EDMONTON AIRPORTS ANNUAL REPORT 2013 Hello

Hello

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It’s one small It’s word overflowing word hello. It’s the world’s the world’s hello. It’s card. greeting be a peace offering, question. a an invitation, It comes with a wave, a handshake, a smile. you travel, Wherever for a word there’s Hello. the with It’s meaning. that welcomes word introduces friends, strangers and starts conversations. It can 46 / Corporate Objectives 4 / Message from the Board Chair 6 / Message from the President and CEO the President Chair 6 / Message from the Board 4 / Message from 10 / Passenger Experience 24 / Air Service of Directors 36 / Board 48 / Management Discussion & Analysis 67 / Sustainability Report 70 / Financial Statements

CONTENTS 2 2013: ayear of hellos. 3

we’ll move you. was directed to our new President and CEO, to our new President was directed in January 2014. The hello business is booming at EIA, and we’ve got a lot of news to tell you. So sit back, and say hello to the year thatyour saw relax a whole new level. airport reach promise: We of our partnership with Ivanhoé Cambridge. IvanhoeUnder a conditional agreement, will develop the ultimate outlet shopping experience right at the airport. Of course, the biggest hello of the year Ruth, Airports who joined Edmonton Tom

or dropping off, shipping or receiving, shipping or receiving, off, or dropping shopping or dining, they count on us can choice service, more to bring them more smiles each year. and more In 2013, we said hello nearly seven million to said hellopassengers, who in turn to millions business contacts aroundof friends, family and hola, halló, aloha said hi, howdy, the world. We and how YOU doin’ to new international, US, sun destination and domestic air service. We business to the airport cargo welcomed more and significantly enhanced our ability to serve also business aviation needs. We the region’s development at the airport agave commercial big high five and hello with the announcement Whetherand community our customers coming or going, picking up members are 4 5

40 per cent, and gained an outstanding40 per cent, terminal our with the capacity to meet goal. He leaves behind10-million-passenger legacy of having transformedthe impressive internationalEIA into a truly world-class airport. set out to find another of Directors The Board could help write theexceptional leader who chapter in Edmonton Airports’next great international search, After a rigorous history. we were very pleased to welcome Tom Ruth very pleased to welcome Tom we were as our new President and CEO. Tom joins us and CEO. Tom as our new President he International Halifax Airport where from success in leading that airportenjoyed great experience on also has excellent Tom forward. and side – the breadth the airline and cargo airportdiversity of experience our high-growth confident in the lead, we are needs. With Tom EIA will consistently deliver on its promise, its mission and ultimately continue to realize hasand a world-class new terminal, future the will be leveragingnever looked so bright. We those assets to meet our goal of reaching of driving our region’s economic prosperity. economic prosperity. of driving our region’s 2013 has been a year filled with successes, team a great new leader, and with a strong focused 10 million passengers by 2020. We’re and internationalon attracting new regional will pursue commercial travellers. We development to support this and to generate into air service. that can be reinvested revenue is a key revenue non-aeronautical Growing step that will take EIA to the next level in its as one ofevolution, cementing its reputation international great airports. North America’s With us, EIA will community support behind and continuecontinue to play to its strengths as success and reputation to drive the region’s an economic powerhouse. So as we close one I can say with history, chapter in the airport’s just getting started. confidence that we’re Chair Redl / Board Tom

Hello! Welcome to Edmonton Airports’ 2013 to Hello! Welcome that follow will leadAnnual Report. The pages for memorable year an incredibly you through fitting that the It’s our airports and our region. Report is “Hello”theme for the 2013 Annual said hello to a whole newbecause this year we region.era in air service for the some exciting new destinations, welcomed We announced and City, most notably New York and Reykjavik to flights non-stop new upcoming regional saw increased We Dallas/Fort Worth. Saskatoon and flights to air service with more international service to Cancun,Regina, more and Montego Bay and the addition of a new Grand Bahama. Withsun destination, Freeport, over 60 non-stop destinations and still growing, its vision for ourEIA is successfully realizing places. flights to more community: more numbers, in record Passengers have responded with nearly seven million travellers using EIA friends and to help them say hello to family, the the country and around business around significant gains in business were world. There services cargo aviation at EIA, and increased business, which cargo helped to drive more 14 consecutive quarters of growth reached in continue to play a key role in 2013. We supporting the industries that drive our economy. region’s is happening in a brand All of this progress new terminal building that has generated community pride and support.unprecedented The new terminal not only connects us to the world, but is also a gathering place that art, showcases and supports our community’s sport and wellness.music, culture, leadership was an important contributorGreat to the significant success at EIA. After nine as years at the helm, Reg Milley retired and CEO of Edmonton Airports.President Reg is known as much for In our community, his friendly demeanor as for his considerable business acumen. Under his leadership the non-stop destinations, gained 15 more region seat capacity by its commercial grew

MESSAGE BOARD CHAIR’S BOARD 6 7

more places more Fulfill the goal of serving 10 million passengers by 2020 of non-aeronautical Accelerate growth revenue flights to Continue to attract more » » » » » »

Together, we can look forward to more non- to more we can look forward Together, stop not only in air and growth destinations developmentservice but in the commercial that helps to support it. Over the coming years we’ll see the land between Highway 2 and the terminal building transformed into a bustling that will business centre – a thriving aerotropolis significant horsepower to ouradd even more as an economic engine for the region. role continues, and my part adventure The growth in it is just beginning. And so, to the region’s ourbusiness leaders, to the community and to anddedicated employees, I say an enthusiastic to beingheartfelt, “Hello!” I’m looking forward leg of our journey. part of the next prosperous and CEO Ruth / President Tom To say that I’m joining a winning team is an I’m joining a winning say that To understatement. In the past yearincredible to celebrate, thanksEIA has had many reasons a and the contributions of results to robust community who havemyriad of partners in the in the airport’s role played such an important started meeting with thesuccesses. Still, as I’ve leaders, community members business region’s clear that neither it’s and our own employees, nor this company would ever rest this region determined our to keep We’re on its laurels. The and moving forward. growing region region. of this and a reflection a culture, it’s have a clear mandate: We drive to do better isn’t just a goal at EIA; drive to do better isn’t

its history. passenger numbers made Record-breaking strong EIA also saw ever. 2013 the busiest year performance general in both business and of which serve the energyaviation flights, many sectors in northern Alberta andand resources private terminals. EIA’s North from Canada’s The number of these corporate charter flights an astonishing 28 per cent over the 2012grew strong total, and that's on top of previous annual growth. This was also a big year for Villeneuve Airport. A runway extension was completed, and installedupgraded navigational aids were range of airto accommodate a broader operations. Significant development is ongoing as businesses seek to capitalize on as an economic driver. potential Villeneuve’s experience leading a my previous Through northern I was lucky to spend time airline, in Edmonton. Now that I’m returning, to spending a lot more I look forward time listening and working cooperatively our passengers and with the community, and its our business partners. This region for growth reputation airport have a great what attracted me and transformation. It’s to this job, and I’m excited to play a part in continuing to develop this community asset growth. and support the region’s

There are few things more exciting than few things more are There thatof an organization becoming the leader expectations. Inhas consistently exceeded very pleased to beNovember 2013, I was and CEO ofchosen to serve as President time in such a great Edmonton Airports at PRESIDENT ANDPRESIDENT MESSAGE CEO’S 8 AND COMMERCIALDEVELOPMENT PROSPERITY THROUGHAVIATION DRIVING OURREGION’SECONOMIC DEPLANED PASSENGERS BY2020 10 MILLIONANNUALENPLANEDAND MORE FLIGHTSTOPLACES Mission Goal Vision 9 Our core values Safety and security first. quality service Own the outcome: deliver and products. Doing the right things right: show individual integrity. and organizational in Invested in our talent: be people-focused teamwork and collaboration. respect, Dedicated to sustainability: consider social, and financial impacts. environmental Grow the Business the Grow Operational Excellence Passenger Experience Our three strategic themes

You had me at bonjour. EXCEPTIONAL PASSENGER EXPERIENCE 12 13 3) 1 0 2

After careful consideration, we forged ahead consideration, we forged After careful a world-class airport that wouldwith creating for decades economy help fuel the region’s job is to be an engine for the to come. EIA’s Standing still economic growth. region’s and movedwould have stymied that growth away from potential air service improvements the region. for slow and steady economicOur predictions right onrecovery were and passenger traffic we completed Expansion 2012 and the money, wasjust in time. When the expansion project announced in 2008, our annual passenger traffic was 6.4 million passengers. Annual consistently sincepassenger traffic has grown then to just under seven million passengers in 2013 – up almost five per cent (or 306,000 well on our way 2012. We’re passengers) from of 10 million passengersto meeting our target by 2020. Airlines took notice. By the end of 2013, 60 domestic, US over the region EIA offered and international non-stop destinations. The is enjoying the most robust region Edmonton history. air service in its 7 0 2 6,

0 4 INTERNATIONAL PASSENGERS December 31, HELLO NEW HELLO

(January 1– (January 6 9 4,7 6 US TRANSBORDER PASSENGERS

1,2 Passengers 6 BREAKING DOWN THE NUMBERS 2 2 12, DOMESTIC PASSENGERS 5,3 Five years ago, EIA embarked on a massive known as Expansion project redevelopment 2012. It was a calculated risk. On one hand, whichthe economy had fallen into recession, had a significant impact on passenger traffic North America. Many airports were across seeing air service shrink and passenger numbers dwindle. Although partially shielded by the region’s the recession of the effects from had our passenger growth economy, robust if it was the right timeslowed. Many wondered for EIA to take on such a huge project. On the other hand, EIA was at a tipping point. The terminal beyond its capacity. was already was coming knew that economic recovery We passenger trafficand when it arrived more would come with it. Those passengers would attract more expect outstanding air service. To places, we needed an airportflights to more efficiently. more aircraft that could handle more Record breaking passenger growth EXCEPTIONAL PASSENGER EXPERIENCE PASSENGER EXCEPTIONAL 14 for everyone comfort First class EXCEPTIONAL PASSENGER EXPERIENCE required. handshake secret or card No membership at anaffordable drop-in price. and convenienceofanupscaleairportlounge with avalidboarding passthequiet,comfort Plaza Premium Loungesoffer anypassenger Departuresthe Domestic-International lounge. of theairport’s secondPlazaPremium Loungein regardless ofairlineorclasstravel,courtesy comfort andhospitalityforallpassengers passengers welcomedaneweraoffirst-class In spring2013,EIAdomesticandinternational

Premium Lounge. and great serviceatEIA’s newestPlaza flights cannowsayhellotothefriendlystaff passengers flyingondomesticorinternational a presentation orjustwanttotreat themselves, some quiettimebetweenflightstoworkon and television.Whetherthey’re lookingfor access,magazines,newspapers Internet beverages, comfortableseating,workstations, food, arangeofalcoholicandnon-alcoholic lounge, passengerscanenjoyexceptional 25 loungesaround theworld.Oncein to openatEIAandpartofanetwork This isthesecondPlazaPremium Lounge

15 Plaza Premium Lounge Plaza Premium 16 17

HELLO Luxury EXCEPTIONAL PASSENGER EXPERIENCE PASSENGER EXCEPTIONAL and convenience Opening soon, the Renaissance at EIA will outstanding comfort and convenienceoffer travellers.for both business and leisure including 213 rooms, The hotel features suite. With13 suites and a presidential the latest in hotel chic, guests can wind down sample the fine dining of at the Halo Bar, Ihasz, executive chef, Andrew renowned all while enjoying local music, art and entertainment. For easy air travel, this is the place to be! check in for your flight stay, After a relaxing and your trip at the kiosk in the hotel lobby, out of the Walk is only a short pedway away. hotel straight into EIA Airport Departures. The Renaissance at EIA will also offer fantastic meeting facilities with state of the with its top-notch Along art technology. food and beverage service, the hotel will feet of meeting space, 20,000 square offer including a spectacular grand ball room that seats over 700 people. With all this the eagerly-awaited Renaissanceand more, at EIA will be one of the Capital Region’s event locations. premier Explore class,Explore comfort 18 for parking, dining and shopping. for parking,dining andshopping. contests forflights andexclusiveoffers provide. Atlaunch,EIArewards offered because theylovetheexperience we passengers tomakeEIAtheirfirst choice so wecanbettermeettheir also allowsustogetknowourpassengers customers, forchoosingEIA.EIArewards rewards , aprogram tothankyou, our In December, EIAbeganpilottesting EIA rewards discount onfeesforadvancebookings. system provides uptoa25 percent addition toconvenience,thereservation parking inadvanceoftheirarrival,and 40 percentin2013.Customerscanbook very popularwithcustomers,growing by which wasexpandedinMarch 2013,proved The onlineparkingreservation system, in EIAtosupportairservicedevelopment. revenue generatedfrom jetSetisre-invested the servicesunderalicenseagreement. All owned byEIA,andVancouver operates Airport.ThejetSetbrandis International opening ofasecondlocationatVancouver jetSet Parkingexpandedin2013withthe products andservices. on specialsanddiscountsairport and otherprocesses andreceive information love atEIA.Membersenjoyfasterbooking 6,500 registered members.There's alotto began inDecember2013andnowhasover 2012. OurnewjetSetrewards program jetSet alonegrew over20percentfrom an optionthat’s bestforyouon-siteatEIA. self-parking,there’sparkade, orlong-term valet, reserved executivesection,covered parking options.Whetherit’s curbside popular in2013.EIAoffers eightdifferent All ofEIA’s parkinglotscontinuedtobevery parking of art The EXCEPTIONAL PASSENGER EXPERIENCE

needs. We want

A 747 100,000 for the three-year pilotprogram. each month,just overhalfwaythrough carrying more than10,000passengers the servicehassteadilygrown inpopularity, with theairport.Launchedinspring 2012, Century ParkonEdmonton’s south side 100,000 ridermark.Theroute connects popular Route747busservice reached the and EIAcelebratedamilestonewhenthe In August,EdmontonTransit System(ETS) 19

Ivanhoé Cambridge is a leader inat EIA. Ivanhoé Cambridge established thethe outlet business, having and in Toronto Mills successful Vaughan Mills outlets in Calgary. CrossIron be convenientlyThis development, to 2 south oflocated adjacent to Highway 350,000 square Airport Road, will feature outlets with 85 brands underfeet of retail at EIA The Outlet Collection one roof. in the fall of 2016,is scheduled to open options level of retail bringing a whole new to the region. The Outlet Collection at EIA is expected to draw new passengers to EIA and create Revenue new business for the community. the land lease on this project generated from into building better airwill be reinvested service for the region.

therapy at EIA One of Edmonton Airports’ strategicOne of Edmonton non-aeronautical objectives is to grow generated meaning revenue revenue, other than traditional aviation sources from fees and airportactivities such as landing fees. Non-aeronautical improvement land and building comes from revenue, concessions as well as parking, leases, retail EIA air service. to improve and is reinvested land mass of any airport in has the largest significant offering Canada at 7,000 acres, potential for development. With 2012 complete, our focus Expansion over the next years will be on fostering land development betweencommercial Highway 2 and the terminal. With that in pleasedmind, in December 2013 we were withto announce our conditional agreement of landIvanhoé Cambridge to lease 45 acres for the development of The Outlet Collection Seriousretail 20 21

and we’re always welcoming new partners and we’re restaurants representing flavours from Asia, flavours from representing restaurants Belgium, the Netherlands, France, Italy and North America. Those hungry for shopping will find whatever looking for in one of our many shops,they're whether it is technology and accessories, convenience items, books, sterling silver clothing and jewelry, costume jewelry, toys. accessories or children’s The EIA Marketplace is a work in progress to help give our passengers an exceptional airport experience.

HELLO

Marketplace retail options. retail 2013 marked the first full operational year at EIA.for our new concessions program Customers enjoyed a multitude of new and favourite shopping and dining choices local brands like Booster Juice, Caffe from Metalsmiths and Cookies bySorrentino's, to a number of national brand foodGeorge and shopping outlets. Post-security dining options now include quick-serve to full service One of our main goals is to ensure the timeOne of our main goals is to ensure passengers spend in the terminal is enjoyable That's why we’ve focused onand relaxing. enhancing options within the EIA Marketplace. a growing Passengers can choose from number of fantastic shopping, dining and The airport with everything EXCEPTIONAL PASSENGER EXPERIENCE PASSENGER EXCEPTIONAL 22 Awards, righthere inEdmonton. sponsor the2013CanadianCountryMusic the airport.Thisyear, wewere alsoproud to atministagesaround talented performers the day, you’llhearbeautifullivemusicfrom of anaudience.Atvarioustimesthroughout local artistsanopportunitytoplayinfront atEIAgiveyoung Live musicperformances consider ourselvesanARTport! arttotheregion.international It’s whywe airport eachyear. Theprogram alsoattracts the millionsofpeoplewhocomethrough the EIA’s ArtProgram showcaseslocalartiststo the great thingsourregion hastooffer. show ourcommunitypridebyhighlightingall new, isaperfectplaceto world-classterminal ground; we’re atworkinourcommunity. Our EIA isnotjustatworkintheairandon community our you, to Hello

make ourcommunityagreat placetolive. were proud toworkwithpartnersthathelp Through thisandmanyotherinitiatives,we andSupportServices(YESS). Empowerment raised more than$100,000forYouth EIA’s annualCharityClassicgolftournament sport, safety, healthandwellness.In2013, organizations fosteringartandmusicculture, We alsolendoursupporttocommunity Everything Flows,NothingStandsStill Erin Pankratz-Smith – Erin Pankratz-Smith– Live Entertainment Braden Gates–

23 Holes Greenhouses – Enjoy Centre Holes Greenhouses Hope Air ICE on Whyte iHuman ITU Triathlon Jasper National Park Kaminski Music K-Days Parade Leduc #1 Discovery Centre Leduc Food Bank of Commerce Leduc Regional Chamber Leduc-Nisku Economic Development Association Leduc LINX Connect Centre MacEwan University Music Inc. March Celebration of the Arts Mayor’s (NAIT) Northern Institute of Technology Alberta Princess Patricia Canadian Light Infantry Photographers of Canada Professional Reynolds Museum Rise Up House St. John Ambulance Air Rescue Service) (Shock Trauma STARS Hospital Foundation Stollery Children’s of Science TELUS World The Works United Way University of Alberta Awards Welcome You’re Empowerment and Support Services) YESS (Youth Our current community partnerships include: community Our current Open Women’s 2013 LPGA CN Canadian Museum Alberta Aviation Alberta Ballet Alberta Craft Council Alberta Government Legislature Art Gallery of Alberta Roots Festival Beaumont Blues and Hall of Fame Canadian Aviation Awards Canadian Country Music Chrysalis Citadel Theatre City of Edmonton Cooper Studios Downtown Business Association Flight (Air Canada) Take Dreams Edmonton Catholic School District Edmonton Chamber of Commerce Edmonton Economic Development Corporation Edmonton Eskimos Edmonton International Athletics Festival Edmonton Oilers Edmonton Opera Edmonton Public Library Edmonton Public School Board Edmonton Public Schools Foundation Edmonton Sun Annual Christmas Auction Edmonton Symphony Orchestra Edmonton Tourism Zoo Society Edmonton Valley Eyes Photography Frozen Government of the Northwest Territories Heritage Festival EIA communityEIA partnerships Halló, howdy and hola. OUTSTANDING AIR SERVICE

26 OUTSTANDING AIR SERVICE season. Why? Because the community had season. Why?Becausethecommunityhad weekly flightwasalsoaddedforthesummer from seasonaltoyear-round service.Afifth service three weeksearlier andexpandingit the airlineannounceditwouldbestarting but thingsreally pickedup amonthlaterwhen about thearrivalofIcelandairtoregion, Local Twitter userswere quicktospread thenews traditional cross-Canada routes. destinations issignificantlyshorterthan and Paris.Overalltravellingtimetothese including Amsterdam, Copenhagen,Frankfurt to over20popularEuropean destinations From Reykjavik,it’s justahop,skipandjump to Europe. seven hours,butserveasanimportantgateway breathtakingly beautifulcountryinlessthan new route wouldnotonlyconnectthemtoa The communitywasexcitedtorealize thatthis Europe viaanon-stopflighttoReykjavik. access tomore than20destinationsacross week outofEIA.Theregion wouldhavenew a 2014, Icelandairwouldoperatefourflights Icelandair wascomingtoEIA!StartinginMarch Atlantic, thestorybroke inSeptember2013: After agreat dealofworkonbothsidesthe story love A community else intheworld[exceptIceland]#yeghunt#avgeek@FlyEIA @Icelandair hasmore socialmediafollowersin#yegthananywhere B Lau‏@thebinsterJan29 Iceland� @Icelandair thanksforthefunand swag!#YEGhunt#yeg Trevor prentice ‏@whiverwillJan23

HALLÓ of newpossibilities. and theirimaginationstoIcelandair’s world beyond, whohaveopenedtheirhearts the peopleofEdmontonregion and helped thisromance along –andofcourse, and alltheothercommunitypartnerswho Commerce, EdmontonTourism, Travel Alberta Development, theEdmontonChamberof City ofEdmonton,EdmontonEconomic of localmatchmakers,includingthe happened were itnotfor a wholehost This lovestorywouldneverhave the world. attest, EIAandtheregion are eagertowelcome non-stop destinations.Afterall,asIcelandaircan the Reykjavikroute, it’s alsohowweattractnew not onlyhowwemaintaingreat airservicelike destination. Thatrelationship anddemandis people thinkingaboutIcelandasaholiday household word inthecommunity, withmany was wildlypopular. Reykjavikquicklybecamea Europe, t-shirtsandotherprizes.Theevent a city-widescavengerhuntforfree flightsto In January2014,Icelandairlaunched#YEGhunt, work byIcelandair. social mediabuzzandthegreat promotional fallen alittleinlovewithIceland,thanksto to winatripEurope istoday. What atonoffunthe@icelandair#yeghunthasbeen.Lastchance Edmontontourism ‏@EdmontonTourism Jan23

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Even more destinations Even more The completion of Expansion 2012 not only allowed us to keep pace with air service but also caught the our region demand from gates and more attention of airlines. More have to wait don’t space means aircraft apron for an available gate, even during peak hours. Passenger demand and efficient infrastructure a potent combination that helps to attractare with over 60 non-stop air service. Now, has the region destinations to choose from, never had such easy access to the world from its own airport. A New York state of mind A New York United Airlines’ highly EIA and In May, service to non-stop anticipated year-round with six flights per off City took New York week to Newark Liberty International Airport. ofBusiness travellers now have access to one key financial hubs and connectivity the world’s they can more, globe. What’s to the entire in the morning leave Edmonton for New York and be back in their own beds that night. travellers departing for New leisure Similarly, EIA will arrive in the Big Apple in from York than hours – more a speedy four-and-a-half enough time to have dinner and take in a show the same night (even with the time change!).

Dallas

HOWDY ¡Hola! México! announced a new winter Sunwing In January, Weekly Cancun. to Edmonton from series flight began in February and wrappeddepartures up in mid-April. This additional service was a support for of the community’s result direct flights to Cancun and the Mayan Riviera. Putting a bow on a great year was thePutting a bow on a great announcement in December of American Airlines’ new non-stop service to Dallas/Fort International Airport, beginning AprilWorth 2014. The service operates daily on an Airbus A319 featuring conveniences like in-flight This route will provide convenience for will provide This route business travellers, particularly in the energy linking them to the sector, and resources hub. American Airlines’ largest world through will now American Airlines, the region Through have access to the oneworld alliance global network of almost 1,000 destinations in more than 150 countries. Regional passengers will now have even easier access to Central and South America. Wi-Fi, AC power in-seat entertainment and outlets at every seat. Deep inDeep the heart of Texas OUTSTANDING AIR SERVICE AIR OUTSTANDING 30 aviation business through growth Economic main terminal. main terminal. commercial airserviceout ofthe region’s economyandondemand for success there hasadirect impactonthe energy andresources sectors.Facilitating economic development,particularlyforthe Business aviationiscriticaltonorthern Canada. Albertaandnorthern northern service forindustrialclientsworkingin lounge forlarger groups thatcharterair It willfeature a400-seatsecured passenger 150-seat area foraircharterpassengers. pilots withtheirownaircraft, andanupscale 20-passenger VIPloungeforclientsand shop space.Thefacilitywillalsooffer a feet ofpassengerlounges,officeand feet ofhangarspaceand25,000square business aviationoffering 42,000square Aerocentre 2,anotherpremier facilityfor and EIAannouncedtheconstructionof In June,EdmontonShellAerocentre support businessaviationfortheregion. in infrastructure, facilitiesandservicesto reflection oftheinvestmentswe’vemade landings. Thisgrowth isapositive year. Thatrepresents almost26,000 flights in2013compared totheprevious saw 28percentmore corporatecharter in scheduledflights,EIA’s privateterminals Not tobeoutdonebystrong performance OUTSTANDING AIR SERVICE

floor ofCentral Tower. headquarters toEIAandnowoccupiesone Canadian Helicopters alsomoveditswestern to EIA’s administrativeoffices.Canadian in themiddle.CentralTower isnowhome Tower created efficientnewofficespace baggage systematthebottom,Central control centre atthetopandnew In additiontothestate-of-the-artairtraffic baggage. efficient loadingandunloadingofpassenger technology, thenewsystemfacilitatessafeand tracking andcutting-edgebaggagescreening fullyautomatedbaggage online in2013.With EIA’s newintegratedbaggagesystemcame Located atthebottomofCentralTower, sight linesoftheairfield. headroom, whichimproves airtrafficcontrollers’ cent more floorspaceandfourextrametres of the newcontrol towercaboffers about50per services. Inadditiontoa360-degree view, briefings, airportadvisoryservicesandother air trafficcontrol,weather flightinformation, Canada’s civilairnavigationservicethrough is responsible forthesafetyandefficiencyof transitioned intoitsnewspace.NAV CANADA Silver certifiedCentral Tower, NAV CANADA theopeningof8-storey LEED With unmistakable greeting: welcometoEdmonton. architecture sendsarrivingpassengersoneclear, against thestarkprairiebackdrop. Itsunique project. Itstandsasastunning,iconiclandmark Central Tower, afittingcodatotheexpansion were completedin2013withtheopeningof development program Expansion 2012terminal The finalstagesofthegame-changing Canadian Helicopters Canadian NAV CANADA and Central Tower,

Central Tower Central 31 32 cardiac emergency. a person’s lifewhenusedimmediatelyina can restart aperson’s heart,andmaysave These easy-to-useautomatedmedicaldevices Defibrillators(AEDs). of AutomaticExternal pleased tohelpKimRuetherraiseawareness In August,EIA’s emergency response crew was Leduc alsoparticipatedintheexercise. responders from LeducCountyandtheCityof Airlines staff, localvolunteersandemergency that wouldstemfrom anactualcrash.Delta to simulatethefire, smokeandotherissues Trainer (MAFT)wasusedinthemockscenario simulated planecrash.TheMobileAircraft Fire each year. InJune,ERScrews responded toa Services (ERS)conductsaseriesofexercises essential, EIA’s ownEmergency Response readiness intheeventofanemergency is airport community. Becausemaintaining security ofourpassengers,staff andtheentire Our toppriorityeverydayisthesafetyand security and Safety OUTSTANDING AIR SERVICE by creating a safer community for all of us. by creating asafercommunityforallofus. Ruether fortheirefforts tomakeadifference a person’s life.We saluteKimandWayne people usedanAEDattheairporttosave separate occasionsin2013,quick-thinking locations throughout theairport.Ontwo EIA hasover60AEDsinstalledinvarious medical emergency. encourage peopletouseAEDsincaseofa Health Services,Kimworkedwithmediato the HeartandStroke FoundationandAlberta from beingusedincorrectly. helpfrom With and havebuilt-insystemstoprevent them devices actuallytalkyouthrough whattodo that AEDsare verysimpletooperate–the The Ruethersnowworktoshowpeople were unaware thattheyshoulduseit. beside him,butthepeopletryingtohelphim made allthemore tragicbecauseanAEDlay life toasuddencardiac arrest. Thelosswas of Brock Ruether, a16-year-old wholosthis Kim andherhusbandWayne are theparents 33

help aircraft land safely when visibility ishelp aircraft certifiedlimited. These enhancements were in February 2014. Canada by Transport A new strategic plan has been developed for Villeneuve Airport, drawing on extensive consultation with municipal, business and aviation stakeholders. Edmonton Airports put nearly $7 million in capitalhas already investment into Villeneuve Airport since 2000, and plans to invest another $17 million over the next five years. of Alberta, and CANADA, the Province NAV also investing millionsthe private sector are a it remains in Villeneuve to ensure Airport sustainable, long-term asset for the entire region. the entire

control tower. control Airport Canada designation as the With its Transport official Satellite Airport, Villeneuve region’s experienced significant growth Airport (VA) handles an and expansion in 2013. VA movements eachaverage of 200 aircraft mainly for training flights and is used day, Flightand small privately-owned aircraft. by the NAV controlled movements are CANADA Its satellite status means the airport must be anable to handle diverted flights, function as alternate airport and accommodate medevac Late in 2013, with fundingsmaller aircraft. of Alberta, one Villeneuve the Province from runway was extended to 5,000 feet on the existing airport land to accommodate a wider range of operations. A Category 1 Instrument Landing System (ILS) was installed, providing radio signals and high intensity lighting to Villeneuve 34 gas industry. logistics services forCanada’s oiland increasing demandfortransportationand network andwillhelpthemmeet the Lynden’s North AmericanandCanadian centre atEIA.Ourairportisavitallinkto and logisticscompany, openedanewservice afull-servicefreight International, forwarding At thebeginningofyear, Lynden and Mexico. trade route through Canada,theUS internationally-recognized keylong-distance Highway 2’s CANAMEXCorridor, partofan proximity toLeduc-Nisku IndustrialParkand It offers easyaccesstoair cargo carriersand other cargo, freight andlogisticscompanies. EIA's Cargo istheperfectlocationfor Village Agency (CBSA)facility. servicing andanewCanadaBorder Service airside buildingfacilities,road andland development ofadedicatedaircargo apron, infrastructure,Village whichincludesthe a multi-milliondollarinvestmentinCargo Over thepastthree yearsEIAhasmade cargo developmentsideofthebusiness. air servicefront, andwe’re alsobusyonthe attentiononthecommercial EIA isgarnering logistics and Cargo, freight

to twice-dailyservice. demand overtheholidayseasonbymoving Cargojet responded toincreased Edmonton season tohandleincreased demand. mid-November through the busyholiday operated awide-bodyBoeing767Ffrom In otherserviceenhancements,DHL companies inCanada. one ofthefastest-growing freight forwarding freight forwarding andproject logisticsandis Thelocalcompanyspecializesin Village. relocated itsoperationsto EIA’s Cargo In March,Freight AOGInternational Logistics increasing volumes. to thelarger AirbusA300Ftohandle course oftheyearFedExroutinely switched January 2013withanAirbusA310F. Overthe between EIAanditsworldhubinMemphis FedEx launchedfull-timewide-bodyservice 35

A new partnership between EIA and A new partnership between for light Panatonni Development at the Cargo industrial development and Village, including warehousing forwarding freight logistics facilities for for users that will be custom built Construction of a custom-built forwarding freight 30,000-square-foot Inc. building by Runway Developments The conference also provided the perfect also provided The conference to announce two newvenue and opportunity at EIA: projects infrastructure cargo »  »  @R3Cargo what a wonderful evening! Full of class & international #bravo! @flyeia @flyeiaCargo flare @R3Cargo event was amazing! Thanks @flyEIA for being time at the Roads.Rails. fantastic hosts! GR8 event. Great job @flyEIA we are . Great in #Edmonton Runways conference to some new opportunities. looking forward What an absolute amazing evening!! So honored to be part of the to be part What an absolute amazing evening!! So honored g @CIFFAinc amazing team @flyEIA and @flyEIACargo Happy Birthday In September, EIA and the Canadian In September, AssociationInternational Forwarders Freight than 250 cargo, hosted more (CIFFA) across leaders from shipping and logistics the world at thethe country and around and Runways nationalinaugural Roads, Rails was The Edmonton region conference. cargo host in recognition chosen as the conference air and railof its solid intermodal road, infrastructure. national andIn addition to featuring various parts ofinternational speakers from event included flyovers of the the industry, guests for out-of-province the oil sands area and tours of the Leduc-Nisku Business Park, park outside energy largest North America’s of Houston, Texas. Roads, Rails and Runways national cargo conference 36 DIRECTORS BOARD OF at-large positions. the board haselectednottofillthetwo and background are represented ontheboard, Currently, sincethedesired skills,experience any gapsinskills,experienceorbackground. at-large appointmentsthat are usedtofill and Sturgeon County. Theboard has two Leduc, ParklandCounty, StrathconaCounty and oneeachbyLeducCounty, theCityof ofCanada Edmonton, twobytheGovernment Six directors are appointedbytheCityof consists ofamaximum15members. The Board ofDirectors ofEdmontonAirports Board Composition

systems to manage those risks. systems tomanagethoserisks. of thebusinessandimplemented appropriate management hasidentifiedthe principal risks (CEO) succession,andsatisfying itselfthat business plan,planningChiefExecutive Officer Edmonton Airports’strategicplan andannual an ethicscode,reviewing and approving adopting andmonitoringcompliancewith functions include Some ofitskeygovernance in highstandards ofboard governance. to maintainandseekcontinuousimprovement out theseresponsibilities, the board endeavours and affairs ofEdmontonAirports. Incarrying strategic direction andoversightofthebusiness The board isresponsible forthestewardship, Board Governance 37

CEO, Tom Ruth. Tom has joined Edmonton Ruth. Tom CEO, Tom his prior position as CEO of theAirports from The Halifax International Airport Authority. to advancing the strategic looks forward board and business plans of Edmonton Airports under leadership. Tom’s Edmonton Airports is making a strategic sources focusing on growing shift towards in support of revenue of non-aeronautical Places.” In anticipation of this shift,to More the and management recognized the board members’ real opportunity to leverage board estate development skills and knowledge by striking the Real Estate Development Oversight June 21, 2013. This newCommittee, effective and to the board directly committee reports real brings a dedicated focus on commercial estate development. the organization’s vision of “More Flights vision of “More the organization’s Gail Stepanik-Keber Rolly Owens Mary Cameron Anne McLellan Bryan Bailey Dale Klein Robert Petryk Tom Redl, Chair Redl, Tom Robert Carwell, Vice-Chair Blumenthal Leonard Naseem Bashir Ralph Young McCaw Maureen Left to Right In December 2012, in anticipation of Reg Edmonton Airports as from retirement Milley’s struck a CEO and CEO, the board President Special Committee, tasked with theSearch amandate of implementing and conducting for Edmonton Airports’ newdiligent search CEO. The committee executed its mandate with the assistance of the Governance and established CEO Compensation Committee’s succession plan. Following a competitive bid Special Committee the CEO Search process, engaged the services of an executive search firm international that conducted a thorough of candidates. search An excellent pool of candidates was brought the committee for consideration, andbefore with its unanimous resolution in accordance ispassed on November 14, 2013, the board new pleased to welcome the organization’s 38 Full Director biographiescanbefoundat:www.corporate.flyeia.com/about-us/board-management Gail Stepanik-Keber(ParklandCounty)wasre-appointed board tothe effective January1,2014. Maureen McCaw(CityofEdmonton)wasre-appointed board tothe effective January1,2014. ofManitoba. office ofDeputyMinisterHousingwiththeGovernment to thatwasPresident &CEOofPaymentSystemsCorporation.Ms.Cameronheldthe alsoformerly Ms. CameronPresident istheformer &CEOofAlberta’s Workers’ CompensationBoard, andprior Ms. Cameron isthePrincipalofCameron andCompanyisapartnerwithWestLife PartnersInc. boardMary CameronofCanada)wasappointedtothe effective (Government March 15,2013. Leonard (LeducCounty)wasre-appointed Blumenthal board tothe effective January1,2013. Industrial HeartlandAdvisoryCommittee. He isapastboard memberofMapleMortgageTrust AdvisoryInc.,andpastchairoftheSturgeon Sector Mortgage(I-V)InvestmentCorporationandamemberoftheRealEstateCouncilAlberta. Mr. KleinisthePresident ofCanadaICICapitalCorporation,founderandboard memberwith Dale Klein(Sturgeon board County)wasappointedtothe effective January1,2013. Corporate Directors (ICD)EdmontonChapter. the board oftrusteesattheStolleryChildren’s HospitalandisanexecutivewiththeInstituteof Groupof theboard ofCompanies.Mr. fortheWilliams Bashircurrently servesasvice-chairof Mr. Williams EngineeringCanadaandchairman BashirisPresident andChiefExecutiveOfficerof boardNaseem Bashir(CityofEdmonton)wasappointedtothe effective January1,2013. Board changesin2013 39

Appoint or remove at-large directors; at-large Appoint or remove officers; Appoint or remove the auditor; Appoint or remove vice chair and chair, board and compensation of the board, the responsibilities Approve committees; board established by management, safety and security programs Review environmental, compliance; insurance coverage and regulatory including standards, a culture throughout the organization that includes the core values approved by the board values approved the core that includes the organization throughout a culture and articulated in the strategic plan; Ethics with the board-approved Adopting an ethics code and monitoring compliance of Edmonton Airports practices Code, and satisfying itself that executive management an ethical corporate culture; and creates things, which takes into account, among other Following a strategic planning process the adoption and through and sustainability, the opportunities and risks of the business business plan; monitoring of the strategic plan and annual has identified the principal risks of theSatisfying itself that executive management systems to manage these risks; business and implemented appropriate has succession plans in place forSatisfying itself that executive management management; has adopted a communication policy for theSatisfying itself that executive management for receiving measures effective shall ensure which policy stakeholders and community, the stakeholders and the community; and feedback from is monitoring internal andSatisfying itself that executive management controls management information systems. Satisfying itself that executive management of Edmonton Airports practices and creates Satisfying itself that executive management re values; principles of vision, mission and core Edmonton Airports’ guiding transparent appropriate and the community through Accountability to stakeholders feedback communication, including practices and effective disclosure processes, mechanisms; National and international practices; and airport best by the Canadian SecuritiesCorporate Governance Guidelines as recommended Coalition for Good GovernanceAdministrators, Canadian and Institute of Corporate Directors.

(b) (c) (d) (e) Board Responsibilities Board will: Only the board (a) (b) (c) (d) (e) (f) (g) Board Stewardship Board of the and supervision direction strategic for the stewardship, is responsible The board of Edmonton Airports, including: business and affairs (a) Governance and Guidelines Principles as a governance rather will perform responsibilities board its overall stewardship The board to: and will have regard than a management board (a) (b) (c) (d) 1.3 1.2 MANDATE 1.1 BOARD 40 MANDATE BOARD 1.4 (m) (l) (k) (j) (i) (h) (g) (f) (e) (d) (c) (b) (a) The board authorizes: Board Authorizations (ix) (viii) (vii) (vi) (v) (iv) (iii) (ii) (i) Approve SpecialResolutionmatters,including; Plan President andCEOsuccession; Select, evaluateandestablishcompensationforthePresident andCEO; Approve corporategoalsandobjectivesassessperformance; Approve annualauditedfinancialstatements; guarantee orotherwise; Approve thegivingoffinancialassistance,directly orindirectly, bymeansofaloan, Authorize theraisingofmoneybyEdmontonAirports; Authorize theissuingofsecurities; guidelines. generating real estatedevelopmentopportunities thatfalloutsideofthe approved and makerecommendations totheboard withrespect toanyinvestmentorincome- andMissionreview Edmonton Airports’landstosupport EdmontonAirports’Vision oversight ofnon-AIFfundedincome-generating real estate developmentopportunitieson The RealEstateDevelopmentOversight Committeetoestablishguidelinesforboard processes tomanagethedisclosedinterest; and give risetoanappearanceofaconflict ofinterest, orgive direction respecting actionsor would notmateriallyordetrimentallyconflictwiththeinterests ofEdmontonAirportsor disclosures madepursuant totheConflictofInterest Rulesthatthedisclosedinterest respecting andCompensationCommitteetomakedeterminations The Governance meetings; The board chairtoappoint adhoccommitteestoactonmattersbetweenboard delegate authoritytootheremployees; board-approved plans,whichauthorityincludestherightofPresident and CEOto The President andCEOto manageallaspectsofEdmontonAirports,consistentwith audit plan; The AuditCommitteetoapprove quarterlyunauditedfinancialstatementsandtheannual any materialchangetoAirportMasterPlan. participation withAffiliates,and managed andoperatedbyEdmontonAirports, entering intoanagreement tomanageandoperateanairportnotpreviously amendment, replacement orrepeal ofbylaws, Airports AuthoritiesAct, requests oftheBoard tothereviewer appointedundersection29oftheRegional the appointmentofasubsidiarydirector asadirector orofficerofanAffiliate, the appointmentofadirector asadirector orofficer ofanAffiliate, sale, leaseorexchangeofallsubstantiallytheassetsEdmontonAirports, amendment ofArticles,

41 Meet at least four times per year; Meet at least four times and timely management reports; Review appropriate and a GovernanceAppoint an Audit Committee with and Compensation Committee mandates; board-approved or mandate for a capital project with a board-approved Appoint a Special Committee of Edmonton or reputation the credit that could materially affect series of capital projects Airports, as determined by the board; vice chair, chair, committees, board board assessments of the board, Conduct regular chairs and individual directors; committee board and committee mandates workplan, board mandate and the board Annually review confirmation, acknowledgement director’s for a director, workplans, terms of reference committee board vice chair, chair, the board and declaration, and position descriptions for clear to ensure secretary and board and CEO, corporate secretary chairs, president and expectations; delineation of responsibilities consisting of for directors, development program director Establish a comprehensive selection, orientation and continuing education; director vacancies; and participate in filling board Review size and makeup of the board engage advisors as required; Directly at the and CEO at each meeting and as the board Meet in camera with the President management; and independence from beginning and end of each meeting to ensure confirmation,annually to sign a directors’ acknowledgement and directors Require declaration. Board Effectiveness Board will: committees as required, board with support from The board, (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) 1.5 42 Bryan Bailey, FCA,CA Maureen McCaw, ICD.D Dale Klein Robert Carwell,FCA,CA,ICD.D Mary Cameron*** Leonard Blumenthal Naseem Bashir, P.Eng, ICD.D Anne McLellan,LLB,LLM corporation. ThefollowingisEdmontonAirports’disclosurePractices. ofitsCorporateGovernance practices required ofpubliccompanies,adaptingthem toEdmontonAirports’statusasanon-share practicesthatareAirports iscommittedtoimplementingcorporategovernance inalignmentwith rulesthatapplytopubliccompanies,Edmonton practices. Althoughnotsubjecttogovernance Securities Administrators,publiccompaniesare required todisclosetheircorporategovernance Instrument 58-101DisclosurePractices,publishedbytheCanadian ofCorporateGovernance GuidelinesandtheaccompanyingNational Under NationalPolicy58-201CorporateGovernance PRACTICES GOVERNANCE DISCLOSURE OF CORPORATE Attendance Record ofeachDirector for2013 Independence ofBoard Chair Independence ofDirectors Composition oftheBoard Rolly Owens Robert Petryk,ICD.D Tom Redl,ICD.D Gail Stepanik-Keber Ralph Young *****Resigned from committeeeffective August2013 ****Ex-officio member ***Appointed toboard effective March 15,2013 **Not amemberofcommittee– attendedaspartofdirector orientation *Not amemberofcommittee– attended onavoluntaryorinvitationalbasis description. and responsibilities are describedintheboard chair’s position The board chairisanindependentdirector. Theboard chair’s role All EdmontonAirportsdirectors are independent. Board Board 4/5 5/5 4/5 5/5 5/5 4/5 5/5 5/5 5/5 5/5 5/5 4/5 4/5 Committee Audit 4/4 4/4 2/3 4/4 2/2** 1/1* 4/4 3/3**** 2/4 Committee Compensation & Governance 1/1* 1/1* 3/3 3/3 3/3 3/3 3/3 3/3

Committee Oversight Development Real Estate 4/4 4/4**** 4/4 4/4 4/4**** 1/2***** Committee Special Search CEO 10/10 10/10 10/10 9/10 9/10

43 The Director Development Program sets out an orientation Development Program The Director a to provide which is designed for new directors, program Airports and the to Edmonton introduction comprehensive governancepolicies and practices. The program board’s chair and vice includes orientation sessions with the board the Governance and Compensation Committee chair, chair, and management, and CEO and corporate secretary, president and tours of the as well as attendance at committee meetings, facilities operated by Edmonton Airports. for funding for Development provides The Policy for Director sets Development Program development. The Director director for continuing education to expand a director’s out a program government policy, knowledge of the aviation industry, business risk, competition and governance. that sets out its role has a written mandate The board mandate is set The text of the board and responsibilities. out herein. chair, has written position descriptions for the board The board Governance and Compensation Committee chair, vice chair, Development Oversight Real Estate Audit Committee chair, corporate and CEO, the the president Committee chair, secretary. and the board secretary sessions are held at the beginning and end of everyIn camera sessions are with the accordance committee meeting in board and board committee mandates. board and board Director Continuing Education Director New Director Orientation New Director Orientation and Continuing Education Position Descriptions Position Descriptions Board Mandate Board Board Mandate Board In Camera Meetings Director Independence Director 44 Code ofBusinessConductandEthics PRACTICES GOVERNANCE DISCLOSURE OF CORPORATE of Directors Nomination andAppointment Nomination ofDirectors Conflict ofInterest Rules Conduct andEthics Written CodeofBusiness

4.  3. 2.  1.  competencies required ontheboard. Theprocess consistsof: disciplined andtransparent process tobringtheskill setsand Director DevelopmentProgram, provides forastrategic, The director selectionprocess, whichisacomponent ofthe annual basis. required onan form tocompleteapersonalinformation 2014, directors, officersandexecutivemanagementwillbe from thosetransactions.Beginningin discussionsconcerning have amaterialinterest inatransactiontorecuse themselves manage disclosedinterests, suchasrequiring directors who of interest. Theboard implementsappropriate processes to be perceived asgivingrisetoanappearanceofaconflict of EdmontonAirportsoranyinterests thatmayreasonably that maymateriallyordetrimentallyconflictwiththeinterests management andemployeeshavebecomeinvolvedwith and appointmentsthatdirectors, officers,executive disclosure ofallinterests, activities,investments,memberships Code require and form completionofapersonalinformation The ConflictofInterest partoftheEthics Rulesthatform and declaration. to signannuallythedirector’s acknowledgement confirmation, board monitorscomplianceofdirectors byrequiring directors Edmonton Airports’directors, officersandemployees.The The board hasadopted a writtenEthicsCodeapplicableto candidates interviewed. Communication withtheAppointer astothesuitabilityof iftheretime commitment,andtodetermine isaculturalfit;and the skillsetandcompetenciesrequired andexpectationsof chair andotherdirectors withthecandidatetocommunicate andCompensationCommittee Meeting oftheGovernance to assistinidentifyingcandidates; the board encouragesthe Appointertoutilizeasearch firm consider indesignatingcandidates,andwhere appropriate, Communication ofselectioncriteriatotheAppointer matrix maintainedbytheboard; in theskillsetsandcompetenciessetoutskills Compensation Committeetoidentifyanticipatedgaps and Gap analysisconductedbytheGovernance

45 Assessments of the board, board committees, the board chair, chair, committees, the board board Assessments of the board, (both self and committee chairs and individual directors board Assessment information may be conducted regularly. peer) are or interviews questionnaires collected and compiled through may be conducted or a combination of the two techniques and with the assistance of external consultants. All assessment by the Governance and Compensation reviewed are results The Governance and chair. Committee and the board for recommending Compensation Committee is responsible based on assessment results. and monitoring improvement The Board’s standing committees are the Audit Committee, are standing committees The Board’s Governanceand Compensation Committee and Real Estate appoints board Development Oversight Committee. The mandates as required. special committees with board-approved The Governance and Compensation Committee has to compensation. with respect responsibilities The Governance Committee mandate and Compensation recommending and for reviewing includes responsibility and the CEO evaluation process approval for board Philosophy, compensation, Edmonton Airports’ Compensation Compensation Philosophy and director the Directors’ compensation. The Governance mandate Committee and Compensation of the the size and makeup for reviewing includes responsibility vacancies. filling board and board annual The Governance and Compensation Committee’s skill sets and identifying director workplan includes reviewing and recommending size and makeup of board, gaps, reviewing vacancies. sets to Appointers for board competencies and skill

Board Committees andBoard Individual Directors Board Assessments Board Assessments of the Board, Other Board Committees Other Board Other Standing Committees Compensation Committee Compensation Committee Responsibilities, Powers and Operation Compensation Nominating Committee Nominating Nominating Committee and Responsibilities, Powers Operation 46 STRATEGIC OBJECTIVES (2013-2017)STRATEGIC OBJECTIVES LONG-TERM Increase airservice revenue development opportunities in 2013. revenue developmentopportunitiesin2013. EIA investednearly$14millionof reinvested cashfrom operationsintonon-aeronautical By 2017,EIAseekstoinvest$18.5 millionannuallyinrevenue investmentopportunities. keep aeronautical feesdownandsupportEIA’s continuedairservicegrowth. investments willhelpgrow non-aeronautical revenues inthefuture, which willhelp operations. Thisrevenue was reinvested intocommercial infrastructure. These In 2013,EdmontonAirportsgeneratednearly$14millioninreinvested cashfrom net earnings. this objectivebytrackingourpercentage ofcashcontributedfrom EdmontonAirports’ investments inrevenue-generating initiatives.We will knowweare makingprogress on this, weneedtomanageourexpensesaccumulatecashflow that canthenfund Edmonton Airportsmustbepositionedtoinvestingrowth opportunities.To do Improve financialsustainability of service. enhance theoverallpassengers’experienceandprovide amore consistentlevel service, improved by0.02pointsto0.71.EIAcontinuesinvestininitiativesthatwill satisfaction score of4.31 out of5.Thestandard deviation,ameasure ofconsistency In 2013,EIAachievedanewall-timescore foroverallpassengersatisfactionwithatotal satisfaction score of4.30 and astandard deviationof0.68. Service Qualityaveragescore andourstandard deviation. By2017,EIAseeksanoverall levels. Onewaywewillknoware makingprogress onthisobjectiveisbyourAirport focus onoperationalexcellencebyreducing inconsistenciesandimproving service evidence showstheirsatisfactionincreases. To drivesatisfactionlevelsatEIA,wewill When passengershaveaconsistentandseamlesstravelexperienceatairports, Expand andretain passengerbase at opportunitiesinAsiaonboththepassengerandcargo fronts. progress towardscargo securinganewinternational destinationandcontinuestolook to Reykjavikprovided byIcelandair(anewEuropean-based destination).EIAhasmade to Dallas/FortWorth (anewyear-round transborder destination)andyear-round service Two ofthethreetargets long-term were metin2013.We announcedyear-round service cargointernational destination. one newyear-round USdestination,onenewEuropean/Asian destinationandonenew whatspecific determine regional orseasonalservicesare needed.By2017,EIAseeks destinations weaddoverthenextfiveyears. We review passengerdemandannuallyto We willknowifweare makingprogress onthisobjectivebythenumberofnew strengthening ourairlinepartnershipsinorder todeliver more flightstomore places. We willfocusondrivingpassengerandcargo demandandatthesametime

47

on a scale of 5 on Airport Council International’s Airport Service Quality program. Council International’s on a scale of 5 on Airport service levels to passengers as consistent more EIA was also able to provide deviation on total satisfaction scores in the standard evidenced by a decrease 0.73 in 2012 to 0.71 in 2013. from Improve financial sustainability Improve from cash $14 million in reinvested In 2013, Edmonton Airports generated nearly These infrastructure. into commercial was reinvested operations. This revenue which will help in the future, revenues non-aeronautical investments will help grow continued air service growth. fees down and support EIA’s keep aeronautical Expand and retain passenger base passenger Expand and retain 4.31 for customer satisfaction in 2013, scoring score EIA achieved a new record EIA had two major route announcements in 2013. Icelandair announced new announcements in 2013. Icelandair EIA had two major route with connections to over 20 European EIA to Reykjavik, service from year-round of EIA welcomed American Airlines’ announcement destinations. In addition, Increase air service Increase non-stop service to Dallas/Fort Worth. Other achievements in 2013 included Other achievements Worth. non-stop service to Dallas/Fort hub in Newark. via the airline’s service to New York the launch of United Airlines’ to sun charter significant capacity increases also provided Sunwing and Air Transat Grand Bahama. added a new destination, Freeport, destinations, and Sunwing 2013 PERFORMANCE ON PERFORMANCE 2013 STRATEGIC OBJECTIVES STRATEGIC

MD&A

Management Discussion and Analysis 50 Advisories AND ANALYSIS 2013 MANAGEMENTDISCUSSION standardized meanings. Therefore, theymaynot becomparabletosimilarmeasurespresentedbyotherentities. between periods. These measuresarenotinaccordance with, to, oranalternative GAAPanddonothave andtoprovide amoreconsistentbasisforthecomparison focused ontheperformanceofourongoingoperations is included resultsinamannerthat methodforassessingouroperating toprovidereaderswithanalternative to enhancethereader’s overallunderstandingofourfinancialperformanceorcondition. Theyare accounting principles(GAAP)and, therefore, areconsiderednon-GAAPmeasures. These measuresareprovided standardizedmeaningasprescribedbygenerallyaccepted any Certain measuresinthisMD&Adonothave Non-GAAP andAdditionalGAAPMeasures including usedinitsdevelopment. assumptionsandestimates onourforward-lookinginformation Please refertotheOutlooksectionofthisMD&Aforfurtherinformation from thoseexpressedin, orimpliedby, thisforward-lookinginformation. constitutesafinancialoutlook.that Ouractualresults, performanceorachievementscoulddiffermaterially The disclosure foundundertheheading “Outlook” inthisMD&Amaycontainforward-lookinginformation Forward-Looking Information Cautionary StatementRegarding Regional AirportsAuthority.Edmonton mean Edmonton Airports MD&AareinCanadiandollarsunlessotherwisestated.All amountsinthefollowing Referencesto Financial beenpreparedinaccordancewithInternational ReportingStandards(IFRS). have Statements with theFinancial andnotedisclosures Statements fortheyearendedDecember31, 2013. The Financial Discussionand Management The following Analysis ofFinancial Results(MD&A)shouldbereadinconjunction

51

was announced. On September 18, 2013, the City Council of Edmonton requested that Edmonton Airports take necessary the City Council of Edmonton requested that Edmonton 2013, On September 18, Airports was operating As Edmonton 2013. Airport effective November 30, of City Centre steps for full closure did not have a material impact on the financial the result of the closure the airport on a cost-recovery basis, Airports. position of Edmonton Airports President and Chief Executive Officer (CEO) Reg Milley retired. Edmonton 2014, Effective January 20, A replacement was announced in 2013. Airport at (AIF) the Fee Airport Improvement Airports announced that the Edmonton 2013, On November 13, will applyThe new amount to travel on bringing the fee to $30 per departing passenger. will increase by $5, 2014. 1, 2014 for tickets sold on or after February or after July 1, Overall passenger growth of from 2012 was 4.6% resulting in a record number of overall passengers 7.0 million. Business aviation passenger growth of passengers of from 2012 was 27.8% resulting in a record number 0.7 million. 10.2% over 2012 to 156,000 movements. Airport increased by Aircraft activity at the Revenue growth in 2012. of 7.3% resulted in recognizing revenue of $182.8 million from $170.4 million Airports announced that they had entered into a conditional agreement Edmonton 2013, On December 4, with Ivanhoé Cambridge to lease approximately 45 acres of land to develop a retail outlet destination called Highway Commercial Project. Airport’s The as part of “The Outlet Collection at EIA” two runways and oversaw the installation of a precision Airport’s Villeneuve Airports extended one of Edmonton will help facilitateThe two projects of medevac flights carrying the acceptance instrument landing system (ILS). Funding for this projectpatients as well as improve the overall safety of landings in adverse weather conditions. Alberta government. was provided by the Airport Servicepassenger satisfactionhighest overall Airports earned its 5 on the 4.31 out of score of Edmonton Quality (ASQ) passenger survey. Iceland and and new non-stop service commenced to Reykjavik, York non-stop service to New During 2013, (DFW) Worth to Dallas/Fort Recent Events Airports’ operations results or financial in 2013 thatCertain events transpired have had an impact on Edmonton Corporate Profile Corporate Airport Airports) operated Edmonton International Authority (Edmonton Airports Regional Edmonton In 2013, Authorities Act is to managethe Regional Airport as defined in to ensure these airports Our mandate, (Alberta), development and community expected to foster economic we are As well, secure and efficient. they are safe, not-for-profit As a no-share, airline and transportationby improving service and expanding the aviation industry. this mandate. are re-invested in the airports so we can fulfill the net earnings we earn entity, (the Airport), Edmonton (the Airport), City Centre Airport Villeneuve Airport. and or that may have an impact on future results. » » » » » » » » » » » 52 PASSENGER TRAFFIC aircraftmovementswasakeyfocusin2013. available parking, carrentalsandconcessions. To passengergrowth, facilitate increasingthefrequency and diversityof from landingandterminalfees. Indirectly, passengervolumesalsosupportnon-aeronauticalrevenuesincluding they directlydriverevenuesintheformof drivesaeronauticalrevenues AIF andalsosupportaircraftactivitythat passengers. Passenger volumesaresignificantintheoverallfinancialperformanceofEdmontonas Airports In 2013, numberofsatisfied andretainingagrowing toattracting weshiftedourfocusfromincreasingcapacity AIR SERVICE 2013 Operations times on most routes compared with options currently available to those travelling toand/orfrom Edmonton. tothosetravelling times onmostroutes comparedwithoptionscurrentlyavailable willprovideconvenientaccesstomajormarketsacrossEurope resultinginshortertotalflight This newservice exciting additionin2014withIcelandair introducingyear-round commencinginMarch. toReykjavik service will seean outsideoftheUnitedStates Announced inSeptember2013, destinations tointernational service aswellCentral andSouth acrosstheUnitedStates access andmoreoptionsfortravel America. access toallthreeofthemajorworldairlinespartnerships. As an American hub, DFWwillprovideincreased the airportwithaccesstoOneworldglobalallianceofairlines. hasdirect Regionnow This meanstheCapital toDallas/Fortof carrierswithdailynonstopservice Worth (DFW). The additionof American Airlines alsoprovides Announced inDecember2013, commencing 2014,April theairportwillwelcome American Airlines toitsfamily from capacity Air Canada. andNorthern toSaskatchewan regional capacity Alberta fueledbythelaunchof WestJet Encoreandincreased 2012 drivendirectlybyincreasedfrequenciestokeyhubsincluding Toronto and Vancouver aswellincreased one oftheworld’s largestbusinessandfinancialcentres. Domesticsectorpassenger trafficincreased4.0%over increased globalaccessbothtoandfromEdmontoninadditionproviding theEdmontonregiondirectaccessto toNewLiberty service Airport, NewarkonUnited Airlines inthespringof2013. This majorglobalhubprovides andUSflights. improved terminalspaceforinternational inthissectorwashighlightedbythelaunchof Growth increased 7.7%over2012. builtduringtheexpansionwhichaddedand This wasdrivendirectlybycapacity Traffic acrossallpassengersectorsincreasedin2013butwasprimarilydrivenbytransbordertraffic, which 2013, a6.4%increaseover2012. 700,000 passengers, a28%increase, yearoveryear. Intotal, nearly7.7millionpassengersin theairportserved vision: Moreflightstomoreplaces. morethan terminalsincreasedtoserve aviation atbusiness Passenger traffic by over306,000(4.6%)2012. theregion’sThis increasecontinuestoindicate supportforEdmonton Airports’ at theairport.2013 wasanotherrecord-settingyearforpassengertraffic Commercialpassengertrafficincreased International Transborder Domestic Grand Total Commercial Total Aviation General/Business 1,003,938 4,726,473 6,090,120 6,090,120 359,709 2010 N/A 1,085,466 4,814,157 6,855,477 6,277,137 377,514 578,340 2011 Change N/A N/A 8.1 1.9 4.9 3.1 % 1,173,882 5,109,637 7,235,861 6,676,445 392,926 559,416 2012 Change (3.3) 8.1 6.1 4.1 5.5 6.4 % 1,264,796 5,312,226 7,697,995 6,983,229 406,207 714,766 2013 Change

27.8 7.7 4.0 3.4 6.4 4.6 % 53 % (7.5) 10.2

(24.4)

Change 2013 OPERATIONS 2013 2012* 51,377 42,213 142,269 2013 55,527 55,863 156,738 AIRPORT FEES AIRPORT with the Airports is focused on increasing non-aeronautical revenue sources and controlling expenses, Edmonton terminal An increase of 3.0% over 2012 for landing, goal of providing airlines with the lowest airport cost. possible of offsettingand bridge fees charged to carriers utilizing the airport was implemented in 2013 with the objective inflationary increases in general airport operating expenses and increased expenses associated with a larger airline-related charges 2014, For building and apron footprint following the completion of Expansion 2012. All aircraft activity at Villeneuve Airport is general aviation-related with approximately asVilleneuve 75% of activity classified All aircraft activity at This is the result of the migration of aircraft previously based down years. from 90 % in previous local movements, Villeneuve is relatedto activity atThe majority of local movement Villeneuve. at Edmonton City Centre relocating to flight training. for approximately passengers in 2013. 700,000 general/business EDMONTON CITY CENTRE AND VILLENEUVE AIRPORTS by 15.9% in 2013Villeneuve decreased Airport and Combined aircraft movements at Edmonton City Centre The majority Airport at the end of November. Centre of Edmonton City largely as a result of the permanent closure were in the general aviationAirport categoryof movements at Edmonton City Centre and related to a variety government activity, corporate aviation, non-scheduled commercial activity (charters), including of activities, Medevac operations have recreational and medevac. activity personal business flying, flight training, surveying, state-of-the-artAmbulance have a modern, Air ServicesAlberta Health and STARS been relocated to EIA where Alberta and northern Canada. facility to handle medevac activity from across The airport remains one of the lowest-cost airports in Canada in terms were increased by approximately 3%. of aircraft-related charges. EDMONTON INTERNATIONAL AIRPORT EDMONTON INTERNATIONAL Aircraft activity generates Aircraft activity at movements. airport increased by 10.2% over 2012 to 156,000 the generateslanding fee revenues and the main terminal building at terminal revenues for aircraft using the airport. Commercial passenger and cargo flights make up approximately 65% of all activity at the airport while General Airports’ control zone) accountAviation (those that and local movements don’t leave Edmonton and Business This Aviation over 2012. activities increased by 28.8% General and Business for the remainder of the activity. growth was driven primarily by the migration of aircraft from Edmonton City Centre as well as continued growth in activity related to fly-in/fly-out energy Passenger and mining projects accounted northern resource projects. AIRCRAFT MOVEMENTS Airport In total, the airport now the service offers 60 non-stop destinations to over In total, the best air service and continues to boast history. in the Capital Region’s Air Transat and Sunwing both added significant capacity to their winter charter schedules, including the including capacity added significant both and Sunwing charter schedules, to their winter Transat Air new destination. Grand Bahama as a of Freeport, introduction Edmonton International Airport Villeneuve City Centre Annual Report (TP 577) Aircraft Movement Statistics *Restated to reflect Statistics Canada 54 CARGO minimal increasesinnetborrowing. Funds fromtheincreasein Edmonton AIF willallow Airports tofunditsnear-term program with capital projects.of fundingthesecapital bythe Revenuegenerated topassengervolumes. AIF isdirectlyrelated receive governmentfundingforairportexpansionorimprovements. The means AIF isthereforetheprimary onorafterJuly1,for travel 2014. The EdmontonInternational Airport andotherCanadianairportsdonot The Airport ImprovementFee (AIF)willbeincreasedin2014to$30, a$5increasefromthecurrentrate, 2013 OPERATIONS opportunities in the Capital Region. opportunities intheCapital presentfreightandcargo playersthat from thiseventwerefavourable. tothekeyindustry Itdrewattention of theindustriesdriving Alberta’s economicgrowth, including afly-overtouroftheoilsands. Overallimpressions from thecargo, togetherinEdmontonandprovidedthemwithafirst-handview shippingandlogisticsindustry Freightpartnership withtheCanadianInternational Forwarders Association. This eventbroughtover250leaders In September, Edmonton Airports co-hostedtheRoads, Cargo Conferencein RailsandRunwaysNational theairport. at required forcontinuedfreightgrowth announcing anewlightindustrialdevelopment. These developmentswillprovidetheinfrastructureandfacilities commencing constructionofa30,000-square-footfreightforwardingbuildingandPanattoni Developments in2012.in Canadawith28%growth Othersignificantadditionsin2013included RunwayDevelopments freightforwardingcompanies in freightforwardingandprojectlogisticsisoneofthefastest-growing Freight LogisticsalsoaddedtheirpresencetotheCargo in2013.Village specializes company This locallyowned theairportandup-gaugedaircrafttomeetpeakseasondemand.than tripledtheirfootprintat AOG International fortheairport’s2013 wasayearofcontinuedgrowth Cargo Village. DHLmovedintoanewfacilitywhichmore airport speaktothestrengthof theforefrontofbusinessinvestment. Alberta economyandplaceEdmontonat ofonly1.4%in2013andtheNorth cargo growth American marketdeclined by0.4%. at the figures The growth by 15.5%. theInternational consideringthat This istremendousgrowth Air Transport reportedglobal Association operations, including bellyfreightonpassengeraircraft, grew grewby8.3%whilevolumesoncharteroperations animpressive8.3%increaseintotalcargovolumesover2012volumes.The airportsaw Scheduledcargo Total Charter Scheduled Cargo Tonnage 35,448,921 35,336,277 112,644 2010 37,263,051 37,080,515 182,536 2011 Change 62.0 5.1 4.9 % 37,882,402 37,744,006 138,396 2012 Change (24.2) 1.7 1.8 % 41,032,917 40,873,053 159,864 2013

Change

15.5 8.3 8.3 % 55

% % 3.4% 5.2% 7.2% 9.4% 2.0% 7.3% 7.3% -3.7% 10.9% 14.2% 15.3% 92.4% 10.3% 164.0% Change Change $ $ 78 728 146 9,708 2,754 7,845 5,822 3,682 5,014 2,814 -1.8% 12,462 12,462 (10,913) Change Change $ $ 89 2012 2012 7,785 3,877 47.9% 81,667 55,312 38,162 71,111 48,562 38,958 88,715 170,382 (11,807) 170,382 $ $ 235 2013 2013 8,513 3,955 46.2% 84,421 63,157 43,984 74,793 53,576 41,772 98,423 182,844 (22,720) 182,844 REVENUE (in thousands) EBITDA EBITDA margin % Depreciation and amortization Interest expense Net loss Airport improvement fee Concessions and parking Airside and general terminal and security Police Real estate leases Other revenue The table above illustrates that revenue generated by Edmonton Airports was sufficient to cover operatingThe table above illustrates and thatgenerated revenue by Edmonton Consistent with many infrastructure developments, which are the cash expenses of operations. interest expenses, Airports’ revenue was not sufficient to cover the non-cash expense of depreciation and amortizationEdmonton utilizing the increased capacity. and will not be for several years as focus shifts to In 2013, we experienced a net loss of $22.7 million, which was an increase of 92.4% over the prior year. The net which was an increase of 92.4% over the prior year. we experienced a net loss of $22.7 million, In 2013, investment during the expansion to increase our capacityloss was a result of higher costs from our significant depreciation and amortization expense andThese costs included for growth and improve passenger experience. interest expense. NET OPERATING RESULTS NET OPERATING (in thousands) 2013 Financial Performance2013 Financial its transformational that expansion our capacity has increased Airports concluded for growth Edmonton In 2013, The following from creating and financial resources we shifted our human and as a result capacity to utilizing it. is an explanation operating of the impact on results. Revenue Expenses 56 at Edmonton Airports. at overthelastseveralyearsandresultingincreaseintenants return onourinvestmentinlandservicing revenueswere$4.0million(2.0%)higherthan2012.During 2013realestate This increaserepresents ofparkingfeeincreasesimplementedinSeptember2012. was thefull-yearrealization ourjetSetlot.network promotionofouronlineparkingbookingsat Also contributingtoincreasedparkingrevenue clientele, generalandbusinessaviation geared towards andanincreasedsocial onlinemarketingstrategies year. Parking revenueincreasedduringtheyearasaresultofpassengeractivity, newparkingproducts forafullyear,Expansion 2012wereoperational whichresultedinanincreaseconcessionrevenues, yearover $5.0 million(10.3%)higherthanin2012. During2013theshoppinganddiningoutletsopenedaspartof andrealestate.ground transportation Revenuesfromconcessionsandparkingtotaled$53.6millionin2013, Edmonton suchasparking,Airports alsoearnsrevenuefromnon-aeronauticalcommercialoperations concessions, NON-AERONAUTICAL REVENUE forpoliceandsecurityfees. totheagreement This increaseisaresultofincreasedcostsrelated During 2013, policeandsecurityfeerevenuewas$8.5million, anincreaseof$0.7million(9.4%)over2012. Edmonton Airports recoverssomepoliceandsecurityexpensesthroughaperpassengerchargetoairlines. activity, sector, particularly inthebusinessaviation aswellanincreaseinlandingandterminalfeesof 3.0%. an increaseof$2.8million(7.2%)from2012. The increaseinrevenueismadeupofbothincreasedaircraft Airside andgeneralterminalrevenue(AGT)isderivedfromairlineactivity. AGT revenuewas$41.8million, theairportin2013. result ofthe4.5%increaseinnumberdepartingpassengersat AIF revenuewas$74.8million, anincreaseof$3.7million(5.2%)over2012. The increasein AIF revenuewasthe principal onthebondsanddebenturesissuedforEdmonton Airports’ redevelopmentandexpansion. During2013, The Airport ImprovementFee sourceoffundingEdmonton (AIF)istheprimary Airports usestopayinterestand improvement fees, airsideandgeneralterminalpolicesecurity. of4.6%,mainly bypassengergrowth yearoveryear, whichisthemaindriverofrevenues derivedfromairport We hadrecordannualrevenueof$182.8millionwhichwasanincrease7.3%overtheprioryeardriven AERONAUTICAL REVENUE 2013 FINANCIALPERFORMANCE

57 % %

6.5% 5.0% 5.9% 7.7% 4.9%

-2.6% -1.5% 13.4% 14.2% 15.3% 13.6% 17.8% 10.3% 15.3% -63.5% Change Change $ $ 26 437 218 706 (259) 7,845 5,822 3,773 4,175 1,436 2,187 2,187 3,868 5,822 24,412 Change Change 2013 FINANCIAL PERFORMANCE FINANCIAL 2013 $ $ 2012 2012 6,711 4,333 (1,018) (6,095) 38,162 27,667 23,482 13,944 11,960 16,851 45,275 55,312 28,424 38,162 181,571 $ $ (992) 2013 2013 7,148 4,551 (2,227) 43,984 31,440 27,657 15,380 12,666 16,592 47,203 63,157 30,611 43,984 205,983 Airport improvement fee collection costs Airport improvement fee collection Police and security Police Edmonton Airports’ interest costs represent interest on the outstanding balances of the revenue bond (Series A (Series Airports’ interest costs represent interest on the outstanding balances of the revenue bond Edmonton Finance Alberta Capital Bond) issued in October 2000 and the fixed rate debentures (Series C Bond) issued by the million as compared to $38.2 million During 2013 interest expense increased by 15.3% to $44.0 Authority (ACFA). The increase was primarily attributable due to a full year of to an increase in Series C Bond interest in 2012. interest costs on 2012 draws as well as increased interest from the $20.0 million draw in the first quarter of 2013. as a result of year over year, The remainder of the increase was attributed to the reduction in capitalized interest, the completion of major projects to which interest was being capitalized. (in thousands) Interest Salaries and employee benefits administration supplies and maintenance, Service, Canada lease rent insurance and property taxes Utilities, depreciationthe largest contribution in 2013 as $3.0 million of it was available was recorded for the 9 months for use in 2013. NET INTEREST EXPENSE A Bond interest Series Interest income and other interest Capitalized interest DEPRECIATION AND AMORTIZATION DEPRECIATION increased amortization for 2013 by $7.8 million costs Expansion 2012 combined with other capital investments, the full-year impact of additional capitalThis increase reflects assets that became to $63.2 million (14.2%). available for use in 2012 as well as those that became available office tower for use with the central making During 2013 operating expenses increased by 13.4% to $206.0 million as compared to $181.6 million in 2012. During 2013 operating as compared to $181.6 million in 2012. expenses increased by 13.4% to $206.0 million during the expansion to increase by an increase in costs from our significant investment This was primarily driven our capacity for growth and improve passenger experience. OPERATING EXPENSES OPERATING (in thousands) Depreciationand amortization Series C Bond interest 58 salaries Capitalized Defined contributionplan Long-term benefitplan executiveretirementplan Supplementary Defined benefitpensionplan Salaries andbenefits (in thousands) SALARIES ANDEMPLOYEE BENEFITS 2013 FINANCIALPERFORMANCE written offin2012. marketing initiatives. In2013baddebtsintheamountof$0.5millionwererecovered frompreviousamounts expenses andsuppliesrequiredfora largerassetbase, to expensesrelated andincreasedadministrative to $23.5millionin2012. costs, The increasewasdrivenbyincreased contractedservices increasedoperating Services, maintenance, expensesincreased17.8%to$27.7millionascompared supplies andadministration expense Bad debt(recovery) Administration Maintenance andsupplies Service (in thousands) SERVICE, MAINTENANCE, SUPPLIESAND ADMINISTRATION expansion.on capital Additionally, salarieswasreducedasthereareductioninhumanresourcesfocused the amountofcapitalized the amendment. As aresult, inaccordancewith oftheobligation additionalcostswererecordedtoreflectthere-calculation During 2013, Edmonton ofthelong-termbenefitplaneffectiveMarch31,Airports committedtotermination 2014. andinterestincomeontheplanassets.on thedefinedbenefitobligation andinterestexpense 2013currentservice usedtocalculate discountrate costs werehigherduetoalower match expectedpaymentsfromtheplan. that quality fixedincomeinvestmentswithcashflows During2013 rate,Defined benefitpensionplanexpenseisdrivenbythediscount rate basedonhigh- whichisaninterest salaries.capitalized underthecollectivebargainingagreement, for employees anincreaseinpensioncostsandadecrease in 2012. The increasewasdrivenbyfull-yearstaffingofpositionsfilledpartwaythrough2012, a3%increase benefitsincreasedby13.6%to$31.4millionascompared$27.7 During 2013salariesandemployee 31,440 32,657 26,930 27,657 28,162 12,360 (1,217) 1,225 3,993 6,347 9,455 2013 2013 (505) 429 80 $ $ 27,667 29,718 25,404 23,482 22,972 (2,051) 3,440 9,806 5,172 7,994 2012 2012 510 397 428 49 $ $ Change Change (1,015) 3,773 2,939 1,526 4,175 5,190 2,554 1,175 1,461 834 828 553 31 1 $ $ -199.0% Change Change 208.6% -40.7%

63.3% 13.6% 16.1% 17.8% 22.6% 26.0% 22.7% 18.3% 9.9% 0.2% 6.0%

% % 59 $ 0 0 50 750 6,000 8,580 15,380

Rent Payable

% 0% 1% 5% 8% 2013 FINANCIAL PERFORMANCE FINANCIAL 2013 10% 12% Rate OTHER COMPREHENSIVE LOSS Airports experienced a net re-measurement gain on post-employment benefits of $9.9 million in 2013 Edmonton year These re-measurement adjustments are the result of the change, as compared to a $3.1 million loss in 2012. Airports’ actuarial expert to estimate the pension obligation in actuarial assumptions used by Edmonton over year, The gain in 2013 was the net result of a $1.9 million loss from the change in mortality at the end of each period. a $3.3 million return on plan assets and an $11.6 million gain from a $3.3 million experience loss, assumptions, most significantly by the increase in the discount impacted rate to 4.9% in the change in financial assumptions, 2013 from 4.0% in 2012. OTHER ITEMS gains of $0.4 million in 2013 relate and a gain resulting to foreign exchange on the US-dollar bank account Total from disposal of an apron in the third quarter of 2013. AIF IMPROVEMENT FEE COLLECTION COSTS AIF IMPROVEMENT FEE COLLECTION The increase is million as compared to $4.3 million in 2012. AIF collection costs for 2013 increased 5.0% to $4.6 AIF on behalf AIF revenue as it is a 6.0% fee paid to the airlines for collecting the directly driven by the increase in of Airports. Edmonton 2012. The increase is a direct result of an increase in contracted labour costs as negotiatedThe increase is a direct result of an in the contract 2012. terminal. and additional security required for the expanded POLICE AND SECURITY in police and security expenses increased by 6.5% to $7.1 million compared to $6.7 million During 2013, UTILITIES, INSURANCE AND PROPERTY TAXES AND PROPERTY UTILITIES, INSURANCE as compared to $12.0 million in property tax expenses increased 5.9% to $12.7 million insurance and Utilities, driven mainly by the increased consumption from a full year Utility costs (primarily electricity) were higher, 2012. Property tax expenses in 2013 of utilization of the expansion and opening and operation of the central office tower. Insurance premiums were consistent with the previous period. reflecting a higher tax assessment. increased, Based on “Airport Revenues” (in thousands) Revenues” “Airport Based on CANADA LEASE RENT LEASE CANADA at Edmonton “Airport Revenues” of on a progressive scale, on a percentage, Rent expense is based Canada Lease - $171.4 million), $185.4 million (2012 for 2013 were “Airport Revenues” Lease. defined in the Ground as Airports, million in 2012. in comparison to $13.9 rent expense of $15.4 million in a 10.8% increase in which resulted On the first $5 million On the next $5 million On the next $15 million On the next $75 million On the next $150 million On any amount over $250 million

60 » » » » » » » » included: The mostsignificantprojectsinthiscategory to 2014completeprojectsstartedin2013. $38.8 millionwasspentonallprojectstoDecember31, 2013, $4.3million was carriedover andapproximately airsidedevelopments,to serve toenhancingpassengerexperience. parkinglotexpansionsandprojectsrelated experience. This includes terminalleaseholdimprovementsfornewconcessions, andtaxiway expandedapron include expandcapacity, thosethat Projects inthiscategory and/orimprovepassenger newservices create GROWTH the retailoutletdestination. prepare landforcommercialdevelopment, including willbeleasedtoIvanhoéCambridgefor landthat During 2013thehighwaycommercialdevelopmentprojectcontinued. Edmonton Airports continuesto projects startedin2013. on allprojectstoDecember31, 2013, $3.9millionwascarriedoverto2014complete andapproximately available. becomes andcashflow earningsgrow $17.5millionwasspent asoperating which willbeapproved includeforEdmonton buildtherevenuecapacity thosethat Projects inthiscategory Airports, thefundingfor COMMERCIAL REALESTATE Edmonton asfollows. projectsareidentifiedbyairportandbrokenintothreemaincategories Airports’ capital Capital Projects and connectionofCUPfirealarmsto theterminalsystem. Costsin2013totalled$3.2million. Continued workontheCentralUtilities Plant(CUP), including the secondReservoir, LiftStation theSanitary forexistingand futuredevelopmentinthearea. stormcapacity adequate Costsin2013totalled$1.9million. Construction ofastormmainfromtheNorthGADevelopmenttowest side ofRunway02/20toensure stafftooccupythebuildingbeginning administrative 2013.April Costsin2013totalled$11.1million. Completion ofthecombinedofficeandcontroltower, including allowed internalandexternal finishesthat offices andrequiredfirealarmupgradestotheentireterminalbuilding. Costsin2013totalled$9.3million. Completion oftheterminalportionExpansion2012: system, completion ofthebaggage RCMP relocated totalled $2.5million. General terminalfacilityandprovideaccessto futurelotsadjacenttothetaxilane.Aviation Costsin2013 isbuildinganew access toadeveloperthat Extension oftheexistingtaxiwayromeotoeastallow an externaltenant. Costsin2013totalled$1.8million. toenabletheleaseoffourthfloor ofleaseholdimprovementstothecentralofficetower Installation capacity. Costsin2013totalled$2.0million. Edmonton to allow Airports theopportunityandflexibilitytomeetfuturemasterplanrequirementsincrease road airsideservice andtaxiwayconnectionleadingtoacargofacilitypaved Construction ofanapron exceededtheirnormallifeexpectancy.are over43yearsoldandhave Coststotaled$1.7millionin2013. Life cycle systemsreplacementsrequiredintheolderNorth Air Terminal buildingasthemajorityofsystems

61 $

190

(5,716) 80,112 (26,752) (26,562) (21,177) (47,739) Change (101,148) CAPITAL PROJECTS CAPITAL $ (10) 2012 44,050 97,175 75,998 (21,167) (21,177) 103,591 (168,808) $ 180 2013 2,443 38,334 75,998 28,259 (88,696) (47,919) (47,739) Milled and repaved sections of Runway 12/30. Costs in 2013 totalled $1.6 million. Costs in 2013 totalled Milled and repaved of Runway 12/30. sections corrected airside storm water drainage issues and conducted further Runway 02, Reconstructed the end of $5.8 million. Costs in 2013 totalled investigation state into the of taxiways. Our current ratio, defined as current assets over current liabilities, was 0.9 at December 31, 2013 as compared was 0.9 at December 31, over current liabilities, defined as current assets Our current ratio, (in thousands) We completed 2013 with a cash and equivalents balance of $28.3 million, compared to $76.0 million at 2013 with a cash and equivalents balance of $28.3 million, completed We capitalThe decrease in our cash position was a result of $90.3 million spent on expenditures, 2012. December 31, $17.5 million in financing outflows offset by positive cash flow from operations of $38.3 million and financing inflows of $20.0 million. AIF revenues, reserve funds, its bank credit facility and financing from the Alberta Capital Finance Authority (ACFA). (ACFA). Authority Finance Alberta Capital from the its bank credit facility and financing reserve funds, AIF revenues, Airports’ success as it allows of the reinvestment position is imperativeMaintaining a strong financial to Edmonton cash flows in supporting our strategic objectives. an increase was due to a decrease in cash and cash equivalents, The decrease 2012. to 1.3 at December 31, in the current portion of post-employmentin the current portion of long-term debt and an increase benefits as The current ratio in 2013 is more reflective of a a result of termination of the long-term benefit pension plan. we carried significant excess cash Airports as end of 2012 to assist with at the reasonable ratio for Edmonton of Expansion 2012. the payment of expenditures relating to the close Liquidity and Capital Resources Liquidity and authority without share capitalAirports is an is funded through operating and accordingly revenues, Edmonton In line with the objective of improving airport infrastructure, the most significant projects in this category the most significant included: of improving airport infrastructure, In line with the objective » » MAINTENANCE categoryProjects in this infrastructure such as system airport facilities and the maintenance of existing include on $14.7 million was spent and capital fleet replacement restoration. paving programs, replacements, lifecycle and approximately 2013 projects over to 2014 to complete $0.2 million was carried December 31, all projects to started in 2013. Cash flows from operating activities Cash flows activities used in investing Cash flows activities from financing Effect of foreign exchange on cash and cash equivalents Net decrease in cash and cash equivalents of year beginning Cash and cash equivalents, end of year Cash and cash equivalents, 62 rate debenture with semi-annual installments was drawn from debenturewithsemi-annualinstallmentswasdrawn rate ACFA tofundinvestingcashflows. to 2012andthereforeareducedrequirementforfinancing. Duringthefirstquarterof2013, a$20.0millionfixed $103.6 millionintheprioryear. The decreasewasaresultofdecreasedinvestingactivitiesin2013ascompared For theyearendedDecember31, 2013,to fromfinancingactivitiestotaled$2.4millioncompared cashflows FINANCING CASHFLOWS andmaintainingexistingstructures. toutilizingcapacity expenditures asourfocusshiftedfrombuildingcapacity $168.8 millionintheprioryear. The significantyear-over-year decreaseismainlydueto thedecreaseincapital For theyearendedDecember31, 2013, usedininvestingactivitiestotaled$88.7millioncomparedto cashflows INVESTING CASHFLOWS assets.activities wereusedtorepaylong-termdebtandinvestinrevenue-generating benefitpaymentsandinterestpaid.of anincreaseinrequiredpost-employment fromoperating Cashinflows $38.3 million, comparedto$44.1millionintheprioryear. This year-over-year decreasewasmainlytheresult For theyearendedDecember31, 2013, activitiesdecreasedby13.0%to fromoperating ourcashflows make newinvestments. Edmonton torepayloans, sufficientcashflows capability and Airports hasgenerated maintainoperating oftheextenttowhich activitiestobeakeyindicator We arisingfromoperating considerthecashflows ofprofitorloss.the determination Therefore, thisincludes from cashflows AIFrevenueandinterestexpense. enterinto principal revenue-producingactivitiesandgenerallyresultfromtransactionsothereventsthat Edmonton areprimarilyderivedfromour activitiesasthosethat fromoperating Airports definescashflows OPERATING CASHFLOWS LIQUIDITY AND CAPITAL RESOURCES four-fiscal-quarter basis. fiscal-quarter basis. At December31, 2013, thanzeroonarolling weregreater theICRwas1.56andcashflows fiscalquarteronarollingfour-at theendofany thanzero greater (ICR) ofnotlessthan1.25:1andnetcash flows Pursuant tothetermsofEdmonton Airports creditfacilitywith ACFA, Ratio wemustmaintainanInterestCoverage ACFA FINANCING and 2.94:1, respectively. ofnotlessthan1.25:1. Ratio Coverage Gross DebtService At December31, 2013, were1.35:1 ratios onarolling12-monthbasisof1.00:1and Ratio We Coverage arerequiredtomaintainaDebtService $16.9) hasbeensetasidefortheFund. - and MaintenanceContingency bya$40milliontermrevolvingloanofwhich $18.7(2012 Fundissatisfied Fund. Reserve deposits of$32,518(2012-$32,158)existasarequirementtheDebtService The Operating andmaintenance expenses.equal toonequarterofourannualoperation At December31, 2013, restricted andMaintenanceContingency costsandanOperating Fund Fund equaltoonehalfofourannualdebtservice Pursuant tothetermsofEdmonton Airports revenuebond, Reserve wearerequiredtomaintainaDebtService REVENUE BOND Debt Covenants

63

DEBT COVENANTS DEBT A (High) A Stable A1 Stable 2012 Rating A (High) A1 Stable A positive 2013 Rating Date September 2013 April 2013 November 2012 The following section highlights some of the key strategic risks identified by management that could affect business outcomes over the short to medium term. Economic growth plays a major role in Edmonton Airports’ ability to meet and achieve its business objectives. Economic growth plays a major role in Edmonton The Alberta and Edmonton economies continue to drive the Canadian economy with the provincial economy The growth Strong is projected intoexpected to advance by 3.9% in 2014 following growth of around 3.3% in 2013. Growth driven by investment continues to be with the provincial economy set to expand by another 3.5%. 2015, Since the with approximately underway. $200 billion in projects planned or currently in oil sands mega projects, employment and retail sales economic, Edmonton Region serves as a staging ground for much of this investment, unemploymentThe provincial rate is anticipated to continue to drop towards 4% over thegrowth is anticipated. the US and around next two years and firms will have to continue to bring labour in from other parts of Canada, workers travelThese bring their families to home frequently and/or the world to meet their labour demands. making them a stable source of passenger demand. Alberta to visit, The global economy is starting to show signs of stronger growth with advanced economies beginning to grow at The International Monetary Fund (IMF) is projecting global economic growth of 3.75% in 2014, a quicker pace. 2015 is expected to be even stronger with globalan improvement from the estimated 3% rate of growth in 2013. activity drives the increased movement of people and goods. Increased global economic growth reaching 4%. Boeing is projecting average annual growth volumes through 2032 of 5% for both global passenger and cargo traffic growth Passenger based on an average GDP growth rate IMF forecast. that is below that near-term of the andAsia-Pacific followed by which is growing by 6.9% annually, America, is anticipated to be highest in Latin services along with existing to Worth, new non-stop service to Dallas-Fort The airport’s the Middle East at 6.3%. Newark and Houston provide Edmonton with great connectivity to the fastest-growing air service market in Latin Francisco provide strong connectivity to Angeles and San Los Seattle, Vancouver, America and frequent flights to the Asia-Pacific market. Outlook our focus from increasing capacityIn 2013 we began to shift to attracting and retaining a growing of number million passengers and record revenue We achieved record passenger traffic of 7.0 of satisfied passengers. pursuing opportunities to grow to achieving financial sustainability by remain committed ourWe $182.8 million. growth to ensure passenger continues so thatwill revenue “filling the building” and non-aeronautical revenue all costs of operations. become sufficient to cover Rating Agency CAPITAL FINANCING CAPITAL Ratings remain consistent The followingAirports. is a summary of the most recent ratings issued for Edmonton A rating. Airports’ to have continues outlook on Edmonton a positive Poor’s year and Standard & with the previous S & P Moody’s DBRS 64 Interest coverage ratio Interest coverage ratio coverage Debt service Debt/enplaned passenger($) expenditures Capital Net income/(loss) EBITDA margin Revenue Passengers (in thousands) Our outlookto2020: OUTLOOK for airlines. andaffordablefuel inthepriceofoilrepresentsoptimalbalance betweeneconomicgrowth and stablegrowth globaleconomicactivityanddecreases inairlineprofitability.prices leadtolower asawhole, For theindustry slow short-term positiveimpactonairportactivity. This positiveimpact, however, isshort-lived, asthehigherenergy Sharp pricespikesdrivenbyfactorsoutsideofsupplyanddemand, 2008, aswasseeninlate a tendtohave $70/barrel,oil approaches activityinthe withnewprojectsoftenbeingputonhold. Alberta oilsandstendstoslow higher ticketpricesand/orfuelsurcharges. Conversely, pricesaregoodforairlines, energy lower butasthepriceof arepartiallyoffsetbyincreasedairline costs(fuelistheirlargestexpense),benefits ofthisgrowth whichresultin levels.average exceeds and theairportseebenefitsofastronglocaleconomypassenger growth The Traditionally, andstablepace, aslow pricesincreaseat whenenergy drivenbyworldeconomicgrowth, theregion oil sands. impactsonourbusinessoutcomes. bothpositiveandnegative pricesmayhave Changesinenergy Edmonton Airports andtheEdmontonregionareclosely tiedtothe sectoranddevelopmentofthe Alberta energy ENERGY/OIL PRICES forecast financialreturns. development. marketwouldslow commercial realestate than The resultwouldbereducedrevenuesand lower would likelyresultinEdmonton Airports’ fallingshortoftheseforecasts. Additionally, weakeninginthelocal any Plan.Strategic thanforecasteconomicgrowth, Externaleventssuchaslower warsoramajorterroristattack outlinedintheorganization’s strategies ofgrowth assumptionsarebasedonasuccessfulimplementation growth passengers in2020thanthebaseforecastproducedby Transport Canada. Edmonton Airports’ currentpassenger our traditional business model. see if we followed 1.1 million more Our seven-year forecast calls for approximately could beseenasaggressive, thanwewould traditionallyexpectto higherpassengergrowth astheyanticipate surrounding bothpassengervolumesandcommercialrealestate. assumptions Ourseven-yearpassengergrowth Edmonton assumptions dependentongrowth andbusinessobjectiveoutcomesareheavily Airports’ corporate GROWTH ASSUMPTIONS Strategic Risks $204,010 ($23,314) $62,500 46.6% 7,357 $262 2014 1.58 1.43 $224,799 ($11,587) $87,288 50.4% 7,666 $259 2015 1.91 1.66 $238,435 ($12,756) $67,463 48.8% 7,973 $244 2016 1.94 1.66 $255,213 $57,082 ($7,104) 50.2% 8,403 $230 2017 2.34 1.79 $271,870 $56,681 $3,566 52.2% 8,901 $210 2018 2.65 1.84 $287,634 $56,835 $20,831 56.1% 9,435 $191 2019 3.24 2.00 $305,177 $46,693 $30,631 10,000 57.0% $173 2020 3.57 2.15 65 STRATEGIC RISKS STRATEGIC This economic activity drives charter activity to the north through the 1 Ensuring airport long-term growth and development objectives are aligned with those of our municipal partners, growthEnsuring airport long-term with those of our municipal partners, and development objectives are aligned proposed annexation lands and adjacent areas of airport of the City of Edmonton’s particularly in the context support and cooperation with local developers to build land use on airport for non-aeronautical Working growingproperty in the interest of air service prosperity in the region. and driving economic Developing a third runway that is operationally optimal for EIA and addresses social, economic and third runway thatDeveloping a is operationally social, for EIA and addresses optimal environmental considerations

1 Government of Alberta, http://oilsands.alberta.ca/economicinvestment.html Alberta, 1 Government of BUSINESS AND STRATEGIC PLANS BUSINESS AND STRATEGIC Airports 2013 Business Plan and 2014 – 2020 Strategic Plan are availableThe Executive Summary of Edmonton at www.flyeia.com. Accountability and operational conduct reporting, Airports’ public accountability requirements with respect to planning, Edmonton lease and associatedeffectiveness are documented the airport ground agreements with the Government of the Regional Airports Authorities Act including (Alberta). Canada and under the relevant provincial legislation, These agreements and incorporating legislation set out specific requirements for matters such as business ethics, in the In addition to information included periodic performance reviews and disclosure. audit, conflict of interest, the following items require disclosure. Analysis above, 2013 Management Discussion and BUSINESS AVIATION This strong growthThe airport has experienced in the business aviation sector over the last several years. This activity is driven by diamonds, growth by resource prospecting exploration is largely driven extraction. and capital investment in the oil sands is estimated example, For precious metals and energy (oil and gas reserves). to add up to $207 billion over 2013-2022. » » COMMUNITY Air service connects the haveAirports on local communities. a significant impact of Edmonton The activities needs to remainAirports Edmonton trade and tourism. jobs, growth, world and supports economic region with the its neighbours. and supported by, actively engaged to ensure its growth with community plans are aligned with, engagementOur community will focus on: priorities » TALENT GAP TALENT business viewpoint represents The shift towards demand-based passenger marketing and a passenger-centred In some cases this shift may require new skills and Airports’ business culture. a new development in Edmonton It is critical to ensure that are developing and acquiring the appropriate we skill sets to meet thisbest practices. are doing this through formal workforce planningWe strategic focus and that our organization is aligned correctly. are developing our current leaders and identifyingWe gaps. to identify gaps and implement strategies to close trades and technical skills are being upgraded Similarly, future leaders who will ensure we continue to succeed. mission-critical talent not readily Specialized skills and through apprenticeships and effective knowledge transfer. These deliberate talent management activities will help ensure we available in the short term will be acquired. have the right people focusing their efforts in alignment with the strategy. Resource extraction is driven by commodity prices, and if prices do not remain strong, we could experience a and if prices do not remain strong, Resource extraction is driven by commodity prices, negative impact on investment and related air charter activity. Airport’s Fixed Base Operators. It is anticipated that this activity will grow Operators. Base as investment in the resource extraction Fixed Airport’s industries increases. 66 competitive tenderingprocess. 1992 dollars)that, forthereasonsoutlinedincorrespondingtable, onthebasisofa public werenotawarded basis ofapubliccompetitivetenderingprocess. We enteredintotwocontractsinexcessof$126,869($75,000 amount, andcircumstancesofthecontract, andnature thecontract onthe andthereasonsfornotawarding onthebasisofapubliccompetitivetenderingprocess.were notawarded Suchreportingshallidentifytheparties, wereenteredintoduringtheyearand report onallcontractsinexcessof$126,869($75,0001992dollars)that Edmonton Airports, inaccordancewiththeairportgroundleaseGovernmentofCanada, isrequiredto PUBLIC COMPETITIVETENDERING (Alberta). including theRegionalAirportsAuthoritiesAct documented intheairportgroundleasewithGovernmentofCanadaaswellprovinciallegislation, Edmonton Airports confirmsitscompliance, respects, inallmaterial withthepublicaccountabilityrequirements policy.that (Alberta), Edmonton ConflictofInterestappropriate PolicyAirports confirmsithasan andisincompliancewith withtheGovernmentofCanadaandRegionalAirportAuthoritiesAct In accordancewiththeleaseagreement CONFLICT OFINTEREST ACCOUNTABILITY ARINC IBM Supplier (BASED ON2013EDMONTONCPIINDEX) 2013 SOLESOURCECONTRACTSOVER$126,869 (Lifecycle ReplacementProgram) andsoftwareforCUTESystem Servers Program readers forCUTELifecycle Replacement Purchase ofCUSSkiosksandpassport Project

$250,000 $750,000 Value program with aproductorequipmentstandardization provider/Incompliance service Proprietary program with aproductorequipmentstandardization provider/Incompliance service Proprietary Code 67 SUSTAINABILITY SUSTAINABILITY 68 The developmentofsustainabilityatEdmontonAirports SUSTAINABILITY REPORT in theSpringof2014. An assessmentofambientairqualityunderway, settobecompleted Purchasing environmentallysustainableoffice supplies waste diversionin2013over2012. throughout theterminalandofficespace, leadingtoan11%increasein Expanding EIA’s disposalbins waste diversionprogramwithsegregated from airportpropertyisclean andsafefortheenvironmentcommunity. discharged systemtoensure thewater treatment Building thewetlandswater forcarpooling. suchasparkingstalls dedicated discounts andinitiatives through inadoptingsustainable transportation EIA supportsemployees throughadiscountonthetrip-feetaxispaytoEIA.taxi services Additionally, theuseofhybridvehicles and encouraging for scheduled ETS747busservice totheInternational Supporting greentransportation Airport throughthe Committee,Advisory the meetings. Annual PublicMeetingandtown-hall in Quality(ASQ)surveys,Air Service theNoise Committee,Advisory theBusiness suchasthe through engagements Committee,Airline Consultative participation Developing forumstobetterunderstandtheconcernsofourstakeholders who passthroughourairporteachyear. artists andmusicianstoprofiletheirtalentthesevenmillionpassengers andsponsorshipswhileprovidingopportunitiesforlocal through donations experiences andcontributetooveralltraveller more communityinitiatives Ambience Program. Through theseinvestments, beenabletosupport wehave Expanding theCommunityInvestmentProgramanddeveloping Art and of resourcesinadditiontoimprovedwastediversion. new buildings. Building toLEEDstandardhascontributedmoreefficientuse the expandedterminal)inordertominimizeenvironmentalfootprintof for Expansion2012(LEEDSilvertheCentral Tower andLEEDCertifiedfor andEnvironmentalDesign(LEED)expectations Setting LeadershipinEnergy in supportoftheeconomicprosperityregion. Increasing ournon-aeronauticalrevenuethroughcommercialdevelopment fromEdmontontoover60non-stopdestinations.expansion ofairservice toourvision, dedication Showing moreflightstoplaces, throughthe Initiative SOME EXAMPLESOFCORPORATE COMMITMENTS: sustainable infrastructure, andcommunitypartnerships. airservice bytheinvestmentsmadein has hadanincreasingcommitmenttovalues-drivendecisionsasdemonstrated environmental stewardship, social At Edmonton Airports, allofourassetstoadvanceregion’s wearecommittedtoresponsiblymanaging well-being andeconomic prosperity. Category oftheTripleCategory BottomLinesupported Economic In thelastdecadeEdmonton Airports Environmental Social 69

Social

Environmental Economic Category of the Triple Bottom Line supported Category of the Triple This along with many other factors support the belief that following GRI’s Framework will help Edmonton Airports will help Edmonton Framework This along with many other factors support the belief that following GRI’s to expanding our Sustainability Program using a methodology that is easily communicated and understood by Energy consumption outside of the organization Energy intensity of the organization Our total number of passengers analysed by international and domestic flights, Our total number of passengers analysed by international and domestic flights, as well as origin-and-destination passengers. and transfer amount of cargo Total Energy consumption within the organization our stakeholders. Total number of aircraft movements by day and night, broken down by number of aircraft movements by day and night, Total different types of aircrafts Initiative In 2013, Edmonton Airports integratedAirports into the long-term corporate sustainability objectives strategy Edmonton for In 2013, The future of sustainability at Edmonton Airports at of sustainability The future The GRI report offers a smooth transition from our previous commitment to sustainability. Here is a sample sustainability. transition from our previous commitment to The GRI report offers a smooth expanding our commitment to the Triple Bottom Line. 2014 marks Edmonton Airports’ dedicationto augmenting marks Edmonton 2014 Bottom Line. Triple to the expanding our commitment the corporate-wide its first Sustainability Report. Sustainability Program and the commitment to producing advised by the guidelines of an internationally new Sustainability Report will be implemented reporting EIA’s as well as deployment of dedicatedThe use of a framework, Initiative the Global Reporting (GRI). system, to the success of integrating is paramount into every sustainability aspect of our operationspersonnel, and while bringing will provide direction about howA framework to manage the sustainability program, culture. order and a common language. of six of the many indicators that we have already begun tracking to international standards.

FINANCIAL STATEMENTS 72 73 74 (in thousandsofdollars) December31,As at 2013and2012 STATEMENTS OFFINANCIALPOSITION EDMONTON REGIONALAIRPORTS AUTHORITY Cash andcashequivalents CURRENT ASSETS ASSETS Accounts receivable(note5) Restricted deposits(note6(b)) NON-CURRENT ASSETS Prepaid expensesandother Current portionoflong-termdebt(note6) benefits(note7) Current portionofpost-employment underfinancelease Current portionofobligation andaccruedliabilities(notes8(b),Accounts payable 10) CURRENT LIABILITIES LIABILITIES Intangible assets(note9) Property, plantandequipment(note8) Prepaid expenseandlesseereceivable Net Assets Commitments (note14) Contingencies (note13) Long-term debt(note6) Post-employment benefits(note7) underfinancelease Obligation Tenants’ securitydeposits NON-CURRENT LIABILITIES Deferred revenue Chair Approved bytheBoardofDirectors: See accompanyingnotestofinancialstatements. Chair – Audit Committee 1,094,778 1,010,185 1,007,703 1,094,778 945,730 28,259 18,667 50,812 32,518 56,943 18,688 35,823 87,075 3,886 2,407 3,553 1,477 2013 806 457 22 $ 3 - 1,137,763 1,006,691 1,037,822 1,137,763 944,105 (note 3) 75,998 18,201 97,396 32,158 74,802 17,502 57,235 17,623 99,941 3,197 1,014 1,269 2012 504 27 38 23 $ - 75 $ 89 (23) (595) (618) 2012 6,711 4,333 7,785 3,877 (3,695) 11,960 13,944 23,482 27,667 38,162 55,312 38,958 48,562 71,111 (11,189) (11,807) (15,502) 181,571 170,382 $ 158 261 419 235 2013 7,148 4,551 9,854 8,513 3,955 12,666 15,380 27,657 31,440 43,984 63,157 41,772 53,576 74,793 (23,139) (22,720) (12,866) 205,983 182,844 Police and security Police Airport improvement fee collection costs (note 11) THE UNDERNOTED LOSS BEFORE OTHER ITEMS Gain (loss) on foreign exchange (note 8(e)) plant and equipment Gain (loss) on disposal of property, Utilities, insurance and property taxes Utilities, NET LOSS FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS): TO NET LOSS WILL NOT BE RECLASSIFIED THAT ITEMS Remeasurement gain (loss) on post-employment benefits (note 7) COMPREHENSIVE LOSS FOR THE YEAR See accompanying notes to financial statements. Canada lease rent (notes 1, 14(c)) Canada lease rent (notes 1, Service, maintenance, supplies and administration maintenance, Service, Salaries and employee benefits Interest (note 6(f)) Police and security and Police Real estate leases Other revenue EXPENSES 9(b)) Depreciation and amortization (notes 8(c), Airside and general terminal Concessions and parking REVENUE fee (note 11) Airport improvement (in thousands of dollars) (in thousands As at December 31, 2013 and 2012 2013 and As at 31, December EDMONTON REGIONAL AIRPORTS AUTHORITY AIRPORTS REGIONAL EDMONTON LOSS COMPREHENSIVE OF STATEMENTS 76 (in thousandsofdollars) December31,As at 2013and2012 STATEMENTS OFCHANGESINNETASSETS EDMONTON REGIONALAIRPORTS AUTHORITY NET ASSETS -ENDOF YEAR Total comprehensivelossfortheyear Net lossfortheyear willnotbereclassifiedRemeasurement gain(loss)that tonetloss NET ASSETS -BEGINNINGOF YEAR See accompanyingnotestofinancialstatements. (12,866) (22,720) 87,075 99,941 9,854 2013 $ (11,807) 115,443 (15,502) 99,941 (3,695) 2012 $ 77 $ 23 46 34 (21) (23) (10) 259 595 110 (352) (147) 2012 4,265 4,371 1,148 (6,095) (3,438) (6,069) 55,312 75,998 44,050 97,175 37,014 (11,807) (10,771) (37,565) (16,386) (21,177) 120,000 103,591 (151,670) (168,808) $ 47 (35) (28) 313 208 180 (158) (360) (659) (261) (689) 2013 4,755 5,647 2,291 1,113 2,443 (2,227) (3,343) (7,456) 63,157 28,259 36,997 20,000 75,998 42,871 (22,720) (88,915) (87,359) (43,941) (17,529) (47,739) Depreciation and amortization Amortization of borrowing costs (Gain) loss on foreign exchange (Gain) loss on disposal of property, plant and equipment (Gain) loss on disposal of property, Post-employment benefit expense Post-employment - net costs Finance Accounts receivable Prepaid expenses and other Accounts payable and accrued liabilities Deferred revenue security deposits Tenants’ CASH FLOWS FROM OPERATING ACTIVITIES FROM OPERATING CASH FLOWS year Net loss for the Adjustments for: (in thousands of dollars) (in thousands For the years ended December 31, 2013 and 2012 2013 31, December ended the years For EDMONTON REGIONAL AIRPORTS AUTHORITY AIRPORTS REGIONAL EDMONTON FLOWS CASH OF STATEMENTS plant and equipment (note 8(f)) Purchase of property, See accompanying notes to financial statements. CASH FLOWS FROM INVESTING ACTIVITIES CASH FLOWS FROM INVESTING Lessee receivable Purchase of restricted deposits Purchase of intangible assets plant and equipment Proceeds on disposal of property, and equipment plant Interest paid capitalized to property, ACTIVITIES NET CASH FLOWS USED IN INVESTING YEAR – END OF AND CASH EQUIVALENTS CASH Changes in working capital: benefit contributions Post-employment Interest paid Interest received ACTIVITIES NET CASH FLOWS FROM OPERATING ACTIVITIES CASH FLOWS FROM FINANCING Repayment of finance lease Repayments of long-term debt Proceeds from long-term debt ACTIVITIES NET CASH FLOWS FROM FINANCING Effect of exchange rate on cash and cash equivalents at the end of the year AND CASH EQUIVALENTS NET DECREASE IN CASH Cash and cash equivalents – beginning of year 78 terminals, increasingairsidecapacity, andincreasingcargoaircraftfacilities. Edmonton Airports iscommittedtothecontinuingdevelopment ofthe Airport. This includes continuedredevelopmentofthe byNavCanada,owned ofCanada’s theoperator system, civilairnavigation areexcluded from Airport operations. mandate. These assetswillreverttotheLandlord(Transport oftheCanadaLease. ortermination Canada)upontheexpiration Assets bridges, groundsideassetsincluding parkinglots, toexecute its structuresnecessary maintenancefacilitiesandotherancillary Alberta. The assetsofthe Airport include anair-terminal, airsideassetsincluding tworunways, multipletaxiwaysandaprons, loading The 2,800hectaresoflandintheCounty LeducadjacenttotheCityofinProvince onapproximately Airport operates innote14(c).due totheLandlordarebaseduponprojectedGrossRevenueineachyearandestimated Revenue inexcessof$250.0million. ofGrossRevenueissubjecttoaudit bytheLandlord.The calculation The futureleasepayments between $25.0millionand$100.0million, 10%forGrossRevenuebetween$100.0millionand$250.0million, and12%forGross between $5.0millionand$10.0million, 5%forGrossRevenuebetween$10.0millionand$25.0million, 8%forGrossRevenue ranges: withthefollowing percentages $5.0 million,documents usingescalating 0%forGrossRevenuebelow 1%forGross Revenue the of GrossRevenueat asapercentage Canada LeaseRentiscalculated Airport asdefinedbytheCanadaLeaseandrelated asawhole. industry aviation controloveraeronauticsandassuch,regulatory willsetsafetyandsecuritystandardsforairports, the licenseairportsandregulate andchargestodevelopimprovefacilities.on acommercialbasisandhastheauthoritytosetrates The Landlordretains fully responsibleforthemanagement, the anddevelopmentat operation Airport. Edmonton the Airports isfreetooperate Airport ofthe totheoperation related and theLandlordforallmatters Airport. UnderthetermsofCanadaLease, Edmonton Airports is riskandresponsibilitiesbetweenEdmonton It determinestherent(CanadaLeaseRent)tobepaidandgenerallyallocates Airports betweenEdmonton The CanadaLeaseistheprincipaldocumentgoverningrelationship the Airports andtheLandlordat Airport. orkindexceptthoseforwhichtheLandlordhasgrantedrightsofnon-disturbance. nature encumbrances ofany must alsobefreeandclear Occupancy ofany Agreement, Transfer, (asdefinedintheCanadaLease)orother LeaseholdMortgage return controlofthe Airport totheLandlord. The ofgoodorder,Airport mustbereturnedinastate conditionandrepair. The Airport option torenewtheCanadaLeaseorfurtherextendterm. At theendofrenewalterm, Edmonton to Airports isobligated on July31, 2072. theextensionoftermwasonsameconditions, that The partiesagreed therewasnolongerany exceptthat was dulyreceived. As aresult, expire thetermofCanadaLease has beenextendedforanadditional20yeartermandwillnow On August 13, 2012, theLandlordadvisedEdmonton itsnoticetoexercisetheCanadaLeasetermextensionprovision Airports’ that Edmonton Airports and Edmonton liabilitywithrespecttoclaimsAirports didnotassumeany theLandlordpriortothisdate. against Airports assumedcontrolofthe Airport. All revenueandexpenditure contractsineffecton August 1, 1992, wereassignedto with theLandlordtolease Airport facilitiesforaninitialperiodofsixtyyearsendingin2052. On August 1, 1992, Edmonton (the Airport) toEdmonton Airports. EffectiveJuly31, 1992, Edmonton Airports signedtheGroundLease Agreement (CanadaLease) On 2,April 1992, Edmonton withtheLandlordtotransfercontrolofEdmontonInternational Airports signedanagreement Airport EDMONTON INTERNATIONAL AIRPORT wereauthorizedforissuebytheBoardofDirectorsonMarch27,These financialstatements 2014. Edmonton andareexemptfromfederalprovincialincome tax. operations fromairport-related Airports’ earnings aregenerated T9E 0V3, Alberta, Canada. Edmonton at #1, Airports registered officeandprincipalplaceofbusinessislocated 1000 Airport Road, EdmontonInternational Airport, described asnetassets. promotingitspurposesandnodividendsarepaidoutofthesurpluses. towards applied are Surplusesinthesefinancialstatements the BoardofDirectorshaselectednottoappoint. Inaccordancewiththeprovisionsof Act, allofEdmonton Airports’ surplusesare Leduc, Parkland County, CountyandSturgeonCounty. Strathcona twoDirectorswhich The BoardofDirectorshas therighttoappoint bytheCityofEdmonton,are appointed twobytheGovernmentofCanada(theLandlord) andoneeachbyLeducCounty, theCityof industry.and anexpandedaviation The BoardofDirectorsEdmonton Airports consistsofamaximum15members. SixDirectors service efficient mannerandtoadvanceeconomiccommunitydevelopmentbypromotingimprovedairlinetransportation (the Act) (Alberta) Airports AuthoritiesAct Edmonton Regional Airports Authority (Edmonton onJuly26,Airports) wasincorporated 1990undertheprovisionsofRegional 1 For theyearsendedDecember31, 2013and2012(inthousandsofdollars) NOTES T NATURE OFOPERATIONS for the purposes of managing theairportsforwhichitisresponsible inasafe,for thepurposesofmanaging secureand 79 Cash and cash equivalents of pooled money-market funds with an original term cash and other investments comprised Cash and cash equivalents includes of 90 days or less. substantially all the risks and rewards related as a finance lease when it transfers to the lessee to ownershipA lease is classified as operating leases. All other leases are classified of the leased asset. SIGNIFICANT ACCOUNTING POLICIES Basis of preparation Airports prepares its financial statementsFinancial Reporting Standards (“IFRS”) in compliance with International Edmonton as set out in the Handbook of the Canadian Institute ofAccounting Standards Board (“IASB”) and as issued by the International Airports has consistently applied IFRS throughout these financial statements. Edmonton Accountants (CICA Handbook). Chartered statements The financial The financial statements have been prepared in Canadian dollars under the historical cost convention. unless otherwise noted. and notes are presented in thousands of Canadian dollars It alsoThe preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. The areas Airports’ accounting policies. requires management to exercise its judgment in the process of applying Edmonton or areas where assumptions and estimates are significant to the financial involving a higher degree of judgment or complexity, in note 4. statements are disclosed b) c) Leases 2 These policies have been The principal accounting policies applied preparation in the financial statements of these are set out below. unless otherwise stated. consistently applied to all the years presented, a) CITY CENTRE AIRPORT CITY CENTRE provides that which signed a ground lease agreementAirports with the City of Edmonton, (City Lease) Edmonton 1996, April 1, On of the At the end years ending in 2052. for an initial period of fifty-six Airport facilities lease the City Centre Airports will Edmonton to the Landlord. Airport Airports is obligated control of the City Centre to return Edmonton extended, unless otherwise lease term, Airports signed an amending Edmonton Airport, of City Centre desire for a phased closure facilitate the City of Edmonton’s To the effect of which was to surrender certain 2010, on July 23, Agreement) with City of Edmonton Amending agreement (City Lease and one runway was closed 2010, August 4, On certain terms of the City Lease. and amend 2010, August 4, leased lands effective to the City of Edmonton. certain tenant leases were assigned Airport on a cost-recovery basis until itsAirports operate City Centre thatAgreement required Edmonton Amending The City Lease usedAirports collected fees for aeronautical activity and Edmonton such date by the City of Edmonton. to be determined full closure, Any operating of Edmonton deficits were to be funded by the City Airport. those fees to offset the operating costs of the City Centre all the rights and title to the chattels, Airports retained Edmonton and any operating surplus was to be paid to the City of Edmonton. and equipment. which comprise predominately maintenance vehicles of CityAirports take necessary steps for full closure Edmonton requested that the City Council of Edmonton 2013, On September 18, the result of was operatingAirports the airport on a cost-recovery basis, As Edmonton 2013. Airport effective November 30, Centre Airports. did not have a material position of Edmonton impact on the financial the closure VILLENEUVE AIRPORT chattels and equipment comprising the assets, Airports acquired from the Landlord all lands, Edmonton 2000, On March 30, Airport operates on approximately 579 hectares of land in Sturgeon County and isVilleneuve Airport for a nominal amount. Villeneuve recreational flying and general role is to serve the needs of small commercial, Airport’s Villeneuve a certified general aviation airport. aviation and it is a flight training facility with a flight control systemNAV CANADA. owned and operated by two runways and oversaw the installation of a Airport’s Villeneuve Airports completed the extension of one of Edmonton In 2013, The two projects will help facilitate the acceptance of medevac flights carrying patients precision instrument landing system (ILS). and contributed to airfield development. 80 d) For theyearsendedDecember31, 2013and2012(inthousandsofdollars) NOTES TOTHEFINANCIALSTATEMENTS EDMONTON REGIONALAIRPORTS AUTHORITY useful lives unless it is reasonably certain that Edmonton useful livesunlessitis reasonablycertainthat bytheendofleaseterm. Airports will obtainownership of thefutureeconomic benefitsembodiedintheasset. Leasedassetsareamortized overtheshorterofleasetermandtheir each componentofan itemofproperty, plantandequipment, sincethismostclosely ofconsumption reflectstheexpectedpattern usefullivesof ofcomprehensivelossona straight-linebasisovertheestimated isrecognized inthestatements Depreciation of comprehensivelossduringtheperiodin which theyareincurred. reliably. amountofthereplacedpartisderecognized. The carrying Repairsandmaintenancecostsare chargedtothestatements toEdmonton thefutureeconomic benefitsembodiedwithinthepartwillflow probable that Airportsanditscost canbemeasured The costofreplacingapartanitemproperty, amountoftheitemifitis plantandequipmentisrecognizedinthecarrying ofcomprehensiveloss. statements property, amountofthat disposal withthecarrying plantandequipment, andarerecognizednetwithinotheritemsinthe Gains andlossesondisposalofanitemproperty, plantandequipmentaredeterminedbycomparingtheproceedsfrom (major components)ofproperty, plantandequipment. When partsofanitemproperty, differentusefullives, plantandequipmenthave items theyareaccountedforasseparate duringtheconstructionofasset. interest capitalized for theirintendeduse, and thecostsofdismantlingandremovingitemsrestoringsiteonwhichthey arelocated includes anddirectlabour, thecostofmaterials tobringingtheassets aworkingcondition othercostsdirectlyattributable any Cost includestotheacquisitionofasset. aredirectlyattributable expendituresthat The costofself-constructedassets oftheCanadaLease. ortermination the expiration Noamountsareamortizedlongerthantheleaseterm. not include areleasedfromtheLandlord(note8). thecostoffacilitiesthat These assetswillrevertto Transport Canadaupon impairmentlossesandincludeaccumulated onlytheamountsexpendedbyEdmonton Airports. Property, plantandequipmentdo Property, cost, plantandequipmentaremeasuredat governmentgrants, netofapplicable and depreciation lessaccumulated Property, plantandequipment revenue overtheleaseterm. lessee, stand-alonevalue, anddonothave astenantincentivesandamortizedonastraightlinebasisto thesecostsaretreated expenseovertheusefullifeofcorrespondingasset.recognized throughdepreciation Ifthecostsincurredarespecificto economic valuetothespaceindependentofleaseinplace, toproperty, suchcostsarecapitalized plantandequipment lease, leaseincentivesareprovidedtothelesseeenterintoanoperating In theeventthat whentheleaseincentiveaddsfuture leasesisrecognizedonastraight-linebasisovertheleaseterm.Rental incomefromoperating constant periodicreturnonEdmonton Airports’ netinvestmentinthefinancelease. of Edmonton Airports inthelease. a Leaseincomefromfinanceleasesisrecognizedoverthetermofleaseinordertoreflect at anamountequaltothenetinvestment The amountreceivablefromthelesseeinaccordancewithafinanceleaseisrecognized Edmonton Airports as thelessor: The CanadaLeaseandtheCity Amending leases. Agreement areaccountedforasoperating inwhicheconomicbenefitsfromtheleasedassetareconsumed. ofthetimepattern basisismorerepresentative systematic benefitofincentivesisrecognizedasareductionrentalexpenseonstraight-line basis,The aggregate exceptwhereanother leases, leaseincentivesarereceivedtoenterintooperating In theeventthat suchincentivesarerecognizedasdeferredrevenue. inwhicheconomicbenefitsfromtheleasedassetareconsumed. ofthetimepattern basisismorerepresentative systematic leasepaymentsmadearerecognizedasanexpenseonastraight-linebasisovertheterm,Operating exceptwhereanother ofinterestontheremainingbalanceliability.periodic rate The finance chargesareexpensedaspartof “Interest” expenses. charge andthereductionofoutstandingliability. toeachperiodsoasproduceaconstant The financechargeisallocated position within underfinancelease”.“Obligation apportionedbetweenthefinance Minimumleasepaymentsofafinanceare payments, theinceptionoflease. eachdeterminedat offinancial The correspondingliabilityisrecognizedinthestatements anamountequaltothefairvalueofleased asset,plant andequipmentat oriflower, thepresentvalueof minimumlease at the commencementoftheleasetermasanitemproperty,A leasedassetinaccordancewithafinanceleaseisrecognized Edmonton Airports asthelessee: 81 1.67 - 50.00% 2.50 - 25.00% 2.50 - 20.00% 1.67 - 25.00% 1.67 - 33.33% 5.00 - 33.33% 2.85 - 20.00% 33.33 - 50.00% Over the term of the lease The major categories of property, plant and equipment are amortized at plant and equipment are amortized the following annual rates: The major categories of property, (EXCLUDING LEASED FACILITIES) AND FACILITIES TERMINAL Buildings Roadways systems and lots facilities Parking taxiways and apron surfaces Runway, Other facilities AND MACHINERY EQUIPMENT equipment and maintenance Vehicles Furniture and equipment Computer hardware LEASE OFFICE EQUIPMENT UNDER FINANCE lives and residual values are reviewed at useful each financial year end and adjusted as appropriate. Depreciation methods, Intangible assets Intangible assets are measured at cost less accumulated only the amortization and accumulated impairment losses and include Intangible assets do not include offset by any contributions from government grants. Airports, amounts expended by Edmonton the cost of the facilities thatthe Landlord (note 9). are leased from These assets are capitalized purchased computer software and software licences with finite useful lives. Intangible assets include and amortized on a straight-line basis in the statement of operations at the following annual rates: Purchased software and software licences 33.33 - 50.00% Impairment of financial assets If such Airports assesses whether there is objective evidence that a financial asset is impaired. Edmonton At each reporting date, its financial assets carried Airports recognizes an impairment loss for at amortized cost. Edmonton evidence exists, loan or receivable and the present value of the estimatedThe loss is the difference between the amortized cost of the future The carrying amount of the asset is reduced by this original effective interest rate. the instrument’s discounted using cash flows, amount either directly or indirectly through the use of an allowance account. Impairment losses on financial assets carried subsequent periods if the amount of the lossat amortized cost are reversed in The reversal decreases and the decrease can be related the impairment was recognized. objectively to an event occurring after shall not result in a carrying amount of the financial asset that exceeds what the amortised cost would have been had the in netThe amount of the reversal shall be recognised impairment not been recognised at the date the impairment is reversed. equity instruments are not reversed. losses on available-for-sale Impairment loss. Impairment of non-financial assets are reviewed at plant and equipment and intangible assets reporting date each to determine whether there is any Property, of the purpose For recoverable amount is estimated. then the asset’s If any such indication exists, indication of impairment. assets are grouped at the lowest which there are separately levels for identifiable cash- measuring recoverable amounts, fair value less costs to sell and value in use (being the The recoverable amount is the higher of an asset’s generating units (CGUs). An impairment loss is recognized for the amount present value of the expected future cash flows of the relevant asset or CGUs). carrying amount exceeds its recoverable amount. by which the asset’s Airports evaluates impairment losses for potential reversals when events or circumstances may indicate such Edmonton The increased carrying asset other than goodwill attributable amount of an to a reversal of an consideration is appropriate. impairment loss shall not exceed the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognised for the asset in prior years. e) f) g) 82 k) j) i) h) For theyearsendedDecember31, 2013and2012(inthousandsofdollars) NOTES TOTHEFINANCIALSTATEMENTS EDMONTON REGIONALAIRPORTS AUTHORITY extinguished, discharged, cancelledorexpired. transferred.or whenthefinancialassetandallsubstantial risksandrewardshave is Afinancialliabilityisderecognizedwhenit Financial fromthefinancialasset expire, assetsandliabilitiesarederecognizedwhenthecontractualrights tothecashflows provisions ofthefinancialinstrument. of anotherparty. Financial assetsandliabilities arerecognizedwhenEdmonton Airports becomesapartytothecontractual givesrise toafinancialassetofonepartyandliabilityorequityinstrument contractthat A financialinstrumentisany Financial instruments independent qualifiedactuaries. recognized infulltheperiodwhichtheyariseothercomprehensiveincome. arevaluedannuallyby These obligations DB pensionplan. Actuarial gainsandlossesarisingfromexperienceadjustmentschangesinactuarialassumptionsare asusedforthe usingthesamemethodology The expectedcostsoftheDBSERPareaccruedoverperiodemployment in netlossfortheyear.Past costsarerecognizedimmediately service full intheperiodwhichtheyariseothercomprehensiveincome. Remeasurement gainsandlossesarisingfromexperienceadjustmentschangesin actuarialassumptionsarerecognizedin pensionliability. oftherelated theduration approximating maturity to duration have bondsthat ofhigh-qualitycorporate usinginterestrates futurecashoutflows by discountingtheestimated independent actuariesusingtheunitcreditmethod. isdetermined benefitobligations The presentvalueofthepost-employment theendofreportingperiodlessfairvalueplanassets.at by annually iscalculated The definedbenefitobligation The liabilityrecognizedinthebalancesheetrespectofDBpensionplanispresentvaluedefinedbenefitobligation future paymentisavailable. isnotaDCplan. A DBplanisapensionthat expense whentheyaredue. acashrefundorreductioninthe Prepaidcontributionsarerecognizedasanassettotheextentthat inthecurrentandpriorperiods. service toemployee the benefitsrelating benefit Thecontributionsarerecognizedasemployee topayfurthercontributionsifthefunddoesnotholdsufficientassetsallemployees has nolegalorconstructiveobligations The DCplanisapensionunderwhichEdmonton entity.Airports paysfixedcontributionsintoaseparate Edmonton Airports agreements. underthetermsofcollectivebargaining non-funded long-termbenefitplanforeligibleemployees (DC) pensionplan, isanon-fundedliability, ExecutiveRetirementPlan(SERP) withonememberthat a (DB) Supplementary anda Edmonton plansincluding variouspost-employment Airports operates adefinedbenefit(DB)pensionplan, adefinedcontribution Post-employment benefit »  »  » »  » and ifcollectionisreasonablyassuredasfollows: Edmonton Airports recognizes revenueswhenreceivedorreceivableiftheamounttobecanreasonablyestimated Revenue recognition ofnetlossintheperiodwhichtheyareincurred. in thestatements foruseasintendedbymanagement.time astheassetsareavailable costsarerecognizedasinterestexpense All otherborrowing to theacquisitionorconstructionofqualifyingassetsareaddedtocostthoseassets, costsattributable Borrowing untilsuch costs Borrowing Airside andgeneralterminalparkingrevenuesarerecognizedastheairportfacilitiesutilized. andadjustedtoactualamountsreceived. whennecessary estimated Airport improvementfee(AIF)revenueisrecognizedbaseduponmonthlyremittancesfromaircarriers. Monthlyremittancesare Real estate revenuenetofincentivesisrecognizedonastraight-linebasisoverthetermsrespectiveleases.Real estate Police areprovided. andsecurityrevenueisrecognizedastheseservices minimum rentalsoverthetermsofrespectiveleases. ofreportedconcessionsalesandspecified percentages ofagreed Concession revenueisrecognizedbaseduponthegreater 83

Expected returns on plan assets will no longer be recognized in net loss. Instead, interest income on plan assets, Instead, in net loss. Expected returns on plan assets will no longer be recognized an discussions on risk associated relating with each plan, will be enhanced and will include to benefit plans Disclosures timing and uncertainty of explanation of items recognized in the financial statements and descriptions of the amount, Airports’ future cash flows. Edmonton Past servicePast costs are to be recognized immediately in the Statements of Comprehensive Loss; Plan administration costs are to be expensed as incurred; and calculated using the discount rate used to measure the pension obligation, will be recognized in the Statementscalculated using the discount rate used to measure the pension obligation, of Comprehensive Loss; »  »  IAS 19, ‘Employee benefits’ was revised in June 2011. The significant amendments to IAS 19 that The significant impacted Edmonton ‘Employee benefits’ was revised in June 2011. IAS 19, Airports are as follows: »  »  Financial assets and liabilities at fair value through profit or loss: A financial asset or liability is classified in this classified category is A financial asset or liability if at assets and liabilities profit or loss: fair value through Financial instruments in this category Financial are or repurchasing in the short-term. for the purpose of selling acquired principally statements costs are expensed in the comprehensive loss. of Transaction atrecognized initially and subsequently fair value. changes in fair value are presented in the statementsGains and losses arising from other gains of comprehensive loss within classified atas assets and liabilities or loss are fair value through profit Financial they arise. and losses in the period in which the statements expected to be realized or paid beyond twelve months of current except for the portion position of financial as non-current. which is classified date, are non-derivative Loans and receivables that financial assets with fixed or determinable payments Loans and receivables: restricted Airports’ loans and receivables comprise accounts receivable, The Edmonton are not quoted in an active market. Accounts in current assets due to their short-term nature. which are included deposits and cash and cash equivalents, a discount to reduce the when material, less, atreceivable are initially recognized the amount expected to be received, receivables are measured at method less amortized cost using the effective interest Subsequently, receivables to fair value. a provision for impairment. accounts payable and accrued liabilities, liabilities at amortized cost include Financial at liabilities amortized cost: Financial Trade payables are initially recognized at the amount required to obligations under a finance lease and long-term debt. trade payables are measured at amortized cost using the effective Subsequently, be paid which approximates fair value. and subsequently net of any costs incurred, transaction Long-term debt is recognized initially at fair value, interest method. as current liabilities if payment is due liabilities are classified Financial at amortized cost using the effective interest method. they are presented as non-current liabilities. Otherwise, within twelve months. The amendments are required to be applied retrospectively in accordance with IAS 8 – Accounting Policies, Changes in Accounting Policies, The amendments are required to be applied in accordance with IAS 8 – retrospectively Airports has retrospectively adjusted the assets and liabilities as at Edmonton As such, Accounting Estimates Errors. and expenses and cash flow for the periods ended 2012 and income, 2012 and January 1, December 31, 2013, December 31, 2012. 2013 and December 31, December 31, it was noted that contributions paid in 2012 for 2011 and contributions paid in Through the review of the amendments to IAS 19, reported. 2013 for 2012 were inappropriately in pension assets and therefore reduced the pension liability previously included CHANGES IN ACCOUNTING STANDARDS AND DISCLOSURES CHANGES IN ACCOUNTING STANDARDS New and amended standards adopted in 2013 Airports for the first time for the financial year beginning on or after The following standards have been adopted by Edmonton Airports: 2013 and have a materialJanuary impact on Edmonton 1, i) At initial recognition, all assets and liabilities are classified as followed as instruments on the purpose for which the depending assets and liabilities are classified all At initial recognition, were acquired: were acquired: (i) (ii) (iii) Government grants as reductions to the carrying plant and equipment are recorded value of the assets to All government grants related to property, All government grants related recorded as reductions to the related to revenue and expense are expense which the grant applies. in the period which the grant has met recognition criteria.

i. 3 l) 84 For theyearsendedDecember31, 2013and2012(inthousandsofdollars) NOTES TOTHEFINANCIALSTATEMENTS EDMONTON REGIONALAIRPORTS AUTHORITY ii.

Adjustments to the statements offinancialposition: Adjustments tothestatements ofthechangeinaccountingpolicy oftheimpactarisingfromapplication andtheerrornotedaboveisasfollows: The summary i) ofCashFlows ofStatements Change inpresentation iii) ii) Comprehensive lossafteraccountingchange Increase innetloss(IAS19revised) Decrease inothercomprehensiveincomeresultingfromreclassification adjustment benefits(IAS19revised) Increase inothercomprehensiveincomeforremeasurementofpost-employment Comprehensive lossbeforeaccountingchange Adjustments tocomprehensiveloss: Net lossafteraccountingchange benefits(IAS19revised) Increase insalariesandemployee Net lossbeforeaccountingchange Increase (decrease) to post-employment benefits Increase (decrease)topost-employment Net assetsbeforeaccountingchange Adjustments tonetloss: Net assetsafteraccountingchange Increase (decrease)resultingfromreclassification adjustment statement ofcashflows.statement Therewasnoimpacttotheflowsasoperating, ofcash classification investingorfinancingactivities. comparability toCanadianreportingentities. oftheDecember31, resultedinarestatement The changeinpresentation 2012 includingdirect methodtotheindirectasthisprovidesmorereliableandrelevant information improved Effective September30, 2013Edmonton fromthe ofCashFlows Airports changedthemethodofreportingStatement has beenaddedtonote15asaresultofadoptionthenewstandard. requiredorpermittedbyotherstandardswithinIFRSs. whereitsuseisalready itshouldbeapplied how Additional disclosure which are largely aligned between IFRSsand US GAAP, donotextendtheuseof fair valueaccounting but provide guidanceon fair valueandasinglesourceofmeasurementdisclosure requirementsforuseacrossIFRSs. The requirements, IFRS 13, ‘Fair valuemeasurement’, aimstoimproveconsistency andreducecomplexitybyprovidingaprecisedefinitionof appropriately.Airports hasonlyoneitempresentedinOCIandidentifieditstype basis ofwhethertheyarepotentiallyreclassifiable toprofitorlosssubsequently(reclassification adjustments). Edmonton from theseamendmentsisarequirementforentitiestogroupitemspresentedin ‘other comprehensiveincome’(OCI)onthe Amendment toIAS1, regardingothercomprehensiveincome.‘Financial presentation’ statement The mainchangeresulting December 31, 2012 100,498 99,941 (557) $ -

January 1,January 2012 115,611 115,443 (15,502) (11,807) (15,113) (10,937) 2012 2012 (870) (389) (870) (168) 870 $ $ $ -

85 IFRS 9 Financial Instruments IFRS 9 Financial of financial assets and measurement and recognition classification, addresses the instruments’, ‘Financial IFRS 9, the parts of IAS 39 that It replaces relate 2009 and October 2010. 9 was issued in November IFRS financial liabilities. classified into two 9 requires financial assets to be IFRS and measurement of financial instruments. to the classification The determination is made those measured as at fair value and those measured at amortized cost. measurement categories: business model for managing and its financial instruments on the entity’s depends The classification at initial recognition. retains most of the IAS the standard 39 For financial liabilities, the contractual cash flow characteristics of the instrument. the part of a fair is taken for financial liabilities, in cases where the fair value option The main change is that, requirements. own risk is recorded in other comprehensive income rather credit than the income statement, value change due to an entity’s Airports’ will Edmonton full impact. assess IFRS 9’s Airports’ is yet to Edmonton unless this creates an accounting mismatch. remaining phases of IFRS 9 when completed by the Board. also consider the impact of the Assets IAS 36 Impairment of the the standard has been amended to include 2014, beginning on or after JanuaryEffective for accounting periods 1, additional information measurement when the recoverable amount of impaired about the fair value requirement to disclose is not expected to haveThis amendment a material impact on the financial less cost of disposal. assets is based on fair value Airports. position of Edmonton IFRIC 21 Levies that the obligating the interpretation event giving rise clarifies 2014, Effective for years beginning on or after January 1, in the relevant legislationto a liability to pay a government levy is the activity described that triggers payment of the levy. full impact. Airports has yet to assess IFRIC 21’s Edmonton CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATION UNCERTAINTY AND ESTIMATION CRITICAL ACCOUNTING JUDGEMENTS Critical judgments in applying accounting policies: The followingAirports’ accounting are the critical judgments that management has made in the process of applying Edmonton policies and that have the most significant effect on the amounts recognized in the financial statements. When the signed. to tenants or tenant improvements are often provided when new leases are Payments Lease incentives: such costs are to the space independent of the lease in place, payments or tenant improvements add future economic value and do not have stand-alone value, specific to the lessee, If the costs incurred are plant and equipment. capitalized to property, these costs are treated to revenue over the lease term in accordance as tenant incentives and amortized on a straight line basis Airports uses its judgment in determining whether the lease incentive Edmonton Operating – Incentives. leases with SIC 15, plant and equipment or a lease incentive. should be recorded as property, plant judgments are utilized in determining when an item of property, Critical plant and equipment and intangible assets: Property, This determination impacts the timing of and equipment and intangible assets are available for use as intended by management. cessation of capitalized interest and commencement of depreciation. Accounting standards issued but not yet appliedAccounting standards i) ii) iii) IAS or IFRIC interpretations that are not yet effective that are expected to haveThere are no other IFRSs, a material impact on Edmonton Airports.

In applying Edmonton Airports’ accounting policies, management is required to make judgments, estimates and assumptions management is required to make judgments, Airports’ accounting policies, In applying Edmonton The estimates and associated about the carrying amount of assets and liabilities that are not readily apparent other sources. from Actual results may differ from these estimates. relevant factors. assumptions are based on historical experience and other Revisions to accounting estimates are Accounting estimates basis. and their underlying assumptions are reviewed on an ongoing recognized in the period in which the estimate that is revised if the revision affects only period or in the period of the revision and periods. future periods if the revision affects both current and future i. 4 iii. 86 ii. For theyearsendedDecember31, 2013and2012(inthousandsofdollars) NOTES TOTHEFINANCIALSTATEMENTS EDMONTON REGIONALAIRPORTS AUTHORITY 5 Other receivablesandaccrued grantsreceivable Capital Trade receivables-net Less: fordoubtfulaccounts allowance Trade receivables maintenance, suppliesandadministration” expenses(note15). were foundtobeimpairedandaprovisionforimpairmentofaccountsreceivablehasbeen recordedaccordinglywithin “Service, All ofEdmonton ofimpairment. beenreviewedforindicators Airports’ tradeandotherreceivableshave Certaintradereceivables

make. wouldbeachievedinanarm’s fromtheactualpricesthat mayvary These estimates thereportingdate. lengthtransactionat isnotobservable, data Edmonton applicable marketparticipantswould abouttheassumptionsthat Airports usesits best estimate marketparticipantswoulduseinpricingtheinstrument.as muchpossible, that data consistentwithobservable Where techniques,valuation Edmonton Airports makesmaximumuseofmarketinputs, are, andassumptionsthat andusesestimates purposes, whereactive marketquotesarenotavailable. Detailsoftheassumptionsareprovidedinnote15. the Inapplying Fair valueoflong-termdebt: Edmonton techniquesinmeasuringfairvalueoflong-termdebtfordisclosure Airports usesvaluation to beaccurate. year endedDecember31, werereviewedandfound withthis extrapolation 2013sincetherevisedassumptionsusedinrelation Edmonton of theDBpensionplantobebestmethodestimate andforthe andexpenseasat Airports pensionobligation areincludedfor pensionobligations innote7. Edmonton oftheDecember31,Airports considerstheextrapolation 2012figures the discountrate. amountofpensionobligations. changesintheseassumptionswillimpactthecarrying Keyassumptions Any on anactuarialbasisusinganumberofassumptions. The assumptionsusedindeterminingthenetcostforpensionsinclude Post-employment benefits: aredetermined depends onanumberoffactorsthat Thepresentvalueofthepensionobligations arerevisedaccordingly, calculations reviewed onaregularbasisanddepreciation actuallivesmaydifferfromtheestimates. and pastexperience, physicallifeoftheasset. theanticipated andtakeintoconsideration are While theseusefullifeestimates usefullives. andamortizedovertheirestimated assets aredepreciated Usefullivesaredeterminedbasedoncurrentfacts Property, plantandequipmentintangibleassets: Significantcomponentsofproperty, plantandequipmentintangible within thenextfiscalyear. amountsofassetsandliabilities reporting period, adjustmenttothecarrying asignificantriskofcausingmaterial have that arethekeyassumptionsconcerningfuture, The following theendof uncertaintyat andotherkeysourcesofestimation uncertainty Key sourcesofestimation ACCOUNTS RECEIVABLE 14,175 14,427 18,667 1,485 3,007 2013 252 $

15,400 16,045 18,201 2,551 2012 250 645

$

87

$ $ 2012 2012 4,285 4,671 4,285 4,671 12,831 17,502 944,105 227,577 738,315 965,892 227,577 223,292 218,621

$ $ 2013 2013 3,972 5,271 3,972 5,271 13,417 18,688 945,730 222,907 745,483 968,390 222,907 218,935 213,664 Maturity Date 2030 November 1,

$ Varying Semi-annual Instalment Less current portion Series C BondLess current portion Series C current portion Total costs Less unamortized transaction Bond and restricted deposits A Series A Bond) to fund the requirements of the bond issue (Series Airports completed a $250 million revenue Edmonton In October 2000, an existing credit facility and to complete the Net proceeds of the issue were used to retire project. Redevelopment Terminal Air construction. project’s a Debt ServiceAirports is required to maintain Reserve Fund equal to one-half of Edmonton Pursuant to the terms of this bond, its annual debt service to one quarter of its annual operation fund equal costs and an Operating and Maintenance Contingency (2012 - $32,158) exist as a requirement of Restricted deposits of $32,518 2013, At December 31, and maintenance expenses. The Operating and Maintenance of 1.10% (2012 - 1.05%). These deposits earned annual interest the Debt Service Reserve Fund. undrawn letter of credit or availability of the Series B Bond and revolving credit facility. Fund can be satisfied by cash, Contingency Airports is required to maintain a Debt Service Coverage Ratio Edmonton on when the bonds are outstanding, Throughout the term, All covenants have been met. a rolling 12 months basis of 1.00:1 and a Gross Debt Service coverage Ratio of not less than 1.25:1. Series A Bond Series C Bond A Bond Less current portion Series Interest Rate 7.21% Less unamortized transaction costs Less current portion Series B Bond and revolving credit facility $5 million revolving credit facility with the RoyalAirports maintains Bank of Canada a three-year term, Edmonton In addition, to support operations revolving loan (Series B Bond) for general corporate and a $40 million term purposes and to assist in the in 2012 for another three-year term and no draw The credit facility was renewed downs interim financing of construction projects. 2013 $18,701 (2012 - $16,906) of the term revolving As at December 31, on the credit facility were made in 2013 (2012 - $nil). A Bond. Fund as required under the Series loan had been set aside for the Operating and Maintenance Contingency Airport and relatedPledged as collateral Lease; Canada to the bonds are a first leasehold mortgage on the Edmonton International all book without limitation, Airports including a security interest over all of the present and future personal property of Edmonton and all sources of revenue and assets and any reserve funds; and a floatingdebts, charge over all of the other present and future Airports. property and assets of Edmonton LONG-TERM DEBT LONG-TERM long-term outstanding Total b) c) 6 a) 88 d) For theyearsendedDecember31, 2013and2012(inthousandsofdollars) NOTES TOTHEFINANCIALSTATEMENTS EDMONTON REGIONALAIRPORTS AUTHORITY Fixed Debentures, Rate insemi-annualinstalmentsofprincipalandinterest: SeriesCBonds payable pledgedunderthe The collateral Agreement isthesameasandranksequallywithSeries A andSeriesBBonds. beenmet. All covenantshave fiscalquarteronarollingfourbasis. thanzeroasoftheendany greater not lessthan1.25:1andnetcashflows Throughout theperiod, whendebenturesareoutstanding, Edmonton of Ratio Airports isrequiredtomaintainanInterestCoverage reduces, dollarfordollar, toEdmonton theamountavailable Airports underCreditFacility 1. oftheEdmontonInternational aidsandotherassetsrequiredfortheoperation Airport.navigational The useofCreditFacility 3 projects, thegeneral purposeofwhicharetoconstructorimproveinfrastructureinrespectbuildings, airfield, land, roads, Credit Facility 3, for$100million, loans, bywayoffixedrate expenditure istobeusedsolelyforthepurposesoffundingcapital residual balanceinCreditFacility 2 canbeusedforthesamepurposesasCreditFacility 1. million ofCreditFacility 2untilallthe SeriesBBondisredeemed. OnceSeries A andSeriesBBondsarefullyredeemed, any theSeries cancellation A BondandtheSeriesBBond. The First Amending ofthefinal$50 drawdown Agreement restrictsany Credit Facility 2, for$300million, loans, bywayoffixedrate istobeusedfirstlyforthepurposesofredeemingorpurchasing theEdmontonInternational expenditures at Airport. Credit Facility 1, for$1.0billion, loans, bywayoffixedrate istobeusedsolelyforthepurposesofairportinfrastructure Agreement containsthreeCreditFacilities. theEdmontonInternational infrastructureat the constructionofnon-expansionrelated Airport. The Credit Amended andRestated 2012, theFirst Amending Credit Agreement wasamended(AmendedandRestated Agreement) forEdmonton Airports tofinance Agreement) forEdmonton at theEdmontonInternational expansionprogram Airports tofinancethecapital Airport. OnMarch12, FinanceCapital Authority (ACFA) onDecember 6, 2006. OnMarch19, 2008the Agreement wasamended(First Amending marketsplatform,Under itsexistingcapital Edmonton Airports enteredintoaCredit Agreement (Agreement)withthe Alberta Series CBond 4.37% Interest Rate 4.50% 5.00% 4.68% 4.89% 4.55% 4.67% 4.54% 4.56% 4.00% 4.40% 4.41% Semi-annual Instalment 1,145 1,552 3,068 1,245 1,845 1,439 2,112 1,511 755 395 398 920 $

Maturity Date Maturity December 15, 2026 March 15, 2027 September 17, 2027 June 15, 2027 June 16, 2028 September 17, 2028 December 15, 2039 March 15, 2040 June 15, 2040 October 01, 2040 December 15, 2040 March 15, 2041 435,483 14,854 22,989 32,393 66,170 37,289 28,205 56,422 47,236 66,369 47,867 7,935 7,754 2013 $

448,315 15,688 24,204 33,924 69,191 38,014 28,747 57,503 48,194 67,633 48,747 8,322 8,148 2012 $

89

- $ $ 130 Total 2012 (1,148) (6,095) 64,944 65,199 65,456 66,334 71,274 16,851 28,424 44,257 38,162 70,000 30,000 30,000 40,000 20,000 12,831 50,000 50,000 290,000 738,315 725,484 1,269,099 1,602,306

$ $ 121 2013 (1,113) (2,227) 46,256 45,251 44,171 43,010 41,697 16,592 30,611 46,211 43,984 70,000 30,000 30,000 40,000 20,000 20,000 13,417 50,000 50,000 Interest 413,531 633,916 310,000 745,483 732,066

$ 18,688 19,948 21,285 23,324 29,577 855,568 968,390 Principal March 15, 2042 March 15, 2042 June 15, 2042 September 17, 2042 December 17, 2043 March 15, December 15, 2041 December 15, September 15, 2041 September 15, June 15, 2041 June 15, 512 488 651 324 343 926 1,174 1,041 2014 2015 2016 2017 2018 Thereafter Interest expense (income) Series A Bond interest Series Series C Bond interest Other interest and financing costs Interest income and other Capitalized interest (note 8(d)) 3.41% 3.25% 3.26% 3.24% 3.42% Less current portion are as follows: interest payments required to retire the long-term debt The future annual principal and 3.70% 3.35% Fixed Rate Debentures, Series C Bonds payable Series of interest only: in semi-annual instalments Rate Debentures, Fixed 4.16% f) e) 90 The table below outlineswhereEdmonton The tablebelow amountsandactivityareincludedAirports’ postemployment inthefinancialstatements: 7 For theyearsendedDecember31, 2013and2012(inthousandsofdollars) NOTES TOTHEFINANCIALSTATEMENTS EDMONTON REGIONALAIRPORTS AUTHORITY The defined benefit obligation iscomposedasfollows: The definedbenefitobligation benefits Remeasurement gain(loss)onpost-employment Long-term benefitplan Supplementary executiveretirementplan Supplementary Defined benefitplan REMEASUREMENTS FOR: Long-term benefitplan offinancialposition Liability inthestatements Long-term benefitplan executiveretirementplan Supplementary Defined benefitpensionplan LIABILITIES INCLUDEDINSTATEMENTS OFFINANCIALPOSITION: Liability in the statements offinancialposition Liability inthestatements Present valueofunfundedobligations Deficit offundedplans Fair valueofplanassets Present valueoffundedobligations executiveretirementplan Supplementary Defined benefitpensionplan EXPENSE INCLUDEDINNETLOSSFOR THE YEAR: a) POST-EMPLOYMENT BENEFIT appointed experienced,appointed independent professionalexpertssuchasinvestment managers, actuariesandfundholders. Edmonton ofthepensionplan andhasalso committeetoassistinthemanagement Airports hassetupapensionadministration Responsibility forgovernanceofthepension planlieswithEdmonton Airports. Pensions andthebenefit paymentsarefromfundsadministeredunderaninsurancecontract. paidareindexedwithinflation The levelofDBpensionbenefitsprovided depends onamember’s pensionable salary.average andtheirbest lengthofservice December 31, toDecember31, 2012withanextrapolation 2013. thanDecember31,no later 2013. at completedas werepreparedbasedonanactuarialvaluation The financial statements June18,contained inanactuarialreportdated 2013. forfundingpurposesmustbeeffective The nextrequiredactuarialvaluation December31, fortheDBportionofpensionplanwascompletedasat The mostrecentfundingrecommendation 2012andis time passes. included arenow and suchemployees intheDCpensionplan. intheDBpensionplanwilldiminishas The numberofemployees Effective October1, 2013, Edmonton Airports closed subjecttocollectivebargaining theexistingDBpensionplantoemployees Defined benefitpensionplan 40,195 40,942 9,854 9,555 5,647 1,225 5,960 2,407 2,806 5,960 5,213 3,993 2013 2013 175 124 747 747 429 $ $

13,388 13,388 17,623 34,439 47,827 17,623 (3,695) (4,463) 4,265 1,734 2,501 4,235 3,440 2012 2012 668 100 397 428 $ $

91

- $

(89) 291 200 519 Total 2,719 3,238 5,523 4,463 (1,260) (5,947) 13,388 11,432

- - - $ (89) 291 2,610 (1,390) (1,390) (1,260) (1,260) (5,947) (28,654) (34,439) plan assets Fair value of Fair

- - - - $ 200 2,719 1,909 4,628 5,523 5,723 (2,610) 47,827 40,086 of obligation Present value Benefit payments Administration costs Employer Participants Payments from plans: Payments 2012 At December 31, At January 1, 2012 At January 1, Current service cost Interest expense/(income) Remeasurements: in interest expense/(income) amounts included excluding Return on plan assets, Experience losses ( loss ) Impact of remeasurements on other comprehensive income Contributions: Impact on net loss for the year assumptions Gain from change in financial The movement in the defined benefit obligationThe movement 2013 over the years 2012 and plan assets of the pension plan and fair value of is as follows: 92 For theyearsendedDecember31, 2013and2012(inthousandsofdollars) NOTES TOTHEFINANCIALSTATEMENTS EDMONTON REGIONALAIRPORTS AUTHORITY for eachassumptionpresented. todeterminethetotalimpact tothetotalplanobligations pension planofachange inanassumptionareweightedproportionately tochangesinassumptionsissetoutbelow.The sensitivityofthedefined benefitobligation TheeffectsontheDBportionof Retiring 20yearsafterendorreportingperiod: theendofreportingperiod: Retiring at lifeexpectancy 60: age intoanaverage inyearsforapensionerretiringat assumptions translate the pensionplan. tothepensionplan. arenotmaterial actuarialgainsorlossesthat Recentexperiencehasindicated These andexperienceof Assumptions regardingfuturemortalityaresetonactuarialadviceinaccordancewith published statistics increase ofcompensation Rate Discount rate Loss fromchangeinmortalityassumptions Return onplanassets, excluding amountsincluded ininterestexpense/(income) Remeasurements: Impact onnetlossfortheyear cost Current service 1,At January 2013 Gain fromchangeinfinancialassumptions Interest expense/(income) The significantactuarialassumptionsareasfollows: Contributions: Experience loss At December31, 2013 Payments fromplans: Impact ofremeasurementsonothercomprehensiveincome(loss) Female Male Female Male Participants Employer Administration costs Administration Benefit payments Present value Present value of obligation (11,575) 47,827 40,942 (5,757) (6,280) 1,948 5,152 3,227 1,925 3,347 $ - - - -

Fair valueof plan assets years 2013 2013 29.5 27.1 28.4 25.5 3.25 4.90 (40,195) (34,439) % (1,399) (3,275) (1,399) (7,079) (3,275) 5,757

292 (52) $ - - - -

(11,575) 13,388 (3,275) (7,079) (9,555) 3,753 1,948 3,227 3,347 years 2012 2012 Total 27.5 26.0 26.6 24.3 3.50 4.00 526 747 292 (52) % $ -

93

% 4.2 63.7 32.1 2012 100.0

assumption Decrease in % 0.0 Increase by 2.0% Increase by 5.0% Decrease by 0.1% 59.9 40.1 2013 100.0 Increase in assumption Increase by 2.2% Increase by 0.1% Decrease by 4.7%

Impact on defined benefit obligationImpact on defined 0.25% 0.25% 0.8 years Change in assumption Through its defined benefit plans, Edmonton Airports is exposed to a number of risks, the most significant of which are detailed the to a number of risks, Airports is exposed Edmonton plans, Through its defined benefit below: ASSET VOLATILITY The plan liabilities are calculated using a discount rate set with reference to corporate perform bond yields; if plan assets under to outperform corporate which are expected The plans hold a significant proportion of equities, this will create a deficit. this yield, toAirports intends Edmonton mature, As the plans contributing volatilitybonds in the long-term while and risk in the short-term. Airports believes that Edmonton risk by investing more in assets thatreduce the level of investment better match the liabilities. a level of continuing equity investment due to the long-term nature group, of the plan liabilities and the strength of the supporting Airports’ long-term strategyis an appropriate to manage the plan efficiently. element of Edmonton Plan assets are comprised as follows: Mortality rates Discount rate Rate of compensation increase Equities Debt securities Cash and other CHANGES IN BOND YIELDS although this will be partially offset by an increase in the value of A decrease in corporate bond yields will increase plan liabilities, bond holdings. the plan’s RISK INFLATION The majority and higher inflation will lead to higher liabilities. benefit obligations are linked to inflation, The majority of the plan’s meaning that inflation an increase in assets are loosely correlated the deficit. will also increase with inflation, of the plan’s LIFE EXPECTANCY result in will so increases in life expectancy obligations are to provide benefits for the life of the member, The majority of the plan’s Airports’ plans where inflationary increases resultThis is particularly significant in all Edmonton liabilities. an increase in the plan’s in higher sensitivity to changes in life expectancy. in this note is based on changing one assumption while holding all other assumptions constant. Each sensitivity analysis disclosed When calculating the sensitivity correlated. and changes in some of the assumptions may be this is unlikely to occur, In practice, the same method (present value of the defined of the defined benefit obligation to variations in significant actuarial assumptions, benefit obligation calculated with the projected unit credit method period) has been at the end of the reporting applied as for calculating in the statement the liability recognised of financial position. Airports ensures that the investment positions are managed within an asset-liability Edmonton In case of the funded plan, matching that (ALM) framework has been developed to achieve long-term investments that are in line with the obligations ALM objective is to match assets to the pension obligations Airports’ Edmonton Within this framework, under the pension plans. by investing in long-term fixed interest securities with maturities that match the benefit payments as they fall due and in the such that are well diversified, Investments Airports does not use derivatives to manage its risk. Edmonton appropriate currency. A large portion of assets in the failure of any investment would not have single a material impact on the overall level of assets. Airports believes that equities offer the best returns over the long-term with an Edmonton 2013 consists of equities and bonds. risk. The plans are not exposed to significant foreign currency acceptable level of risk. Total 94 For theyearsendedDecember31, 2013and2012(inthousandsofdollars) NOTES TOTHEFINANCIALSTATEMENTS EDMONTON REGIONALAIRPORTS AUTHORITY b) The expected maturity analysisofundiscountedpensionandlong-termbenefitsissummarizedasfollows: The expectedmaturity is18.4years. of the definedbenefitpensionplanobligation duration The weightedaverage December31,as at 2013. or thelong-termbenefitplan. forfundingpurposesthepensionplanisduetobecompleted Thenextannual actuarialvaluation Edmonton contributionisequalto13.0%ofpensionablesalaries.Airports’ currentservice There arenocontributionstotheSERP Edmonton of$2,512tofundthepensionplandeficitoverfiveyears.Airports willmakespecialpaymentsforpastservice December31,As at 2012, solvency theaggregate deficitindefinedbenefitportionofpensionplanamountedto$15,715. Balance atendoftheperiod Impact ofremeasurementsonothercomprehensiveincome(loss) would result in an increased defined benefit obligation of the SERP of approximately $80. approximately oftheSERP would resultinanincreaseddefinedbenefitobligation Defined benefitpensionplan. rate assumption forthedefinedbenefitobligation Theeffectofa0.25%decreaseinthediscount oftheSERParesameusedfor The methodsandtypesofassumptionsusedindeterminingthedefinedbenefitobligation Impact onnetlossfortheyear Interest expense beginningoftheperiod Balance at Current service cost Current service SERP Defined benefitpensionplan The movement in the defined benefit obligation oftheSERPoveryears2012and2013isasfollows: The movementinthedefinedbenefitobligation December31, completedat independent actuarialvaluation 2013. member oftheSERPwillbemadefromgeneralrevenuesEdmonton Airports. werepreparedusingan The financialstatements 2005. The benefitsprovidedundertheSERPconstituteanon-fundedliabilityofEdmonton Airports. All payments madetothe Edmonton ExecutiveRetirementPlan (SERP)withonemember,Airports also hasaDBSupplementary effectiveFebruary 1, executiveretirementplan Supplementary At December31, 2013 Long termbenefitplan Less than 1 year 3,061 2,142 169 750 $

1-2 years Between 1,116 182 923 11 $

2-5 years Between 3,345 3,916 538 33 $

100,339 5 years 96,575 2,806 2,501 3,387 2013 (124) Over 429 113 316 377 $ $

101,593 108,432 2,501 2,173 4,276 2,563 2012 Total (100) 428 114 314 $ $

95

- $ 289 108 397 (668) 2012 (122) 2,127 1,734

$ 74 301 850 (175) (377) 2013 1,734 1,225 2,407 Leave the accumulated balance on deposit with Edmonton Airports until retirement, death or termination Airports until retirement, Leave the accumulated with Edmonton balance on deposit Cash out long-term benefits accumulatedCash out long-term benefits to dateretirement savings; or direct the balance to or Current service cost Balance at beginning of the period Interest expense servicePast cost Impact on net loss for the year (loss) Impact of remeasurements on other comprehensive income Benefits paid the long-term benefit plan are the same used for Defined benefitThe methods and types of assumptions used in determining April of 2014. liability in Airports expects to settle the mortality as Edmonton pension plan excluding Defined contribution pension plan Airports maintains a pension plan with defined contribution provisions providing pension benefits to employees who Edmonton This same and whose employment collective bargaining. conditions are not subject to 2010, joined the plan after November 1, 2013 and whose employment conditions are pension plan is maintained for employees joined the plan after October 1, who defined contribution portion of the plan is a maximum ofAirports’ contribution to the Edmonton subject to collective bargaining. regular salary and wages. 5.5% of the employee’s The net expense for the defined contribution portion of the pension plan in 2013 was $80.3 (2012 - $49.3). Balance at end of the period Current service costs will continue to accumulate up to March 31, 2014 for employeesCurrent service that do not cash out long-term benefits by costs will continue to accumulate up to March 31, April of 2014. the liability in Airports expects to settle Edmonton 2014. March 31, benefit obligationThe movement in the defined is as follows:the long-term benefit plan over the years 2012 and 2013 of »  Long-term benefit plan Long-term benefit plan for eligible employees has a DB long-term benefit Airports also bargaining unit collective under the general Edmonton The employees and management a separate and firefighters under excluded collective bargaining agreement. agreement, The financial statements Airports. liability of Edmonton plan constitute a non-funded under the long-term benefit benefits provided 2013. actuarial valuationwere prepared using an independent completed at 31, December as a result 2013, On October 15, benefit plan are accrued over the period of employment. The expected costs of the long-term Airports will terminate the long-term Edmonton of the re-negotiated unit collective agreement, terms of the general bargaining employeesbenefit plan for employeesand management unit collective under the general bargaining and excluded agreement 2014 offering employees the following two options: effective March 31, »  d) c) 96 8 For theyearsendedDecember31, 2013and2012(inthousandsofdollars) NOTES TOTHEFINANCIALSTATEMENTS EDMONTON REGIONALAIRPORTS AUTHORITY Disposals Additions /transfers 1,January 2013 Balance at December 31, 2012 Balance at derecognition Disposals and Additions /transfers December 31, 2011 Balance at COST derecognition Disposals and for theyear Depreciation December 31, 2011 Balance at DEPRECIATION December 31, 2013 Balance at At December31, 2013 Disposals the year for Depreciation 1,January 2013 Balance at December 31, 2012 Balance at At December31, 2012 CARRYING AMOUNTS December 31, 2013 Balance at PROPERTY, PLANTANDEQUIPMENT

Buildings Buildings 103,950 711,389 711,389 429,300 282,580 119,444 815,290 630,768 147,762 147,762 563,627 184,522 28,534 36,809 (491) (216) (49) (49) $ $

Roadways Roadways Roadways Roadways systems systems 40,893 40,893 15,846 25,047 44,240 31,128 11,289 11,289 29,604 13,112 3,347 1,814 9,475 1,823 $ $ - - - -

117,883 117,883 101,437 121,787 facilities facilities and lots and lots Parking Parking 16,587 29,477 84,206 33,528 33,528 84,355 37,581 3,904 4,137 4,053 (141) (86) $ $ - -

and apron and apron and apron and apron taxiways taxiways taxiways taxiways surfaces surfaces 206,019 206,019 186,672 215,924 145,785 145,721 Runway, Runway, 14,737 19,347 11,343 48,955 10,420 60,298 60,298 70,139 (4,832) (579) $ $ - -

facilities facilities 81,875 81,875 79,102 26,555 85,614 50,886 30,870 30,870 51,005 34,728 4,049 2,947 4,483 4,045 Other Other Other Other (174) (310) (168) (187) $ $

maintenance maintenance maintenance maintenance Vehicles and Vehicles and equipment equipment 20,127 20,127 17,940 13,481 22,662 13,986 13,986 15,200 2,563 2,942 1,246 7,462 1,242 6,141 (755) (741) (28) (28) $ $

Furniture and Furniture and Furniture and Furniture and equipment equipment 16,349 16,349 16,165 17,416 10,176 1,362 1,451 7,589 7,240 1,364 8,989 8,989 7,360 (315) (295) (177) 499 (51) $ $

Computer Computer Computer Computer hardware hardware 10,283 10,283 18,007 11,063 (1,754) (1,754) 9,478 9,403 2,123 4,092 2,511 6,187 6,187 4,096 6,944 919 (39) (28) $ $

equipment equipment equipment equipment finance finance finance finance Office Office Office Office under under lease lease 115 115 115 115 23 48 23 71 71 21 44 94 $ $ ------

Construction Construction Construction Construction (352,212) progress progress 114,738 114,738 466,950 114,738 (73,112) work in work in work in work in 41,626 41,626 $ $ ------

1,382,681 1,010,185 1,319,671 1,319,671 1,185,411 1,006,691 136,175 259,116 312,980 312,980 372,496 70,278 55,154 62,290 (1,915) (7,268) (1,290) (2,774) Total Total $ $

97

$ 218 659 (285) (570) Total 3,002 2,935 2,935 3,024

- - - - $ 44 44 868 (868) work in progress Construction

$ 615 (285) (570) 2,134 1,086 2,935 2,935 2,980 software Computer INTANGIBLE ASSETS INTANGIBLE At December 31, 2013, $41,626 (2012 - $114,738) of property, plant and equipment were under construction of which $41,260 were under construction plant and equipment (2012 - $114,738) of property, $41,626 2013, At December 31, to depreciation. other facilities not yet subject and and aprons, runways taxiways was for buildings, (2012 - $114,406) - $34,569) relating 2013 is $15,125 (2012 unpaid capital to in accounts payable at and accrued liabilities 31, December Included 10). expenditures (note in the statements plant and equipment depreciation was included of property, $62,290 (2012 - $55,154) 2013, At December 31, of comprehensive loss. Borrowing costs $2,227 (2012 - $6,095) in borrowing costs capitalized during the year. includes plant and equipment Property, were capitalized at a weighted average rate of its general borrowing (2012 - 4.36%). of 4.86% $4,755 (2012 - $34). of $4,494 (2012 - $626) were disposed of for proceeds of Assets with a net book value Airport. Villeneuve to funding up to $14,000 for the runway extension atAlberta has committed the The Province of To December 31, 2013 $11,200 has been received from the Province and $12,990 in costs has been incurred. from the Province and $12,990 in costs has been incurred. 2013 $11,200 has been received December 31, To Balance at December 31, 2011 Balance at December 31, COST Additions/transfers Disposals 2012 Balance at December 31, Balance at January 1, 2013 Balance at January 1, Additions/transfers Disposals 2013 Balance at December 31, 9 a) b) c) d) e) f) 98 For theyearsendedDecember31, 2013and2012(inthousandsofdollars) NOTES TOTHEFINANCIALSTATEMENTS EDMONTON REGIONALAIRPORTS AUTHORITY 10 Other accrualsandpayables Accrued interestonlong-termdebt Payroll benefitspayable sourcedeductionsand other employee (note8(b)) Construction payables Trade payables b) a) At December31, 2013 At December31, 2012 CARRYING AMOUNTS Balance atDecember31, 2013 Disposals fortheyear Amortization Balance at January 1, January Balance at 2013 Balance atDecember31, 2012 Disposals fortheyear Amortization Balance at December31,Balance at 2011 AMORTIZATION of intangible asset amortization was charged to the statements ofcomprehensiveloss. waschargedtothestatements of intangibleassetamortization Intangible assetsarepurchasedsoftwareandlicenses. DuringtheyearendedDecember31, 2013, $867(2012-$158) At December31, 2013, $44(2012-$Nil)ofintangibleassetswereunderconstructionandnotyetsubjecttoamortization. ACCOUNTS PAYABLE ANDACCRUEDLIABILITIES Computer Computer software 1,014 2,218 1,921 1,921 2,048 (570) (285) 762 867 158 $

Construction Construction progress work in work in 35,823 15,125 8,667 7,549 4,213 2013 269 44 $ $ ------

57,235 34,569 9,002 7,506 4,733 2012 1,425 1,014 2,218 1,921 1,921 2,048 Total (570) (285) 806 867 158 $ $

99

$ $

2012 2012 15,631 61,473 34,607 111,711 507,225 475,227 (31,998) (906,429) 1,381,656

$ $ 2013 2013 15,276 53,661 28,924 97,861 (36,549) 582,018 545,469 (913,755) 1,459,224 CONTINGENCIES OPERATING LEASES OPERATING AIRPORT IMPROVEMENT FEE (AIF) IMPROVEMENT AIRPORT No later than a year Later than 1 year and no later than 5 years Later than 5 years Contingent-based rents recognised in the statements $8,313 (2012- $9,480). of comprehensive loss were 13 The outcome of these actions is currently not determinable. Airports has been named as a defendant in certain lawsuits. Edmonton AIF revenue retained by airlines AIF collection costs, cumulative expenditures Less: The cost of settlement, Airports. these actions will not result in any material expense to Edmonton Airports’ opinion, In Edmonton will be accounted for in the period of settlement. if any, 12 and agricultural hangars and industrial lands which terminate between 2014 and Airports leases various retail spaces, Edmonton receivable under operatingThe future minimum lease payments leases are: 2072. (cumulative from program inception) 11 including capitalAIF to fund and the related expenditures costs, financing implemented an Airports Edmonton 1997, April 12, Effective note 14(a)).Airport (see atof airport and terminal facilities and expansion the planned redevelopment International Edmonton 100 c) b) a) 14 For theyearsendedDecember31, 2013and2012(inthousandsofdollars) NOTES TOTHEFINANCIALSTATEMENTS EDMONTON REGIONALAIRPORTS AUTHORITY or similarinstruments. December 31,The fairvalueoflongtermdebtat 2013is$1,021,290 (2012-$1,058,307). and interest)oftheoutstanding debtinstruments, toEdmonton available current marketrates discountedat Airports forthesame (principal usingthefuturecashflows asLevel2ofthefairvaluehierarchyitiscalculated of thelong-termdebtiscategorized offinancialpositionislong-termdebt. valueinthestatements thecarrying does not approximate has afairvaluethat Thefairvalue Edmonton offinancialposition. fairvalueinthestatements assets at Airports doesnotrecordany Theonlyfinancial instrument that iii) ii) i) as follows: Financial fairvalue, instrumentsmeasured at method. intolevelsbyvaluation arecategorized beendefined The differentlevelshave FAIR VALUE MEASUREMENT 15 maintenance andsecurity, airservice, marketingandjanitorial services. annualcommitmentsas follows: These contractshave Edmonton management, technology contractsfortheprovisionofparkingandinformation building Airports has operating commitments Operating At December31, 2013, Edmonton commitmentsintheamountof$6,674(2012-$56,123).Airports hadoutstandingcapital restoration. infrastructure. include systemlifecycle Projects inthiscategory replacements, programs, paving fleetreplacementandcapital enhancing thepassengerexperience. tothemaintenanceofexistingairportfacilitiesand The thirdgroupofprojectsisrelated for newconcessions, airsidedevelopments, andtaxiwaytoserve to expandedapron parkinglotexpansionsandprojectsrelated capacity, and/orimprovethepassengerexperience. newservices create includes terminalleaseholdimprovements This category development, lightindustrial development, andothersimilarinvestments. expand ismadeupofprojectsthat category The Growth earningsgrow, asoperating approved available. include becomes andcashflow highwaycommercial Projectsinthiscategory includes forEdmonton Commercial RealEstate buildtherevenue capacity projectsthat Airports, thefundingforwhichwillbe Real Estate, andMaintenance. Growth Edmonton whichareCommercial projectsareidentifiedbyairportandbrokenintothreemaincategories Airports’ capital commitments Capital Inputs for the asset or liability that are not based on observable market data (that is, (that inputs)(Level3). marketdata unobservable arenotbasedonobservable Inputs fortheassetorliabilitythat is,or indirectly(that derived fromprices)(Level2). isprices) fortheassetorliabilityeitherdirectly(that Inputs otherthanquotedpricesincluded are observable withinlevel1that Quoted prices(unadjusted)inactivemarketsforidenticalassetsorliabilities(Level1). 2018 2017 2016 2015 2014 forthenextfiveyearsasfollows: year andareestimated International Airport (seenote1). The futureleasepaymentsduetotheLandlordarebaseduponprojectedGrossRevenueineach The grossrevenues, ofestimated Amended Canada Leaseisbaseduponapercentage including AIF revenues, theEdmonton at 2018 2017 2016 2015 2014 COMMITMENTS FINANCIAL INSTRUMENTS,RISKMANAGEMENTANDCAPITAL MANAGEMENT 25,009 22,955 21,028 19,614 17,611 16,222 2,008 8,250

108 363

$ $ 101

$ 2012 4,233 1,049 5,282

$ 758 2013 2,613 3,371 Greater than 90 days No other impairments havewithin trade or other receivables. been identified Liquidity risk Airports’ Liquidity risk arises through excess obligations Edmonton over available financial assets due at any point in time. objective in managing sufficient readily liquidity risk is to maintain available reservesto meet its liquidity requirements at any Airports achieves this through funds generated by operationsborrowings and externally through bank and Edmonton point in time. to invest its cash has a policy Airports Edmonton bonds that provide flexibility in the timing and amounts of long-term financing. and restricts these investments to federal underlying investment policy balances in short-term pooled money market funds whose provincial government issues and in issues of large highly-rated Canadian financial institutions. 30 to 90 days Credit risk credit risk represents the carrying amount and restricted deposits, accounts receivable cash and cash equivalents, For on the balance sheet. Cash and cash equivalents and restricted deposits credit risk is reduced by investing in instruments equivalents and restricted deposits credit risk is reduced Cash and cash on the balance sheet. thatissued by financial institutions managementprovincial government issued believes are credit worthy and in federal and short-term instruments. Airports derives Edmonton risk is the carryingThe maximum exposure to credit value of receivables on the balance sheet. AIF revenue remitted from two airlines. approximately and 72% (2012 - 71%) of its airside and general terminal customer credit evaluations letters of credit, Airports mitigates risk by endeavouring credit to obtain security deposits, Edmonton and other credit enhancement methods. provision for 2013, At December 31, due in 30 to 90 days. Accounts receivable are non-interest bearing and are generally impairment of accounts receivable was $251 (2012 - $645). is as follows: but not impaired, the aging that analysis of trade receivables are past due, 2013, At December 31, v) There were no transfers between the levels of the fair value hierarchy during the period. of the fair value hierarchy during transfers between the levels There were no RISK MANAGEMENT Airports in which Edmonton risks of the business for understanding the principal of Directors is responsible Airports’ Board Edmonton confirming thatAirports and there purpose of Edmonton risks incurred and the a proper balance between achieving is engaged, The Airports. monitor and manageare systems in place to effectively view to the long-term viability of Edmonton those risks with a associated which reviews significant financial risks with future performance, Audit Committee, the Board of Directors has established growth to achieve its Airports opportunities identified by management and lost that could materially affect the ability of Edmonton is responsible for confirming thatThe Board of Directors management in place to has procedures strategic or operational targets. mitigate identified risks. iv) 102 For theyearsendedDecember31, 2013and2012(inthousandsofdollars) NOTES TOTHEFINANCIALSTATEMENTS EDMONTON REGIONALAIRPORTS AUTHORITY Edmonton requirements. Airports hasnoexternally imposedrestrictions oncapital restrictions imposedon capital. at areasonable cost.order tosecureaccess tofinancing at December31, As 2013, Edmonton Airportswasin compliance withthe (notes6(a)and6(c)). Ratio andInterest Coverage Ratio Edmonton Coverage Debt Service in Airports maintainsitscreditrating Edmonton Airports’ plan, whichisunchangedfrom2013, Ratio, Coverage Gross istocomplywiththecovenantsforDebtService toairportoperations, andfeesrelated adjust rates projectplans. AIF orbyadjustingitscapital conditions andtheriskcharacteristicsof underlyingassets. To structure, maintainoradjustthecapital Edmonton Airports may purpose.stated Edmonton structureandmakesadjustmentstoitinthelightofchanges ineconomic thecapital Airports manages Edmonton theairportsinconjunction withits in proportiontoriskanditsabilityoperate Airports setstheamountofcapital itsairportsinasafeandsecurefashion. andmanage ability tooperate equity inproperty, plantandequipmentascapital. Edmonton istosafeguardtheentity’s capital Airports’ objectivewhenmanaging anddevelopment.all surplusesareretainedandreinvestedinairportoperations Edmonton and contributedcapital Airports manages Edmonton underprovisions oftheRegional withoutsharecapital Airports isincorporated Airports Authority Act (Alberta)and, assuch, CAPITAL MANAGEMENT vi) The following tablesetsoutEdmonton The following Airports’ financialliabilities, including interestpayments,applicable: where rates increased by 1 percent and decrease by $931 if interest rates decreaseby1percent. increasedby1percentanddecrease$931ifinterestrates rates liquidity. animpactoninterestincome. willhave ininterestrates Fluctuations Interestincomewouldincreaseby$938ifinterest Edmonton ofinterestinordertomaintain rates floating Airports’ cashandequivalentsrestricteddepositsareinvestedat increased by1percent. decreasedby1percentanddecrease$95,094ifinterestrates long-term debtwouldincreaseby$111,267ifinterestrates holding tomaturity. animpactonthefairvalueoflong-termdebt. willhave ininterest rates Fluctuations The fairvalueofthe Edmonton debenturesundertheSeriesCBondandotherdebtsecuritieswithintentionof Airports entersintofixedrate and cashequivalents, restricteddeposits, benefitliabilitiesandlong-termdebt. post-employment ininterestrates. riskarisesbecauseofthefluctuations Interest rate Edmonton riskonitscash Airportsisexposedtointerestrate INTEREST RATE RISK theforeignexchangeriskfromcurrency believesthat Management conversionsisnegligible. Edmonton Airports’ functional currency istheCanadiandollarandmajorpurchasesaretransactedindollars. FOREIGN CURRENCYRISK Edmonton Airports’ income orthevalueoffinancialinstrumentsheld. changesinmarketprices,Market riskisthethat suchasforeigncurrency andinterestrates, exchangerates willaffect Market risk aslow. assessestheliquidityriskat Airports’ management creditfacilities,Given theavailable theamountsofcashandequivalents, andthetimingofliabilitypaymentsEdmonton After 5years 1 to5years Within 1year AS AT DECEMBER31, 2012 After 5years 1 to5years Within 1year AS AT DECEMBER31, 2013 Long-term 1,239,257 1,194,790 329,781 342,572 64,006 64,944 debt $

commitments Contractual Contractual 95,054 88,017 99,335 51,619 $ - -

and other and other payables 49,729 26,937 Trade $ - - - -

1,239,257 1,194,790 424,835 201,752 441,907 143,500 Total $

103

$ 1 $ 4 3 70 16 16 19 17 17 15 28 20 20 22 17 26 23 69 22 11.5 Total Annual Retainer

------1 $ 1 1 1 1 5 Evan Cameron Gordon Clanachan Shelley Miller Dale Klein Naseem Bashir Mary Cameron Leonard Blumenthal Expenses

- $ 4 3 18 17 16 15 27 20 20 22 17 26 22 64 22 Compensation January 2013 March 2013 January 2013 December 2012 DIRECTORS’ AND OFFICERS’ REMUNERATION AND EXPENSES AND REMUNERATION AND OFFICERS’ DIRECTORS’ Chair (does not collect meeting fees) Chair (does not collect meeting fees) Vice-chair (does not collect Director Director retainer) Committee chairs (do not collect Directors meeting fees are $900 dollars per meeting. Board and Board Committee Meeting fees: compensation in 2013: paid and expenses reimbursed to each Director Total * Term was completed in December 2012. Remuneration paid in 2013 is for meetings attended in the last quarter of 2012. in December 2012. was completed Term * Airports’ Board of Directors were as follows: Changes to Edmonton Bryan Bailey Naseem Bashir Leonard Blumenthal Cameron Mary J. Audit Committee) Robert Carwell (Vice Chair and Chair, Dale Klein Maureen McCaw Anne McLellan Rolly Owens Robert Petryk Gail Stepanik-Keber Redl (Chair) Tom Ralph Young Shelley Miller* Evan Cameron* Gordon Clanachan* New Board Member Re-appointed Board Member Term Completed Term Directors’ compensation 16 Act This informationto the Regulations is provided pursuant of the a) 104 For theyearsendedDecember31, 2013and2012(inthousandsofdollars) NOTES TOTHEFINANCIALSTATEMENTS EDMONTON REGIONALAIRPORTS AUTHORITY b) President and Chief Executive Officer* President andChiefExecutiveOfficer* Total in2013wasasfollows: foreachkeymemberofmanagement compensation General Counsel and Corporate Secretary* General CounselandCorporate Vice PresidentCommercialDevelopment andInfrastructure Vice PresidentOperations at December31,at 2013 nolongerwithEdmonton Key membersofmanagement Airports Vice PresidentPassenger MarketDevelopment* Chief Financial Officerand Services* VicePresidentCorporate incentives, amounts: andreimbursementofexpensesinthefollowing andallowances) During theyearendedDecember31, 2013, Edmonton (basesalary,Airports provideditsDirectorsandOfficersremuneration Total forDirectorsandOfficers: remuneration (3) (2)  (1) Othercashbenefitsinclude allowances. incentive pay(pernote16(a)(3))andmanagement * DenotesofficerofEdmontonat December31, Airports 2013 To 4OfficerswhoarenotDirectors To 4officerswhoarenotDirectors To Directors To Directors All Officers receive incentive pay that is tied to achieving Board established organizational goalsandobjectives. istiedtoachievingBoardestablishedorganizational All Officersreceiveincentivepaythat Plan andgrouplifeinsuranceplan. including benefitsandcontributionsorpaymentsmadeonbehalfofemployees of alltaxableemployee theDBPlanandDC Other non-cashbenefitsinclude ExecutiveRetirementPlan(SERP)(pernote 7(b))andEdmonton Supplementary Airports’share

Base salary 1,751 420 158 221 224 255 225 248 $

benefits Other cash 1,631 1,006 250 119 (1) (3) 35 89 95 37 $

Remuneration Remuneration benefits non-cash non-cash Other 520 812 100 2,668 2,326 2,397 2,084 30 46 50 47 19 313 342 (2) $

$ $

1,190 4,194 1,361 2013 Total 223 356 393 367 304 $ Expenses Expenses

1,096 2,856 1,201 2012 2013 2012 Total 297 234 123 110 111 101 28 10 13 $ $ $ - -

105 COMPARATIVE INFORMATION COMPARATIVE SUBSEQUENT EVENT SUBSEQUENT 18 presentation. year’s to conform to the current Certain comparative figures have been reclassified As a result of inspections performed subsequent to December 31, 2013, Edmonton Airports determined thatAirports parts of moving Edmonton 2013, to December 31, performed subsequent As a result of inspections An estimate of the total replacement to restore operational require capability of the walkways. categorized as buildings, walkways, it is probable that the reimbursement However, determined. be replaced has not yet been of the assets to impact of the derecognition will be recovered from a third party. of the costs to replace the assets 17 106 Management TeamManagement Executive APPOINTERS EMC AND Alberta T9E0V3 Airport Edmonton International 1, 1000AirportRoad Edmonton Airports SecretaryBoard & Assistant KarenExecutive Croll, Secretary Corporate & Counsel Bill Wright, General Operations &Infrastructure Steve Rumley, President, Vice Services Corporate President, Vice & Officer Financial Chief Rob Malli, Commercial Development Myron President, Keehn,Vice Passenger MarketDevelopment Traci Bednard, President, Vice T om Ruth,President &CEO

[email protected] [email protected] f 7808908329 t 7808908900

Airport &PortPrograms Jason Tom, Director, AuthoritiesManagement, Airport &PortPrograms Natalie Bossé,Director General, Representatives Appointer Transport Canada Tarnawsky,Peter Officer Administrative Chief Tom Flynn,Mayor Sturgeon County Rob Coon,ChiefCommissioner Roxanne Carr, Mayor Strathcona County Officer Administrative Chief Vincent, Pat Mayor Shaigec, Rod Parkland County Brian Bowles,CountyManager John Whaley, Mayor Leduc County Paul Benedetto,CityManager Greg Krischke,Mayor City ofLeduc Farbrother,Simon Manager City Don Iveson,Mayor City of Edmonton /flyeia @flyeia flyeia.com @flyeia /flyeia

City of Edmonton Don Iveson, Mayor Simon Farbrother, City Manager

City of Leduc Greg Krischke, Mayor Paul Benedetto, City Manager

Leduc County John Whaley, Mayor Brian Bowles, County Manager

Parkland County Rod Shaigec, Mayor Pat Vincent, Chief Administrative Officer

Strathcona County Roxanne Carr, Mayor Rob Coon, Chief Commissioner

Sturgeon County Tom Flynn, Mayor Peter Tarnawsky, Chief Administrative Officer

Transport Canada Natalie Bossé, Director General, Airport & Port Programs Jason Tom, Director, Authorities Management, Airport & Port Programs Hello