CzeCh airlines - České aerolinie

Notes to the Consolidated Financial Statements
For the Year ended 31 December 2010
annual report 2010 | 108
3. BASIS FOR PREPARATION OF FINANCIAL STATEMENTS
The Group’s consolidated financial statements have been prepared under the going
concern assumption.
The Government of the Czech Republic decided to stabilize the situation in the
Parent Company in 2009 and requested the preparation of a Restructuring Plan.
The plan was approved in May 2010 for year 2010 through 2013. The Restructuring
Plan was presented to the European Commission on 12 May 2010 which is currently
undertaking a review relating to the loan provided by the Company OSINEK, a.s. “in
liquidation”. The Restructuring Plan was approved at the Parent Company extraordinary
General Meeting held on 20 May 2010. The going concern assumption applied
by the Group’s Management is conditional upon the successful implementation of
the Restructuring Plan.
analysis of possible impairment of the fixed assets, which is based on future discounted
cash flow from operating activities. The assumption is that in future years
it will be possible to complete the implementation of the measures contained in the
Restructuring Plan and the Group will achieve positive operating cash flow. Based
on those long term projections, the Group’s Management has concluded that the
fixed assets are not impaired.
As of 24 November 2010, the Government of the Czech Republic approved the
proposal to create the holding of selected companies in the area of air transport and
ground services owned by the state including Letiště Prague, a.s. and České aerolinie
a.s. The Government also approved the establishment of the joint stock Company
Český Aeroholding, a.s. and charged the Ministry of Finance with the preparation of
a draft decision to increase the share capital by contributing the state share in the
companies Letiště Prague, a.s. and České aerolinie a.s., so that the holding creates
an effective structure that will provide airport operations, air transport services and
related services. After the restructuring of České aerolinie a.s., within three years,
a draft proposal of entry of a strategic investor to České Aerolinie a.s. should be
introduced.
As of 19 January 2011, the Government Resolution decided to privatize the part
of assets of the Company Správa Letiště Prague, s.p. by its contribution to Český
Aeroholding, a.s. The Company was established as of 11 March 2011.
The holding structure and strong group base should support the Parent Company in
the successful fulfilling of the Restructuring Plan.
In 2010, the Group had negative cash flow from operating activities, which indicates
possible impairment of fixed assets. The Group’s Management prepared the