CzeCh airlines - České aerolinie

NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 31 December 2010
annual report 2010 | 57
3. BASIS FOR PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared under the going concern assumption.
The Government of the Czech Republic decided to stabilize the situation in the
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 on 12 May 2010 to the European Commission, which is currently
undertaking a review relating to the loan provided by OSINEK, a.s. “in liquidation”.
The Restructuring Plan was approved at the Company’s extraordinary General
Meeting held on 20 May 2010. The going concern assumption applied by the
Company’s Management is conditional upon the successful implementation of the
Restructuring Plan.
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 Company will achieve positive operating
cash flow. Based on those long term projections, the Company’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 restructuring the Company České aerolinie a.s., within three
years, a draft proposal of entry a strategic investor to the Company 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 Company České
aerolinie a.s. in the successful fulfilling of the Restructuring Plan.
In 2010, the Company had negative cash flow from the operating activities, which
indicates possible impairment of the fixed assets. The Company’s Management
prepared the analysis of possible impairment of the fixed assets, which is based