CIVIL AVIATPil AUT}IORITYOF THE PHILPHilESNOTES TO FII{AITCIAL STATEME}Ir8

1. GET{ERAL T}IFORTATIOT

Agprrry Prcfle

The Civil Aviation Authority of the Phi[ppines (CAAP or Arfihority) rms created byvirtue of Reptblic Acil (RA) t*lo. 9497 othenuise knorvn as the Cfuil AviationAuthority Act of 2008 f,rtricfi was enaded on ilarcfi 4,2W8. Under its TransitoryPrwisions (Sedion 85, Chepter XlU, Air Transportation O'trce (ATO), createdunder RA 776 *o knmn * the 'Chril Aerona,rtbs Act d the Philippine' wiasabdished and d its poners, drilbs and r[hts rcstcd by hw and exercised by thesaid agency uas tnansfened to CAAP. Ukeu,be, all ass€ils, rml and personalpropatles, funds and renrenues owned by or \r€sted in the different dfpes of theATO, including all onfrads, rBcords end docr,lmsrts rchting to the operations ofthe abdished {ency and its ofiEces and brandres uere similarly transfened toCAAP. Any real poperty ourrcd ty fie ndbnd gorrernment or gio,Emment-omed corponatbn nfiicfi ie bcing used and ulilized as offie or facllfi by theATO sha$ also be hansfened ard tified in farror d CAAP.

The rnandate of CAAP is in line wtth the po[cy of the State to provide safe andefficitxtt air transportatbn for the @untry as enunciated in Chapter l, Secilion 2(Dedaration d Potuy) d RA 9497, b wit, lt is lweby &dard the Nby of frESfafa to prcvi& salb aN etrrcfunt air franspt aN raglatory selvices in tnPhilippines by poviding for he creation af a civil avia{pn auhority wifrijurtsdkilrc,n over ttlo rcstrucfurtng of frE ctvtl sydan, tln pruttotbn, &velopmentand regulation cftu fur/rnba[ opnfnnal, srr/fefy arrd avtaliw wurrry" fundionsunbrhs civll aviation atffifity.

Chaptar ll, Seclion 4 (Organizatkcn of Arfrhorily] d its enablirlg lary crosted CAAPas an indegt&lnt rqulatory body witr, guasi-iu&ial aN gua*le$slafvepourcrs arfr powssng wlrpomlfa. affiibutes It is ailacfied to the Departrnent ofTransportatbn (DOT$ brthe purpose d polrsy coordination.

CAAP is the adrninlsilrdor d the Flbht lnbrmdion Regbn (FlR) and the Adhoritymanaging the ryiatbn scdor of the Philippinee.

@rporabo#lJectilv*

The obiedircs of the Affioriry ar€ as tufilore:

a. Dodopment ard utilizatlon dthe air potentiel of the Philippines;

b. Encour4ernent and devdopment of an air transportation system properlyadapted to the present and ftrturc d foreign and domestic mmmerce d thePhilip$nes;

c. Regulation of air hansportation in suctr a manner as to support soundeconomlc corditbn in suctr trancportation and b imprwe the relationsb€tti,een air caniers;

d. Assufiancs of the safety, quality, reliability, and afrordabilily of air transportseruies brthe riding publb; and

e. Enconragenrent and der$pnrent st a ylabh and gbbdly ompetitircPhilippine avEtion induSry.

O rga n i zatio n a I Structu re

The corporate powers of CAAP are vested in a board which is composed of eightmembers, as follows:

. Secretary of the DOTr who shall act as Ex-Ofricio Chairman;

. Director General of the Civil Aviation (DGCA) who shall automatically bethe Vice.Chairman of the Board;

r Secretary of the Department of Finance (DOF);o Secretary of the Department of Foreign Afiairs (DFA);o Secretary of the Department of Justice (DOJ);o Secretary of the Department of the lntedor and Local Govemment (DILG)o Secretary of the Department of Labor and Employment (DOLE); ando Secretary of the Department of Tourism (DOT).

CAAP is headed by a Director General (DG), who is also the Chief Executive andOperating fficer responsible for all civil aviation in the Philippines and theadministration of RA 9497. He shall be appointed by the President of thePhilippines and shall have a lenure of office of four years, which may beextended for another non-extendible term of four years and shall only beremoved for cause in accordance with the rules and regulations prescribed by theCivil Service Commission (CSC).

The DG has two Deputy Direc{or Generals (DDGs). Prior to 201 1 , the twopositions already existed to oversee the administrative and operational aspects ofthe Authority. ln order for CAAP to realize its full corporate powers, and pursuethe objec{ives of RA 9497, specifically Section 15 (please refer to the next pageunder'Flsca/ Autonomy), the need to create the posilion of the Chief Financialfficer (CFO) became apparent. The Board of Directors, through BoardResolution No. 2011-006, Series of 201 1 approved the creation of the CFO, whoshall assume a co-terminus appointment with the appointing authority and theconesponding qualification standards and salary shall be at par/equivalent withthat of the DDG.

A Table of Organization, which was developed in consultation with CSC and theDepartment of Budget and Management (DBM) in 2009, is presently in effect inCAAP. An Organizational Restructuring Program (ORP) was iniliated in 2012with a targeted implementation in 2013.

The ORP is cunently undergoing further rationalization and alignment to CAAP'sSustainability Programs as a resuh of its regained slature as a credible civilaviation authority in the intemational civil aviation community. With the regainingof its Category 1 aviation safety status from the US Federal AviationAdministration (FAA) on April 10, 2014, CAAP has freed Philippine civil aviationfrom all restrictions that had hampered ils grovvth and development since 2008,including the removal of the lntemational Civil Aviation Organization (ICAO)Significant Safety Concems (SSCs) in March 2013 and the delisting of thePhilippine civil aviation from the European Union (EU) Aviation Safety List in July2013. The ORP was submitted on January 6, 2016 to the GovemanceCommission for GOCCs (GCG) for approval. lt was retumed on March 11,2016by GCG, withoul ac{ion, enjoining CAAP to align its submission accoding to theprescribed process and foms under GCG Memorandum Circular No. 2015-04,Reorganization, Rationalization and Personnel Planning in the GOCC Sector.After completing the first four requirements under GCG Guidebook forReorganization for GOCCs in April 2017, the CAAP Reorganization process is

now in the workforce analysis and planning prooess being undertaken by thethird-party consultant Wllis Towers Watson.

To further streamline lhe operations of the Authority, the managementimplemented a new Airport Clustering Scheme in 2018 and created 4 Clusterscovering the 75 airporls operated by CAAP, to wit:

Cluster / Atua Centel Locadon l{o. of SatelliteAirports/Facilities

CLUSTER 1

Area 1

Area 2Area 3

CLUSTER 2Area 4Area 6AteaT

CLUSTER 3Area 5Area 8Atea 12

CLUSTER,tArea IArea 10

Area 1 1

LaoagTuguegaraoClark

Puerto PrincasalloiloMadan

L€aspiTadobanButuan

ZamboangaLaguindinganDavao

4

615

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5

5

9

4

9

45

Fiscal Autononry

Under Sec'tion '15 of the lmplementing Rules and Regulations of RA 9497, theAuthority shall enjoy fiscal autonomy. All revenues eamed by the Authority fromthe collectionflevy of any and all such fees, charges, dues, assessments andfines it is empowered to colleci/levy shall be used solely to fund the operations ofthe Authority. All monetary revenues collected shall accrue to the Authority andshall be deposiled to its bank account. Funds collecied by the Authority shall beretained efiec{ive March 23, 2008, the date of effedivity of the CAAP Charter.

Exemption from Taxs, Customs and fartfi Duties

Under Section 16 of RA 9497, the importation of equipment, machineries, spareparts, accessories and other materials, including supplies and services usedsolely and exclusively in the operations of the Authority, not obtainable locallyshall be exempt from all direc't and indirect taxes, wharfage fees and othercharges and restrictions, the existence of pertinent laws to the contrarynotwithstanding.Likewise, the Authority is also exempt from the payment of capilal gains tax,documentary stamp tax, real property estate tax and all other local govemment-imposed taxes and fees.

Principal Ofice

The Authorit/s principal office is at MIA Road, Pasay City, Metro Manila,Philippines.

2. FINANCIAL REPORTING FRAIIEWORK AND BASIS OF PREPARATIOiI ANDPRESENTATON

Statement of Comoliance

The financial statements of the Authority have been prepared in accordance withPhilippine Financial Reporting Standards (PFRSS), which indudes all applicablePFRSS, Philippine Accounting Standards (PASs), and interpretations issued bythe lntemational Financial Reporting lnterpretations Committee (lFRlC),Philippine lnterpretations Committee (PlC) and Standing lnterpretrationsCommittee (SlC) as approved by the Financial Reporting Standards Council(FRSC) and Board Of Accountancy (BOA) and adopted by the Securities andExchange Commission (SEC).

Basis of Prcparation

The financial statements of the Authority were prepared on the historical costbasis unless othenrise indicated.

Historical cost is generally based on the fair value of the consideration given inexchange for goods and seNices.

Fair value is the price that \ivould be received to sell an asset or paid to transfer aliability in an orderly sec*ion between market participants at the measurementdate, regardless of whether that price is directly observable or estimated usinganother valuation technique. ln estimating the fair value of an asset or a liability,the Agency takes into account the characteristics of the asset or liability if marketparticipants would take those characteristics into account when pricing the assetor liability at the measurement date.

For financial reporting purposes, fair value measurements are categorized intoLevel 1, 2 or 3 based on the degree to which the inputs to the fair valuemeasurements are observable and the significance of the inputs to the fair valuemeasurement in its entirety, which are described as follows:

Level 'l inputs are quoted prices (unadjusted) in ac,tive markets for identicalassets or liabilities that the entity can access at the measurement date;

Level 2 inputs are inputs, other than quoted prices included within Level 1,that are observable for the asset or liability, either directly or indirectly; and

Level 3 inputs are unobservable inputs the asset or liability.

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Functional and Presentation Cullgncv

The financial statements are presented in Philippine peso, which is theAuthority's functional curency. All financial information presented has beenrounded of to the nearest peso, except when otherwise stated.

ln preparing the financial slatements of the Authority, tEnsactions in cunenciesother than the entity's functional curency (foreign currencies) are recognized atthe rates of exdrange prevailing at the dates of the transactions. At the end ofeach reporting period, monetary items denominated in foreign currencies aretranslated at the rates prevailing d that date. Non-monetary items carried at fair

value that are denominded in foreign currencies are translated at the ratesprevailing at the date when the tair value was determined. Non-monetary itemsthat are measured in terms of historical cost in a foreign currency are notkanslated.

Exchange differences on monetary items are recognized in prolit or loss in theperiod in which they arise.

Use of Estimates and Judgments

The preparation of the financial slatements in conformity with PFRSs requiresmanagement to make judgments, estimates and assumptions that affect theapplication of policies and reported amounts of assets, liabilities, income andexpenses. The estimates and associated assumptions are based on historicalexperience and various other faclors that are believed to be reasonable under thecircumstances, lhe results of which form the basis of making the judgments aboutcarrying values of assets and liabilities that are not readily apparent from olhersources. Actual results may differ from these estimates.Estimates and underlying assumptions are reviewed on an ongoing basis.Revisions to accounting estimates are recognized in the period in which theestimates are revised if the revision affec'ts only that period or in the period ofrevision and future periods if the revision affects both current and future periods.

ln particular, information about significant areas of estimation uncertainty andcritical judgments in applying accounting policies that have the most significanteffec't on the amounts recognized in the financial stalements are discussed inNote 5 to the financial slatements.

3, T{EWANDREVISEDACCOUNTING STANDARDS

The accounting policies adopted are consistenl with those of lhe previousfinancial year, except for the adoption of the following new and amended PFRSwhich the Authority adopted effec{ive for annual periods beginning on or afterJanuary 1,20'18.

Unless othenrise indicated, the adoption ofthe new and amended PFRS did nothave any material effec't on the financial statements. Additional disclosures havebeen included in the notes to financial statements, as applicable.

PFRS 9, Financial lnstruments - This standard will replace PAS 39, FinancialInstrumenb: Recognition and Measurcmenf (and all the previous versions ofPFRS 9). lt provides requirements for the classification and measurement offinancial assets and financial liabilities, impairment, hedge accounting,recognition and deEcognition.

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PFRS 9 requires all recognized financial assets to be subsequently measuredat amortized cost or fair value (through prcfit or loss or through othercomprehensive income), depending on the classification by reference to thebusiness model within which these are held and its contractual cash flowcharacteristics.

For financial liabilities, the most significant effec{ of PFRS I relates to caseswhere the fair value option is taken: the amount of change in fair value of afinancial liability designated as at fair value through profit or loss that is

attributable to changes in the credit risk of that liability is recognized in othercomprehensive income (rather than in profit or loss), unless this creates anaccounting mismatch.

For the impairment of financial assets, PFRS 9 introduces an "expected creditloss" model based on the concept of providing for expected losses atinception of a contrac't; recognition of a credit loss should no longer wait forthere to be objective evidence of impairment.

For hedge accounting, PFRS 9 introduces a subslantial overhaul allowingfinancial statements to better reflec{ how risk management activities areundertaken when hedging ftnancjal and non-financial risk exposures.

The derecognition provisions are canied over almost unchanged fromPAS 39.

The Authority has performed a preliminary assessmenl of the impact of PFRS9 on the financial statements based on an analysis of the financial assets andliabilities and the facts and circumstances that exist as at December 31, 2018.

The following table shows the original classification categories under PAS 39and the new classification categories under PFRS 9 for each class of theAuthority's financial assets as at January 1, 2018:

Classification Classificationunder PAS 39 under PFRS I

Years

Cash and CashEquivalent

Short-Termlnvestments

Held toMaturity

Long-Termlnvestments

Held toMaturity

Financial Assets 1,479,638,665 1,479,638,665at Amortized Cost

Loans and Financial Assets 6,075,265,139 6,075,265,139Receivable at Amortized Cost

Financial Assets 9,646,009,241 9,U6,o@,241at Amortized Cost

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Receivables Loans and Financial Assets 2,669,888,079 2,669,888,079Receivables at Amortized Cost

Concerning impairment, the Authority expects to apply the simplifiedapproach to recognize lifetime expecled credit loss for the Authority's tradereceivables. Although the Authority is cunently assessing the extent of thisimpact, it is anticipated that the application of the expected credit loss modelof PFRS 9 will result in earlier recognition of credit losses. However, it is notpracticable to provide a reasonable estimate of that efiect until the detailedreview that is in progress has been completed. ln particular, theimplementation of the new expected credit loss model proves to bechallenging and might invotue significant modifications to the Authority's creditmanagement systems.

PFRS 15, Revenue from Contracl with Customers - The new standardreplaces PAS 11, Construction Contracis and PAS 18, Revenue and relatedinterpretations. lt establishes a single comprehensive framework for revenuerecognition to apply consistently across transactions, industries and capitalmarkets, with a core principle (based on a five-slep model to be applied to allcontrac{s with customers), enhanced disclosures, and new or improved

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guidance (e.g. the point at which revenue is recognized, accounting forvariable considerations, costs dfulfilling and obtaining a contrac{, etc.).

The Authority intends to use the full retrospective melhod of transition to thenew standard. Based on the cunent accounting tEatment of lhe Authority'smajor sources of revenue, the Authority does not anticipate that theapplication of PFRS 15 will have a significant impaci on its financial positionand/or financial performance, apart from providing more extensive disclosureson the Authorit/s revenue transac'tions. Horvever, as the Authority is still inthe process of assessing the full impac't of the application of PFRS 15 on thefinancial s{alements, it is not practicable lo provide a rcasonable financialestimate of the effect until the Authority complete the detailed review.

Amendment to PFRS 15, Revenue from Contracl with Customers -Clarification to PFRS 15 - The amendments provide clarifications on thefollowing topics: (a) identifying performance obligations; (b) principal versusagent considerations; and (c) licensing. The amendments also provide sometransition rclief for modified conlracts and completed contrac{s.

ll Amendment to PFRS '1, Fist-time Adoption of Philippine Financial ReportingStandards - Deletion of Short-term Exemptions for Firct-time Adopters - Theamendmenl is part of the Annual lmprovements to PFRS 2014-2016 Cycleand deleted the short-term exemflions in paragraph E3-E37 of PFRS I,because it has now served its irdended purpose.

Amendments to PAS 28, lnvestments in Associates and Joint Ventures -Measuring an Associate or Joint Venture at Fair Value - The amendmentsare part of the Annual lmprovements to PFRS 2014-2016 Cyde and clarifythat the elec{ion to measure at fair value through profit or loss an investmentin an associate or a joint venture that is held by an entity that is a venturecapilal organization, mutual fund, unit trust or other qualifying entity, isavailable for each investment in an associate or joint venture on aninvestment-by-investment basis, upon initial recognition.

Amendment to PAS 40, lnvestment Property - Transfer of lnvestmentProperty - The amendments darify lhat transfers to, or from, investmentproperty (including assets under conslruclion and development) should bemade when, and only when, theIe is evidence that a change in use of aproperty has ocarn€d.

Philippine lnterpretation IFRIC 22, Foreign Cunency Transactions andAdvance Consideration - The interpretation provides guidance clarifying thatthe exchange rate to use in transac'tions that involve advance considerationpaid or received in a foreign currency is the one at the date initial recognitionof the non-monetary prepayment asset or deferred income liability.

New and Amended PFRS Issued but Not Yet Effedive

Relevant new and amended PFRS vrhich are not yet effec{ive for the year endedDecember 3'1, 2018 and have not been applied in preparing the financialstatements are summarized below.

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Eftctive for annua! periods beginnlng on or after January l,2019:

PFRS 16, Leases - This standard replaces PAS 17, Leases and its relatedinterpretations. The most significant change introduced by the new standardis that almost all leases will be brought onto lessees' statement of financialposition under a single model (except leases of less than 't2 months andleases of lor-value assets), eliminating the distinciion between operating andfinance leases. Lessor accounting, ho\,yever, remains largely unchanged andthe distinction betureen operating and finance lease is retained.For the Authority's non-cancellable operding lease commitments as atDecember 31, 2018, a preliminary assessment indicates that theseanangements will continue to meet the definition of a lease under PFRS 16.Thus, the Authority will have to recognize a right-of-use asset and acorresponding liabilily in respec't of all these leases - unless these qualify forlow value or short-lerm leases upon the application of PFRS 16 - which mighthave a significant impacl on the amounts recognized in the Authority'sfinancial statements. However, it is not prac,ticable to provide a reasonableestimate of that effect until the Authority complete the review.

Philippine lnterpretation IFRIC 23, Uncedainty Over lncome Tax Treatments- The interpretation provides guidance on hour to reffect the efiects ofuncertainty in accounting for income taxes under PAS 12, lncome Taxes, inparticular (i) whether uncertain tax treatments should be consideredseparately, (ii) assumptions lor taxation authorities' examinations, (iii)determination of taxable profit (tax loss), tax base, unused tax credits and taxrates, and (iv) efiect of changes in fac{s and circumslances.

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Amendments to PFRS 9, Financial lnstruments - Prepayment Features wilhNegative Compensation - The amendments allow erfities to measureparticular prepayable financial assets with negative compensation atamortized cosi or at fair value lhrough other comprehensive income (insteadof at fair value through profit or loss) if a specffied condition is met. lt alsoclarifies the requirements in PFRS 9, Financial lnstruments for adjusting theamorlized cost of a financial liability when a modification or exchange doesnot result in its derecognition (as opposed to adjusting the effeclive interestrate).

Amendments to PAS 28, lnvestments in Associates and Joint Ventures -Long-term lnterests in Associates and Joint Ventures - The amendmentsclarify that long-term interests in an associate or joint venture that, insubstance, form part of the enlity's net investment but to which the equitymethod is not applied, are accounted for using PFRS 9, Financiallnstruments.

Amendments to PAS 19, Employee Benefits - Plan Amendment, Cudailmentor Settlement - The amendments specify how companies remeasure adefined beneft plan when a change - an amendment, curtailment orsettlement - to a plan takes place during a reporting period. lt requiresentities to use the updated assumplions from this remeasurement todetermine cunent service cost and net interest cost for the remainder of thereporting period after the change to the plan.

Amendments to PFRS 3, Business Combinations and PFRS 1'1, JointAnangemenb -Previously Held lnterest in a Joint Operation - The

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amendments are part of the Annual lmprovements to PFRS 2015-2017 Cyde.The amendment to PFRS 3, Business Combinations clarifies that when anentity obtains control d a business that is a joint operation, the acquirerapplies the reguirements for a business combinalion achieved in stages,including remeasuring previously held interests in the joint operdion at ilsacquisition date fair value. The amendment to PFRS '11, Joint Anangementsclarifies that when an entity oblains joint control of a business that is a jointoperation, the previously held interests in that business are not remeasured.

Amendment to PAS 12, lncome Taxes - lncome Tax Consequences ofPayments on Financial lnstruments Classified as Equily - The amendmentsare part of the Annual lmprovements to PFRS 2015-2017 Cycle and clarifythat income tax consequences of dividends are linked more direc{ly to pasttransac'tions or events that generated distributable profits than to distributionto owners and thus, should be recognized in profit or loss, othercomprehensive income or equity accoding to where the entity originallyrecognized those past transactions or events.

Amendments to PAS 23, Bonowing Costs - Bonowing Costs Eligible forCapilalization - The amendments are part of the Annual lmprovements toPFRS 20't$.2017 and clarify that in calculating the capitalization rale ongeneral bonowing, if any specific bonowing remains outstanding afier therelaled qualifying asset is ready for its intended use or sale, that bonowingbecomes part of the funds thal an entity bonows generally.

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Efrective for annual pcriods beglnnlng on or after January 1,20211

PFRS 17, lnsurance Contracts - This standard will replace PFRS 4,lnsurance Contrac'ts. ll requires insurance liabilities to be measured at currentfulfillment value and provides a more unifonn measurement and presentationapproach to achieve consistent, principle-based accounling for all insurancecontracts. lt also requires similar principles to be applied to reinsurancecontrac{s held and investment contracls with discetionary participationfeatures issued.

Defened effectivity:

Amendments to PFRS 10, Consolidated Financial Statements and PAS 28,lnvestments in Associates and Joint Ver ures - Sale or Contribution ofAssets Betvveen an lnvestor and its Associate or Joint Venture - Theamendments address a current conffic:t between the two standards and clarifythat a gain or loss should be recognized fully when the transac{ion involves abusiness, and partially if it involves assets that do not constitute a business.The effec{ive date of the amendments, initially set for annual periodsbeginning on or after January 1, 2016, was defened indefinilely in December2015 but earlier application is still permitted.

Except for PFRS 16, the adoption of the foregoing new and amended PFRS is notexpected to have any marterial efiecl on the financial statements of the Authority.

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4, SU]IIMARY OF SIGI{IFICANT ACCOUNTING POLICIES

The significant accounting policies that have been used in the preparation ofthese ftnancial statements are summarized below. These policies have beenconsistently applied to all the years presented, unless otheMise staled.

Financial Assgds.

lnitial Recoqnition

Financial assets are recognized in the Authority's financial statements when theAuthority becomes a party to the contractual provisions of the instrument.Financial assets are recognized initially at fair value. Transaction costs areincluded in the initial measurement of the AuthoritFs financial assels, except forinvestments classified at fair value through profrt or loss (FVTPL).

Classification and Subsequent Measurement

Financial assets are classified into the following specified categories: financialassets al FVTPL, financial assets al fair value through other comprehensiveincome (FVOCI) and financial assets at amortised cost. The classificationdepends on the nature and purpose of the financial assets and is delermined atthe time of initial recognition.

The Authority classifies financial assets as subsequently measured at amortisedcost, fair value through other comprehensive income orfair value through profit orloss on the basis of both:

The Authority's business model for managing the financial assets and

The contrac{ual cash flow characteristics of the financial asset.

A financial asset is classified at amorlised cost if both of the followingconditions are met:

The financial asset is held within a business model whose objec{ive is tohold financial assets in order to collect contrac{ual cash flows and

The contractual terms of lhe ftnancial asset give rise on specify dates tocash flows that are solely payments of principal and interest on the principalamount outstanding.

A financial asset shall be measurcd at fair value through othermmprehensive income if both of the following conditions are met:

The financial asset is held within a business model whose objec'tive isachieved by both collecting contractual cash flows and selling financialassets and

The contractual terms of the financial asset give rise on specified dated tocash flows that are solely payments of principal and interest on the principalamount outstanding.

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A tinancial asset shall be measured at fair value through profit or loss unless it ismeasured at amortised cost or at fair value through OCl.

As of reporting date, the Authority's financial assets are dassified al amortisedcost.

lmpaiment of fu,aroa, assefs

Wth the exception of purchased or ofiginated credit impaired financial assets,expected credit losses are measured through a loss allowance at an amount equalto:. the 12-month expec{ed credit losses (expected credil losses that result from

those defauh evenls on the financial instrument that are possible within '12

months afler the reporting date); or

full lifetime expec{ed credit losses (expected credit losses that resutt from allpossible defauJt events over the life of the financial instrument).

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A loss allwance for full lifetime expeded credit losses is rcquired for a financialinstrument if the credil risk of that financial instrumerd has increased significantlysince initial recognition, as well as to contract assets or trade receivables that donot constitute a financing transac'tion in accordance with IFRS 15.

For all other financial instruments, expected credit losses are measured at anamount equal to the 12-month exp€cred credit losses.

With the exception of purchased or originated credit-impaired ftnancial assets, theloss allowance for financial instruments is measured al an amount equal tolifetime expecled losses if the credit risk of a financial instrument has increasedsignificantly since initial recognition, unless the credit risk of the linancialinstrument is lor al the reporting date in which case il can be assumed that creditrisk on the financial instrument has not increased significantly since initialrecognition.

Dereagnition of /inanoal assefs

The Authority derecognizes financial assets when the contrac{ual dghts to thecash flows from the asset expire, or when it transfers the financial asset andsubstantially all the risk and rewards of oirnership of the asset to another party. lfthe Authority neither transfers nor retains substantially all the risks and rewards ofownership and continues to control the transfened asset, the Authorityrecognizes its relained interest in the asset and an associated liability foramounts it may have to pay. lf the Authority retains substantially all the risk andrewards of ownership of a transfened financial asset, the Authority continues torecognize the financial asset and also recognizes a collateralized bonowing forthe proceeds received.

On de€cognition of financial asset in its entirety, the difierence between theasset's carrying amount and the sum of the consideration received andreceivable ard the cumulative gain or loss that had been recognized in othercomprehensive income and accumulated in equity is recognized in profit or loss.

On derecognition of a financial asset olher than in its entirety (e.9. when theAuthorig netains an option to repurchase part of a transfened asset), the

Authority allocates the previous canying amounl of the financial asset betweenthe part it continues to recognize under conlinuing involvement, and the part it nolonger recognizes on the basis of the relative fair values of those parls on thedate of the hansfer. The difference between the canying amount allocated to thepart that is no longer recognized and lhe sum of the consideration received forthe part no longer recognized and any cumulative gain or loss allocated to it thathad be€n recognized in other comprehensive income is recognized in profit orloss. A cumulative gain or loss that had been recognized in other comprehensiveincome is allocated between the part that continues to be remgnized and the partthat is no longer recognized on lhe basis of the relative fair values of those parts.

lnventorles

lnventories are valued at the lower of cost and net realizable value. Cost isdetermined using the average cost method. The lnventory Account of theAuthority indudes office supplies, fuel, accountable forms, medical supplies, andother supplies and materials. lnventories are recognized as Expenses whendeployed for utilization or consumption in the ordinary course of operations ofCAAP.

Prcpaymenb and Otrcr Curren Asse6

Prepayments represent expenses not yet incuned but already paid in cash.Prepayments are inilially recorded as assets and measurcd at the amount ofcash paid. Subsequently, lhese ale charged to profrt or loss as they areconsumed in operdions or expire with the passage of time.

Prepayments are classified in the statements of financial position as currentassets when the oost of goods or services related to the pGpayments areexpected to be incuned within one year or the Authority's normal operating cycle,whichever is longer. Othenrise, prepayments are dassified as non-cunentassets.

Other current assets represent assets of the Authority which are expected to berealized or consumed within one year or within the Authority's normal operatingcycle whichever is longer. Other cunent assets are presented in the financialstatement of fimncial position at cost.

Prcper$and Eqtipment

Property and equipment are initially measured at cost. The cost of an item ofproperty and equipment comprises:

its purchase price, including import duties and non-refundable purchasetaxes, after deducling trade discounts and rebates;

any costs directly dtributable to bringing the asset to the location andcondition necessary for it to be capable of operating in the manner intendedby managemenl; and

the initial estimate of the future cosls of dismanuing and removing the itemand restoring the site on which it is located, the obligation for which an entityincurs either when the item is acquired or as a crnsequence of having used

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the item during a particular period for purposes other than to prcduceinventories during that period.

Property and equipment, except land, are stated in the financial statements atcost less accumulated depreciation, amortization and any impairment in value.Land is stated at cost less any impairment in value.

Expenditures incuned after the property and equipment have been put intooperation, such as repairs, maintenance and overhaul costs, are normallyrecognized in profit or loss in the year the costs are incured. ln situations whereit can be clearly demons{rated that the expenditures have resulted in an increasein the future economic benefrts expected to be obtained from the use of an itemof property and equipment beyond its originally assessed standard ofperformance, the expenditures are capitalized as additional costs of property andequipment. The cost of replacing a component of an item of property andequipment is recognized if il is probable that the future economic benefitsembodied within the component will flow to the Group, and its cost can bemeasured reliably. The carrying amount of the replaced component isderecognized.

Vvhen parts of an item of property and equipment have differcnt useful lives, theseare accounted for as separate items (major components) of property andequipment.

Depreciation and amortization are calculated on a straight-line basis over theestimated useful lives of the prcperty and equipment.

lmpairmenl of Non-financiat Assels

At each reporting date, non-financial assets are reviewed to determine whetherthere is any indication that those assets have suffered an impairment loss. lfthere is an indication of possible impairment, the recoverable amount of anyaffecled asset (or group of related assels) is estimated and compared with itscarrying amount. lf estimated recoverable amount is lower, the carrying amount isreduced to its estimated recoverable amount, and an impairment loss isrecognized immediately in profit and loss.

lf an impairment loss subsequently reveses, the carrying amount of the asset isincreased to the revised eslimate of its recoverable amount, but not in excess ofthe amount that would have been delermined had no impairment loss beenrecognized for the asset in prior years. A reversal of an impairment loss isrecognized immediately in profit or loss.

Derecogn ition of Non-fr nancial AsseF

Non-financial assets are derecognized when the assets are disposed of or whenno future economic benefits are expec{ed from these assets. Any differencebetween the carrying value of the asset derecognized and the net proceeds fromderecognition is recognized in profit or loss.

-d

Financial Liabiliti* and Equity lnstrumenb

Classification as Debt or Equitv

Debt and equi$ instruments issued by the Authority are classified as eitherfinancial liabilities or as equity in accordance with the substance of thecontractual arrangements and the definitions of a financial liability and an equityinstrumenl.

Financial Liabilities

lnitial recoqnition

Financial liabilities are recognized in the Authoritys financial slatemenls when theAuthority becomes a party to the contractual provisions of the instrument.Financial liabilities are initially recognized at fair value. Transaction crsts areincluded in the initial measurement of the Authority's financial liabilities except fordebt instruments classified at FVTPL, ln a regular purchase or sale, financialliabilities are recognized and derecognized, as applicable, using settlement dateaccounting.

Classification and Subsequent Measulement

Financial liabilities are classified as either financial liabilities 'at FWPL' or 'otherfi nancial liabilities'.

Financial liabilities at FWPL

Financial liabilities are classified at FWPL when the financial liability is eitherheld for trading or designated upon initial recognition.

A financial liability is classified as held for trading if:

it has been acquired principally for the purpose of repurchasing it in the nearterm; or

on initial recognition it is part of a portfolio of identified financial instrumentsthat the Authority manages together and has a recent ac{ual pattern of short-term profrt-taking; or

it is a derivative that is not designated and efiective as a hedging instrument.a

a

a

a

A financial liability other than a financial liability held for trading may bedesignated as at FWPL upon initial recognition if:

such designation eliminates or significantly reduces a measurement orrecognition inconsistency thal would otherwise arise; or

the financial liability forms part of financial assets or financial liabilities or both,which is managed and its performance is evaluated on a fair value basis, inaccordance wilh the Authority's documented risk management or investment

a

a

strategy, and information about the Authority is provided intemally on thatbasis; or

it forms pad of a contrad containing one or more embedded derivatives, andPAS 39 Financial lnstruments: Recognition and Measurement permits theentire combined contracl (asset or liability) to be designated as at FVTPL.

Financial liabilities at FWPL are stated at fair value, with any gains or lossesarising on remeasuremer( recognized in profit or loss. The net gain or lossrecognized in prcfit or loss incorporates any interes{ paid on the financial liabilityand is induded in the 'other gains and losses line item in the slatement ofcomprehensive inmme. Fair value is determined in the manner described innotes.

Othe r fi n ancial I i ab ilities

Other financial liabilities (inctuding bonowings, if any) are subsequentlymeasured at amortized cost using the efiec{ive interest method.

The effec{ive interest method is a method of calculating the amortized cost of afinancial liability and of allocating interesl expense over the relevant period. Theeffective interest rate is the rate that exaclly discounts estimated future cashpayments through the expeded life of the financial liability, or (where appropriate)a shorter period, to the net carrying amount on initial recognition.

Financial liabilities, inter-agency payables and other payables are classified asother financial liabilities.

Otrsetting fi nancial instrumen&

Financial assets and liabilities are ofiset and the net amount reported in thestatements of financial position when there is a legally enforceable right to offsetthe recognized amounts and there is an intention to settle on a net basis orrealize the asset and setfle the liability simultaneously.

A right to offset must be available today rather being contigent on a future eventand must be exercisable by any of the counterparties, both in the normal courseof business and in lhe evenl of default, insolvency or bankruptcy.

Dercagnition ol frnancial liabilities

The Authority derecognizes financial liabilities when, and only when, lheAuthority's obligations are discharged, cancelled or expired. The differencebetween the carrying amounl of the financial liability derecognized and theconsideration paid and payable is recognized in profit or loss.

EquW instrumenls

An equity instrument is any contract that evidences a residual interest in theassets of an entity after deduc{ing all of its liabilities. Equity instruments issued bylhe Authority are recognized at the proceeds received, net of direct issue costs.

Retained eamings

Retained eamings represent accumulated profit attributable to equity holders ofthe Authority afier deducling dividends declared. Retained eamings may alsoinclude effect of changes in accounting policy and prior period adjustments asmay be required by the standard's transitional provisions.

Ptovisions and Contingencl*

Provisions are recognized when the Authority has a present obligation (legal orconstructive) as a result of a past event, it is probable that an outflow ofresources embodying economic benefits will be required to settle the obligationand a reliable estimate can be made of the amount of the obligation. Where theAuthority expec{s some or all of a provision to be reimbursed, for example underan insuranc€ contrac{, lhe reimbursement is recognized as a separate asset bulonly when the reimbursement is virtually certain. The expense rclating to anyprovision is presented in prolit or loss, net of any reimbursement. lf the effec{ ofthe time value of money is material, provisions are discounted using a currentpretax rate that Eflec{s, where appropriate, the risks specific to the liability.Where discounting is used, the increase in the provision due to the passage oftime is recognized as interesl expense.

Contingent liabilities are not recognized in the consolidated financial statements.These are disclosed unless the possibility of an outflow of resources embodyingeconomic benefits is remote. Contingent assets are not recognized in theconsolidated financial statements but are disdosed in the notes to consolidatedfinancial stalements when an inflou, of economic benefits is probable.

RdatedPa,,bs

Related party relationship exists when one party has the ability to control, directly,or indirec,tly through one or more intermediaries, the other party or exercisessignificant influence over lhe other party in making financial and operatingdecisions. Such relationships also exist between and/or among entities whichare under @mmon control with the rcporting enterprise, or beh een, and/oramong the reporting enterprise and its key management personnel, direclors, orits shareholders. ln considering each possible related party relationship,attention is direc{ed to the substance of the relationship, and not merely the legalform.

Revenue R*ognifion

Revenue is recognized to the extent lhat it is probable that the economic benefttswill flow to the Authotity and the revenue can be measured reliably. Revenue ismeasured at the fair value of the consideration receiv€d or receivable andrepresents amounts receivable seMces provided in the normal cource ofbusiness.

The following specific recognition criteria must also be met before revenue isrecognized.

Renderinq of Senyices

Revenue from a contEci to provide services is recognized as revenue in theaccounting periods in which the servi(s are rendered. Revenue from a contract

to provide services is recognized when all of the following conditions aresatisfied:

r the amount of Evenue can be measured reliably;o it is probable that the economic benefts associated with the transaction will

flow to the Authority;. the stage of completion of the transac'tion can be measured reliably; ando the costs incuned for the transaction and the costs to complete the

lransaciion can be measurcd reliably.

lnterest Revenue

lnterest revenue is accrued on a time proportion basis, by reference to theprincipal outstanding and at the effedive interest rate applicable, which is the ratethat exacily discounts estimated firture cash receipts through the expected life ofthe financial asset to that assel's ne,t carrying amount.

Revenue from rental is recognized in the statement of comprehensive income ona straight-line basis over the term of the lease.

Expenx R*ognition

Expenses are recognized in profit or loss when a decrease in future emnomicbenef( related to a decrease in an assel or an increase in a liability has arisenthat can be measurcd reliably. Expenses are recognized in prcfrt or loss: on thebasis of a dired association betvreen the costs incuned and the eaming ofspecific items of income; on the basis of systematic and rdional allocationprocedures when economic benefits are expec{ed to arise over severalaccounting periods and the association with income c€in only be broadly orindirectly determined: or immediately when an expenditure produces no futureeconomic benefits or when, and to the extent that, future economic benefits donot qualify, or cease to qualify, for recognition in the stdements of financialposition as an asset.

I-eases

Leases are classified as finance leases whenever the terms of the lease transfersubstantially all the risks and rewards of oyvnership of lhe leased asset to thelessee.

All other leases are classified as operating leases. Rental payments underoperating leases are recognized in profrt or loss on a straight-line basis over theterm of the relevant lease.

Authotw as Les&e

Leases which transfer to the Authority substantially all risks and benefitsincidental to ownership of the leased item are classified as finance leases andare remgnized as assets and liabilities in the statement ot financial position atamounts equd a the inc€ption of the lease to the fair value of the leasedproperty or, if lower, al the present value of minimum lease payments. Leasepayments are apportioned b€tween the finance co6ts and reduc{ion of the lease

Rental Revenue

liability so as to achieve a conslant rate of interest on the remaining balance ofthe liability. Finance costs are direc'tly charged against income. Capitalizedleased assets are depreciated over the shorter of the estimated useful life of theasset or the lease term.

Leases which do nol transfer to the Authority substantially all the risks andbenefits of owneship of the asset are dassified as operating leases. Operatinglease payments are recognized as expense in the statement of comprehensiveincome on a straight-line basis over the lease term. Associated costs, such asmaintenance and insurance, are expensed as incuned.

Authoity as Lesxr

Leases wherein the Authority substantially transfers to the lessee all risks andbenefits incidental to orynership of the leased items are classified as finane:leases and ale plesented as receivable at an amount equal to the Authorily's netinvestment in the lease. Finance income is recognized based on the pattemreflecting a constant periodic rate of retum on the Authority's net investmentoutstanding in respec't of the finance lease.

Leases which do not transfer to the lessee substantially all the risks and benefitsof ownership of the asset are dassifled as operating leases. Lease income fromoperaling leases is recognized as income in the statement of comprehensiveincome on a straight-line basis over the lease term.

The Authority de{ermines whether an anangement is, or contains a lease basedon the substance of the arrangement. lt makes as assessment of whether thefulfillment of the anangement is dependent on the use of a specific asset orassets and the anangement conveys a right to use the asset.

EmfloyaeBen€rfs

Short-tem benefts

Short term benefits include salaries, bonuses, compensated absences and otherforms of employee benefrts that are expec{ed to be settled within one year fromreporting date. Short-term employee benefits are recognized as expense in theperiod the related services are provided-

Terminal leave berrefits

Terminal leave benefrts are computed based on the actual leave credits earnedby employees as of reporting date. The amount reported as liability in thestatement of financial position is based on the employees' salary grade as ofreporting dates.lncome Tax

lncome tax expense represents the sum of the cunent tax and defened taxexpense.

Current Tax

The cunent tax expense is based on taxable profit for the year. Taxable profitdiffers from net profit as reported in the statements of comprehensive income

because it excludes items of income or expense that are taxable or deductible inother years and it further excludes items that are never taxable or deduc.tible. TheAuthority's cunent tax liability is calculated using 30% regular corporate incometax (RCIT).Deferred Tax

Deferred tax is recognized on temporary differences between the carryingamounts of assets and liabilities in the financial statements and theconesponding tax bases used in the computation of taxable profit. Defened taxliabilities are generally recognized for all taxable temporary differences. Defenedlax assets are generally recognized for all deductible temporary differences to theextent that it is probable that taxable profits will be available against which thosedeductible temporary differences can be utilized. Such deferred tax assets andliabilities are not recognized if the temporary difference arises from the initialrecognition of assets and liabilities in a transaction that affecls neither the taxableprofit nor the accounting profit.

The carrying amount of defened tax assets is reviewed at the end of eachreporting period and reduced to the exlent that it is no longer probable thatsufficient taxable profrts will be available to allow all or parl of the asset to bere@vered.

Defened tax liabilities and assets are measured at the tax rates that are expecledto apply in the period in which the liability is settled or the asset realized, basedon tiax rales (and tax laws) that have been enacted or substantively enac{ed bythe end ofthe reporting period.

The measurement of deferred tax liabilities and assets reflects the taxconsequen@s that would follow from the manner in which the Authority expects,at the end of the reporting period, to re@ver or settle the c€lrrying amount of itsassets and liabilities.

Current and Defened Tax for the Year

Current and defened tax are recognized in profit or loss, except when they relateto items that are recognized in other comprehensive income or directly in equity,in which case, the cunent and defened tax are also recognized in othercomprehensive income or directly in equity respectively.

Foreign Currency Tnnsactions and Tnnslation

The accounting recods of the Authority are maintained in Philippine pesos.Foreign cunency transac{ions during the year are translated into the func{ionalcurency at exchange rates which approximate those prevailing on transactiondates.

Foreign cunency gains and losses resulting from the seftlement of suchtransactions and from the translation at year-end exchange rates of monetaryassets and liabilities denominated in foreign cunencies are recognized in profit orloss.

Change in the fair value of monetary financial assets denominated in foreigncunency classmed as AFS financial assets are analyzed between translation

differences resulting from changes in the amortized cost of the security and otherchanges in the canying amount of the security.

Translation difierences related to changes in amortized cosl are recognized inprofit or loss, and other changes in the carrying amount are recognized in othercomprehensive income.

Evenb after Reporting Dale

Subsequent events that provide additional information about conditions existingat period end (adjusting events) are recognized in the financial statements.Subsequent events that provide additional information about conditions existingaffer period end (non-adjusting events) are disclosed in the notes to financialstatements.

5. SIG NIF]CANT ACCOUNTIilG JUDGi/IEiITS AND ESTIilIATES

The preparation of the financial statements in accordance with PhilippineFinancial Reporting Standads requires the Authority lo make estimates andassumptions that affect the amounts reported in the financial statements andaccompanying notes. Future events may occur which will cause the assumptionused in aniving at the estimates to change. The effecis of changes in estimateswill be reflecled in the financial statements as they become reasonablydeterminable.

Judgments

ln the process of applying the Authority's accounting policies, management hasmade the following judgments, apart from those involving estimations, whichhave the most significant effect on the amounts recognized in the financialstatements:

Assessment of lmpairment of Nonfinancial Assefs

The Authority determines whether there are indicators of impairment of theAuthority's receivables, and property and equipment. lndicators of impairmentinclude significant change in usage, decline in the asset's fair value onunderperformance relalive to expected historical or projected future results.Determining the fair value requires the determination of future cash flows andfuture economic benelits expec{ed to be generated from the crntinued use andultimate disposition of such assets. ll requires the Authority to make estimatesand assumptions that can materially affect the financial statements. Futureevents could be used by management to condude that these assets areimpaired. Any resulting impairment loss could have a material adverse impact onthe Authority's financial position and financial performance. The preparation ofthe estimated future cash flows and economic benefits involves significantjudgments and estimation.

Esfimales

The following arc the key assumptions conceming the future and other keysources of estimation uncertainty at the reporting date that have a significant risk

of causing a material adjustment to the carrying amounts of assets and liabilitieswithin the next financial year.

Estimating useful lives of property and equapment

The Authority estimates the useful lives of its property and equipment based onthe period over which these asse,ls are expecled to be available for use. Theestimated useful lives of these assets and residual values are reviewed, andadjusted if appropdate, only if there is a significant change in the asset or how itis used.

The estimated useful lives used in depreciating propefty and equipment are asfollows:

YeaB YearcBuildingsRunways and Taxiways

Olher StructuresLand lmprovementsAirport EquipmentCommunication Equipment

Medical, Dental, LaboratoryOther MachineriesEquipment.Firefighting EquipmentMotor VehiclesFumiture and Fixturesffice EquipmentOther PE

3010 &

1010

1010't0

10

77755

6. CASH ANDCASH EQUIVALENTS

This account consists of the following:2018 2017

Cash on Hand (Collecting O,fiicers/Petty Cash)Cunent Account - PesoSavings Account - Dollar and PesoTreasury BillsTime Deposits - Peso

68,926,359r,979,698,9361,311,577,033

199,03t,9830

81,545,2291 ,674,388,8131,617,030,248

99,803,0622,602,497,787

3,557,234,3'10 6,075,265,139

Cunent Account - Peso includes the amount of P359.65 million which pertains tounidentified deposits in the Head Ofiice since 2011 up to December 31, 2018.

Foreign cunency deposits are translated into Philippine Peso using the closingrates of P52.58 and P49.93 to US$1.00 as of December 31,2018 and 2o17,respec{ively.

The overall decrease in cash and cash equivalents is due to dividendspaid/remitted by the Authorily to the Bureau of Treasury amounting lo P6.22billion on May 15, 2018.

7. SHORT.TERTI INVESTXIET{TS

Shott-term lnvesbnents pertain to investments in time deposits and treasury billswith Authorized Govemment Depository Banks (AGDBS) eaming 1.00 percent to6.40 percent interest, for a period of 91 days and not more than 1 year, asfollows:

20r8 2017Time Deposits - Dollar and PesoTreasury Bills

6,562,ffi3,{022,4li7,28,780

8,293,306,7171,352,702,524

9,029,311,862 9,646,009,241

The Authority's short-term investments are measurcd at amorlised cost

8. RECEIVABLES

This account consisls of lhe following:201A 2017

(As restated)Accounts ReceivableDue from fficers and Employeeslnterest Receivable

4,r80,159,874308,612

23,317,717

4,068,246,2970

22,330,321

Allowance for lmpairment4,503,786,203{,539,096,545

4,090,576,6181,622.439,039

2,864,689,658 2,468J37,579

lnter-Agency ReceivablesNational Govemment Agencies (NGAs)Local Govemment Units (LGUs)Government-owned or ControlledCorporations (GOCCS)

63,725,8745,183,524

127,304

63,518,5525,197,175

130,46169 702 68 846 '188

Other ReceivablesReceivable+DisallowanceslChargesOperating Lease ReceivableOthers

91,569,23:'2,029,885

8,379,812

91,121,8902,363,840

39,418,582

Allowance for lmpairment141,978,930

423,277132,904,312

0141 '132,904,312

3,075,282,013 2,669,888,079

Ac@unts Re@ivable pertains to amounls due from airline companies,concessionaires/lessees and other govemment entities for the use of facilities,services and utilities of the airport.

lnterest ReceivaD/e pertains to accrued interests on time deposits, treasury billsand bonds.

A reconciliation of the allowance for impairment at the beginning and end of 2018and 2017 is shorvn below.

2018 2017(As restated)

Beginning balance 1,622,439,039't6,657,506

646,417,145976,021,894lmpa irment loss during the year

{,639,096,545 1,622,439,039

Full provision for accounts receivables amounting to P159,587,741 pertaining toAir Transportation Otrice (ATO) ac@unts was recognized.

Due from NGAS pertains to advances for the purchase of goodsi/services asauthorized by larv and fund transfers to the NGAs for implementation of projec{s.

Due from LGUS pertains to fund transfers to various provincial government forland acquisition.

Due from GOCCs pertains to landing and take-off fees, parking fees, airnavigation fees and other unpaid charges of Govemment-o\ rned and ControlledCorporations.

RecervaDles-Drsallowan@stoharyes pedains to audil disallowances/charges ofpublic/private individual/entilies which became final and executory.

Openting Lease Receivable pertains to accrual of rental income from lease ofCAAP hangar by Alphaland Corporation (lessee) with an aggregate land area of1,580 square meters and a lease term of 10 years beginning July 201'1. As aconsideration for the lease of the Hangar, the lessee shall pay on a monthly basisthe amount of P70 per square meter, subject to an escalalion rate of 10 per centper annum. For the period ending Decembet 31,2018 and 2017, the lease rateswere P136.41 and P124.O1 per square meler, res@ively.

Other Receivabres pertains to unliquidated cash advances of CAAP employeeswho were separaled, retired, resigned and/or deceased disbursing ofiicers. Thisalso includes charges to be collected from airline operators for payment of thedaily subsistence allowances of CAAP flight inspectors.

9. INVENTORIES

This account consists of the following:20{8 2017

(As restated)Ofiice SuppliesFuel, Oil and LubricantsAccountable Forms, Plates and StickersMedical, Dental and Laboratory SuppliesDrugs & MedicinesOther Supplies and Materials

18,703,46318,238,4905,521,781

123,91284,986

55,03r,275

11,646,71218,362,3938,823,OO2

81,71286,365

18,910,6(N97,703,907 57,910,788

10. OTHER CURREilT ASSETS

This account consists of the following:2018 20't7

(As restated)PrepaymentsAdvances

93,339,480 102,442,212tA l1 46 595 308

136,751,360 149,037,520

10.1 Breakdown dl Prepaynenb accourfi is as follows:2018 2017

(As restated)Advances to ContraclorsPrepaid lnsurancePrepaid RentWithholding Tax at Source

81,137,15211,787,U2

67,41947,567

100,194,4121 ,535,118

712,6820

93,339,480 102,442,212

Advances to Contractots pertains to advances for mobilization funds ofconlraclors.

Prcpaid lnsunnca pertains to payment of GSIS insurance premium for newlypurchased fire trucks and additional CAAP Airport.

10.2 Breakdorn of Aclvances account is as follows:20't8 2017

(As restated)Advances to Special Disbursing OffcersAdvances to fficers & EmployeesAdvances for Paylqll

35,94:1,6255,908,2551,560,000

32,725,39112,207,236

1,662,681

'l:l,/l11,880 46,595,308

Advances to Special Disbucing Orfrcers refers to amounts granted toaccountable officers and employees for special purpose/time-bound undertakingsto be liquidated within a specified period. The account also indudes unliquidatedcash advances for confidenlial and intelligence expenses.

Advances to Offcr,ls and Employees pertains to the balances of unliquidatedcash advances of officers and employees for local and foreign travels.

Advances for Payroll pertains to amounls granted to regular disbursing officersfor payment of wages of Job Order personnel, overtime and night differential.

1I. LONG.TERII INVESTTSENTS

This account consists of the following:

December 3{, 2018Amount Term lntercst Eamed

lnvestmenls in Bonds - Local 500,000,flr0 5 years {8,5fl1,000lnvestmenls in Time Deposits -Foreign

274,963,864165,035,819't61,438,400268,541,996180,660,379

3 years3 years3 years3 years3 years

6,643,4033,955,4273,946,8666,359,951

437,223r,05{, .640.'058 21,342,870

5{10.760.2{G 5 years 760,2$Other lnvestmeris1 7U 40,603,116

Decembor 3l 2017Amount Term lnterest Eamed

lnvestments in Bonds - Local 500,000,000 5 y.ears 1 ,798,6'1 1

lnvestments in Time Deposits - 167,977,978Foreign 255,454,790

153,253,894153,302,003249,650,000

3 years3 years3 years3 years3 years

4,218,9246,297,4513,815,457

379,724693,472

979,638 665 15 405 0281,479,638,665 17,203,639

The Other ,rvesfnenfs consist of inveslments that are managed by UnitedComnut Planters Life Assurance Corporation (COCOLIFE) where 80 percent ofthe amount is allocded to Peso Bond Fund and 20 percent to Peso Fixedlncome Fund. This investment was placed in December 2018 and has a five.year term. lnterest rate varies depending on the movement of the market but inno case shall eamings be lower than 3 percent. Actual eamings for 2018 mayappear to be lower than lhe other types of investment because the revenuegenerated was only for 17 days.

O,ther lnveslments are measured at Fair Value through Other Comprehensivelncome while other long-term investments are measured at amortised cost.

12. PROPERW AND EQUIPMENT

This account consists of the followinq:

land Lerdlnpaoltnt.r a

Bolldlno. .ndd,!!.

Stuotraaa

FuntLuaa analEqulFn.rn

Conatuotlonln Progltaa TOTAL

At O.c.mber 31, m17CoitAccumdatsdDeDr€ciatior/AdiustrrErt

37,38S,S28, fi,(

0

28,861,866.656

2' .407.060.1 60

5,3 t 8,3SO,51 I1,692,G2651

5,0G,,236,924

2,119.2(D,706

1 ,008,,163,81 I0

77,721,486,09

.1n.N.515tLt Carrrng AmoontO.o.mb..31, Al7lAr lttt d) t,.tl9.g2a.fi{ 715,(m6-496 t.71c.36?.r07 za:!+0t0.218 1.09t.{8t.ltt 52.5eo.tr2.5lt

CoatAt January I , 201 IAdditiorE/A.qubitionsDiepGalsAdi'Etne.lb

s7,w,9a,11400

(,15.8S5.433,

28,861 ,844,6565@,6€,538

0(361.36.7.114\

5,318,390,5181e8,3ja(24

o(9,742.9't1\

5,053,236,924

&,247,A@(2,2S0,95/)

(25.3$,€50)

1,G8,€3,8181S,322,355

0(200,955.8@)

71 ,721 ,A86,Ofi8,1,1,526,83)

(2,290.95/)('l 09,325, 1,{l }

At t .osrb..3l, 20lt t ,L,(oaiLllt 29.O5O.lrlE.77l E,a14ne,Czr t,,t9+7e5,12oi,000,t30,t6i4 7a,A1,7*,7f1

A.qrnd&d Oep.6ciation:At Jenu€ry 1,2018Additions/Acqubfiorl.DbpGabAdiustn€nt6

2t,1107,60,1d,1,U7,732,24

(585,095,29i)

't,fia@z61155,207,(B1

0(302.3,6.420)

2. I 19.2m.708{o7,9!,7,e32

(2,01,{,356)60,800,494

o x,1n2s,5190 2,410,856,8S0 (2,014,356)0 (826,601,219)

00

0l! q.!c!!bc. !1,!S1t q ?2r68ep!zJq !a{4,e03,2c2 i,rE ,r34a7r o 26,710,534,t43

At D.o.mber tr, 201 tC6tA.oJndst8d D€prEi.tion

c7 34,012,@1o

29,{m,i44.7/822.669,6S7,1 (B

5.171.579.441,15,'W.82

5.49,1.7S.1 202,545,93,t,,178

1,G0,&D,5640

75,&,?tS,T7126,710,534.8,t4)

[.t C.rqnng AmountO.camDlr 31, 201t t,3L!oaaa& i,3E0r5t,6r6 4,020,010,186 2,004,440,aa2 r,m0,E30,!8{ a\1.I.,2t1,98

The Land lmprcvements account includes Runways, Aprons, Taxiways and theAirport Systems of the 75 Airports managed by the Authority.

Buildings and Other Sfrucfules account includes the Administration Buildings,Training Centers, Hangars, Control Towers, Transmitter buildings and Radarbuildings which are used in the daily operations of CAAP.

Fumiture and Equipment account pertains largely to air navigational equipmentinstalled in different airports operated by CAAP. ln addition, this account includesCCTV Surveillance Systems, Voice Logging Syslems for the Control Towers, andAirport Equipment such as Baggage Carousel and Airport Security System. ltalso includes Aircrafr and Airport ground equipment.

13. OTHER ]{ON4URREilT ASSETS

This account consists of the following:2018 20't7

DepositsOther Assets, net

22,924,32313,653,122

22,889,32313,653,123

36,5n,445 36,542,446

13.1 . Breakdown of Deposits account is as follows:2018 20't7

Deposits on Letters of CreditGuaranty Deposits

18,332,144,592,183

18,332,1404,557,183

Deposds on Letterc of Credit pertains to Letters of Credil opened to importvarious spare pads, equipmenl, etc.

Guaranty Deposifs pertains to security deposits in connection with inter-facilitydata communication of various airpons.

13.2. Breakdown of Other Assets account is as follows2018 2017

(As restated)Deferred ChargesOther Assets

13,653,1222.167.5:'0.601

13,653J221,705,'136,190

Less: Accumulated lmpairment Losses2,181,183,7232,167,5:t0,60r

1,718,789,3121,705,136,189

Other Assets, net 13,653,122 13,653,123

Defened Charges includes payment to Federal Aviation Administration (FAA)amounling to P10.'16 million which intends to make personnel available on atemporary duty assignment basis to provide certain civil aviation technicalassistance to CAAP.

OfherAssefs balance pertains to dormant and undocumented assets of the thenATO. Full provision was recognized pending verification of unidentified assets.

The increase in Other Assets ac@unt was due to the reclassification of Propertyand Equipment in various Area Cenler.

22,924,323 22,889,323

14, FII{Ai{CIAL LIABILITIES

This account consists of the following2018 2017

(As restated)Accounts PayableDue lo OfEcers and Employees

571,160,2U'165,059,075

7'.t9,721,630104,977,656

736,219,309 824,699,286

Acaunts Payable represonts payables to suppliers/contractors for purchases ofmaterials, supplies and other obligations to non-government entities inconnec'tion with the operation of the Authority.

Due to Officerc and Employees refers to the amounts due to officers andemployees of the agency which indudes overtime, salades, and other claimspertaining to personnel services.

Under PFRS 9, the financial liabilities of the Authority are measured at amortisedcost.

15. INTER.AGEI{CY PAYABLES

This account consists of the following:2018 2017

(As restated)lncome Tax PayableDue to Other NGAsDue to BIRDue to GSISDue to PagJBlGDue to PhilHealthDue to LGUsDue to GOCCsDue to Treasurcr of the Philippines

83{,369,827180,'142,08678,131,01521,982,1525,096,8291,989417

15,6522,210

0

0179,682,68274,492,98818,682,6384,825,4051,719,218

15,6528,964

3,000,000,0001,120,029,/88 3,279,427,547

lncome Tax Payable pertains to the Authority's cunent tax liability based on 30percenl regular corporate income tax (RCIT) of taxable profit for the year incompliance with R.A. 10963 or the TRAIN Law. Prior to TRAIN Law, the Authorityhas been exercising the exemption to taxes brought about by the fiscal autonomyvested to CAAP by virtue of the R.A. No. 9497.

Due to Other National Govemment Agencies (NGAs) consists of the following:

2018 2017

Funds from DOTr for doivnloaded INFRA 106 790 106 422 355

Prior years' ATO account balanc€s for undocumented/unsupported transac{ions transfen€d to CAAP books 51,399,60G 51 399 606Funds for Anti-Hiiacking and Tenorism Campaign 11,665,82 11,O77,428Funds received by ATO from DOT for asphalt paving ofrunway shoulder at lGlibo Airport transfened to CAAP bookswith supporting documents 5,000,000 5 000 0m

2018 2017Funds trom DOTr for the salaries of employees assigned atthe Cotabato Airport und6r ARMM 2,741,011 2 741 011Unliquidated tunds from DILG for the hostirE of 31c ASEAN o 92,321Others 2,W,7% 2,949,961

1 40,442,086 1 7 9,682,682

Funds for Anti-Hijacking and Tenorism Campaign pertains to colleclions of CAAPfor the ffice of the Transportation Security (OTS) which was remitted onJanuary 3, 2019.

Due to Burcau of lntemal Revenue (B/R) represents taxes withheld as tocompensation, withholding tax, final VAT, and business tax.

Due to Gwemment Seruice lnsunnce Sysfem (GS/S), Home DevelopmentMutual Fund (Pag-lBlG) and Philippine Health lnsura,ne Coryoation (PhilHealth)accounts represent premiums and loan amortization deduc{ions from theemployees' salaries for remittance to the concemed offices.Due to Local Govemment Units (LGUs) has been canied over from theDecember 31 , 2013 balance of Area Center 12 and has remained unverified dueto lack of general ledgers, joumals, and any other supporting schedule toconoborate the figures in the Financial Statements.

Due to Govemment-Owned or Contolled Corpontions (GOCCS) pertains topayables of Area Center 5 to other collection agencies such as govemmentbanks for loans of personnel.

16. TRUST LIABILITIES

This account consis{s of the lollowing2018 2017

Guaranty Deposits PayablePerformance/Bidders'/Bail Bonds Payable

9,0,588,(5622,494,112

50,014,45625,005,824

I {7,082,598 75 020 280

Guannty DepoMs Payable pertains to liability arising from cash received toguaranty performance which are refundable to the depositor.

Performance/Biddes'/Bail Bonds Payable pertains to liability arising from thereceipt of cash bond to guarantee the performance of the contract.

The Trust Liabilities of the Authority are measurcd at amortized cost inaccordance to PFRS 9. Upon completion of the contrac't, these liabilities will bepaid a year after final inspeciion of the project.

t7. DEFERRED CREDITS

Defened Credds pertains to advance payment from Concessionaires/Customersin Area Centers which are not yel eamed as of December 31 , 2018.

18. PROVtStOilS

This account consisls of the following:2018 2017

Leave Benefits PayableOther Provisions

126,723,t79

'f,705,66't

87 ,751,7430

131,4J29,W a7 ,751,743

Leave Benefits Payable pertains to the accumulated unused leave credits ofemployees.

Other Provisions pertains to interest income eamed by deposits in compliancewith Sec{ion 2 of DOF Department Circular No. 1-2017 s'hich shall be remitted tothe Bureau of Treasury upon issuance of the lmplementing Rules andRegulations.

,I9. OTHER PAYABLES

Other Payables pertains to deduciions from salaries due to loans from Landbankof the Philippines granted to various CAAP employees due for remittance in thefollowing month. This also includes COA disallowances deducted from theterminal benefits of the retiring employees which is under appeal with theCommission Proper amounting to P8.09 million.

20. GOVERilMEilT EOUITY

Under RA 9497, CAAP has an authorized capitalization of P50 billion which isalready fully subscribed by the Republic of the Philippines.

2I. CONTRIBUTED CAPITAL

The Contributed Capital pertains to the amount in excess of the P50 billionsubscribed capital stock of the National Govemment.

22. RETATilED EARNTi{GS (DEFlCrTl

This account pertains to the accumulated eamings (losses) and prior periodadjustments starting July 2008 onwards when CAAP was established andb€came operational.

23. tNCOiltE

This account consists of the tollowing:2018 2017

(As reslated)Business RevenueService Revenue

9,107,620,914 8,796,239,s24230 r38 50r 178 418 665

9,337,759,375 8,974,658,189

I

Busiress Revenue pertains to operational charges, lelecommunication charges,and other fees and charges for the use of aercnautical and air navigationfacilities.

This consisls of the following:2018 20't7

lncome from Communication FacilitiesTransporlation System FeesLanding and Parking FeesRenULease lncomeCommunication Nefurork FeesFines and Penafties - BusinessOffier Business lncome

6,023,925,458 5,699,451,7742,212,375,288 2,260,651,963552,593,055 552,617,143'132,183,812 127,144,42127,51,5,531 25,555,2505,260,311 3,49',t,526

1F3J1749 14 ,4479,107,620,871 8,796,239,524

lncome fiom Communicdtion Facilities perlains to income for the use ofcommunication facilities owned by CAAP. lncome is recognized upon billing atmonth end.

Transpoftation Syslem Fees refer to terminal fees imposed by CAAP ondepading passengers, presently pegged at P200.00, P150.00 and P100.00depending on the airport terminal. This fees are presently termed as DomesticPassengers Service Charge (DPSC) which are already integrated at the Point ofSale of Airline Tickets pursuant to CAAP Memorandum Circular (MC) No. 022-17Series of 2017.

lncome is recognized upon remittance by the Airline Caniers

Landing and Paking Fees refer to fees charged fur the use of aircraft of theairport facililies and seNices for landing and parking. lncome is recognized uponbilling at month end.

Rent/Lease ,ncorre pertains to rental of land and floor areas within the vicinity ofCAAP. lncome is recognized upon billing at month end.

CAAP (lessor) is under lease agreement with Alphaland Corporation (lessee)classified as operating lease for the lease of the CAAP hangar with a land area of1,580 square meters. The lease is for a period of 10 years and the lessee shallpay on a monthly basis, the amount of P70.00 per sguare meler subject to anescalation rate of 10 per cent per annum. The lessee started to occupy thepremises in June 2011.

At year end, Alphaland Corporation has an outstanding commitment under non-cancellable operating leases that fall due as follows:

2018 2017Not later than 't yearLater than 1 year but not laler than 5 years

2,694,0904,789,090

2,262,1979,540,498

7 r80 1',t,802,695

Godofredo P. Ramos Airport which is under the Concession Agreement wilh theTransAir Development Holdings Corporation is classified under operating lease.The lease is for a period of 25 years, with annual fxed rental of P8.00 million.The Company slarted occupying the premises on Oc{ober 16, 2010.

)

At year 6nd, the Authority has an outstanding commitment under non-cancellableoperating leases that fall due as follows:

2018 2017Not later than 1 yearLater than 1 year but nol later than 5 yearsLater than 5 years

8,000,000

'O,000,00096.000.000

8,000,00040,000,000

104,000,000{,1.f,000,000 152,000,000

Communication Networt< Fees perlains to the revenue share of the Authority forthe Remote Ground Stations enumerated in the Agreement between CAAP andAeronautical Radio of Thailand for the Operations and Maintenance of Very HighFrequency (VHF) Air Ground Data Link Stations at siles in the Philippines. ltincludes fees collected for the connedion of telephone services and for the use ofthe facility.

Fines and Penalties - Busrhass pertain to fines and penatty charges for delayedor non-compliance with business regulatory requirements. lncome is recrgnizedupon receipt of payment.

Other Business ,ncwe pertains to income not falling under any of the specificbusiness income accounts. lncome is recognized upon receipt of payment. Thisconsists of the folloring:

2018 2017Vehicular ParkingWeighing Conveyor and Check-ln ChargesAerobridgeffacking feesBid DocumentsAccess Pass/lDGarbage CollectionAeronautical lnformation Publication (AlP)RecordsResearch Fee

70,443,23112,$3,75222,782,030{0,218,9284,479,1061,814,650

896,1r6649,206

tO0

58,832,73936,894,57823,335,3134,017,8851,866,0601,170,732

858,733351,207

200153,717,119 127 ,327,447

Seruice Revenue pertains to fees and charges for licenses, permits, certifications,and other service income. This consists of the following:

2018 2017Clearance and Certification FeesPermit FeesLicensing FeesFines and Penallies - ServiceOther Service lncome

27,il9,71120,129,601t0,799,3302,767,605

168,792,2U

20,710,11120,179,201

9,265,0092,101,576

126,162,768230,138,s01 't78,418,665

Cleannce and Ceftification Fees refer lo fees and charges collecled for theissuance of clearancesi/certificates to operators of aircraft. lncome is recognizedupon receipt of paymenl; however, lhere are some cases that Approved MaterialDistributo/s Certificates are recognized upon billing at monlh end.

Pemit Fees pertain to fees and charges collec{ed by CAAP in the issuance ofpermits to operalors in the exercise of regulatory powers. lncome is recognizedfor these fees upon billing at month end.

Ucersrhg Fees pedain to fees charged by CAAP to individuals for the issuance oflicenses such as private pilot license and the like. lncome is recognized uponreceipt of payment.

Fines and Penalties - Service pertains to fees collec'ted for the processing ofdocuments for fines and penalties charged lo service income. lncome isrecognized upon receip( of paymenl.Other Service lncome reters to income not falling under any of the specificservice income account. This is recognized upon receipt of payment. This consistof the following:

?fi8 2017Daily Subsistence AllowanceWater/Electricity/Telephone/CableCourse FeeEnergy FeeMedical ExaminationDental ExaminationLaboratoryAdministrative Feelnspec{ion FeeEngine & Propeller Change FeeTransfer FeeChange FormMedical Proceduresy'TreatmentDeRegistrationTime Between OverhaulChange of Company Name

95,925,57535,947,11317,097,3908,472,5735,134,8961,906,7001,818,8051,463,(M9

640,13224',t,159

59,28846,82420,00014,3704,380

0

69,50't,39333,734,853

7,841,6005,207,9555,981,2001,238,450

807,7601,',174,245

546,186't9,68058,74616,20013,30020,400

0800

168,792,2il 126,162,768

24. PERSONNEL SERVICES

This account consists of the following:20r8 20't7

(As restated)Salaries and Wage3 1,235,358,958 1 035 564 207Odter CompensationOvertime and Night DifferentialYear-end BonusPersonal Economic Relief AllowanceHazardPayClothing/Uniform Allo^,anceCash GiftRepresentation AllowanceTransportation AllowanceHonorariaPrcductivity lncentive AllowanceLongevity PaySubsistenca AllowanceOther Bonuses and Allowances

225,555,437200,657,97767,9r0,50554,186,350r9,309,63713,215,2il7,926,8007,r63,0196,726,6042,022,8O01,005,000

162,6507,4[,2,89.1

166,338,629161,'t61,49065,542,99922,539,02913,966,70016,793,0537,977,3657,283,6134,532,U81,385,000

250,000296,436725 3933

613,324,620 471 792 055

2018 2017(As restated)

Petsonnel Benefits ContributionRetirement and Life lnsurance PrerniumsPhilHealth ContributionPaglBlG ContributionECC Contribution

144,338,87812,9U,4153,746,2il3,389,259

119,819,1209,542,7833,225,7713,279,200

16,0,380,805 135 866,874Other Peronnel BonefftsTerminal Leave BenefitsOther Personnel Benefrts

126,723,67930,.136,580

222,636,96'l59,985,762

157,160,259 2A2,622 7232,170,234, 3 i,925,845,859

The increase in Personnel Services was due to the implementation of the ThirdTranche of The Salary Standardization Law of 2015. ln addition, the GovemanceCommission for Govemment Owned or Controlled Corporation (GCG) issued anauthorization dated 14 June 2018 for CAAP to adopt the compensationframework under E.O. No. 36, s. 2017 converting all Job Level salary standardsto Salary Grade standards.

25. MAINTENA}.ICE AND OTHER OPERATING EXPENSES

This account consists of the following:2018 2017

(As restated)

General ServicesUtility ExpensesRepairs and MaintenanceProfessional ServicesSupplies and Materials ExpensesCommunication ExpensesTraveling ExpensesRenuLease ExpensesTraining ExpensesTaxes, lnsurance Premiums and Other FeesConfidential, Extraordinary and Misc.ExpenseDividends ExpensesOther Maintenance and Operating Expenses

627,739,823472,750,940305,349,324200,388,908185,8{t4,03

82,262,06871,8$,21456,952,7904,6*,72136,156,1'A

15,290,6704,705,681

155,157,7{6

541,525,06'1384,912,463235,123,893219,375,539164,679,52667,625,15276,490,72920,667,43948,381,11167,916,654

1 't,020,893

0118,772,294

2,259,U1,476 1,956,490,754

Breakdown of General Services is as follows:2018 2017

(As restated)Security ServicesJanitorial ServicesOlher General Services

296,825,260127,59,032203,345,53{

235,089,052118,569,239187,866,770

627,739,823 541,525,061

The increase in Rent/Lease Experrses pertains to the cost of rental of aircraftused for flight inspections.

The increase in the Other Maintenance and Operating Expenses was due to lheDaily Subsistence Allowances paid to CAAP flight inspedors.

26, NONCASH EXPET{SES

This account consists of the following:2018 20't7

(As restated)Depreciationlmpair[le0t

2/(10,856,8991?J!1-$3

2,762,196,288976,02't,894

2,4i28,88,62 3,738,218,182

Breakdown of Depreciation is as follows:2018 2017

lnfrastruc*ure AssetsMachinery and EquipmentLand lmprovementsBuildings and O{her Struc{urcsTransportation EquipmentFumiture, Fixtures and BooksO{her Property and Equipment

1,*7,,j2,42377,215,2fi280,589,834155,207,(x}14,78/,,886

3,734,09'l2,193,&7

1,874,022,059377 ,731,0',t0323,855,560159,176,52621,640,669

5,284,891485,573

2,410,856,899 2,762,196,288

Breakdown of lmpairment is as follows:20r8 2017

Accounts ReceivableOther Receivables

10,657,d(ts 976,021,89401 7

t7,73{,55:} 976,021,894

27. OTHER TNCOME (EXPENSESI

This account consists of the following:2018 2017

(As restated)lnterest lncomeGain on Foreign Exchange (FOREX)Management Superuisionff rusteeshipBank ChargesLoss on Sale of Property andEquipment

189,5{6,955I'(l'323,809

F81,5r6)1225,2141

(209,r98)

152,388,12932,488,923(1,093,089)

(77,785)

00Other Financial Cha es 760

267,860,396 183,706,178

lnterest lncome pertains to interest eamed from savings and cunent accounts,treasury bills, time deposits and investment in debt instruments for both peso anddollar deposits.

Gain on Foreign Exchange in the amount of P143.32 million and P32.49 millionfor CY 2018 and 2017 respeclively, pertains to the amount of gain in theconversion of foreign cunencies in accordance with paragraph 23 of PAS 2'1. Aforeign exchange rate difference of P2.65, P49.93 in 2017 and P52.58 in 2018,was recorded in recognizing forebn exchange gain for CY 20'18. The significantincrease was due to inflation of year-end closing Peso per US Dollar.

Loss on Sale of ProperU and Equipment only includes sale of Furniture andEquipment. lt does not include Other Assets account wailing for disposition.

Other Financial Charyes pertains to the 3.5 percent service charge fromDomestic Passenger Service Charges (DPSCS) collecied by airlines as containedin CAAP MC No. 022-17 Series of 2017.

28. INCO]IIE TAX EXPENSE

The income tax expense is based on to€ble profit for the year. lt is calculatedusing the 30 percent regular corporate income tax (RCIT). V\rrth the Tax Reformon Acceleration and lnclusion (TRAIN) Law, officially cited as Republic Act No.10963, for CY 2018, CAAP is obliged to pay its Corporate lncome Tax.

29. INCOME FROI GRANTS AND [PIATIOI{S

lna nre fiom Gra,nb and bnations account perlains to completed projec*s andpropedies tumed-over by DOTr to CAAP. Breakdown as follows:

AREACENTER PROJECT AMOUNT

Area 2 VHF Tlr'Rx, VHF Transceiver & ATIS Proiec{ - Basco

Asphalt Ov€rlay of Runway - Basco12,830,000

140,427,503

Area 3

Concreting of Apron including Ramp & Upgrading of Taxiway -MarinduquoConcreting of Apron including Ramp & Upgrading of Taxiway;DesKop Computer; Digital Camera - RomblonWdenirE of Runway and Epansion/Rehab of Terminal Bldg. -San Jose

19,249,591

31,676,966

88 4U 026

P{ea7Asphalt Overlay of Runrvay and lmprovement of DrainageSystem - Dumaguete

Construction of Extemal Supply System - Panglao90,233,'171

65,708,441

Area 8Tiling Works at Passenger Terminal Building - Tacloban

Construc{ion of New Terminal Area - Ormoc5,613,045

90 317 287

Atea 12Control Tor/€r Communication Equipment - Butuan

Security F€nce - Siargao5,800,0002,395,920

553,655,951

30. CUMULATIVE CHANGES !N FAIRVALUE OF II{VESTUENTS

Cumulative Changes in Fair Value of lnvestments pertains to the accumulatedgain on the change in fair value of investment with COCOLIFE on which the fundis allocated to Peso Fixed lncome Fund and Peso Bond Fund.

3I. RESTATEMENT OF ACCOUNTS

The 2017 financial statements were restated to reflect the followingtransac'tions/adj ustments:

CY 2016 errors d ed in 2017 and 2018

December 31,2016

(As previouslyreported)

R6tatement /Adjustment

January l,2017

(As restated)STATEIUENT OF FINANCIAL POSITIONRecoivables, n6t

Correclion of Pior Years' Reeivabldhwmelnventories

Pior years' unrecorded,.ssuarces of suppliesand mateials

Property, Plant and Equipmont, netDecrease in Depreciatbn due to doublere@rdingRecognition of PPE fron DOTC / DOT.Reclassification from Other Assets to PPEDereagnition of PPE due to double re@rding -lntechConection of vaious enoneous entries in PPEAdjust me nts i n de preiation

Financial LiabilitiesPayablesRecognition of lease payable (rental of LaN inBacold and Ozamis City for 1 992 to 201 6)Conection of prior years' payables

Due to Officer3 and EmployeesCorrection of prior years' error

lnter-Agency Payableslncrease in BlR, GS,S, PagJBrG, PhilHEALTHcontibution

ProvisionsCorrection of ptior years' terminal leave payable

Other PayablesConection of ptior years' dher payables

STATEMENT OF CHANGES IN EQUITYGovemment Equity

Decrcase in Depreciation due to doublerecordingRe@gnition of PPE fton DOTCDerecognition of PPE due to double rc@rditv -lntechAdjustment on Accumulated lmpairme - AherAssets due fo douDle rc@rdingRe@gnition of lease payable (rcntal ol Land inBacolod and Ozamis City for 1992 to 20OB)

R6tained Eamings (DeficitlConection of Prior Years' Reeivabldlncome(2016 and below)Recognitan of PPE ftom DOTrConec'tion of pior years' terminal leave payableConection of prior years' enor

(10,584,708)64,887,r97,813 (10,374355,964) s4,512,841,849

276,048,90841,149,10541,O95,710

8,840,458,549

60,262,43

360,479,9/t5307,994,294

52,485,651

8,473,1W),224

427,W,583

18,519,714

78,732,97034188,512,107,394

81,277,42561,277,425

(10,584,708)

(10,718,382,958)43,519,s22)

(747,407)170,522,92617O,il4,215

154,090,52516,453,690

(21,289)(21 ,289)231,372

231,372(110,548)(110,548)130,589130,589

8,901,733,974

49,677,735

531,002,871478,St8,509

52,4G4,362

6,473,671,600

427,A34,035

18,650,303

(10,494437,s86) 68,238,s32,79s{ 1 0,533,339,390} 7 5,97 8,7 88,N2

276,048,9074,938,000

(10,520,313,488)

(156,973,760)

(137,039,051)

(7,779,137,0131 38,90r,805 17,74o,235,m8t

61,277,42536,211,105

110,54821,289

Rffignition of leasP- Fyable for the rental ofLand in Bacold and Ozanis City for 2Ng to2016Conection of payables/ex@n*s (n16 andbelow)Correctbn of various e oneous enties in PPEPior years' unrwrM issuarces of suppl,resaN mateialsAdj u st n e nts i n d e p reciatio nlndeas in BlR, GS/S, PagJErG, PhilHEALTH@ntibutionConedion of pior years'dher payables

(17,051,474)

(16,453,690)(1s,519,322)

(10,584,708)(747,407)

(2s1,372)(130,589)

CY 2017 enors discovercd in CY 2018

December 31,2017

(As prevlouslyreport6d)

Restatement /Adiustment

January 1,2018

(As restated)STATEMENT OF FINANCIAL POSITIONReceivables, net

Overstatement d impaiment loss for PhilippineAidines ac@untConeclbn of Prior Years' Rmivable/ln@meUnder*aternent of pdor years' interest inc,,nE

lnventorieaCY 2017 unrc@dd issuan@s of supplies aNmateials

Other Curront AssetsRecognition of expired portion of preqid rent

Property, Plant and Equiprnenq notA justments in depreciation

Other Noncurrant AssetsDerc@gnition of PPE due to doubb E@rding -lntechAdjus:tment on Afium. lmpairment - OtherAssets due to buble rc@rdingReclassification from Other Assets to PPE

Financial Liablliti6sPayablesReqnition of leasF- payable (rental of LaN inBa@ld and Ozamis CW for 2017)Conedion of pior years' payablesDue to Officer8 and Employooslncrease in Personal SeryicF-s due to payment ofsalary ditrerential of t&hnical N$onnelLiqu idation/Re i m b u rsement of Traveling,Training and Scholarsh,p EYpenses

lnter-Agency Payableslncrea* in BlR, GSrS, pag-rBrO PdiIHEALTH@ntibution

ProYisaonsReqnitbn of additional terminal leave benefits

STATEMENT OF CHANGES IN EQUIW

Retained Eamingr (Dericit)Conec{ion of 2017 Comprehensive lncome(Note 31)

2,2O6,712,61t 124318,938 2,331,031,55s

66,050,7lfi1

338,856,524124,308,851

10,087(8,139,95s) 57,910,788

153,038,153

52,660,268,889

36,U2,&

760,34,6,588690,386,555

69,980,03:l

3,278,686,2't8

580,696,'105

77,998,877,606

(8,474,327,90/1

1,220,375,916

(8,1s9,955)(4,000,633)(4,@0,633)

(66,676,178)(66,676,178)

0

198,069,470

(156,973,760)(41,095,710)M,352,69829,355,075

149,037,520

52,593,592,511

36,54,2,4/t8

824,699,286719,721,G30

1,8$,9n27,511,15534,997,623 1il,977,656

31,016,591

3,981,032741,38 3,279,427,il7

741,3291,831,0131,831,013

582,416,870

(10,r77,003,9311 67 ,821,873,67 5

(8,156,894,328)

1,537,A@,572

356,335,461

317,433,656

The Authority presented three slatements of tinancial position in compliance withthe requirement of PAS 1, Presentation ot Financial Statements, to include acomplete set of financial statemerfis as s{atement of financial position as at thebeginning of the earliest comparative period whenever the entity retrospectivelyapplies an accounting policy or makes a retrospec{ive restiatement of items in itsfinancial stdements, orwhen it rcdassifies items in its financial statements.

32. RESTATETEiIT OF CY 2017 COTPREHEilSIVE IilCOTE

Net lncome (As pmvlously reporGd) 1,220,375,916Adjustments:

lncome:Coneciion of Prior Years Receivable/lncome (2017)

Expenses:Adjustments in deprecialion (due to lntech appraisal)lncrease in PeEonal Services due to payment of salary

differential of technical personnel for CY 2017Correction of payables/expenses (2017)

CY 2017 unrecorded issuances of supplies and materialsRecognition of expired portion of prepaid rentLiquidation/Reimbursement of Traveling, Training and

Scholarship ExpensesRecognition of lease payable for the rental of Land in

Bacolod and Ozamis Cny for 2017Recognition of additional terminal leave benefitslncrease in BlR, GSIS, pag-lBlc, Ph|IHEALTH conlributionOverstatement of impairment loss for Philippine Airlines

account

Odrer lncome(Experce)Understatement of prior years' interest income

124,308,851124,308,851

(193,114,718166,676,178

3't,016,59127,51't,155

8,139,9554,000,633

3,981,032

1,843,920't ,831,013

741,329

(338,856,s24)

r0,08710,087

Net lncome (fu r$tated) 1,537,809,572

33. FINA]{CIAL RISK TANAGEilIEilT OBJECTIVES AND FOLICIES

Foreign Cunency Risk

The Authority's exposure to the risk for changes in foreign exchange rates relatesto the Authority's foreign cunency denominated monetary assets. The carryingamount of the Authority's foreign cunency denominated monetary assets at thereporting dates are as follows:

Amount in PesoCash in Bank - Savings Accountlnvestments in Time Deposits (short term investment)

839,207,6431,458,432,4031,050,640,458lnvestments in Time Deposits (long term investmenl)3,348,280,504

Forcign cuftetw sensitivry analysis

The following table demonstrdes the sensitivity lo a reasonably possible changein the exchange rates, with all other variables held constant, of the Authority'sincome before tax for the years ended December 31, 2018 and 2017 (due tochanges in the fair value of financial assets and liabililies). There is no otherimpact on the Authority's equig otherthan those already afiec.ting profrt or loss.

Currency Increase(Decrease) Eff€cl on income tax before taxin exchange rate 2018 2017

USD +2.55-2.65

(168,751,300)168,751,300

(5,578,608)5,578,608

lncrease in exchang€ rate (168,751,300) (5,578,608)

Decrease in exchange rate 168,751,300 5,578,608

/nferesf Rafe Rlsk

The Authori!y's exposure to the risk for changes in interest rates relates primarilyto the Authority's bank accounts. As at December 3'1, 2018 and 2017, theseamounted to P3.50 billion and P5.99 billion, respec;tively. The Authorily'sexposure to changes in interest rales is not significant.

Creclit Risk

The Company's exposure to credit risk arises from transactions with its customers.The maximum exposure to credit on these transac'tions is equal to the carryingamount of these financial instruments. Trade receivable balances are monitoredon an ongoing basis to ensurc timely collections.

Wrth respeci to crcdit risk arising from other financial assets of the Authority,which compdse cash in banks, investment in debt instruments and refundabledeposits, the Authori$'s exposurc to credit risk arises from default of thecounterparly, with a maximum exposure equal to the canying amount of theseinstruments. The Authority limils ats exposure to credit risks by depositing its cashonly with financial institutions duly evaluated and approved by the Board ofDirectors.

The Authoritfs exposure to rental deposit is minimal since no defauh in paymentswere made by the counterparties.

The succeeding tables show the credit quality per class of financial asset and anaging analysis of past due but not impaired accounts as at December31,2018and 2017.

December 3t, 2018Neither past due nor impaired

High g[8de SLodardgrade

$kandardgade lmpaied Total

Past duebut not

inpaiedCash and CashEqdvalents

Short-termlnvesbrents

0

0

0Receivables

3.557.23/1.310 0

9,029,311,862 0

0 3,075182,014

0 0 3,557,23ii,310

0 0 9,029,3'11,862

0 1,639,519,822 il,7'1,[,801 ,836

Nei[ter prd dre nor impaied

High grade Stdl(t rdgrade

9.68tandardgrade

Past duehn not

impaiedlmpaied Tot l

LonghTermlnvesbnents

Deposits

2,061,293,121

2.,C21,323

0 2,051 ,293,121

o 22,921,323

00

0

0

0 0r{,68n,7cr,rt8 3,O75iupr4 0 0 1,639,5t9,822 19,375,t35J62

Oecember 3l 2017Neither past due nor lmpahed

High grade St ndardgrade Sr$standar

d gradelmpaired Total

Pa€d duebut not

impaired

Cash and CashEqJivalents 6,075,265,139

Short-termlnvestnenta 9,5,15,009,2,11

Receivables

LongFTermlnvestrnentB

00

00

0 1,622,,439,039

00

00

6,075,265,139

9,6.16,009,2,11

1,292,327 ,1 't 8

1,il79,638,665

2.,889,323

0 2,669,888,079

00

00

0

I,i[79,638,665

2,,8/,.9,323

0

0

0

0Deposits17P,W, 2,680,868,07t 0 01,621/439,03t 2l'518,120,,18G

The credit quality of the financial ass€ts is managed by the Authority. High gradeaccounts consist of receivables from debtors with good financial condition andwith relatively low defaults. Financial assets with risks of defautt but are stillcollectible are considered standard grade accounts. Receivables that are stillcollectible but require persistent effort from the Authority to collect are consideredsubstandard grade accounts.

Liquidity Risk

The Authorig's exposure to liquidity risk is minimal. The Authoritys objective is tomaintain a balance betuyeen continuity of funding and flexibilily. ln addition, theAuthority regularly evaludes its projected and acrual cash flows. Fund raisingactivities may indude bank loans.

The following lables presenl the maturity profile of the Authority's financialliabilities as at Decembet 3'l,2018 and 20'17 based on contraclual undiscountedpayments.

December 31,2018

On demandLess than3 months

3 to 12months

1to5years Total

Financial Liabilitieslnter-AgencyPayables'Trust LiabilitiesOther Payables

736,219,309

180,459,94800

0

000

0

000

0117,082,598

0 736,219,309

180,459,9481 17,082,598

56,969.65856,969.658916,679,257

'exdudes govemment dues and remiltan@s0 o 174,052.255 1,090,73t,513

D,ecember 3l 2017

On demandLess than3 months

3 to 12months

1tosyears Total

Financial Liabilitieslnter-AgencyPayables'Trust Liabiliti6sOther Payabl€s

824,699,26

3,179,707,29800

0

000

0 0 824,699,286

0 0 3,179,707,2913o 75,020,280 75,020,2800 36,694,988 35,694,988

4,0M.405.584 0 o 111,715.264 4.'t16,121.852bxcludes govemn ent dues aN remifrar@s

34. SUPPLEiIENTARY INFOR]UIATIOil 01{ TA)(ES

The total taxes withheld during the year by the Head Ofrice (HO) and Area Centers(ACs) amounted to P345.88 million, of vthich P324.27 million were remitted asfollows:

Type of Tax

BeginningBalance,

January 1,xna

Adju3tments Duringtfio Year

TaxwlthhGld

TaxRomitted

Balance,December31,2018

a. Tax onCompensation

b. CreditableVvithholding Taxes

c. Final WrthholdingTaxes

35,457,435

8,419,249

199,720,091

61,903,853

190,467,641

58,436,300

44,270,379

12,390,035

(4:19,s06)

503,233

10 249 778 328 871 U 800 75 848 19259 %7 470 601

Total u,126,82 392,598 345,883,7'14 324,271,789 76,131,015

On Oc{ober 21, 2016, CAAP received an electronic Letter of Authority datedOctobe||3, 2016 from the Bureau of lntemal Revenue (BlR) for the examination ofbooks of ac@unts and other accounting rccords for the period January 1, 2015 toDecember 31,2015 pursuant to e1A201100082260 AUDM61/008038/2016. AFirst Notice, in relation to the said Letter o, Authority, was received by CAAP onNovember 11,2016. The Authority had already complied with BIR's requirementson December 9, 2016. Additional requirements of BIR were submitted on January10, April 11 and December 5,20'17. All documents submitted were duly receivedby BlR.

On April 25,2018, CAAP received a letterdated April 10, 2018from BIR requestingfor an informal @nfercnce to let CAAP present its side of the case. The informalconference was held on May 15, 2018 which was attended by CAAP Ofiicersauthorized by the Diredor General. Another informal @nference was held on June25,2018 to finalize the settlement of the case. As a result, CAAP recorded a taxliability amounting to P20.37 million in 20'17 which was subsequently paid on June28,2018.

I