CzeCh airlines - České aerolinie

NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 31 December 2010
annual report 2010 | 75
12. PROVISIONS
Fixed assets repairs
CZK’000
Personal costs
CZK’000
Frequent Flyer
Programme
CZK’000
Provision for
income tax
CZK’000
Other
CZK’000
Total
CZK’000
Closing balance as at 1 January 2009 1,598,102 261,914 94,696 25,000 1,979,712
Charge for the year 347,442 422,852 320,085 51,064 1,141,443
Released in the year (120,446) (260,740) (15,236) (25,000) (421,422)
Used in the year (528,047) (79,664) (17,462) (625,173)
Closing balance as at 31 December 2009 1,297,051 344,362 382,083 51,064 2,074,560
Charge for the year 233,410 109,760 27,643 26,114 396,927
Contribution to subsidiaries (24,846) (24,846)
Released in the year (121,508) (120,975) (242,483)
Used in the year (192,932) (206,701) (28,199) (427,832)
Closing balance as at 31 December 2010 1,216,021 101,600 381,527 77,178 1,776,326
For an analysis of the current and deferred income tax, see Note 17.
The provision for repairs of tangible fixed assets includes provisions relating to
planned checks of aircraft and engines and overhauls of engines and landing gears.
Part of these provisions is recognized as tax-deductible in accordance with the
Act on Provisions 593/1992 Coll. in the amount of CZK 127,326 thousand as at 31
December 2010 (as at 31 December 2009: CZK 198,792 thousand).
In accordance with the Act on Provisions 593/1992 Coll., the Company creates
tax-deductible provisions only for repairs of tangible assets owned by the Company.
According to the amendment of this Act, the Company does not create any new taxdeductible
provisions for repairs of tangible assets.
The accounting value of provisions transferred to the subsidiaries as non-monetary
contribution during 2010 is mentioned in Note 28.
Remuneration of the Management team, which resigned in October 2009, also
included the “OK Bonus”. A provision was recognized for the estimated amount
of the OK Bonus in the relevant reporting period. Following the finalization of the
financial statements under International Financial Reporting Standards, as adopted
by the EU for the year ended 31 December 2009, the final amount of the OK Bonus
was determined by an independent advisory firm for the entire 2006–2009 period.
Based on the calculation, the provision was released in the amount of CZK 112,282
thousand during 2010. As of 31 December 2009, the provision recognized in accounting
records remained the same as at 31 December 2008 (i.e. in the amount
of CZK 120 million). The amount of the OK Bonus was not possible to estimate
with reasonable certainty as of the date of 2009 financial statements completion
due to an uncertainty related to the interpretation of the mechanism of the calculation,
which is prepared by an independent advisory firm, although the Company’s
Management performed a detailed analysis of the OK Bonus amount calculation.
The other provisions represent a provision for prematurely terminated lease and
other contracts, a provision for the loss from the sale of the aircraft B737 and a
provision for legal disputes.