- |
---------- |
|
|
142,532 |
141,410 |
4,051 |
|
|
|
---------- |
---------- |
---------- |
|
| PROFIT
AFTER TAXATION |
|
65,173 |
293,465 |
1,852 |
|
| Unappropriated
profit brought forward |
|
602,564 |
325,599 |
17,124 |
|
|
|
---------- |
---------- |
---------- |
|
|
|
667,737 |
619,064 |
18,976 |
|
|
|
|
|
| APPROPRIATIONS |
|
|
|
| Dividend
- preference shares |
29 |
- |
16,500 |
- |
|
|
|
---------- |
---------- |
---------- |
|
| UNAPPROPRIATED
PROFIT CARRIED FORWARD |
|
667,737 |
602,564 |
18,976 |
|
|
|
========== |
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
|
|
STATEMENT OF CHANGES IN
FINANCIAL POSITION |
|
|
