Upload
dinhdat
View
216
Download
0
Embed Size (px)
Citation preview
ANNUAL REPORT 2016TRAVEL SERVICE, a. s.
annual report 2016 | Travel Service2
Responsibility
ProspectLucidity
ReliabilityFriendship
SafetyBezpečnost
Odpovědnost
PerspektivaSrozumitelnostSpolehlivost
Přátelství
annual report | Travel Service 3
Content
1. Principal financial indicators for the reporting period 42. Opening statement of Ing. Roman Vik, general director and a member of
the board of directors 83. Report of the board of directors on company’s business activities
and balance of assets 124. About Travel Service, a. s. 215. Relationships with customers and suppliers 246. Facts recorded in the register of companies maintained by the Municipal
court in Prague 307. Shareholder structure 328. Information on shareholder structure 349. Company management 3810. Corporate governance and compliance 4111. Risk management 4312. Safety 4613. Organisational structure of the company 4814. Information about research and development 5115. Information about acquisition of own shares 5116. Events after the balance sheet date 51
Notes to the financial statements for the year ended 31 december 2016 521. General information 532. Preparation of the annual financial statements 543. General accounting principles and used accounting methods 564. Intangible, tangible and financial assets 625. Inventory 726. Receivables 747. Deferred expenses 788. Equity 809. Changes in equity 8210. Financial derivatives 8411. Provisions 8612. Payables 8713. Payables to credit institutions 9114. Operating revenue of the company 9515. Costs of consumed material, energy and services 9816. Income taxation 10117. Related party transactions 10418. Analysis of development the number of employees and structure of staff costs 10619. Other operating revenue and other operating costs 10820. Financial revenue and costs 11021. Cash flow statement 11222. Risk management 11423. Post balance sheet events 11624. Report on related parties‘ transactions 11725. Independent auditor‘s report 11926. Balance sheet 12127. Profit and loss account 12828. Cashflow 13129. Contact 133
annual report 2016 | Travel Service4
1. Principal financial indicators for the reporting period In line with Czech Accounting Standards (in CZK thousand) 2016 2015 2014 2013 2012 2011
Financial Results
Revenue in total 16 072 105 16 467 885 16 413 200 15 369 051 11 124 616 10 961 681
where of:
Sales of own products and services 15 481 000 14 802 770 15 716 557 14 036 578 10 682 207 10 328 369
where of:
Charter Revenue 6 678 5281 7 626 701 9 431 889 8 479 493 6 973 444 7 580 942
Scheduled Flights Revenue 5 618 5952 4 247 377 3 536 331 3 290 834 2 058 929 1 881 810
Wet and Dry Lease Revenue 2 659 556 2 010 934 1 889 718 1 724 869 943 588 558 563
Sales of goods 24 495 45 764 28 953 21 937 17 976 21 204
Sales of goods 9 049 17 765 21 217 12 807 8 802 13 196
Cost of sales 14 062 108 13 504 945 14 468 197 12 779 831 9 769 260 9 691 055
where of:
Fuel Costs (No Rebilling) 2 407 644 2 708 232 4 101 519 3 819 725 3 129 713 3 222 214
Aircraft Lease 3 692 955 3 364 720 3 145 934 2 755 856 1 721 542 1 733 555
Labour Costs 1 583 520 1 316 251 1 260 742 1 265 887 1 028 288 938 246
Maintenance Costs 2 227 711 2 066 126 1 470 996 1 181 617 945 176 699 095
Added value 1 428 025 1 315 684 1 269 577 1 269 554 921 749 650 511
Operating profit (loss) 71 8533 488 356 274 184 149 530 86 283 26 439
Financial profit / (loss) 178 647 -240 491 -203 679 69 223 -22 207 -26 087
Profit / (loss) on ordinary activities after taxation 193 299 192 487 60 067 158 354 47 706 -4 469
Profit /(loss) on extraordinary activities after taxation 0 0 0 0 0 0
Profit / (loss) before taxation 250 500 247 865 70 505 218 753 64 075 352
Profit / (loss) for the accounting period after taxation 193 299 192 487 60 067 158 354 47 706 -4 469
EBIT 274 232 271 492 79 349 231 783 75 597 10 531
EBT 250 500 247 865 70 505 218 753 64 075 352
annual report | Travel Service 5
¹ Charter Revenue includes even the revenue generated by Business Jet (aerotaxi).
² Scheduled Flights Revenue includes even the revenue generated by sales of flight tickets for shared flights.
³ To provide hedging against the risks arising from fluctuations in aviation fuel prices, the Company concluded commodity swaps with gain of CZK 90,663 thousand with cooperating banks - UniCredit Bank, Komerční banka and Česká spořitelna. To ensure continuity,
this result is included in the financial profit or loss. In the event of recognition of commodity swaps as part of the aviation fuel price in operating profit or loss, the operating profit for 2016 amounted to CZK 162,516 thousand due to lower costs of aviation fuel that are
part of purchased consumables and services. As such, the financial profit is reduced to CZK 87,984 thousand.
EBITDA
EBITDAR
2011 2 586
2011 1 763 307
2012 73 643
2012 1 823 516
2013 300 404
2013 3 087 365
2014 93 529
2014 3 269 964
2015 293 309
2015 3 687 662
2016 290 390
2016 4 014 349
0
0
50 000 100 000 150 000 200 000 250 000 300 000 350 000
500 000 100 000 1 500 000 2 000 000 2 500 000 3 000 000 3 500 000 4 000 000 4 500 000
annual report 2016 | Travel Service6
2016 2015 2014 2013 2012 2011
Balance Sheet
Assets in Total 4 458 976 3 728 543 2 993 392 2 798 280 1 998 232 1 605 436
Equity 1 981 301 982 903 777 432 735 273 575 036 526 042
Share Capital 1 241 236 250 000 250 000 250 000 250 000 250 000
Return on Equity 10,95% 25,22% 9,07% 29,75% 11,14% 0,07%
Return on Sales 1,77% 1,83% 0,50% 1,65% 0,71% 0,10%
5 000 000
6 000 000
4 000 000
3 000 000
2 000 000
1 000 000
0
2016 2015 2014 2013 2012 2011
1 98
1 30
1
982
903
777
432
735
273
575
036
526
042
4 45
8 97
6
3 72
8 54
3
2 99
3 39
2
2 79
8 28
0
1 99
8 23
2
1 60
5 43
6
Assets in Total
Equity
Assets in Total
Equity
annual report | Travel Service 7
2016 2015 2014 2013 2012 2011
Cash flow
Net cash flows from ordinary activities 189 560 -261 695 -109 128 232 625 -75 843 -51 431
Net cash flows from investing activities -511 049 -34 528 -57 918 -172 253 -50 279 -129 420
Net cash flows from financing activities 454 254 301 794 169 099 86 248 120 081 22 956
Cash and cash equivalents at the end of the accounting period
320 988
188 223
182 652
180 599
33 9
79
40 0
20
2016
2015
2014
2013
2012
2011
annual report 2016 | Travel Service8
2. Opening statement of Ing. Roman Vik, general director and a member of the board of directorsDear Shareholders, Business Partners and Employees,
another year is over and here I am sitting in my study room, reading through a book called ‘Year 2016’
which offers fascinating, shocking and emotional stories taking place on airports, in our airplanes,
everywhere around. In this context, I cannot help but reminding you of our principal pillars supporting
the vision of Travel Service, a. s. and its subsidiaries: SAFETY, RESPONSIBILITY, FRIENDSHIP, RELIABILITY,
LUCIDITY, PROSPECT. I believe that these pillars have their substance for the community of people that
love airplanes, flying and all related things, while also offering a constantly expanding and pulsating
dimension such as the endless and pulsating universe around us. I may not know what the centre of
the universe is, but I do know that the centre and focus of our work and our efforts is the safety of our
passengers and people around us.
According to the Annual Safety Review 2016 published by the European Aviation Safety Agency (EASA),
which evaluates aviation accidents and classifies them into the most serious (Fatal Accident), less serious
(Non-Fatal Accident) and serious incidents, only one event from the “Fatal Accident” group was recorded
in commercial air transportation in airplanes with the maximum take-off mass (MTOM) of above 5,700
kg in 2015, it occurred on the Germanwings flight on 24 March 2015. With the exception of 2014 which
saw 2 accidents falling into the “Fatal Accident” category, no more than 2 accidents of this type have been
recorded since 2005. The average number of these accidents in a ten-year period, i.e. until 2015, was 1.3
accident per year. The average number of less serious accidents was 64.2 per year as indicated by the
above review. And what about the year 2016?
The review of the European Aviation Safety Agency that will discuss the overview of 2016 has not yet
been published as of today’s date. However, in pursuing the vision of the Company and its subsidiaries,
we monitor all incidents taking place in the air transportation segment.
In 2016, a number of serious airplane accidents were recorded worldwide. These include the EgyptAir
flight from the Charles de Gaulle airport in Paris to Cairo with 56 passengers and 10 crew members
onboard. Nobody survived this accident and it is suspected to have been a terrorist attack. Another
accident was the accident of the Emirates airplane that occurred at the Dubai airport on 3 August 2016.
At that time, there were 282 passengers and 18 crew members onboard. One firefighter was killed in
tackling the blaze in the accident.
An accident with tragic consequences was the accident of a TU-154 airplane in which all 85 passengers
and 8 crew members died. The cause of this accident has yet to be clarified, again the suspicion of
a terrorist attack exists. The accident of Bolivian LaMia Airlines which happened on 28 November 2016
led to the death of 71 passengers of the 77 persons onboard. One of the possible causes of this tragic
accident might have been the lack of fuel, but also a system failure, as indicated by the Hispanic-American
media agency.
The above accidents confirm the well-known facts that accidents are preceded by incidents and safety
deficiencies and underestimation of safety risks. The underestimation of any risks might have fatal
and catastrophic consequences not only for Travel Service, a. s. and its subsidiaries, but also for our
environment. We seek to learn lessons from each event that occurs anywhere around the world and we
seek to adopt new, primarily preventive measures, such as measures in flight planning, including the
specification of the estimated fuel consumption and relating reserves, in aircraft maintenance, training
of crews and training of other employees, set-up of processes, etc. The day-to-day efforts relating to the
strengthening of safety standards formally culminated in the successful completion of the IOSA audit as
part of the IATA Operational Safety Audit Program (IOSA), and the Company is a registered IOSA OPERATOR
with the registration effective until 30 November 2018.
The technical condition of aircraft is very important for air transportation safety. In 2016, similarly as in the
previous year, we paid maximum attention to aircraft maintenance and the scope of performed work
exceeded the requirements of the aircraft manufacturer, all this in pursuit of safety. In aircraft maintenance, we
cooperated with reputable certified and proven suppliers. The costs directly involved in aircraft maintenance,
net of payroll and other staff costs of technical section employees, exceeded CZK 1,100,577 thousand.
Nevertheless, technology is and always will be only technology; the key factor are people, our employees.
annual report | Travel Service 9
What I believe in most in today’s world where various religions, interests, cultures and traditions meet,
is the responsiveness, attention, intelligence and education, flexibility, responsibility, experience and
enthusiasm, and loyalty and skills of our employees and employees of our subsidiaries. We all need to be
constantly alert to ensuring the safety of our passengers, and other people around us.
In addition, we are fully aware of our responsibility towards our passengers, suppliers, environment,
company, employees and shareholders of the Company.
In 2016, we implemented a series of measures with the objective of mitigating the impacts of passenger
air transportation on the environment and becoming part of the worldwide Earth protection process,
primarily in relation to the production of carbon dioxide. In an effort to reduce the aerodynamic resistance
of aircraft, aviation fuel consumption and production of carbon dioxide, we worked, for example, on
polishing the leading edges, we covered the aerodynamically sensitive parts of aircraft with nano paint
coating, we optimised the filling of aircraft with aviation fuel and we took other measures leading to
a decrease in the total weight of operated aircraft which eventually results in carbon dioxide production
being reduced.
All of our aircraft are equipped with first-aid devices and defibrillators over and above the level required
by the applicable legislation, the crew regularly attends training focused on first-aid, hygiene and sanitary
requirements, behaviour and handling of emergency situations. We conduct regular audits of our partners
that provide aircraft repairs, aircraft handling, etc.
In 2016, the share capital of the Company was increased from the original amount of CZK 250,000
thousand to CZK 1,241,236 thousand. The share capital was increased by CZK 991,236 thousand which
enhanced the Company’s credibility, reliability and prospects. A significant portion of this sum was used
in making advance payments to Boeing for the acquisition of new 737 – 8 MAX aircraft and their inclusion
in the assets of Travel Service, a. s. Other advance payments were made to leasing companies in relation
to supplies of new aircraft of the same type under operating leases. The gradual renewal of the aircraft
fleet will commence in 2018 and the new type of aircraft will be gradually supplied until the end of 2024.
We need to be ready to respond to changes in a relatively close environment, albeit located thousands of
kilometres away from us. We need to be able to respond to the changing market environment and have
a clear perspective, define risks and subsequently mitigate them and take on only reasonable, calculated
and acceptable business risks.
The public referendum held in the United Kingdom decided, by 52 percent to 48 percent, on the exit
of the United Kingdom from the European Union. The result raises numerous questions. For example,
whether the United Kingdom will remain a full-fledged member of the European Common Aviation Area
(ECAA), how to deal with a perceived imbalance between the number of visitors to the United Kingdom
from other EU countries, in 2016 approximately 27.6 million as compared to 56.1 million U.K citizens
travelling to other EU countries, and the related net deficit in revenues and expenses of approximately
£18.1 billion? What will become of the EU Open Skies Agreement which is supervised by the Court of
Justice of the European Union when the current prime minister, Theresa May, prefers the UK not being
subjected to the rulings of the Court of Justice of the European Union. How will the slots for European
transporters be allocated in London and whether the 2006 situation when American transporters moved
from the Gatwick airport to the more lucrative Heathrow airport in relation to the termination of the
Bermuda II Agreement will recur?
In 2016, we continued to take maximum possible care of our passengers and customers. Unfortunately,
and with a certain degree of displeasure, I must say that the average delay of our operated flights
increased from 15 to 20 minutes in 2016. In this regard, vast room for improvement in our work exists. For
this reason, a work committee was established as an auxiliary body of the Board of Directors, its members
are representatives of individual Company divisions (technical, operational, business), and its mandate is
to evaluate the reasons underlying individual delays and to follow up on these findings by proposing and
acting upon remedial measures.
annual report 2016 | Travel Service10
With a view to capitalising on market prospects, we conduct marketing surveys and we search for new
perspectives and market opportunities in Asia, North and South America and Africa (for example in
relation to the Yamoussoukro Decision leading to the liberalisation of African skies; twenty African Union
member states (Egypt, Ethiopia, Kenya, Nigeria, Ghana, Guinea, etc.) have signed an obligation to update
the commitment of the internal single market in Africa).
I believe that we were successful in embracing and implementing the Company’s vision in 2016, primarily
in terms of safety, responsibility, friendly approach, reliability and prospects. It is necessary to continue
in these trends in the following periods and intensify our efforts in searching for new opportunities,
improvement in provided services and our own products.
Thank you all for cooperation, opportunities and fair approach.
Sincerely
Roman Vik
annual report | Travel Service 11
annual report 2016 | Travel Service12
3. Report of the board of directors on company’s business activities and balance of assets The Board of Directors decides all issues of the Company that are not defined as within the authority of
the General Meeting or the Supervisory Board by generally binding regulations or Company’s Articles
of Association. The Board of Directors primarily engages in business management of the Company,
exercises rights and obligations of an employer, grants consent with the transfer of shares and their
pledge, provides for bookkeeping and preparation of the financial statements in accordance with legal
regulations, etc. The Board of Directors cooperates with statutory bodies of subsidiaries when determining
and implementing business policy.
3.1 BUSINESS ACTIVITIES IN 2016
The Company and its three subsidiaries, i.e. Travel Service Polska Sp. z o. o, Travel Service Kft., Travel
Service Slovensko s. r. o., engage in scheduled and charter carriage by air, interstate and international air
transportation of passengers, their luggage, animals, mail and cargo. The fourth subsidiary Travel Service
GmbH is dormant. The last of the subsidiaries – T. S. Building, s. r. o. engages in different principal business
activities, lease of immovable assets.
The Company’s Board of Directors determines and implements principal lines of the business and marketing
policy of the group in air transportation, determines principal lines and concept of the group’s aircraft fleet,
determines general characteristics for procurement of inputs, e.g. in procurement of fuel and provision
other necessary preconditions needed for the generation of sales, provides for the funding of the Company.
The Board of Directors takes such measures that ensure financial and economic stability of the Company
while its growth is sustainable, achievement of adequate profit of the Company, adequate appreciation
of its assets and assets of shareholders. The implementation of the above measures is based on SAFETY,
RESPONSIBILITY, FRIENDSHIP, RELIABILITY, LUCIDITY, PROSPECT pillars.
The Company supplies the market with products consisting primarily in the generation of income from
charter transportation of passengers, charter flights, scheduled transportation of passengers, lease of aircraft
including their maintenance, insurance and qualified crews (WET LEASE), lease of aircraft without standard
maintenance, usual insurance and qualified crews (DRY LEASE) and aerotaxi in the Business Jet category.
In respect of the focus of its business activities, these primarily include services provided to other business
entities (B2B), end customers – individual passengers (B2C) while building a strong “SMARTWINGS” brand.
The group of income generated in B2B predominantly includes charter flights and aircraft leases, income
generated from B2C includes regular transportation of passengers.
The business plan prepared by the Company anticipated total sales of own products and services CZK
15,004,880 thousand for 2016, of which charter transportation of passengers in the amount of CZK
7,372,773 thousand, regular transportation of passengers in the amount of CZK 5,229,726 thousand and
aircraft leases and relating services (WET and DRY LEASE) in the amount of CZK 2,078,413 thousand.
The Company’s operating profit was planned in the aggregate amount of CZK 244,238 thousand and the
profit for the reporting period in the amount of CZK 62,619 thousand. In accordance with the financial
statements, the operating profit amounted to CZK 71,853 thousand; to ensure continuity the result
relating to hedging of fuel prices (hedging instruments – derivatives in the form of commodity swaps) is
recognised in the financial profit and had no accounting effect on the aviation fuel costs, though they are
concluded to hedge against its price fluctuation. In 2016, the income from these derivatives amounted
to CZK 90,663 thousand. The profit for the 2016 reporting period was CZK 193,299 thousand. Profit before
tax amounted to CZK 250,500 thousand in 2016 (2015: CZK 247,865 thousand).
The completed flights and other business activities generated total sales of products and services of CZK
15,481,000 thousand (2015: CZK 14,802,770 thousand). In charter transportation, total sales amounted to CZK
6,449,918 thousand in 2016 (2015: CZK 7,495,260 thousand), schedules transportation of passengers generated
sales of CZK 4,904,563 thousand in 2016 (2015: CZK 3,504,554 thousand), the product consisting in the lease of
aircraft and relating services generated sales of CZK 2,659,556 thousand (2015: CZK 2,010,934 thousand), sold
tickets on flights shared with České aerolinie, a. s. generated sales of CZK 714,032 thousand (2015: CZK 742,823
thousand), aerotaxi services in 2016 totalled CZK 228,610 thousand (2015: CZK 131,441 thousand). Other
services primarily consisting in the rebilling of purchased services, advertising (2016: CZK 21,718 thousand,
2015: CZK 29,108 thousand) amounted to CZK 524,321 thousand (2015: CZK 577,258 thousand).
annual report | Travel Service 13
Sales in B2B are generated based on long-term relationships with entities operating primarily on the
market of the Czech Republic, other European Community countries, North America and Middle East.
The aircraft lease (WET and DRY LEASE) is also provided to subsidiaries Travel Service Polska Sp. z o. o.,
Travel Service Slovensko s. r. o. and Travel Service Kft. Subsidiaries “transform” this product primarily into
passenger charter transportation services. Leases to subsidiaries are provided on a market basis, on an
arm’s length principle. Sales from the direct lease of aircraft to subsidiaries amounted to CZK 214,902
thousand in 2016 (2015: CZK 624,755 thousand). Travel Service Slovensko s. r. o. operated its own OM-TSG
aircraft (2015: OM-HCA, OM-TSG) which flew 1,021.70 BH on TVQ flights (2015: 1,293.07 BH). Travel Service
Polska Sp. z o. o. operated aircraft with SP-TVZ registration which flew 1,234.08 BH on TVP flights (2015:
1,091.08 BH).
In 2016, the Company operated 12,682 (2015: 14,086) charter flights of 40,121.63 block hours (2015:
44,456.32 block hours), 12,505 flights on scheduled lines (2015: 9,901), i.e. 34,102.18 BH (2015: 26,030.02
BH) and 45,836.87 BH of aircraft leases (2015: 36,661 BH). In aerotaxi services, the Company operated
2,819.05 BH (2015: 1,639.18 BH). Other flights, such as flyovers, technical maiden flights, training of crews
amounted to 3,711.43 BH (2015: 2,999.18). In 2016, subsidiaries recorded the total of 15,642.70 BH (2015:
17,353.38 BH).
In total, the Company recorded 126,591.17 BH, and the group recorded 142,233.97 BH in 2016. In the
previous year, i.e. 2015, the Company recorded 111,785.70 BH of flights and the group recorded 129,139.08
BH.
To provide for the above block hours (BH) and generate the income, the Company used the fleet of
aircraft registered by the Company, or its subsidiaries, with the relevant civil aviation authority. The above
performance, predominantly charter and scheduled flights and aircraft leases, was ensured primarily by
28 (2015: 29) Boeing 737-800 aircraft in the most frequently used configuration for 189 passengers with
the total of 104,065.07 BH (2015: 100,990.17 BH) of which for the Company 89,386.22 BH (2015: 88,885.20
BH), two (2015: 1) Boeing 737-900 aircraft with the configuration for 212 passengers with the total of
7,368.30 BH (2015: 1,961.85 BH), of which for the Company 7,365.63 BH (2015: 1,942.02 BH), and two B737-
700 aircraft with the seat capacity for 148 passengers and total of 6,113.62 BH (2015: 5,733.53 BH) of which
for the Company 5,965 BH (2015: 5,714.78 BH).
In March 2016, operating lease of Airbus A320-214 aircraft, manufacturing number 2180, registration OK-
HCB, was discontinued. In April 2016, the lease of Airbus A320-200 aircraft, manufacturing number 4699,
registration OK-HCA, was discontinued. Both aircraft completed 117.58 BH (2015: 5,239.32 BH), of which
for the Company 110.08 BH (2015: 2,766.25 BH).
In aerotaxi services, the Company operated five Cessna 680 Citation Sovereign aircraft, one aircraft (OK-
JUR) was lent by the manufacturer for a limited period of time as part of the complaint procedure. On
average, the Company operated four aircraft of this category, with the average annual completed 704.76
BH, total of 2,819.05 BH (2015: 1,646.85 BH, for the Company 1,639.18 BH). In 2016, the OK-EMA aircraft was
already fully operational; it was damaged by the handling company with which the Company concluded
a settlement agreement and the caused damage was compensated in line with the agreement.
Given the insufficient transportation capacity in the summer season, the Company leased aircraft from
well-established partners in the form of wet lease, these completed 21,750.25 BH in the reporting period
(2015: 13,613.50 BH) of which for the Company 15,787.13 BH (2015: 10,884.40 BH).
The OM-TSG and SP-TVZ aircraft of the subsidiaries completed 5,157.93 BH for the Company. The lease of
this aircraft from the subsidiaries is billed to the Company on an arm’s length basis.
In 2016, Company’s aircraft completed 101,545.72 BH in the form of Dry Lease, without any flights for
other entities. In 2015, they completed the total of 94,639.30 BH. The number of completed BH increased
year-on-year by 7.30%.
annual report 2016 | Travel Service14
The costs relating to the direct maintenance of Company’s aircraft, including the repairs of onboard
equipment, amounted to CZK 1,106,738 thousand in 2016 (2015: CZK 904,283 thousand). The aircraft
maintenance costs increased year-on-year by 22.39%. Although the aircraft fleet of the Company
completed more hours of flight, the increased costs are also due to the “ageing” of the aircraft.
The ageing of the aircraft brings about increased maintenance costs and, in comparison with newly used
models, and increase in costs resulting from the fuel consumption and gradual withdrawal from market
positions. The above facts justify the implementation of the aircraft renewal strategy when the existing
aircraft fleet is replaced by new Boeing 737-8 MAX aircraft. Between 2018 and 2021, the Company will
gradually receive supplies of 32 new aircraft of the above type, of which 8 aircraft will be included in the
assets of the Company based on concluded purchase contracts with Boeing of 29 July 2013 (3 aircraft)
and 22 December 2016 (5 aircraft). Gradually, i.e. from January 2018 to May 2021, 24 new aircraft will be
supplied under operating leases. Leases were agreed for 12 and 13 years, i.e. the anticipated termination
of the operating lease will range from 2030 to 2034.
In 2016, the labour market saw an increased demand for experienced aircraft pilots, especially captains.
Given that situation, the Board of Directors had to adopt and implement
a number of measures, including payroll measures. As compared to 2015, when payroll costs, statutory
social security and health insurance amounted to 965,338 thousand, these costs were increased to CZK
1,150,453 thousand, i.e. by 19.18%. In addition, the costs of employee training increased from CZK 39,179
thousand in 2015 to CZK 56,874 thousand in 2016, of which the flight division accounted for CZK 56,045
thousand of the total costs of the Company. The increase in the educational costs in 2016 was 45.16%.
The average headcount in 2016 was 1,169 persons (2015: 1,082), of which the average headcount of pilots
was 282 (2015: 278 pilots), average headcount of stewards and stewardesses was 453 (2005: 416), average
headcount of employees working in the technical division was 170 (2015: 148) and other employees 264
(2015: 240).
The Board of Directors manages the hedging of the Company against business risks on an ongoing
and systematic basis. It implements measures consisting in the diversification of products, consumer
segments, products and territories on a continuous basis. The Company implements hedging against
foreign exchange rate fluctuations and aviation fuel price fluctuation.
When conditions permit it, and when it is appropriate and purposeful, the Company opens tenders for
supplies of services and products, e.g. in supplies of aviation fuel, in respect of aircraft maintenance, etc.
In certain cases, primarily where it is necessary to ensure maximum quality and reliability of supplied
services in respect of the air operation safety, the Company prefers long-term business relationships, for
example in respect of aircraft engine repairs.
Pursuant to the prepared business plan for 2017, the Board of Directors set a task for 2017 for the Company:
completed 127,821 block hours with the anticipated sales of CZK 17,120,974 thousand and the profit for
the reporting period of CZK 202,020 thousand.
Summary:
1. The planned profit of the Company for 2016 was exceed by CZK 130,680 thousand and amounts to
CZK 193,299 thousand;
2. Planned sales of own products and services of the Company were exceeded by CZK 476,120 thousand;
3. As compared to 2015, the structure of flights changed in favour of scheduled transportation and
aircraft leases;
4. In 2015, the Company discontinued the operations of the AIRBUS aircraft and made further steps to
the implementation of the aircraft unification and aircraft fleet renewal strategy;
5. The number of aircraft used for the additional business activity, aerotaxi, was increased;
6. Increased payroll and other staff costs and educational costs due to shortage of pilots;
7. Risk diversification; and
8. Planned profit after tax for 2017 has been determined on the level of CZK 202,020 thousand.
9. In 2016, we have taken further steps observing our strategy of the aircraft unification and aircraft
annual report | Travel Service 15
fleet renewal which aims at keeping our position on the market and cutting other costs spent on our
aircraft fleet that is aging.
3.2 INFORMATION ON THE BALANCE OF ASSETS
As of 31 December 2016, the assets of the Company amounted to CZK 4,458,976 thousand (2015:
3,728,543 thousand) which were “covered” by the equity of the Company of CZK 1,981,301 thousand
(2015: CZK 982,903 thousand) with the share capital of CZK 1,241,236 thousand (2015: CZK 250,000), third-
party liabilities of CZK 2,413,044 thousand (2015: CZK 2,656,027 thousand) and expenses, or deferred
income, such as purchased air tickets for flights after 31 December 2016, of CZK 61,595 thousand (2015:
CZK 48,459 thousand).
In line with the resolution of the Company’s General Meeting held on 4 May 2016, on the course of which
notarial deed NZ 251/2016 was prepared, the share capital of the Company was increased by CZK 991,236
thousand through the subscription of new shares. The issue rate of all newly subscribed shares in cash
was paid in full and the Company recorded no receivables for subscribed share capital as of 31 December
2016.
As of 31 December 2016, the assets of the Company included fixed assets of CZK 1,250,228 thousand
(2015: CZK 761,359 thousand), i.e. intangible fixed assets with the book value of CZK 64,297 thousand
(2015: CZK 29,400 thousand), tangible fixed assets of CZK 723,292 thousand (2015: 274,481 thousand)
and non-current financial assets of CZK 462,639 thousand (2015: CZK 457,478 thousand). The fixed assets
increased by CZK 488,869 thousand as compared to 2015.
Intangible fixed assets as of 31 December 2016 included emission allowances with book value of CZK
30,655 thousand (2015: CZK 4,419 thousand), software with book value of CZK 14,466 thousand (2015:
14,011 thousand) and advance payments made for intangible assets and intangible fixed assets under
construction with book value of CZK 19,138 thousand (2015: CZK 10,900 thousand). At the end of
the reporting period, the Company held 355,395 emission allowances and aviation allowances (2015:
123,141) on its asset account in the register for trading with allowances for emissions of greenhouse gases
maintained by the national administrator. The assets of the Company include the MS Dynamics NAV 2013
software application intended primarily for bookkeeping and taxes in the amount of CZK 7,872 thousand
and the EFA application, software integrating business, operational and communication activities of the
Company, including the communication with travel agencies in the book value of CZK 6,176 thousand. In
respect of intangible fixed assets under construction, the principal item is the building of the warehouse,
logistics information system and system focusing of aircraft maintenance (Computerised Aviation
Maintenance and Engineering Software) OASES with book value of CZK 8,389 thousand from the British
supplier Communications Software (Airline Systems) limited based in Tiptree, Essex.
Tangible movable assets and sets of tangible movable assets amounted to CZK 38,114 thousand (2015:
CZK 39,022 thousand) as of 31 December 2016. The assets of the Company include aircraft fuel containers
with book value of CZK 12,667 thousand, seats for aircraft of CZK 3,647 thousand, movable assets relating
to aircraft maintenance (e.g. Iplex LX videoscope with a probe, tools for the repair of aircraft brakes, airstair,
transportation cart with a cradle and bars), Dacia Logan with towing device, Škoda Octavia ACTIVE,
Volkswagen Passat, computers, office furniture. During 2016, redundant, damaged or otherwise impaired
assets were disposed of, e.g. on-board computer, KV systems, crack detection device, etc.
In fixed assets, the most significant change was recorded in tangible fixed assets, advance payments
made for the acquisition of tangible fixed assets increased from CZK 217,284 thousand as of 31 December
2015 to CZK 664,255 thousand. The increase of CZK 446,971 thousand relates to the above contracts
concluded with Boeing for the supplies of new aircraft of 29 July 2013 (contract no. 3989) and 22
December 2016 (contract no. TSF-PA-04606). On 1 April 2016, the Company made an advance payment
of USD 5,049 thousand in line with contract no. 3989, following payments of USD 5,087 thousand and
USD 6,219 thousand were made on 30 May 2016 and 30 August 2016. In accordance with the purchase
contract for the supply of 5 aircraft concluded on 22 December 2016, as indicated above, the Company
paid an advance payment of USD 800 thousand in December 2016. Other advance payments were made
after the balance sheet date.
annual report 2016 | Travel Service16
Advance payments were partially made from medium-term loans provided by UniCredit Bank Czech
Republic and Slovakia of CZK 125,000 thousand on 18 December 2015 with regular quarterly instalments
of CZK 10,417 thousand from 31 March 2016 and maturity on 31 December 2018, loan provided by
Raiffeisenbank a. s. of CZK 125,000 thousand on 27 May 2016 with regular quarterly instalments of CZK
10,417 thousand from 30 September 2016 and maturity date on 31 May 2019. After the balance sheet
date, similar loan was provided by Česká spořitelna in the amount of CZK 150,000 thousand with maturity
on 22 February 2020.
The Board of Directors negotiates with a foreign bank and local banks on funding of aircraft that the
Company will acquire based on purchase contract no. 3989 of 29 July 2013.
Advance payments and adherence to contractual arrangements in line with concluded purchase
contracts complies with the Company’s aircraft renewal strategy. Advance payments are made in USD
and identically as similar asset items denominated in foreign currencies are exposed to exchange rate
fluctuations in terms of accounting.
Fixed assets under construction as of 31 December 2016 include assets of the Company of CZK 18,833
thousand (2015: CZK 15,344 thousand). These include recognised interest on provided loans, as indicated
above, for the acquisition of new aircraft.
The Company holds the 100% equity investments in subsidiaries:
1. Travel Service Polska Sp. z o. o, full name TRAVEL SERVICE POLSKA SPÓŁKA Z OGRANICZONA
ODPOWIEDZIALNOSCIA, corporate ID (REGON) 142926546 and (NIP) 5222978306, with its registered
office at ul. GORDONA BENNETTA, nr 2 B, lok. ---, WARSAW, code 02-159, WARSAW, POLAND, recorded
in the Register of Companies since 9 May 2011, statutory executives (CZŁONEK ZARZADU) - Jiří Jurán
and Jiří Beneš;
2. Travel Service Kft., full name Travel Service Légiforgalmi és Szolgáltató Felelősségű Tarsaság, with its
registered office at 16 Wesselényi u 16, 1077 Budapest, recorded in the Register of Companies since
22 January 2001, statutory executives - Attila Farkas and Jiří Jurán;
3. Travel Service Slovensko s. r. o., corporate ID 47 880 627 with its registered office at Ivanská cesta 30/B,
821 04 Bratislava, Slovakia, recorded in the Register of Companies since 10 September 2014, statutory
executives - Jiří Jurán, Peter Šujan and Michal Tomis;
4. Travel Service GmbH, corporate ID HRB 221461, with its registered office at 803 33 München,
Theatinerstrase 23, c/o Baker & McKenzie, recorded in the Register of Companies since 5 September
2014, statutory executive - Jiří Beneš,
5. T.S. Building, s.r.o., corporate ID 645 83 970, with its registered office at Václavské nám. 53/815, Praha 1,
110 00, recorded in the Register of Companies since 14 November 1995, statutory executives - JUDr.
Jiří Šimáně, Lenka Viková and Ing. Jiří Pavlát.
As of 31 December 2016, non-current financial assets amounted to CZK 462,639 thousand (2015: CZK
457,478 thousand) of which CZK 404,704 thousand in controlled entities
(2015: CZK 398,354 thousand). Individual equity investments were as follows:
1. Travel Service Polska Sp. z o. o. - CZK 3,080 thousand (2015: CZK 3,187 thousand)
2. Travel Service Kft. - CZK 233,465 thousand (2015: CZK 227,007 thousand)
3. Travel Service Slovensko s. r. o. - CZK 6,755 thousand (2015: CZK 6,756 thousand)
4. Travel Service GmbH - CZK 676 thousand (2015: CZK 676 thousand)
5. T.S. Building, s.r.o. - CZK 160,728 thousand (2015: CZK 160,728 thousand),
of which CZK 40,000 thousand is the payment over and above the share capital balance
The Company provides its subsidiaries, having the principal business activities consisting in air
transportation of passengers, with servicing based on contracts.
In 2016, Travel Service Polska Sp. z o. o. operated the total of 2,639 (2015: 1,639) mostly charter flights
with completed 8,870.45 (2015: 5,338.38) block hours. It used the SP-TVZ registration aircraft registered to
annual report | Travel Service 17
Travel Service Polska Sp. z o. o. and operated based on operating leases concluded with Wilmington Trust
SP Services (Dublin) Limited, the Company contractually guarantees the due payment of the lease. This
aircraft completed the total of 4,060.93 (2015: 3,618.37) block hours, of which 1,234.08 (2015: 1,091.08)
block hours for Travel Service Polska, 2,809.60 (2015: 2,527.28) block hours on flights of the Company
and 17.15 (2015: 0) block hours on flights of subsidiary Travel Service Slovensko. Other flights of 7,636.37
(2015: 4,247.30) block hours for Travel Service Polska were operated using aircraft under ACMI (Wet Lease).
In total 4,922.38 (2015: 925.53) block hours from lessors who are not group members. Lessors included
for example Canadian company Sunwing (long-term partner, mutual leases, the Company leases its
aircraft to Canada in the winter season, these were Boeing 737-800 with registrations C-FDBD, C-FJVE,
C-FYLC, C-GOFW, which completed 3,954.93 (2015: 925.53) block hours for Travel Service Polska), another
Canadian company Air Transat (Airbus 330-200 aircraft with the capacity of 345 seats, registration C-GTSN,
741,90 (2015: 0) block hours). Company’s aircraft completed 2,459.38 block hours on flights of the Polish
subsidiary and aircraft of subsidiary Travel Service Slovensko completed 254.60 block hours on flights of
the Polish subsidiary.
Pursuant to the concluded mandate contract, the Company provides Travel Service Polska with various
activities relating to its business activities, among other things, the Company maintains technical
documentation relating to aircraft operations, provides for aircraft repairs, supplies of spare parts, training
of flight and other staff, billing, preparation of business contracts, supplies of aviation fuel, insurance, etc.
In addition, the Company provides for the use and accesses to software applications, primarily to AIMS
(Aircraft Information Management System), EFA (including access for its clients), Microsoft Dynamic Nav
(bookkeeping), Salsys (warehouse management), DMS (Document Management Systems) and potential
other applications used by the Company. The Company is entitled to charge a management fee for the
provided services. In 2016, the amount of the management fee was USD 1,619 thousand (2015: USD 1,089
thousand).
In 2016, Travel Service Polska Sp. z o. o. recorded sales of PLN 282,844 thousand (2015: PLN 175,456 thousand) and
profit of PLN 2,109 thousand (2015: PLN 2,841 thousand). The average headcount in 2016 was 210 (2015: 175).
Travel Service Kft. on the air transportation market allocated 2,180.05 (2015: 3,875.32) block hours on 908
(2015: 1,472) mostly to charter flights. These flights were operated by the HA-LKG aircraft, with the original
registration OK-TVB, registered with the relevant civil aviation authority in Hungary, which completed
1,114.75 (2015: 1,126.48) block hours. Company’s aircraft completed 856.55 (2015: 2,404.21) block hours
for Travel Service, Kft., aircraft of Travel Service Slovensko, s. r. o. completed 8.28 (2015: 11.33) block hours
and aircraft of entities outside the ACMI (WET LEASE) leases completed 200.47 (2015: 333.30) block hours.
Pursuant to a concluded mandate contract, the Company is a servicing organisation for Travel Service
Kft. and provides aviation fuel, airport services, employee insurance, procures aircraft, etc. The Company
charged a management fee of EUR 627 thousand (2015: EUR 1,026 thousand) for the services provided
to Travel Service Kft.
In 2016, Travel Service Kft. recorded total sales of Ft 3,751,705 thousand (2015: Ft 6,847,790 thousand)
and profit for the reporting period of Ft 122,700 thousand (2015: Ft 146,739 thousand). The average
headcount in 2016 was 34 (2015: 34), 28 employees at the end of 2016 (2015: 25).
In 2016, Travel Service Slovensko s. r. o. operated 1,784 (2015: 3,304) mostly charter flights and completed
4,592.20 (2015: 8,185.68) block hours. Aircraft registered with the relevant civil aviation authority of
Slovakia, registration OM-TSG, operated 410 flights with completed 1,036.53 (2015: 1,349.10, including
the OM-HCA aircraft) block hours. Other flights were operated on leased aircraft under ACMI lease (WET
LEASE). Aircraft from the Company’s fleet completed 2,698.15 (2015: 5,366.32) block hours, the aircraft
leased from subsidiary Travel Service Polska Sp. z o. o. completed 17.25 (2015: 0) block hours and aircraft
leased from other entities outside the Travel Service group completed 840.27 (2015: 1,470.26) block hours.
Travel Service Slovensko s. r. o. uses, identically as the above subsidiaries, services of the Company. The
Company charged the management fee of EUR 3,011 thousand (2015: EUR 2,982 thousand) for the
provided services.
annual report 2016 | Travel Service18
In 2016, Travel Service Slovensko s. r. o. recorded sales of EUR 51.913 thousand (2015: EUR 60,344 thousand)
and the profit for the reporting period of EUR 1,293 thousand (2015: EUR 402 thousand). The average
headcount in 2016 was 49 (2015: 63), 3 employees at the end of 2016 (2015: 4).
T.S. Building, s.r.o. is an entity which is not involved in air transportation of passengers, and it has no employees. Its
fixed assets include the building in which the registered office is located and T. S. Building rents it to the Company.
Sales of T. S. Building from the rent of the real estate amounted to 14,338 thousand in 2016 (2015: CZK 14,338
thousand) and other sales (rebilling for cleaning, security services, etc.) amounted to CZK 4,247 thousand (2015:
4,285 thousand). These are solely sales to the Company. The profit for the reporting period amounted to CZK 6.471
thousand (2015: CZK 7.791 thousand).
Since 2015, the Company has been the owner of the 34% investment in the share capital of České aerolinie a.
s., with its registered office at Evropská 846/176a, Vokovice, 160 00 Prague 6, corporate ID 45795908. In 2016,
the Company recorded sales of its own products and services of CZK 7,975,248 thousand (2015: CZK 8,057,118
thousand) and generated profit of CZK 241,382 thousand (2015: CZK 223,427 thousand). Profit before tax
amounted to CZK 241,382 thousand (2015: CZK 223,427 thousand).
As of 31 December 2016, the Company recorded long-term receivables of CZK 866,670 thousand (2015: CZK
716,502 thousand). These are primarily security deposits with book value of CZK 826,046 thousand relating to
aircraft leased under operating leases, for example aircraft, OK – TVJ registration (deposit of USD 500 thousand in
favour of WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED), OK-TVV (deposit of USD 670 thousand), etc. On 29
January 2016, the Company paid a security deposit of USD 1,900 thousand to WILMINGTON TRUST SP SERVICES
(DUBLIN) LIMITED in relation to the supply of new Boeing 737-8 MAX aircraft in accordance with the fleet renewal
strategy. The supply of the first aircraft in line with the concluded contracts for aircraft operating lease is anticipated
for May 2019. Another security deposit of USD 1,230 thousand was paid on 10 February 2016 to Celestial Aviation
Tradin 11 limted. In 2016, other deposits were paid, for example on 2 February 2016 and 4 May 2016 in relation to
the conclusion of the contract for operating lease of aircraft, OK-TSO registration. On the other hand, the security
deposit relating to the lease termination and return of aircraft with registration OK-HCB was settled.
Fixed assets, i.e. fixed assets and long-term receivables total CZK 2,116,898 thousand and are substantially
covered by the Company’s equity and medium-term loans (CZK 104,167 thousand). These long-term
funds amount to CZK 2,085,468 thousand.
The balance of inventory as of 31 December 2016, taking into account allowances for material, amounted
to CZK 441,538 thousand (2015: CZK 329,189 thousand). Allowances for inventory of material – material
of CZK 4,717 thousand (2015: CZK 4,760 thousand) were recognised for temporarily disassembled
spare parts from aircraft and represent anticipated costs of their restoring to the original condition. The
temporarily disassembled parts include for example brakes (BRAKE 737-800 HONEYWELL of CZK 19,645
thousand, BRAKE 737-800 GOODRICH of CZK 2,217 thousand, MAIN BRAKE MESSIER-BUGATTI of CZK
4,536 thousand), aircraft engine blades (FAN BLADE of CZK 6,000 thousand), main wheels of CZK 29,113
thousand, CLASS DIVIDER of CZK 8,236 thousand, etc. The inventory of material includes newly purchased
items, such as carpets for aircraft of CZK 1,762 thousand.
Other assets, including trade receivables, were assessed and allowances were recognised where needed.
As of 31 December 2016, the Company recognised allowances for receivables of CZK 71,540 thousand
(2015: CZK 51,183 thousand).
Summary:
1. The share capital was increased by CZK 991,236 thousand in 2016, the balance sheet total has
increased by CZK 730,433 thousand;
2. The increase in fixed assets primarily relates to the implementation of the aircraft renewal strategy
and advance payments made for their supplies;
3. Long-term funds “cover” fixed assets – Company’s assets;
4. All subsidiaries of the Company that are performing their business activities are profitable; the profit of Travel Service
Polska, Sp. z o. o. is PLN 2,109 thousand (CZK 12,918 thousand), the profit of Travel Service, Kft. is Ft 122,700 thousand
(CZK 10,701 thousand), the profit of the subsidiary, Travel Service Slovensko, s. r. o. is EUR 1,293 thousand (CZK 34,937
thousand) and the profit of T.S. Building, s.r.o. is CZK 6,471 thousand; CZK 65,027 thousand in total)
annual report | Travel Service 19
5. The Company is a servicing organization for its subsidiaries and mutually provided services within the
group are billed on an arm’s length basis.
6. In line with the aircraft fleet renewal strategy, advance payments were made for the supplies of new
aircraft B 737-8 MAX by way of operational leasing;
7. The increase in inventory /spare parts in stock is given by the fact that the Company must ensure the
smooth operation of aircraft and the fact that the aircraft fleet is aging;
3.3 PROPOSAL HOW TO DISTRIBUTE THE PROFIT
The Company generated the profit of CZK 193,299,111.60. The Board of Directors proposes to the general
meeting that the following profit distribution to be approved:
1. CZK 13,299,111.60 to be transferred to the fund that is used to cover any potential losses and
entrepreneurial risks of the Company;
2. CZK 180,000,000 to be transferred to the account Retained Profit of Previous Years;
Summary: The Board of Directors proposes not to pay out any dividends in 2016.
3.4 CONCLUSION
Considering results for 2016, the Board of Directors believes that the assets of the Company, including
financial investments, were appreciated in 2016, and preconditions were created for further sustainable
development of the Company and the Company is fully able to continue as a going concern.
Principal tasks for the Company for 2017 include meeting of strategic objectives as indicated above,
including the implementation of further measures relating to the aircraft fleet renewal and further
building of a strong sales brand. In addition, the Board of Directors takes measures aiming to the increase
in the Company’s equity to the amount exceeding
CZK 2,000 million as of 31 December 2017.
Company’s Board of Directors
annual report 2016 | Travel Service20
annual report | Travel Service 21
4. About Travel Service, a. s.
Travel Service, a. s. is one of the oldest and concurrently largest private airlines in Central and Eastern
Europe, in terms of transportation capacity, size of its aircraft fleet and the number of transported
passengers, generated income or balance of its assets. The general information on the Company:
Name: Travel Service, a.s. (hereinafter the “Company”)
Registered office: K Letišti 1068/30, 160 08 Prague 6
Legal status: joint stock company
Register of Company: held by the Municipal Court in Prague, File no. B 5332
Corporate ID: 25663135
Business activities: - scheduled and charter, intrastate and international commercial air
transportation of passengers, their luggage, animals, mail and cargo
- production, trade and services not listed in appendices 1 to 3 to the Trade
Licensing Act
Travel Service, a.s. (hereinafter the “Company”) was formed in accordance with laws of the Czech Republic and is
recorded in the Register of Companies held by the Municipal Court in Prague, File B, Insert 5332. The Company
was formed by a deed of foundation prepared on 23 January 1998 in the form of notarial deed no. NZ/12/1998
(N21/1998). In its resolution with registration no. Rg. B 5332/01 of 28 April 1998, the then Regional Commercial
Court in Prague decided on the entry of Travel Service, a.s. in the Register of Companies. The above resolution took
effect and became enforceable on 28 April 1998. The Company started its business activities in 1998.
Registered office of the Company and the place of its actual administration is located at K Letišti 1068/30, 160 08
Prague 6, Czech Republic.
The Company and its subsidiaries, Travel Service Légiforgalmi és Szolgáltató Korlátolt Felelősségű Társaság,
in abbreviated form Travel Service, Kft. and Travel Service Polska Spólka z Ograniczona Odpowiedzialnošcia, in
abbreviated form Travel Service Polska Sp. z o. o. and Travel Service Slovensko s. r. o. maintained their significant
positions on the air transportation market in Hungary, Poland and Slovakia.
The Company, and its subsidiaries in Hungary, Poland and Slovakia, use the fleet of Boeing 737-900, Boeing
737 – 800, Boeing 737 – 700, Airbus A320-214 and Cessna 680 Citation Sovereign aircraft registered with
aviation authorities in the Czech Republic, Hungary, Poland and Canada. It additionally used short-term
leases of aircraft from other airlines. At the beginning of 2016, the operation of Airbus A320-214 was
discontinued and the aircraft were returned to leasing companies.
The Company holds the 100% equity investment in T. S. Building, s. r. o., corporate ID 645 83 970, with
its registered office in, Václavské nám. 53/815, Prague 1, 110 00, recorded in the Register of Companies
held by the Municipal Court in Prague, File no. C 41233 and 34% investment in the share capital of České
aerolinie a. s., with its registered office at Evropská 846/176a, Vokovice, 160 00 Prague 6, recorded in the
Register of Companies held by the Municipal Court in Prague, File no. B 1662.
annual report 2016 | Travel Service22
The following chart shows the equity investments of the Company:
Travel Service, Kft.
(Hungary)
100%
Travel Service Polska, Sp. z o. o.
(Poland)
100%
T. S. Bulding, s. r. o.
(Czech Republic)
100%
Travel Service Slovensko, s. r. o.
(Slovakia)
100%
Travel Service GmbH
100%
České aerolinie a.s.
34%
Travel Service, a. s.
(including Travel Service, a. s. organizačná zloška Slovensko)
annual report | Travel Service 23
annual report 2016 | Travel Service24
5. Relationships with customers and suppliers
The Company has built its relationships with customers in the long-term and it wishes its customers
to accept their customer role and keep it. Presently, companies face the toughest competition so far.
The move from the philosophy of products and sales to marketing philosophy provides companies with
a better opportunity to beat their competitors. The basic pillar of the well envisaged marketing focus
involves strong relationships with customers and concurrently the company must use the philosophic
basis stating: “If we try to provide a higher level of customer satisfaction, this fact must bring satisfaction
also to other involved parties within total available sources.” In an effort to achieve an increased customer
satisfaction, the Company took numerous measures. For examples, it concluded employment contract
with pilots and stewards and stewardesses – French citizens – in accordance with French labour law for
flights with mostly French speaking passengers.
5.1 CUSTOMERS
In 2016, the Company and its subsidiaries carried out 142,234 block hours of flights relating to services provided to Company’s customers.
2016
Carried out block hours
2015
2014
2013
2012
2011
142 234
129 185
129 833
121 475
86 759
84 145
annual report | Travel Service 25
In 2016, the Company continued the managed process of regrouping of carried out block hours between
the charter carriage and scheduled carriage in relation to the pursing of a strong trademark strategy. The
strengthening of the fleet for aero taxi and return of one aircraft back to operations due to an insured event
resulted in an increase of carried out block hours in the segment of individual transportation. The Company
recorded an increase in carried out block hours in Poland, and decrease in block hours in Slovakia and Hungary.
The following chart shows the increase in the number of carried out block hours in ACMI leases carried
out in Canada, Oman, India, etc.
60 000 Charter Carriage by Air
WET a DRY LEASE
Scheduled Carriage by Air
Business Jet
Travel Service, kft
Travel Service Polska Sp. z o. o.
Travel Slovensko, s.r.o.
30 000
40 000
50 000
20 000
10 000
0
2011 2012 2013 2014 2015 2016
54 0
09
11 2
09
12 6
83
1 44
1
4 80
2
0 0 43 6
82
17 1
53
14 1
63
2 07
5
3 73
3
5 95
3
0 53 8
73
35 1
10
19 9
34
2 27
8
2 16
9
8 11
2
0 49 2
25
47 6
57
21 6
31
2 37
9
3 62
9
4 98
0
0 44 4
56
36 6
61
26 0
30
1 63
9
3 87
5
5 33
8
8 18
6
40 1
22
45 8
37
34 1
02
2 81
9
2 18
0
8 87
0
4 59
2
annual report 2016 | Travel Service26
5.1.1 TERRITORIAL STRUCTURE OF COMPANY’S REVENUES
The Company generated more than 97% revenues with customers or through customers based in 14 states, specifically:
1. Czech Republic - approx. 35% (2015: approx. 39%) 8. Oman - approx. 3%
2. Poland - approx. 14% (2015: approx. 14%) 9. India - approx. 3% (2015: approx. 2%)
3. France - approx. 12% (2015: approx. 10%) 10. Austria - approx. 2% (2015: approx. 1%)
4. Israel - approx. 7% (2015: approx. 4%) 11. Hungary - approx. 2% (2015: approx. 2%)
5. Canada - approx. 6% (2015: approx. 6%) 12. Norway - approx. 1% (2015: approx. 1%)
6. Slovakia - approx. 6% (2015: approx. 3%) 13. Germany - approx. 1% (2015: approx. 3%)
7. Ireland - approx. 3% (2015: approx. 5%) 14. United Kingdom - approx. 1% (2015: approx. 1%)
5.1.2 BUSINESS-TO-BUSINESS MARKET VERSUS BUSINESS-TO-CONSUMER MARKET – CHARTER
CARRIAGE, WET LEASE AND SCHEDULED CARRIAGE
The operating income of the Company is generated primarily from charter carriage, scheduled carriage
under SmartWings brand and ACMI leases (Wet Lease, or Dry Lease). The income from charter carriage
and income from ACMI (WET LEASE) is generated on B2B markets and primarily involves purchases by
travel agents and other airlines. The income from scheduled carriage is generated primarily on B2C
markets using various distribution channels. All listed income in the past 5 years show a growth trend,
the most dynamic growth has been recorded in income generated under Company’s own SmartWings
brand.
annual report | Travel Service 27
37,9
6 %
27,0
2 %
25,1
9 %
23,4
4 %
19,2
7 %
18,2
2 %
16,6
7 %
13,6
7 %
2009
71,2
9 %
Charter Revenue Scheduled Flights Revenue Wet and Dry Lease Revenue
Wet and Dry Lease Revenue Charter Revenue Scheduled Flights Revenue
60,00 %
70,00 %
80,00 %
30,00 %
40,00 %
50,00 %
20,00 %
10,00 %
0,00 %2016 2015 2014 2013 2012 2011 2010
The following chart shows the development in the share of the above income in operating income.
The share of the Company’s income generated in the B2B market and B2C market and trends in prior years were as follows:
43,1
4 % 17
,97
%
37,9
6 %
51,5
2 % 12
,80
%
27,0
2 %
60,0
1 % 13
,46
%
25,1
9 %
60,0
41 % 12
,29
%
23,4
4 %
65,2
8 % 8,
83 %
19,2
7 %
73,4
0 % 5,
41 %
18,2
2 %
73,0
0 %
6,50
%
16,6
7 %
8,60
%
13,6
7 %
60,00 %
70,00 %
80,00 %
90,00 %
30,00 %
40,00 %
50,00 %
20,00 %
10,00 %
0,00 %2016 2015 2014 2013 2012 2011 2010 2009
61,1
1 %
64,3
2 %
73,4
8 %
72,7
0 %
74,1
1 %
78,8
1 %
79,5
0 %
79,8
9 %
Revenue – B2B market
Revenue – B2C market
Mocninná (Revenue – B2B market)
Mocninná (Revenue – B2C market)
annual report 2016 | Travel Service28
5.1.3 BUSINESS-TO-BUSINESS MARKET – B2B
The Company has built and maintained long-term relationships with its clients from amongst travel
agents and airlines. The sold products are as follows:
(i) Charter flights – sale of full aircraft capacity to one partner or division of the full capacity to blocks
and sale of individual blocks to several customers. In respect of unused capacities, in certain cases the
Company makes clearance sales to end customers through distribution channels (B2C).
(ii) Lease of aircraft, including crews, maintenance and insurance (ACMI leases, WET LEASE) when the
aircraft are controlled by the Company.
(iii) Dry Lease.
In charter carriage of persons, significant clients include entities in the Czech Republic, Slovakia, Poland,
France, Austria, Israel, etc. These are entities cooperating in the long-term with well-built customer
relationships.
The lease of aircraft is used primarily when the Company has sufficient transportation capacity available,
specifically in the winter season. Aircraft are leased to India, Oman, Canada, etc. They are leased primarily
to clients having long-term relationships with the Company. Aircraft leases are provided on a long-term
basis, e.g. Oman, Canada.
Aircraft leases are additionally provided on an ad hoc basis, for example in a situation when other airlines
have short-term insufficient transportation capacity. The high flexibility of the Company allows to
conclude these short-term contracts at any night and day time, all year round and dispatch aircraft within
6 hours from the explanation of requirements of the customer.
In 2016, the Company strengthened its position and relationships with long-term clients in EU countries
and beyond the borders of the EU. The Company has a very strong position on the B2B market in the
“Visegrad Four” countries4. The Company strengthens its business relationships with non-EU partners.
5.1.4 BUSINESS-TO-CONSUMER MARKET – B2C
The income generated from transportation under the SmartWings brand has grown faster since 2009
than other income from charter carriage. The Company is aware of the fact that its “customers are more
educated and gather more information than before and they possess tool to verify and search for better
alternatives”5. The Company differs itself from other “low-cost” company by the level of provided services.
The passengers on flights of the Company continued to enjoy numerous benefits as part of their purchase
tickets that were previously treated as standard, and which are currently paid in many competitors. The
Company does not intend to require for example payment for the use of toilets, etc. The Company does
not apply any hidden fees – e.g. additional fees for payments made by payment cards, etc. This difference
relates to the building of a strong SmartWings brand.
The Company is aware that “Building of a strong brand requires a careful planning and significant long-
term investments and the core of the successful brand is an excellent product supported by creative
marketing activities.6” For this reason, the costs relating to advertising and brand building have been
rather stable since 2012.
0
10 000
20 000
40 000
2016 2015 2014 2013 2012 2011
30 000
25 033 25 160 26 262 37 453 26 084 20 666
annual report | Travel Service 29
The SmartWings brand is registered by the Industrial Property Office, similar EU authority (the Trade Marks
and Designs Registration Office of the European Union) and the Company is the owner of the brand in
both graphic and verbal form. Given the business and sales strategy of the Company the brand has been
developed and supported in the long-term and purposefully.
5.2 SUPPLIERS
The Company has operated on the air transportation market for almost twenty years and it has built
and strengthened long-term correct relationships with its suppliers and customers based on the mutual
benefit principle.
The Company has very good relationships with fuel suppliers – Air Total International SA, Shell Czech
Republic, a. s., BP International Limited, World Fuel Services Europe Ltd., etc.
In aircraft maintenance and supplies of spare parts, long-term partners include Lufthansa Technik
Aktiengesellschaft, AJ Walter Aviation Ltd. West Sussex, Honeywell International – Chicago, Middlesex,
Phoenix, Rolle (Switzerland), Czech Airlines Technics a. s. Praha, etc.
As the Company prefers long-term relationships with its suppliers, it searches for optimum prices of
supplied services and products every year. For this purpose, it announces transparent tenders specifically
for supplies of fuel, cyclical aircraft repairs - AV CHECK, etc., when the condition for the participation in
the tender are quality criteria and final decision on the supplier depends on total costs of the Company
relating to the procurement of products and services supplies. Similar method is used for the procurement
of supplies for subsidiaries Travel Service Kft., Travel Service Polska Sp. z o. o. and Travel Service Slovensko
s. r. o.
4 Visegrad Four is a group of four Central European states: Czech Republic, Hungary, Poland and Slovakia formed in 1991.
5 Glen L. Urban, “The Emerging Era of Customer Advocacy”
6 Philip Kotler, Kevin Lane Keller, Marketing Management 12th edition, Grada Publishing
annual report 2016 | Travel Service30
6. Facts recorded in the register of companies maintained by the Municipal court in Prague
In May 2016, the amount of the share capital was recorded in the Register of Companies, it is recorded
as paid in full in the amount of CZK 1,241,236,250 and relating records show the number of registered
shares and their nominal value (12,411 ordinary registered shares in the certificate form with the
nominal value of CZK 100,000 and similar record of CZK 136,250 shares with the nominal value of CZK
1. Share are transferrable to other shareholders or third parties only with the prior written consent of
the Company’s Board of Directors. The record of the share capital is accompanied by a record from the
General Meeting held on 4 May 2016 which decided on an increase in the hare capital.
In August 2016, Ing. Peter Šujan and Mgr. Michal Tomis, as members of the Supervisory Board, were
removed from the Register of Companies. Another record related to a change in the Supervisory Board,
Ing. Ludvík Macháček was recorded as the member of the Supervisory Board and a new member – Ing.
Marcel Hrdá was recorded as the Chairwoman of the Supervisory Board.
The composition of the Company’s Board of Directors in 2016 was as follows: JUDr. Jiří Šimáně, chairman,
Ing. Roman Vik and Ing. Jiří Jurán, members.
annual report | Travel Service 31
annual report 2016 | Travel Service32
7. Shareholder structure
As at 31 December 2016, the shareholder structure was as follows:
(i) UNIMEX GROUP, a.s., Václavské nám. 53, Prague 1, held 1,390 ordinary shares in the certificate form
with the nominal value of CZK 100,000 per share, and 18,460 ordinary shares with the nominal value
of CZK 1 per share. The serial numbers of held shares are 337-409, 668-707, 823-838, 951-1036, 1058-
1100, 1824-1845, 5308-5824, 10708-11300, 109854-128313. The aggregate nominal value of shares
is CZK 139,018,460 and the investment of the shareholder in the share capital is 11.20%. The above
shares entitle the shareholder to exercise all shareholder rights.
(ii) Ing. Roman Vik held 1,390 ordinary shares in the certificate form with the nominal value of CZK 100,000
per share, and 18,460 ordinary shares with the nominal value of CZK 1 per share. Serial numbers of
held shares are 243-336, 435, 631-667, 785-811, 856-893, 1241-1250, 2085-2157, 4791-5307, 10115-
10707, 91394-109853. The aggregate nominal value of shares is CZK 139,018,460 and the investment
of the shareholder in the share capital is 11.20%. The above shares entitle the shareholder to exercise
all shareholder rights.
(iv) CANARIA TRAVEL, spol. s r. o., with its registered office at Horňátecká 5/481, Praha 8, corporate ID
49689428, held 3,435 ordinary shares with the nominal value of CZK 100,000 per share, and 74,194
ordinary shares with the nominal value of CZK 1 per share. Serial numbers of held shares are 410-434,
458-627, 708-784, 839-855, 894-950, 1531-1625, 2250-2500, 5825-7456, 11301-66257, 128314-148661.
The aggregate nominal value of shares is CZK 343,574,194 and the investment of the shareholder in
the share capital is 27.68%. The above shares entitle the shareholder to exercise all shareholder rights.
(v) China International Group Corporation Limited with its registered office at Room 4307-4312, 43/F,
Convention Plaza Office Tower, 1 Harbour Road, Wan Chai, Hong Kong, China, held 6,196 ordinary
shares with the nominal value of CZK 100,000 per share, and 25,136 ordinary shares with the nominal
value of CZK 1 per share. Serial numbers of held shares are 1-242, 436-457, 628-630, 812-822, 1037-
1057, 1101-1240, 1251-1530, 1626-1823, 1846-2084, 2158-2249, 2501-4790, 7457-10114, 66258-91393.
The aggregate nominal value of shares is CZK 619,625,136, and the investment of the shareholder in
the share capital is 49.92%. The above shares entitle the shareholder to exercise all shareholder rights.
annual report | Travel Service 33
annual report 2016 | Travel Service34
8. Information on shareholder structure
Travel Service, a. s.
Roman Vik
(100%)
Mr. Ye Jianming
(90%)
Mr. Zang Jianjun
(10%)
Unimex Group, a. s.
(25%)
TO-SERVIS spol. s r. o.
(50%)
EH Group s. r. o.
(25%)
Jiří Šimáně
(60%)
Jaromír Šmejkal
(40%)
China United Association
International Funding
Centre Ltd. (70%)
Zhong Ye Equity Investment
Fund Ltd.
(30%)
Jiří Šimáně
(60%)
Jaromír Šmejkal
(40%)
Roman Vik
(50 %)
EH Goup s. r. o.
(50%)
China United Association
(HK) Limited
(100%)
Mr. Zang Jianjun
(80 %)
Mr. Lu Dachuan
(20 %)
CANARIA TRAVEL, spol. s r. o.
(27,68%, 2015: 27,68%)
Roman Vik
(11,20%, 2015: 31,16%)
UNIMEX GROUP, a. s.
(11,20%, 2015: 31,16%)
China International Group
Corporation
(49,92%, 2015: 10%)
annual report | Travel Service 35
The above chart shows that the ultimate owners of the equity investment of 50.08% are three Czech
citizens, citizens of the European Union – Jiří Šimáně, Roman Vik, Jaromír Šmejkal and one entity with
its registered office outside the European Union. The change in the shareholder structure made in
2016 resulted from an increase in the share capital of the Company from CZK 250,000 thousand to CZK
1,241,236 thousand.
annual report 2016 | Travel Service36
Jiří Šimáně
Unimex Group, a. s., Chairman of the Board of Directors
BT Golf, s.r.o., Statutory Executive and shareholder holding
an equity investment
UG-D, a. s., Chairman of the Board of Directors
UG SHOPS, s . r. o. , Statutory Executive
TRAVEL FREE, s. r. o. , Statutory Executive
T. S. Building, s. r. o., Statutory Executive
Global Stores, a. s. , Chairman of the Board of Directors
Vinohradská BLDG, a. s. , Chairman of the Board of Directors
UNIMEX GROUP, uzavřený investiční fond, a. s., Chairman of the Board of Directors
UNI HOBBY, a. s., Chairman of the Board of Directors
Janáčkovo, a. s., Chairman of the Board of Directors
Příkopy, a. s., Chairman of the Board of Directors
Václavské, a. s., Chairman of the Board of Directors
Global Spirits s. r. o., Statutory Executive
UG Jet, s. r. o.
Roman Vik
TO-SERVIS spol. s r. o. Statutory Executive and shareholder holding
an equity investment
EH Group s. r. o.Statutory Executive and shareholder holding
an equity investment
EHQ Energy s. r. o. Shareholder holding an equity investment
EHQ s. r. o.Statutory Executive and shareholder holding
an equity investment
CANARIA TRAVEL, spol. s r. o., Statutory Executive
annual report | Travel Service 37
In 2016, China International Group Corporation Ltd. held an equity investment in LAPASAN, s. r. o. (77.78%),
MÉDEA, a. s. (30%), EMPRESA MÉDIA, a. s. (49%) and 100% equity investment in China International Group
Holding Corporation Ltd. in addition to the above equity investment in Travel Service, a. s.
Summary: Relationships among shareholders primarily include relationships among China International
Group Corporation Limited, Unimex Group, a. s. and Ing. Roman Vik, where the “core” business of Roman
Vik is the international air transportation, in Unimex Group, a.s. the international air transportation is one
of many other activities. Mutual relationships may be qualified as parity relationships.
Jaromír Šmejkal
Unimex Group, a. s. Vice-Chairman of the Board of Directors
REAL PROPERTY INVESTMENTS, s. r. o., Statutory Executive and shareholder holding
an equity investment
UG-D, a. s., Vice-Chairman of the Board of Directors
UG SHOPS, s. r. o., Statutory Executive
Travel FREE, s. r. o. , Statutory Executive
Pelicana, s. r. o, Statutory and shareholder holding an equity
investment
Stephany Fiora s. r. o.,Statutory and shareholder holding an equity
investment
Global Stores, a. s. , Vice-Chairman of the Board of Directors
Vinohradská BLDG, a. s. , Vice-Chairman of the Board of Directors
UNIMEX GROUP, uzavřený investiční fond, a. s., Vice-Chairman of the Board of Directors
UNI HOBBY, a. s., Vice-Chairman of the Board of Directors
Janáčkovo, a. s., Vice-Chairman of the Board of Directors
Příkopy, a. s., Vice-Chairman of the Board of Directors
Václavské, a. s., Vice-Chairman of the Board of Directors
Global Spirits s. r. o., Statutory Executive
UNIMEX spol. s r. o.,Statutory Executive and shareholder holding
an equity investment
annual report 2016 | Travel Service38
9. Company management
9.1 GENERAL MEETING
The General Meeting is the supreme body of the Company. The share capital of the Company amounts to
CZK 1,241,236,250 and is composed of 12,411 ordinary shares with the aggregate nominal value of CZK
1,241,100,000 and 136,250 ordinary shares with the aggregate nominal value of CZK 136,250. As indicated
above, shareholders of the Company are Unimex Group, a. s., Ing. Roman Vik and CANARIA TRAVEL, spol.
s r. o. and China International Group Corporation Limited.
9.2 BOARD OF DIRECTORS
The Board of Directors is the statutory body of the Company which manages its activities and represents
the Company in a manner defined in the Articles of Association. Two members of the Board of Directors
act on behalf of the Board of Directors. The Board of Directors is entitled to authorise a member of the
Board of Directors to act on behalf of the Company. Activities of the Board of Directors are defined by
the applicable version of the Company’s Articles of Association. At its meeting held on 28 June 2012,
the Board of Directors authorised its members JUDr. Jiří Šimáně, Ing. Roma Vik and Ing. Jiří Jurán, to act
individually in all matters on behalf of the Company, in accordance with the Articles of Association and
manner of acting on behalf of the Company recorded in the corporate details held in the Register of
Companies.
Since 25 June 2014, the change in the Company’s Articles of Association has been in effect, and each
member of the Board of Directors acts individually on behalf of the Company.
Board of Directors at
31 Dec 2011:
Chairman: Jiří Šimáně
Member: Roman Vik
Member: Sigthor Einarsson
Board of Directors at
31 Dec 2012:
Chairman: Jiří Šimáně
Member: Roman Vik
Member: Sigthor Einarsson
Member: Jiří Jurán
Board of Directors at
31 Dec 2013:
Chairman: Jiří Šimáně
Member: Roman Vik
Member: Jiří Jurán
Board of Directors at
31 Dec 2014:
Chairman: Jiří Šimáně
Member: Roman Vik
Member: Jiří Jurán
Board of Directors at
31 Dec 2015:
Chairman: Jiří Šimáně
Member: Roman Vik
Member: Jiří Jurán
Board of Directors at
31 Dec 2016:
Chairman: Jiří Šimáně
Member: Roman Vik
Member: Jiří Jurán
annual report | Travel Service 39
9.3 SUPERVISORY BOARD
(i) The Supervisory Board is the control body of the Company and it supervises the activities of the Board
of Directors and business activities of the Company.
Supervisory Board at
31 Dec 2012
Ludvík Macháček, Chairman
Michal Tomis, member
Peter Šujan, member
Supervisory Board at
31 Dec 2013
Ludvík Macháček, Chairman
Michal Tomis, member
Peter Šujan, member
Supervisory Board at
31 Dec 2014
Ludvík Macháček, Chairman
Michal Tomis, member
Peter Šujan, member
Supervisory Board at
31 Dec 2015
Ludvík Macháček, Chairman
Michal Tomis, member
Peter Šujan, member
Supervisory Board at
31 Dec 2016
Marcela Hrdá, Chairwoman
Ludvík Macháček, member
Wang MIngtai, member
annual report 2016 | Travel Service40
annual report | Travel Service 41
10. Corporate governance and compliance
The Company develops its own norms, manuals and regulations that are in line with general legal norms
and regulations. The Company has a prepared “EMERGENCY RESPONSE PLAN” PS – II – TVS – 008-08,
“SAFETY MANAGEMENT MANUAL” PŘ-I-TVS-016-01, ORGANISATIONAL MANUAL) TVS-I-011-01, etc.
The Company adheres to conditions of Act No. 49/1997 Coll., on Civil Aviation, as amended, and holds
the operating licence and the Air Operator Certificate issued by the Czech Republic through the Czech
Civil Aviation Authority. In 2015, there was not any change in the certificate of the aviation operator, the
Company successfully renewed the verification of compliance with the EASA (European Aviation Safety
Agency) requirements and the Czech civil Aviation Authority re-issued the Air Operator Certificate. In
2015, several successful external audits were conducted in the Company by business partners.
annual report 2016 | Travel Service42
annual report | Travel Service 43
11. Risk management
As other airlines, the Company is exposed to safety, operational, commercial, credit, political, territorial,
personal, foreign exchange rate and commodity risks. Other companies engaged in international
activities are identically exposed to similar risks to a certain extent. The Company manages and defines
the level of risk acceptance, it focuses on their optimisation. As indicated above, the Company takes an
uncompromising approach relating to the provision of aviation operations safety relating to protection
of lives of people, health of passengers, its employees and other persons.
11.1 SAFETY AND OPERATIONAL RISKS, INSURANCE
The Company is exposed to operational risks arising from the substance of the international air
transportation. The Company takes all possible measures in the air transportation safety.
As part of its risk management, the Company and its subsidiaries in Slovakia, Poland and Hungary
have adequate insurance for an extensive scope of insured events, as indicated below. The Company is
a member of the “Lufthansa Aviation Insurance Group” (“LAIG”) through which all aviation risks are insured.
The insurance broker of LAIG is the “local” broker of Lufthansa Group, “Albatros Versicherungsdienste
GmbH” based in Cologne, and London broker Willis in respect of war and associated risks. Most aviation
risks are placed on the London insurance market. The leading insurer is – except for the below exception
– “Allianz Global Corporate & Specialty AG”. The insurer for the Hull Deductible Insurance and Spares All
Risk Insurance up to the primary limit is “Delvag Luftfahrtversicherungs-AG”.
annual report 2016 | Travel Service44
Insurance Insurance limit Leading insurer Note
Combined accident and liability insuranceAccident up to USD 150 million
Including spare parts above the primary limit
Liability up to USD 850 million Combined single limit
War risk insurance up to USD 320 million Lloyd's
Above-limit war risk insurance – liability to third parties USD 350 million above USD 250 million
Allianz Primary limit of USD 250 mil
Hull Deductible InsuranceUSD 700 million above USD 50 million
Delvag Standard co-insurance USD 750 mil
Spares ALL Risk Insurance EUR 2.6 million Delvag Primary limit
Loss of Use USD 15 thousand / day Allianz Max. 45 days (starting from the 10th day)
In addition to statutory insurance, the employees of the Company, including the employees of
subsidiaries, are provided with insurance coverage when they are travelling from the Czech Republic,
Slovakia, Hungary and Poland abroad. The subject of the insurance coverage are medical treatment costs,
including dentist treatment and physiotherapy, hospitalisations, active assistance, transit, relocation and
transportation, repatriation of body remains. Travel insurance for business trips of employees has been
arranged with ERV Pojišťovna.
11.2 BUSINESS AND CREDIT RISK
Business risks are managed primarily by the diversification of markets:
• Territorial diversification – the Company provides its services to customers based in various parts of
the world (e.g. Canada, France, Austria, Switzerland, Oman, United Kingdom, Poland – see above); in
2015, airplanes of the Company landed on and took off from almost 250 airports worldwide;
• Product diversification – charter flights, scheduled carriage, wet and dry leases, aerotaxi (Business Jet
Aerocab Service) and market diversification - B2B market and B2C market;
• Credit risk – potential origination of bad receivables is covered primarily by received deposits,
received advance payments, bank guarantees. On the other hand, the Company must provide
deposits predominantly to fuel suppliers, lessors, airports, or suppliers of other services. The provision
of deposits involves provision of bank guarantees and standby (import) letters of credit to a certain
extent, that are issued by local banks, and replace the requirements of partners for provision of
deposits.
11.3 EXCHANGE RATE RISKS
The Company is exposed to foreign exchange rate risk, primarily in respect of CZK/USD and EUR/USD
currency pairs. The EUR/USD currency risk is mitigated by the sales of subsidiary Travel Service Polska, Sp.
z o. o. which generates its income in USD and records USD surplus, and lack of EUR on the other hand. In
2015, the Company increased the volume of sales in USD to achieve natural hedging, i.e. a situation when
the income and expenses, primarily in USD, are comparable. However, due to the seasonal character
of individual markets and products, there is, and there apparently will be, a time mismatch between
annual report | Travel Service 45
income and expenses in USD. Currency risks are further managed primarily by currency forwards in
cooperation with local banks - Komerční banka, a. s. a UniCredit Bank Česká republika a Slovensko, a. s.,
Česká spořitelna, a. s. and Raiffeisen Bank.
11.4 RISKS ARISING FROM FUEL PRICE FLUCTUATIONS
Risks arising from fuel price fluctuations are managed using two methods – fuel surcharges with B2B
clients and concluded derivative transactions, specifically commodity swaps with local banks– UniCredit
Bank Czech Republic and Slovakia, a. s., Komerční banka, a. s. and Česká spořitelna, a.s.
11.5 OTHER RISKS
Other risks, such as political risks, natural disasters, are managed by the diversification of products, markets
and destinations, etc. The Company is able to balance potential lack of demand for transportation services
by reduction of its transportation capacities.
annual report 2016 | Travel Service46
12. Safety
The Company pays maximum attention to air transportation safety and preparation for dealing
with emergency situations. The Company publicly undertook to provide safe operations and healthy
environment for all its employees and customers. The pillar of the safety policy is the acceptance of
individual and collective responsibility in the recognition of risks and their management, assessment
of work procedures and awareness that familiarity and extended deficiencies results in the loss of the
possibility to assess the risks. The Company implemented the Safety Management System (SMS) which
became an integral part of the entire existing Company management system in accordance with the
above Commission Regulation (EU) No 965/2012, article ORO.GEN.200. Management system, under
which the operator shall establish, implement and maintain a management system that includes:
(1) clearly defined lines of responsibility and accountability throughout the operator, including a direct
safety accountability of the accountable manager;
(2) a description of the overall philosophies and principles of the operator with regard to safety, referred
to as the safety policy;
(3) the identification of aviation safety hazards entailed by the activities of the operator, their evaluation
and the management of associated risks, including taking actions to mitigate the risk and verify their
effectiveness;
(4) maintaining personnel trained and competent to perform their tasks;
(5) documentation of all management system key processes, including a process for making personnel
aware of their responsibilities and the procedure for amending this documentation;
(6) a function to monitor compliance of the operator with the relevant requirements. Compliance
monitoring shall include a feedback system of findings to the accountable manager to ensure
effective implementation of corrective actions as necessary.
The development, administration and management of this system is provided by the Safety Department
created for this purpose and headed by the Safety Manager.
The Company uses the SAMS software equipment for the safety management.
SAMS was fully implemented in the Company as of 30 June 2014. On 25 June 2014, internal regulation no.
č. PŘ-I-TVS-016-01/14 – “Safety Management Manual” was added.
Summary: The Company used highly qualified personal, modern software and material equipment
adhering to most recent requirements and base of regulations to ensure the maximum safety of its
operational activities, specifically safe flight operations. The Company implemented the corporate culture
of an active search for potential safety and operational risks across the entire structure of the Company
and all employees.
annual report | Travel Service 47
annual report 2016 | Travel Service48
13. Organisational structure of the company
The below organisational structure of the Company is determined by the organisational manual while
adhering to the Company’s Articles of Association and requirements resulting from regulations and
norms relating to international air transportation.
The Board of the Directors
General Director
(Authorized Member of the Board)
Accountable Manager
Managing Director
Deputy of General Director
Safety Manager
Safety Management Department
Security Manager
Security Department
Compliance Monitoring Manager
Compliance Monitoring Department
Technical Director
Technical Division
Ground Operations Director
Ground Operations Division
Flight Operations Director
Flight Operations Division
Commercial Director
Commercial Division
Financial Director
Financial Division
annual report | Travel Service 49
13.1 COMPANY’S MANAGEMENT
Members of the Company’s management offer extensive life experience, long-term work practice and
practical skills usable in the segment of air transportation. They have university market focused education,
they graduated from universities in the Czech Republic, Slovakia and United Kingdom with technical,
economic, business, natural sciences and legal specialisations.
13.2 COMPANY’S BOARD OF DIRECTORS
JUDr. Jiří Šimáně, Chairman of the Board of Directors, graduated from the School of
Law at the Charles University in Prague, he has extensive experience in foreign trade.
From 1976, he worked in Strojexport a. s., between 1988 and 1991 as a representative
in Zambia. He is the founder of Unimex Group, a. s and its majority owner. He has been
the Chairman of the Company’s Board of Directors since 7 January 2010.
Ing. Roman Vik, member of the Board of Directors and General Director of the Company
is concurrently the shareholder of the Company. He graduated from the University of
Economics in Prague. After 1989, he started his business activities, first in procurement,
sale and distribution of copy machines. In 1997, he was an initiator and one of the
decisive founders of Travel Service, a. s.
Ing. Jiří Jurán, MBA, member of the Board of Directors, Deputy General Director – he
studied at the University of Economics in Prague and economic department of the
Technical University in Ostrava, he graduated from Sheffield Hallam University. He took
part in two-year postgraduate studies “Comprehensive Preparation of KB Managers” in
Komerční banka. Between 2001 and 2006, he was a member of the Board of Directors
and General Manager of the Czech Consolidation Agency and he was a member of the
Supervisory Board of
České aerolinie. From 1994 to 2001, he worked in Komerční banka, a.s. on various positions including
the head of the restructuring division where he, among other things, implemented a bailout of CZK 60
billion of risk assets relating to the prepared privatisation of Komerční banka, a.s. Between 1994 and 2006,
he worked together with McKinsey consultancy on several projects (transfer from the product to client
approach, project work-out). From 1992 to 1994, he worked as the CFO of Kovohutě Břidličná, including
the cooperation with the European Investment Bank on the implementation of an environmental project.
From 1990 to 1991, he worked as the investigator of Czech Police, focusing on white-collar crime. Before
1990, he worked in the then State Czechoslovak Bank.
13.3 SENIOR MANAGEMENT TEAM
Mgr. Michal Tomis, Managing Director of the Company – he graduated from the School
of Law of the Charles University in Prague. He started his career in air transportation in
1981 in Řízení letového provozu ČSR (Air Navigation Services) where he held various
positions, including the head of the aviation information services. After 1990, he
worked on various management positions in private aviation companies. He currently
holds the position of the Executive Director of Travel Service, a.s., he specialises in
aircraft acquisitions and leases, including contractual issues, aviation insurance and
regulatory affairs.
Ing. Peter Šujan, Commercial Director of the Company – he graduated from the Department
of Operations and Economics of Transport and Communications of the University in Žilina.
He started his career in 1984 in Československé Aerolinie, in navigation department where
he was responsible for navigation calculations and flight planning. He participated in the
implementation of new A310-300 aircraft in the fleet of ČSA. From 1990, he worked in
various aviation companies. Since 1997, he has worked in Travel Service, a.s., first as a person
responsible for ground operations and planning. Since 2004, he has been the Sales Director
of Travel Service, a.s. Since 2010, he has additionally been the Director of Travel Service, a.s., organizační složka
Slovensko. Since 2006, he has been a member of the Supervisory Board of Travel Service, a.s.
annual report 2016 | Travel Service50
Ing. Pavel Veselý, Flight Operations Director of the Company – he graduated from the
University of Žilina. He started his professional career in 1988 as a commercial pilot.
In 1993, he became an airline transport pilot and he worked for regional airlines as
captain of L 410 and Jetstream BA 31 aircraft. In 1999, he completed a basic professional
training for piloting of Boeing B 737 type aircraft and became a captain of this type of
aircraft and started to work for Travel Service, a.s. Between 2001 and 2004, he was the
head of pilot training. He has worked on the position of the Flight Operations Director
since 2004.
Ing. Jan Bělina, Ground Operations Director of the Company since 1 February 2014 – he
graduated from the School of Transport at the University of Pardubice. He started his
career in 2002 in Travel Service, a.s. as an assistant to air transportation controller. From
2003, he worked as air transportation controller. Five years later, he was appointed
head of the air transport control centre of Travel Service, a.s. He has been the Ground
Operations Director since February 2014.
Ing. Luděk Stašek, Technical Director of the Company – he has worked in the
aviation industry since the completion of his studies at the Aviation Department of
the Military Academy in Brno. His first position was the head of a team of engineers
in aviation repair shops. He started to work for Travel Service, a.s. in 2007 and held
various technical positions. In 2012, he was appointed Deputy Technical Director and
actively participated in the management of the Technical Department. In 2014, he was
appointed Technical Director of Travel Service, a.s.
Mgr. Vladímíra Dufková, spokesperson – she graduated from the Faculty of Science at
the Masaryk University in Brno. From 1994, she worked as a reporter and subsequently
as a TV news anchor in TV Nova. Between 2001 and 2002, she was the spokesperson of
the minister and head of the Czech Government Office. Since November 2003, she has
been a spokesperson of Travel Service, a.s., and has been responsible for PR and
advertising.
Petr Žežulka, IT Manager of the Company – he holds MBA Basic from TC business
School accredited by International Business School Nederland, MBA at the Institute of
Law and Legal Science accredited by the International Education Society. He currently
completes the studies of the BBA legal programme at the the Institute of Law and
Legal Science. He started his career in 2001 in Dimar s.r.o. and Domicall s.r.o. where
he was responsible for the operations of IT systems. Since 2004, he has been the IT
Manager in Travel Service, a.s., responsible for overall operations of IT in the Company
and branches in Slovakia and Poland.
Mgr. Blanka Horáčková (HR Manager) – she graduated from the School of Natural
Sciences of Palacký University in Olomouc. Between 1997 and 2001, she was a lecturer
in companies focusing on training in various communication segments in Czech and
English. From 2001 to 2004, she worked as an HR advisor in Vodafone and Deloitte.
From 2004 to 2001 she worked in two leading banks (ČS, a.s. a Raiffeisenbank, a.s)
on management positions in HR departments. Before joining Travel Service, a. s., she
gained experience from rather small companies (LMC s.r.o, T&CC s.r.o) where she worked as HR project
manager, and in state administration, specifically section of Human Resources Management at the Czech
Ministry of Interior. Since July 2015, she has been the HR Manager in Travel Service, a.s.; she is responsible
for hiring of new employees and coordination of HR projects within the Company.
annual report | Travel Service 51
The Company performed no research and development activities.
The Company acquired no own shares.
See page 116 paragraph 23 Post balance sheet events.
Roman Vik
Member of the Board of Directors
Jiří Jurán
Member of the Board of Directors
Jiří Šimáně
Chairman of the Board of Directors
14. Information about research and development
15. Information about acquisition of own shares
16. Events after the balance sheet date
annual report 2016 | Travel Service52
Notes to the financial statements
for the year ended 31 december 2016
annual report | Travel Service 53
Name: Travel Service, a.s. (hereinafter the “Company”)
Registered office: K Letišti 1068/30, Prague 6, 16008
Legal status: joint stock company
Register of Companies: Municipal Court in Prague, File B, Insert 5332
Date of formation: 28 April 1998
Corporate ID: 25663135
Principal activities: Scheduled and charter, interstate and international commercial air transportation
of passengers, their luggage, animals, mail and cargo
Production, trade and services not listed in appendices 1 to 3 to the Trade
Licensing Act
1. General information
annual report 2016 | Travel Service54
Notes to the financial statements have been prepared in accordance with Decree no. 500/2002 Coll., as
amended, which stipulates the content of the financial statements for businessmen. The information in
the financial statements is based on the accounting documentation of Travel Service, a. s., which primarily
includes accounting documents, accounting books and accounting records. These financial statements
are presented in whole thousands of Czech crowns, unless stipulated otherwise.
Current reporting period is the reporting period from 1 January 2016 to 31 December 2016
Prior reporting periods are the reporting periods from 1 January 2015 to 31 December 2015 and
from 1 January 2014 to 31 December 2014
2. Preparation of the annual financial statements
annual report | Travel Service 55
annual report 2016 | Travel Service56
A) BOOKKEEPING PRINCIPLES
Accounting books are maintained in accordance with accounting regulations applicable in the Czech
Republic.
Amounts in the financial statements and in the notes to the financial statements are rounded to
thousands of Czech crowns (CZK thousand), unless stipulated otherwise.
B) USE OF ACCOUNTING ESTIMATES
The preparation of the financial statements requires the management of the Company to use estimates
and assumptions that have an impact on the reported amounts of assets and liabilities as of the date
of the financial statements and the reported amount of income and expenses for the reporting period.
Management of the Company believes that the used estimates and assumptions will not significantly
differ from the actual figures in the following reporting periods.
Estimates are regularly reviewed; following the meeting of necessary requirements, primarily obtaining of
accounting documents, they are settled, and differences are recognised in the reporting period.
C) INTANGIBLE FIXED ASSETS
Purchased intangible fixed assets are measured at cost, which includes the cost of acquisition and all
acquisition related expenses.
Amortisation of intangible fixed assets for accounting purposes is calculated based on the cost and
anticipated useful life of relevant assets. The Company uses straight line amortisation method. The
anticipated amortisation period in years is calculated as follows:
Technical improvements on intangible fixed assets exceeding CZK 40 thousand for the reporting period
are capitalised.
If the carrying amount of intangible assets exceeds its estimated useful life, allowances are recognised
for such assets and these allowances are expensed. If the impairment of assets is permanent, assets are
written-off on a one-of basis.
Intangible fixed assets with useful lives exceeding one year and the cost not exceeding CZK 60 thousand
per item, are capitalised to a special sub-ledger account and accrued in expenses over three years.
3. General accounting principles and used accounting methods
Useful life Useful life Useful life
2016 2015 2014
Research and development 8 8 8
Software 3 3 3
Valuable rights 3 - 6 3 - 6 3 - 6
annual report | Travel Service 57
D) TANGIBLE FIXED ASSETS
Purchased tangible fixed assets are carried at cost, which includes the cost of acquisition and all acquisition
related expenses (e.g. transportation costs and assembly costs). Tangible fixed assets generated internally
are carried at own cost.
Tangible fixed assets primarily include individual movable assets with individual technical and economic
purpose, with the input cost exceeding CZK 40 thousand and operational and technical useful life
exceeding one year. Tangible fixed assets additionally include buildings, structures, etc.
Tangible fixed assets with useful lives exceeding one year and cost between CZK 2 thousand and CZK 40
thousand per item, are accrued in expenses over three years.
Tangible fixed assets with useful lives exceeding one year and costs not exceeding CZK 2 thousand per
item are expensed upon acquisition.
Depreciation of tangible fixed assets for accounting purposes was calculated based on the cost and
anticipated useful lives of relevant assets. The Company used the straight-line method of depreciation.
The anticipated depreciation period in years is calculated as follows:
If the carrying amount of tangible fixed assets exceeds their anticipated useful lives, allowances are
recognised for these assets.
Repair and maintenance costs of tangible fixed assets are expensed. Technical improvements on tangible
fixed assets exceeding CZK 40 thousand for the reporting period are capitalised.
Useful life Useful life Useful life
2016 2015 2014
Technical improvements of leased buildings and structures
10 10 10
Machines, devices and equipment 4 - 10 4 - 10 4 - 10
Vehicles 4 – 8 4 - 8 4 - 8
Furniture and fixtures 6 6 6
Valuation difference on acquired assets
15 15 15
annual report 2016 | Travel Service58
E) NON-CURRENT FINANCIAL ASSETS
Upon acquisition, non-current financial assets are carried at cost. The cost includes direct acquisition related
expenses.
As of the financial statements preparation date, securities and equity investments denominated in foreign
currencies are translated using the exchange rate of the Czech National Bank applicable as at the balance sheet
date. The resulting exchange rate gain or loss is recognised in account group 41 - Share capital and capital
funds.
F) INVENTORY
Purchased inventory is carried at cost, or replacement cost using the weighted arithmetic average method.
The cost includes the cost of acquisition and all expenses relating to the acquisition of this inventory (primarily
customs duty, transportation costs, packaging costs).
The Company uses the A method for the recognition of additions and disposals of inventory (i.e. method
of accounting for individual additions and disposals). The principle of accounting is the concentration of all
expenses incurred for the acquisition of inventory on asset accounts. Inventory is recognised in operating
expenses when actually used.
Allowances for inventory are recognised when the valuation used in accounting temporarily exceeds the
current market value of relevant inventory.
Inventory of material in the Company may be structured as follows:
• Spare parts for aircraft – are used to put third party tangible fixed assets to their original conditions, i.e. for
repairs in line with concluded contracts for operating leases, primarily of aircraft (e.g. main wheels, brakes,
batteries, steering units, Flight Management Computers (FMC), movable curtain dividers, oxygen bottles,
safety belts, valves, drives, blades of blower, sensors, pipes, etc.);
• Low value consumer material (e.g. gaskets, bolts, washers, pins, rivets, etc.);
• Auxiliary and operational substances – e.g. chemical material (paints, lubricants, fuel, cleaning products);
• Packaging and packaging material (e.g. cases, boxes, bags, pallets) ;
• Movable assets with useful lives not exceeding 1 year regardless the amount of the input cost (e.g.
upholstery, carpets).
The Company also stores material that is not owned by it. This material is separated from the material owned by
the Company and representatives of authorised owners are provided with the possibility make the inventory
count as needed. The Company invites these owners to make the inventory count every year.
G) RECEIVABLES AND PAYABLES
Receivables and payables are carried at their nominal values upon origination. Allowances for receivables are
recognised based on the ageing structure of receivables and individual assessment of the credit standing of
debtors and potential payables of the Company that can be successfully offset against the existing receivables.
Receivables and payables in respect of related parties that arose from business transactions are reported in
Trade receivables/payables.
H) CASH
Cash (cash on hand and cash at bank) is carried at nominal value.
I) EQUITY
The share capital of the Company represents the amount of the capital as recorded in the Register of
Companies. The share premium represents the amount by which the nominal value of newly issued shares
was lower than their issue rate.
In 2014, the Company created a fund for coverage of potential future losses and business risks to which the
balance of the reserve fund was transferred. Other contributions to this fund will be decided annually by the
General Meeting of the Company.
annual report | Travel Service 59
J) PAYABLES TO CREDIT INSTITUTIONS
Short-term and long-term loans are recognised in their nominal values. Short-term loans include the part of
long-term loans that is payable within one year from the financial statements date.
K) RECOGNITION OF INCOME AND EXPENSES
Income and expenses are accrued, i.e. recognised in the reporting period to which they relate (accrual principle).
In accordance with the prudence principle, the Company recognises provisions and allowances for the
coverage of risks, losses and impairment known as of the financial statements preparation date in expenses.
L) FOREIGN CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies are translated to the Czech currency using the fixed
exchange rate determined based on the Czech National Bank’s exchange rate applicable always for one-
month period. In respect of petty cash transactions or transfer of money between bank accounts, the foreign
currency is translated using the exchange rate actually used by the bank for the particular transaction or market
exchange rate agreed with the bank.
All cash assets and liabilities, receivables and payables denominated in foreign currencies were translated as
part of the annual financial statements using the exchange rate promulgated by the Czech National Bank as of
the balance sheet date. All realised and unrealised exchange rate gains and losses are, except for non-current
financial assets listed in note E), reported in the Profit and loss account.
M) FINANCIAL DERIVATIVES
Financial derivatives including currency forwards and options, interest rate, currency and commodity swaps are
recorded off-balance sheet upon acquisition. As of the financial statements date, derivatives are remeasured
to fair value.
Financial derivatives are used for the hedging of the currency, interest rate and market risks as part of the
Company’s risk management strategy.
In line with applicable accounting regulations, the Company does not use the possibility to recognise
derivatives separately as hedging derivatives, it treats all derivatives as trading derivatives not intended for
trading on the public market. Fair value changes as at the balance sheet are recognised in profit or loss.
The fair value of forwards and swaps is calculated as the present value of anticipated future cash flows.
N) INCOME TAXATION
Income tax in the profit and loss account for the reporting period includes income tax payable and changes
in the balance of deferred tax.
The Company calculated the income tax payable using the applicable tax rate from the profit or loss, adjusted
by permanent and temporary differences.
The provision for the income tax in the balance sheet is reduced by a receivable arising from income tax
advance payments made.
Deferred tax reflects temporary differences between the carrying amount of assets or liabilities in the balance
sheet and their tax value. The corporate income tax rate, for the reporting period in which the utilisation of
deferred tax is anticipated, is applied. A deferred tax asset is recognised if it is likely that it will be recoverable for
tax purposes in the following reporting period.
O) SUPPLEMENTARY PENSION INSURANCE SCHEME
The Company provides pilots and airplane captains with contributions for the supplementary pension
insurance scheme. The total amount of the contributions paid in 2016 was CZK 2,882 thousand (2015: CZK
3,067 thousand, 2014: CZK 2,949 thousand). Contributions for the supplementary pension insurance scheme
have been provided by the Company since 30 June 2008. Contributions have been paid based on contracts
that the above employees concluded with pension companies.
annual report 2016 | Travel Service60
To finance the state pension insurance system, the Company makes regular statutory payments to the state
budget. The Company makes these payments in periods defined by legislation and has not reported any
payables past their due dates.
P) LEASES
The cost of assets acquired under finance and operating leases is not capitalised. Lease payments are
recognised in expenses on a straight-line basis over the lease term.
If the asset is purchased after the lease term, the assets are capitalised in the amount of the purchase price, or
in the amount of the replacement cost in the event of free of charge transfer of assets.
Operating lease is the lease of fixed assets when the leased asset is returned to the lessor after the expiration
of the lease term. The costs relating to the lease of aircraft itself are recognised in account group 51 – Services.
Together with the lease of aircraft, the Company pays “supplemental rents” that are recognised in the same
account group and are treated as costs relating to repairs and maintenance and embody the level of standard
wear and tear of leased aircraft, or their individual parts such as aircraft engines, fuselage, landing gear, live limit
parts, APU, etc.
Q) VARIANCES IN THE ARRANGEMENT OF CERTAIN ITEMS IN THE FINANCIAL STATEMENTS, CHANGES IN
VALUATION METHODS, COMPARABILITY OF INFORMATION FROM THE PRIOR AND CURRENT REPORTING
PERIODS
No significant changes in valuation, depreciation and amortisation and recognition were made year-on-year,
except for the following:
Pursuant to the requirements of the amendment to the Accounting Act and implementation decree effective
since 1 January 2016, changes were made in the reporting of balance sheet and profit and loss account
items. To ensure the comparability of these items with the prior period, the balance sheet and profit and loss
items for 2015 were reclassified. The Company proceeded in accordance with Czech Accounting Standard
for Businessmen no. 024 “Comparable period for the reporting period starting in 2016” and the following
reclassifications were made:
Changes in the balance sheet reporting:
Accrued income is reported in D. Other assets (it was reported in short-term receivables before 31 December 2015).
Accrued expenses are reported in D. Other liabilities (it was reported in short-term payables before 31 December 2015).
Payables to credit institutions are reported in C. Payables (before 31 December 2015 as an individual item Bank loans and borrowings).
The entity falls within the large entities category.
Changes in the reporting in the profit and loss account:
Items as of 31 December 2015 (reporting applicable since 1 January 2016) Items as of 31 December 2015 (reporting applicable before 31 December 2015)
E.2. – Adjustments to value of inventories (part of the item)E.3. – Adjustments to value of receivables (part of the item)F.4. - Provisions relating to operating activities and complex deferred expenses (part of the item)
G. - Change in provisions and allowances relating to operating activities and complex deferred expenses
J.1. - Interest expenses and similar expenses - controlled or controlling entity (part of the item)J.2. Other interest expenses and similar expenses
N. – Interest expenses
VI.1. Interest income and similar income - controlled or controlling entity VI.2. Other interest income and similar income
X. Interest income
VII. Other financial income (part of the item) IX. Income from the revaluation of securities and derivatives
K. Other financial expenses (part of the item) L. Costs of the revaluation of securities and derivatives
annual report | Travel Service 61
annual report 2016 | Travel Service62
A) INTANGIBLE FIXED ASSETS
Development in intangible fixed assets:
4. Intangible, tangible and financial assets
Research and development
Software Valuable rightsOther intangible fixed
assets
Intangible fixed assets under construction
Advance payments made
for intangible fixed assets
Total intangible fixed assets
Cost
Balance at 1 Jan 2016 510 52 176 2 467 4 457 10 900 0 70 510
Additions 0 9 279 0 30 655 7 266 972 48 172
Disposals 0 81 0 4 457 0 0 4 538
Reclassification 0 0 0 0 0 0 0
Balance at 31 Dec 2016 510 61 374 2 467 30 655 18 166 972 114 144
Accumulated amortization
Balance at 1 Jan 2016 510 38 165 2 435 0 0 0 41 110
Additions 0 8 608 129 0 0 0 8 737
Disposals 0 0 0 0 0 0 0
Reclassification 0 135 -135 0 0 0 0
Balance at 31 Dec 2016 510 46 908 2 429 0 0 0 49 847
Net book value
Balance at 1 Jan 2016 0 14 011 32 4 457 10 900 0 29 400
Balance at 31 Dec 2016 0 14 466 38 30 655 18 166 972 64 297
annual report | Travel Service 63
During the reporting period, the Company continued to improve its software, MS Dynamics NAV 2013. Having
taken into account the amended law valid in the Czech Republic, the Company implemented the module
that helps to prepare the VAT Control Statement. VAT Control Statement is to be submitted in the Czech
Republic since 1 January 2016, as laid down under the Act on VAT, No. 235/2004 Sb., as amended by Act No.
360/2014 Sb. enacted by the Chamber of Deputies of the Czech Republic on 22 December 2014. In addition,
the Company elaborated on its system of control in the area of revenue generated by sales of tickets for regular
flights operated by the Company. The system of control aimed at comparing and reconciling the revenue,
as recorded in MS Dynamics NAV 2013 and in the systems designated for collecting data from the computer
reservation systems and booking engines.
In the Company’s subsidiary, Travel Service Slovensko, s.r.o., a module was implemented on 1 February 2016
that allows payment orders to be exported in the XML file, as required under the ISO 20022 XML standard. In
2016, Travel Service Polska, Sp. z o. o. continued to implement some changes and amendments arising from
the Polish legislation into its information system. In summer 2016, changes were made that had arisen from
newly executed agreements and business transactions.
In 2016, an analysis was introduced that analyses as to whether invoices issued for fuel were imported into
MS Dynamics NAV 2013 in accordance with the IATA standard (XML Standard for Electronic Fuel Transactions).
The import of invoices prepared in accordance with the IATA standard will provide the Company with more
detailed information that is vital when checking the prices, fees and consumed quantity of fuel.
In mid-February 2016, the AIMS system was upgraded to the last version B2_2014. Thanks to this upgrade, the
Company can now avail of new functions and prolong the technical support provided by AIMS.
Intangible assets in progress include, in particular, the ongoing modernisation and installation of the so-called
Datalink for the aircraft Boeing 737 (to enhance the air traffic safety). In addition, intangible assets in progress
include further development of the EFA software offering sales and operational functions and of the financial
software Microsoft NAV 2013. It also includes the development of the software mentioned above that provides
support for the maintenance system OASES etc.
Other key software that is used by the Company is the information system handling the issues of Air Safety
Management of the Company and its subsidiaries. The Company is required to implement and maintain this
software under Commission Regulation (EU) No 965/2012 of 5 October laying down technical requirements
and administrative procedures related to air operations pursuant to Regulation (EC) No 2016/2008 of the
European Parliament and of the Council Parliament and of the Council. Following a properly rendered tender,
the Company decided to implement the software developed by Airbus called SAMS.
In 2016, the Company further focused on development of the key sales and operational objectives of EFA
(Extranet Flight Application) that, working on the internet interface, gathers important information about and
requirements of the Company’s clients, the information on flights, incl. the number of passengers onboard,
catering, specific requirements and requests of passengers, etc. These objectives are developed by the
Company that closely cooperates with an external supplier.
In 2016, the Company continued with works on implementing the information system called OASES that will
support the maintenance procedures and the procedures of engineering the fleet of aircraft of the Company
and its subsidiaries. This information system is being implemented in corporation with Communications
Software (Airline Systems) Limited, having its registered office in Essex, United Kingdom of Great Britain and
Northern Ireland. We anticipate that the implementation will be completed in May 2017. Intellectual property
rights represent, in fact, the value of the trademark, i.e. SMART WINGS logo and any relevant domain. This closely
relates to the long-term strategy of the Company – to build a strong, solid and well-established trademark.
Other intangible assets include EUA and EUAA emission allowances. Any changes are given by the purchase of
emission allowances, by free allocation of emission allowances and their disposal. The Company is required to
have these intangible assets under Directive 2008/101 EC of the European Parliament and of the Council of 19
November 2008 under which, on 1 January 2012, the civil aviation sector was brought within the existing EU
ETS. Act No. 383/2012 transposed this Directive into the Czech legislation.
The EU ETS also applies to all operators of aircraft parked at or from airports in any Members States of the
European Union (plus Iceland, Lichtenstein and Norway). The Company and its subsidiaries offering services in
the area of air transport are also deemed to be the aircraft operator.
annual report 2016 | Travel Service64
Every year, each operator must determine and report the volume of its CO2 emissions produced in the given
year. The Ministry of the Environment of the Czech Republic has a special reserve of emission allowances
designated for the trading period from 2013 through 2020. The Company meets all the eligibility requirements
and, thus, is entitled to free allocation of emission allowances from the reserve held by the Ministry of the
Environment of the Czech Republic
Since the geographical scope covered by the EU ETS has changed, the Ministry of the Environment of the
Czech Republic determined, by applying its own calculation, the quantity of emission allowances that are
to be freely allocated to aircraft operators for the period from 2013 to 2016. In this period, the Company was
allocated total of 478,528 emission allowances, i.e. 119,632 emission allowances for each year over the course
of the years mentioned above. Nevertheless, the number of freely allocated emission allowances is completely
insufficient for the Company and, as a result, the Company is forced to purchase emission allowances under
the usual market conditions.
Emission allowances that are consumed are recorded as per the emissions actually produced and they are
recorded using the accounts of estimated payables and receivables. When the Company receives the freely
allocated emission allowances, this acquisition is recorded as subsidy and this subsidy does not lower the value
of intangible assets. This subsidy is then cleared to and recognised as revenues at the very same moment (and
at the very same amount) when the consumed allowances are recorded (given to) the register. At the same
time, they are reversed from the assets account.
B) TANGIBLE FIXED ASSETS
Development in tangible fixed assets:
BuildingsIndividual movable assets and sets of movable assets
Tangible fixed assets under construction
Advance payments made for tangible fixed
assets
Valuation difference on acquired assets
Total tangible fixed assets
Cost
Balance at 1 Jan 2016 7 294 102 894 15 344 217 284 60 143 402 959
Additions 0 5 845 3 819 446 971 0 456 635
Disposals 0 22 835 0 0 0 22 835
Reclassification 0 330 -330 0 0 0
Balance at 31 Dec 2016 7 294 86 234 18 833 664 255 60 143 836 759
Accumulated depreciation
Balance at 1 Jan 2016 4 463 63 872 0 0 60 143 128 478
Additions 741 6 680 0 0 0 7 421
Disposals 0 22 432 0 0 0 22 432
Reclassification 0 0 0 0 0 0
Balance at 31 Dec 2016 5 204 48 120 0 0 60 143 113 467
Net book value
Balance at 1 Jan 2016 2 831 39 022 15 344 217 284 0 274 481
Balance at 31 Dec 2016 2 090 38 114 18 833 664 255 0 723 292
annual report | Travel Service 65
Individual movable assets and sets of movable assets
The Company purchased a hydraulic power unit for the acquisition costs of CZK 968 thousand and a RSU
tool that helps to load the data into aircraft – Dataloader for the acquisition costs of CZK 660 thousand.
For the towing procedure for the aircraft, type Cessna, the Company purchased an aircraft tug LEKTRO
AP8600A-EZ for the acquisition costs of CZK 942 thousand. In addition, the Company purchased vehicles,
type Volkswagen Passat, information technology, namely servers, printers and backup systems.
Buildings
The Buildings line reported on the balance sheet reflects, in particular, the construction alterations that were
carried out in hangars rented from Letiště Praha, a. s., having its registered office in Prague 6, K Letišti 6/1019.
Advance payments for tangible assets
In line with the Company’s strategy to, inter alia, modernise its fleet of aircraft that aims mainly at purchases
and operating lease of aircraft Boeing 737 – MAX, in December 2016 the Company signed a contract in
respect of a supply of 5 aircraft, type Boeing 737 – MAX. In total, the Company entered into contracts to
purchase eight aircraft of this type that will become a part of the Company’s assets. As of 31 December 2016,
advance payments of CZK 664,255 thousand were made in respect of these supplies.
Valuation difference on acquired assets
The valuation difference on acquired fixed assets arose when the Company was founded and when the
founder of the company contributed the value of Travel Servis, s.r.o. into the company. It reflects the difference
(positive) between the appraiser’s report for Travel Service, s.r.o. and the sum of all values of all its individual
assets reported in the books of the contributing company. The value of non-monetary contribution was
documented by appraisers’ opinions presented by two appraisers that are independent of the founder.
These opinions were prepared on 23 December 1997. The valuation adjustment to acquired fixed assets
was recognised and expensed by way of deprecation over the course of 15 years. As at 31 December 2016,
the total of accumulated depreciation amounted to CZK 60,143 thousand. As of 31 December 2016, the
valuation difference was depreciated in full.
C) LOW VALUE ASSETS
The aggregate amount of low value tangible fixed assets and low value intangible fixed assets recognised
in expenses in individual years:
In 2016, the Company purchased office equipment and devices, such as a shredder, printer, hard disks,
notebooks, LCD monitors, ultra-mobile projector, mobile phones, clothes lock boxes and wardrobes, office
desk tops, office chairs, racks, etc. In addition, the Company purchased tools and equipment needed to train
the crew and some facilities required – such as, bags, narcotics testing equipment, airline service trolleys,
defibrillation electrodes, the equipment for the technical unit – card data readers from Boeing 737, iPads,
hand trucks, storage lock boxes, boxes for documents, etc.
Acquisition of intangible assets include the purchase of regular service plan for MS Dynamics NAV BREP,
copyrights permitting to show productions and movies onboard, acquisition of licenses and software for
IPads, anti-virus programs and windows licenses.
2016 2015 2014
Low value intangible fixed assets 11 725 6 030 3 768
Low value tangible fixed assets 6 578 5 986 8 840
Total 18 303 12 016 12 608
annual report 2016 | Travel Service66
D) OPERATING LEASES
The Company’s fleet comprises, in particular, aircraft that are used by the Company under the lease
contracts. Most of the aircraft used by the Company are Boeing, type B 737-800 with capacity of 189
passengers and 6 members of the crew. In addition, the Company has two aircraft, Boeing with capacity
of 148 passengers and one aircraft with capacity of 212 passengers. In 2015, the Company’s fleet of
aircraft also included two aircraft Airbus A320 with capacity of 180 passengers. However, their lease was
terminated in February 2016. For a long time, the Company also offers services of an aero taxi and, for
these purposes, it uses Cessna Citation 680 with capacity of 9 passengers.
These aircraft are used in accordance with the lease contracts that were made as follows:
Item no. Assets leased in 2016Manu-
facturing date
Lease period in months
Date of inceptionAnticipated date
of expiration Lessor
1. BOEING 737-8CX, MSN 32362, HA LKG (OK TVB) 4.02 206 3 May 2002 31 March 2019 MASL IRELAND (13) LIMITED
2. BOEING 737-8FH, MSN 29669, OK TVF (C-GTVF) 4.05 182 20 April 2005 19 April 2020 ALC BLARNEY AIRCRAFT Limited
3. BOEING 737-8Q8, MSN 30719, OK TVG (C-GTVG) 4.07 169 4 May 2007 31 March 2021 Macquarie AirFinance Acquisitions (Ireland) Limited
4. BOEING 737-8Q8, MSN 35275, OK TVH (C-GVVH) 5.08 170 12 May 2008 11 May 2022 ILFC AIRCRAFT 73B-35275 LIMITED
5. BOEING 737-86Q, MSN 30294, OK TVE (C-GRKB) 3.04 170 19 March 2004 19 March 2018 Wells Fargo Bank Northwest, National Association
6. BOEING 737-8Q8, MSN 29351, OK TVJ (C-FTAH) 3.04 128 18 Nov 2008 17 May 2019 ILFC Ireland Limited
7. BOEING 737-86N, MSN 32740, OK TVK (C-FGVK) 2.04 97 21 May 2009 22 May 2017 Celestial Aviation Trading 17 Limited
8. BOEING 737-8FN, MSN 37076, OK TVL 1.10 191 25 Jan 2010 9 Oct 2025 MALACHITE AIRCRAFT LEASING LIMITED
9. BOEING 737-8FN, MSN 37077, OK TVM 2.10 186 3 Feb 2010 3 June 2025 Fly Aircraft Holding Twenty Limited
10. BOEING 737-8CX, MSN 32360, OK TVO 3.02 119 21 June 2010 31 March 2020 MASL IRELAND (13) Limited n
11. BOEING 737-8K5, MSN 32907, OK TVP (C-GKVP) 4.02 139 8 June 2010 30 Oct 2021 DCAL 5 LEASING LIMITED
12. BOEING 737-86N, MSN 38018, OK TVR 4.11 122 28 April 2011 27 April 2021 Celestial Aviation Trading 12 Limited
13. BOEING 737-86N, MSN 39404, OK TVS 5.11 122 5 May 2011 4 May 2021 Celestial Aviation Trading 12 Limited
14. BOEING 737-86N, MSN 39394, OK TVT 1.12 122 31 Jan 2012 30 Jan 2022 Celestial Aviation Trading 12 Limited
15. BOEING 737-86N, MSN 38025,OK TVU (C-GKVU) 3.12 122 20 March 2012 19 March 2022 Celestial Aviation Trading 17 Limited
16. BOEING 737-86N, MSN 38027, OK TVV (C-GKVV) 5.12 122 9 May 2012 8 May 2022 Celestial Aviation Trading 26 Limited
17. BOEING 737-86Q, MSN 30295, OK TVW 11.04 97 29 June 2012 28 June 2020 SASOF III (A20) AVIATION IRELAND DAC
18. BOEING 737-8Z9, MSN 33833, OK TVX 4.05 72 29 April 2013 28 April 2019 Macquarie Aviation Capital Finance Limited
19. BOEING 737-8Q8, MSN 30724, OK TVY (C-GTQY) 6.07 72 22 May 2013 21 May 2019 WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED
annual report | Travel Service 67
Item no. Assets leased in 2016Manu-
facturing date
Lease period in months
Date of inceptionAnticipated date
of expiration Lessor
20. BOEING 737-8S3, MSN 29250, OK TSA 3.01 60 4 April 2013 3 April 2018 SASOF III (A10) AVIATION IRELAND DAC (3)
21. BOEING 737-8Q8, MSN 41795, OK TSD 5.14 122 5 May 2014 4 May 2024 ILFC Aircraft 73B-41795 Limited
22. BOEING 737-81D, MSN 39437, OK TSE 2.14 97 3 Feb 2014 2 Feb 2022 Macquarie Aerospace Finance 39437 Limited
23. BOEING 737-8GJ, MSN 37360, OK TSF 1.09 97 24 March 2015 23 March 2023 Halodell Limited
24. BOEING 737-804, MSN 28231, OK TSH 5.00 58 14 April 2015 5 Feb 2020 Constitution Aircraft Leasing (Ireland) 9 Limited
25. BOEING 737-9GJER, MSN 37363, OK TSI 12.12 67 13 May 2015 31 Oct 2020 CIT Aerospace International
26. BOEING 737-8FH, MSN 35093, OK TSC (C-GTQX) 2.07 71 7 May 2013 7 March 2019CONSTITUTION AIRCRAFT LEASING (IRELAND) 9 LIMITED
27. BOEING 737-7Q8, MSN 29346, OK SWT 3.03 113 22 June 2012 21 Nov 2024 ILFC IRELAND LIMITED
28. BOEING 737-7Q8, MSN 28254,OK SWW 2.03 60 1 June 2012 30 Nov 2024 ILFC IRELA)ND LIMITED
29. BOEING 737-900ER, MSN 34952, OK TSM 11.07 74 27 Jan 2016 31 March 2022 SASOF III (A8) Aviation Ireland DAC
30. BOEING 737-800-8GQ, MSN 35793,OK TSO 11.07 72 6 May 2016 5 May 2022 AWAS 35793
31. A320-214, MSN 4699, OK HCA 1.11 28 31 Oct 2013 14 April 2016 Celestial Aviation Trading 69 Limited
33. A320-214, MSN 2180, OK HCB 2.04 28 31 Oct 2013 4 March 2016 Artemis Ireland Leasing Limited
34. Citation 680, MSN 680-0139, OK UNI 6.07 208 13 June 2007 25 June 2017 UG Jet s.r.o.
35. Citation 680, MSN 680-0279, OK EMA 5.09 144 21 May 2009 21 May 2017 UG Jet s.r.o.
Citation 680, MSN 680-0324, OK UGJ 2.12 108 13 March 2012 12 March 2020 UG Jet s.r.o.
36. Citation 680, MSN 680-0558,OK JRT 3.16 60 30 March 2016 30 March 2021 UG Jet s.r.o.
37.BOEING 737-8BK, MSN 29643, SP TVZ - provozováno Travel Service Polska, Sp. z o. o.
6.07 110 15 Feb 2010 14 Feb 2019 Wilmington Trust SP Services (Dublin) Limited
38. BOEING 737-82R, MSN 30666, OM TSG – provozováno Travel Service Slovensko, s.r.o.
3.04 72 9 May 2014 8 May 2020 ILFC Ireland Limited
annual report 2016 | Travel Service68
Costs of operating lease of aircraft listed above can be analysed as follows (in TCZK):
Due to the insufficient number of operated aircraft, especially in summer, the Company enters into so-called
A.C.M.I. contracts (Wet Leasing Agreement). Under these contracts, the Company leases aircraft with a crew,
and maintenance and insurance are included.
In 2016, costs of lease of such aircraft amounted to CZK 1,137,031 thousand in total (2015: CZK 799,040
thousand; 2014: CZK 964,644 thousand). In 2016, the biggest lessors were České aerolinie (Czech Republic,
Airbus A 320, A319), SUNWING AIRLINES (Canada, Boeing 737- 800), SMARTLYNX AIRLINES (Latvia, Airbus
A 320), MIAT Mongolian Airlines (Mongolia, Boeing 737-800), GO2SKY (Slovakia, Boeing 737-800), AirExplore
(Slovakia, Boeing 737-800), NOUVELAIR TUNISIE (Tunisia, Airbus A320) and CORENDON AIRLINES (Turkey,
Boeing 737-800)
During the year, the aircraft were allocated to the Company on an individual basis, such as in Poland,
Hungary, Slovakia, France, Canada, Oman and Maldives. Costs of use of aircraft within the group are then
rebilled at arm’s length. For example, the aircraft with the registration number SP-TVZ whose direct lessee is
Travel Service Polska, Sp. z o. o. was provided to the Company to the extent of 2,810 block hours. The aircraft
with the registration number OM-TSG whose direct lessee is Travel Service Slovensko, s.r.o. was provided to
the extent of 2,348 block hours.
E) NON-CURRENT FINANCIAL ASSETS
Investments in Travel Service, Kft. in Hungary, Travel Service Polska, Sp. z O. O. in Poland, Travel Service
Slovensko, s. r. o., having its registered office in Slovakia and Travel Service GmbH having its registered office
in Germany may be classified as participation in the controlled entities and in associates and in entities with
a controlling and substantial interest. Regulation (EC) No 1008/2008 of the European Parliament and of the
Council of 24 September 2008 on common rules for the operation of air services in the Community and
the local applicable acts and regulation define conditions under which an operating license is granted to
undertakings offering air services. One of these essential conditions is to have these subsidiaries founded.
If the Company had no such operating license and if the subsidiaries did not meet other conditions, it
would be very difficult for the parent company, Travel Service, a.s. to operate some flights from the Member
States mentioned above outside the territory of the European Community. And, as a matter of fact, it would
be rather impossible to operate such flights on a regular basis. This may, as a result, mean that the clients
located in the states mentioned above could not run their business to the extent possible today. In addition,
the Company’s market position in Hungary, Poland and Slovakia would be at risk.
Over the course of its legal existence, the Company has built up such an infrastructure that allows the
Company to pursue a number of business activities and transactions within the group of companies operating
air transport services. Such activities, inter alia, include planning and preparing flights, crew planning,
maintaining flight documents, arranging air operation control, providing catering services, securing flight
permits and permissions, arranging airport access, calculating single flight fuel consumption and optimizing
its possible supply, providing passenger check-in services, dealing with any claims and complaints, ensuring
spare parts for aircraft maintenance, arranging aerodromes maps and routes, safety management system
for air traffic (air safety control). In addition, there are technical activities such as preparing an aircraft
maintenance program, controlling and monitoring the airworthiness orders compliance, maintaining and
keeping aircraft documents relating to modification condition of the aircraft, assessing aircraft regular and
failure rate according to aviation rules and regulations, collecting and maintaining data about aircraft and
rotating aircraft and many other activities and services.
For its subsidiaries, the Company arranges other supplies of material and services, incl. supply of air fuel and it
also arranges aircraft and their crew, incl. staff training. Thanks to demand for a larger number of services plus
the long-term relationships established by the Company, the subsidiaries can avail of delivery conditions,
prices, payment and other conditions that would be typical for standard, large and well-established airlines.
Payable in 2017 Payable in 2018 Payable in 2019 Payable in 2020 Payable in 2021 Payable in 2022 Payable in 2023 Payable in 2024 Payable in 2025 Total
2 794 082 2 622 211 2 222 134 1 784 648 1 331 891 674 361 447 734 336 800 114 301 12 328 162
annual report | Travel Service 69
The subsidiaries may also use the Company’s software equipment, such as AIMS module (Aircraft
Management Information System), EFA, MS Dynamics NAV 2013 (for more information, please see section
INTANGIBLE ASSETS), the system for issuing invoices, credit notes and other documents used for taxation
purposes (except for Travel Service, Kft and Travel Service GmbH), treasure, accounting or any related
support, etc.
The services and business activities mentioned above are provided and arranged between the Company
and its subsidiaries under a contract of mandate where the parties act as the mandatary and the mandatory.
Very often, commercial agreements and contracts are made between more than two entities where
a supplier is one of the contracting party and the Company and its subsidiaries would be the contracting
party. Travel Service, a. s. provides its services for a consideration. The fee to be charged is determined as per
calculations set in accordance with the arm’s length principle.
The Company ensures and performs business activities for its subsidiaries, Travel Service Polska Sp. z o. o.
and Travel Service Slovensko, s. r. o. In addition, the Company is also their sales representative. The Company
provides these services for a consideration.
In addition to the activities and services mentioned above that are provided against a consideration, the
Company also does so-called simple rebilling of, for example, air fuel consumed on the flights operated by
subsidiaries, etc.
As at the balance sheet date, Travel Service GmbH pursues no business activities. The company itself only
represents the Company’s interest to enter the market of carriage by air in Germany.
Another subsidiary where the Company holds a substantive interest is T. S. Building that lets non-residential
premises to the Company – the business administration centre at K Letišti 1068/30 160 08 Prague 6.
Since 2015, the Company has held a substantial interests in České aerolinie a. s., having its registered office
at Prague 6, Jana Kašpara 1069/1, Post Code 160 08, Company Number 457 95 908. Since 31 March 2015,
the Company has held a 34% interest in the registered capital of České aerolinie a. s., by way of holding one
single (collective) ordinary registered stock.
The Company believes that it was a strategic investment to acquire the stock of České aerolinie, a. s. ensuring
sustainable development.
annual report 2016 | Travel Service70
Name, registered office CostInvestment in the share
capital (%)Equity*
Profit/loss for the reporting period
Dividends/Profit share
At 31 Dec 2016
Travel Service, Kft, Hungary 233 465 100.00% 69 988 10 701 0
T. S. Building, s. r. o. 160 728 100.00% 98 795 6 471 0
Travel Service Polska Sp. z o. o. 3 080 100.00% -90 451 12.918 0
Travel Service Slovensko, s.r.o. 6 755 100.00% 18 459 34 944 0
Travel Service GmbH 676 100.00% 263 -363 0
Total 404 704 97 054 51 753 0
At 31 Dec 2015
Travel Service, Kft, Hungary 227 007 100.00% 58 172 12 556 0
T. S. Building, s. r. o. 160 728 100.00% 92 324 7 790 0
Travel Service Polska Sp. z o. o. 3 187 100.00% -106 980 18 012 0
Travel Service Slovensko, s.r.o. 6 756 100.00% -14 300 13 052 0
Travel Service GmbH 676 100.00% 676 0 0
Total 398 354 29 892 51 410 0
At 31 Dec 2014
Travel Service, Kft, Hungary 213 771 100.00% 46 852 27 706 0
T. S. Building, s. r. o. 160 728 100.00% 84 534 6 246 0
Travel Service Polska Sp. z o. o. 3 264 100.00% -127 988 -33 743 0
Travel Service Slovensko, s.r.o. 6 931 100.00% -28 060 -34 992 0
Total 384 694 -24 662 -34 783 0
The following table shows the equity of subsidiaries:
annual report | Travel Service 71
The Company is the only owner of Travel Service, Kft, Hungary. As of 31 December 2016, Travel Service, Kft
reports the equity of HUF 802,520 thousand (CZK 69,988 thousand; as of 31 December 2015, the equity
was CZK 58,172 thousand). In the past, Travel Service, Kft. faced some unfair competition with the state run
carrier – the national airlines Malev. At the beginning of 2012, the European Commission decided that Malev
had to return public subsidies that amounted to more than a hundred million US dollars. On 3 February
2012, Malev discontinued all its flights and bankruptcy was declared over the company’s assets. As a result,
the Hungarian market started to offer standard market conditions without any public subsidies. This had
positive impact on the financial situation of Travel Service, Kft. The Company anticipates that Travel Service,
Kft. will continue to have good economic results and will generate a profit of about HUF 200,000 thousand.
The Company’s subsidiary, Travel Service Polska Sp. z o. o. entered the Polish market in 2012 and on 8 May
2012, it was granted an operating license. The year 2016 was the fourth year when Travel Service Polska
was active on the Polish market for the entire year. Based on the prepared project documentation and
the business plan for 2016, the subsidiary anticipated that it will generate profit before taxes of PLN 3,633
thousand. The actual profit before taxes was, however, lower by PLN 1,614 thousand.
T. S. Building, s. r. o. is the Company’s subsidiary and it is an owner of the building where the Company has
its registered office. Its only principle activity is to let the building located at the address: Prague 6, K Letišti
1068/30. On 25 June 2013, the Company, as the company’s sole member, passed a resolution to make
a voluntary contribution of CZK 40,000 thousand outside the registered capital.
annual report 2016 | Travel Service72
The increase in spare parts for aircraft, including low value consumer material was 34% year-on-year. The increase in these assets results from the strategy of the maximum aircraft use.
The eligible interest of the Company is to maintain the fleet of aircraft in the best working condition possible and
to minimise any delays due to lack of spare parts. This is, however, done while closely observing the principles
of safety of air operations and while complying with all accounting principles, such as principle of transparency
and evidence by document. When any defect is discovered on an aircraft operated under the operating lease
contracts and if it is vital to replace any spare part or component, it happened in 2016 and to a certain extent even
in previous years that the replaced spare part that was supplied for the aircraft was classified as a spare part in the
company’s assets and, thus, “stored” in the particular aircraft. Since there was no relevant document available (and
in order to observe the principle of evidence by document), the removed spare part could not be capitalised
in the Company’s assets. When the operating lease was terminated and the aircraft returned to the lessor, the
Company ceased to be the owner of the spare part or component affixed to the aircraft. As agreed under the
operating lease contracts, the Company is bound by the contract to return the aircraft in the working condition
and the aircraft must comply with all the rules and regulations governing the air operations services. Therefore, the
Company was not entitled to issue any invoice to the lessor for the installation of the spare part or the component.
On the other hand, by replacing the spare part in question, the Company became the owner of the spare part
or the component. These spare parts were then properly stored in the so-called warehouse used for temporarily
removed spare parts or components and, subsequently, these spare parts were divided into two groups – before
repair and repaired. Following the replacement, the Company became, by law, the owner of the spare part or the
component and they were then valued at their replacement costs. The spare parts or the components that were
not repaired as at the balance sheet date were than adjusted. The adjustment recognised for these spare parts or
components reflects the amount of anticipated costs that are to be expended in order reinstate the spare parts
or components to the original condition.
The above resulted in surpluses discovered at the physical count of inventory and in corrections that were to be
made to consumed spare parts in 2016.
Another fact that resulted in higher inventories is the repair of engines and the acquisition of their components
that were replaced by the entity repairing the engines. Under the operating lease contracts, it is agreed that only
new spare parts are implemented and, thus, following any replacements, the Company becomes the owner
of the replaced spare parts or components. These spare parts or components may be used, once repaired, and
the service companies use them when repairing the aircraft. The assets acquired this way are valued at their
replacement costs after taking into account the amount of anticipated costs that are to be expended in order
reinstate the spare parts or components to the appropriate condition.
5. Inventory
At 31 Dec 2016 At 31 Dec 2015 At 31 Dec 2014
Material 446 127 333 859 235 322
- spare parts for aircraft, including low value consumer material 426 820 318 501 222 497
- additional costs relating to the acquisition 16 395 11 944 10 110
- other 2 912 3 414 2 715
Goods 128 90 114
Total (gross) 446 255 333 949 235 436
Provision for inventory -4 717 -4 760 0
Total (Net) 441 538 329 189 235 436
annual report | Travel Service 73
annual report 2016 | Travel Service74
The long-term receivables reported on the balance sheet include, in particular, the advance payments
made for the lease of aircraft of CZK 826,046 thousand (2015: 706,114; 2014: 670,057) and other long-term
advance payments made in relation to the air operations.
The due date of advance payments made in relation to the lease of aircraft is determined as per the
termination date of the lease contracts and as per the date when the leased aircraft are to be returned.
As at 31 December 2016, most of the advance payments made in relation to the lease are classified as
long-term.
In 2015 and 2014, the accrued revenue was reported as “Short-term receivables”.
6. Receivables
At 31 Dec 2016 At 31 Dec 2015 At 31 Dec 2014
Short-term receivables (gross) 1 536 024 1 474 077 974 354
Long-term receivables (gross) 866 670 716 502 704 343
of which receivables with the remaining maturity periods exceeding 5 years
231 810 273 308 361 397
Total receivables (gross) 2 402 694 2 190 579 1 678 697
annual report | Travel Service 75
Short-term receivables on the balance sheet have the following structure of due dates:
Trade receivables Other receivables Total
Before due date 338 778 863 806 1 202 584
- of which intragroup 248 357 4 561 252 918
Past due date 247 161 86 279 333 440
- of which intragroup 153 257 0 153 296
Total at 31 Dec 2016 585 939 950 085 1 536 024
Allowances for receivables -71 540 0 -71 540
Total (net) 514 399 950 085 1 464 484
Before due date 329 873 922 864 1 252 737
- of which intragroup 260 498 329 850 590 348
Past due date 118 406 102 934 221 340
- of which intragroup 0 0 0
Total at 31 Dec 2015 448 279 1 025 798 1 474 077
Allowances for receivables -51 183 0 -51 183
Total (net) 397 096 1 025 798 1 422 894
Before due date 121 726 564 299 686 025
- of which intragroup 66 800 133 123 199 923
Past due date 268 146 20 183 288 329
- of which intragroup 61 537 0 61 537
Total at 31 Dec 2014 389 872 584 482 974 354
Allowances for receivables -86 561 -20 183 -106 744
Total (net) 303 311 564 299 867 610
annual report 2016 | Travel Service76
Other receivables may be analysed as follows:
At 31 Dec 2016 At 31 Dec 2015 At 31 Dec 2014
Receivables – controlled or controlling entity – Travel Service Polska, Sp. z o.o. 0 128 359 39 914
State– tax receivables 2 752 1 864 25 671
- corporate income tax (advance payments for the corporate income tax were offset against the income tax provision in the balance sheet in 2016)
645 274 24 074
- VAT 2 107 1 590 1 597
Short-term advance payments made 212 009 103 730 124 933
Estimated receivables 484 733 563 498 274 225
- payments for aircraft repairs made by the lessor 273 003 210 016 131 638
- insurance benefits 43 552 113 977 0
- income from the lease of aircraft 17 371 0 57 560
- Smart Wings – estimated sales from not-yet recognised scheduled flights 94 394 59 692 57 517
- Management fee 0 135 358 0
- Other 56 413 44 455 27 510
Other receivables 250 591 227 123 99 047
- advance payments for travel costs 85 527 56 255 97 036
- short-term portion of deposits relating to the lease of aircraft 0 43 538 0
- fair value of the receivable arising from concluded commodity and currency swaps 90 862 0 0
- other (deposits and standing advance payments) 74 202 127 330 2 011
Total other receivables (gross) 950 085 1 024 574 583 773
annual report | Travel Service 77
annual report 2016 | Travel Service78
The structure of deferred expenses is as follows:
Complex deferred expenses in 2014 included, in particular, the costs of the operating lease and costs of aircraft insurance.
7. Deferred expenses
At 31 Dec 2016 At 31 Dec 2015 At 31 Dec 2014
Deferred expenses 114 949 310 376 356 456
- lease 88 205 85 806 81 258
- promotion 1 518 705 479
- insurance 7 605 6 116 8 310
- commission for the mediated lease of aircraft 0 60 048 105 087
- preliminarily billed costs for unfinished repairs 5 372 137 777 143 911
- training 3 410 3 069 1 280
- other 8 839 16 855 16 131
Complex deferred expenses 0 0 88 859
Total deferred expenses 114 949 310 376 445 315
annual report | Travel Service 79
Deferred expenses – lease instalments include the part of the lease as of 31 December 2016. It is determined from the invoices received and any payments made on the lease of aircraft that relate to the period up
to 1 January 2017. Below you can find the overview of all flights and periods that relate to the lease:
Deferred expenses spent on the training included the expenses recorded on the accrual basis of accounting that related to the staff training, namely trainings for captains
(pilot-in-command), first officers (co-pilots), flight services managers (head of the cabin crew) and flight attendants.
1. OK - TSH: 1 Jan 2017 to 14 Jan 2017 10. OK - TSO: 1 Jan 2017 to 5 Jan 2017 19. OK - TVX: 1 Jan 2017 to 28 Jan 2017
2. OK - TSA: 1 Jan 2017 to 3 Jan 2017 11. OK - TVJ: 1 Jan 2017 to 17 Jan 2017 20. OK - TVB: 1 Jan 2017 to 9 Jan 2017
3. OK - TVW: 1 Jan 2017 to 28 Jan 2017 12. OK - SWT: 1 Jan 2017 to 21 Jan 2017 21. OK - TVO: 1 Jan 2017 to 20 Jan 2017
4. OK - TSC: 1 Jan 2017 to 17 Jan 2017 13. OK - TVU: 1 Jan 2017 to 19 Jan 2017 22. OK - TVF: 1 Jan 2017 to 19 Jan 2017
5. OK - TVS: 1 Jan 2017 to 4 Jan 2017 14. OK - TVP: 1 Jan 2017 to 8 Jan 2017 23. OK - TVE: 1 Jan 2017 to 18 Jan 2017
6. OK - TVV: 1 Jan 2017 to 8 Jan 2017 15. OK - TVK: 1 Jan 2017 to 22 Jan 2017 24. OK - TVT: 1 Jan 2017 to 30 Jan 2017
7. OK - TSD: 1 Jan 2017 to 4 Jan 2017 16. OK - TVR: 1 Jan 2017 to 27 Jan 2017 25. OK - TVM: 1 Jan 2017 to 3 Jan 2017
8. OK - TVY: 1 Jan 2017 to 21 Jan 2017 17. OK - TVG: 1 Jan 2017 to 3 Jan 2017 26. OK - TVL: 1 Jan 2017 to 8 Jan 2017
9. OK - TVH: 1 Jan 2017 to 11 Jan 2017 18. OK - TSE: 1 Jan 2017 to 2 Jan 2017 27. OK - TSF: 1 Jan 2017 to 23 Jan 2017
annual report 2016 | Travel Service80
Structure of shareholders as at the balance sheet date:
The General Meeting of the Company held on 4 May 2016 passed a resolution that the Company’s registered
share capital of CZK 250,000,000 will be increased by CZK 991,236,250 to its new balance of CZK
1,241,236,250.
The registered share capital has been increased by way of subscribing 9,911 pieces of registered shares at
their nominal value of CZK 100,000 and 136,250 pieces of registered shares at their nominal value of CZK
1. As at 31 December 2016, the registered share capital was paid in full.
8. Equity
Type of shares At 31 Dec 2016 (CZK) Number of shares At 31 Dec 2015 (CZK) Number of shares
UNIMEX GROUP, a.s., 139 000 000 1 390 77 900 000 779
Shares with the nominal value of CZK 100 thousand, paid in full
Shares with the nominal value of CZK 1, paid in full 18 460 18 460
Ing. Roman Vik 139 000 000 1 390 77 900 000 779
Shares with the nominal value of CZK 100 thousand, paid in full
Shares with the nominal value of CZK 1, paid in full 18 460 18 460
CANARIA TRAVEL, spol. s r.o. 343 500 000 3 435 69 200 000 692
Shares with the nominal value of CZK 100 thousand, paid in full
Shares with the nominal value of CZK 1, paid in full 74 194 74 194
China International Group Corporation Limited
Shares with the nominal value of CZK 100 thousand, paid in full 619 600 000 6 196 25 000 000 250
Shares with the nominal value of CZK 1, paid in full 25 136 25 136
Total 1 241 236 250 - 250 000 000 2 500
annual report | Travel Service 81
annual report 2016 | Travel Service82
Share capitalShare
premiumOther capital
funds
Gains or losses from the
revaluation of assets and
liabilities*
Funds from profit
Profit or loss for prior periods
Profit/loss for the reporting
period Total equity
At 31 Dec 2013 250 000 10 149 0 -10 971 26 090 301 651 158 354 735 273
Transfer of the profit or loss of the prior reporting period
0 0 0 0 8 000 112 354 -120 354 0
Other changes in equity 0 0 0 20 091 0 0 0 20 091
Payment of dividends 0 0 0 0 0 0 -38 000 -38 000
Profit or loss for the reporting period 0 0 0 0 0 0 60 067 60 067
Rounding 0 0 0 0 0 1 0 1
At 31 Dec 2014 250 000 10 149 0 9 120 34 090 414 006 60 067 777 432
Transfer of the profit or loss of the prior reporting period
0 0 0 0 8 000 52 067 -60 067 0
Other changes in equity 0 0 0 12 984 0 0 0 12 984
Payment of dividends 0 0 0 0 0 0 0 0
Profit or loss for the reporting period 0 0 0 0 0 0 192 487 192 487
At 31 Dec 2015 250 000 10 149 0 22 104 42 090 466 073 192 487 982 903
Transfer of the profit or loss of the prior reporting period
0 0 0 0 0 192 487 -192 487 0
Other changes in equity 991 236 0 1 6 349 0 0 0 997 586
Payment of dividends 0 0 0 0 0 -192 487 0 -192 487
Profit or loss for the reporting period 0 0 0 0 0 0 193 299 193 299
At 31 Dec 2016 1 241 236 10 149 1 28 453 42 090 466 073 193 299 1 981 301
9. Changes in equity
* revaluation of non-current financial assets (foreign currency equity investments in subsidiaries) using the balance sheet exchange rate
annual report | Travel Service 83
Pursuant to resolutions of general meetings, the profit of the Company generated in 2013, 2014 and 2015 was distributed in accordance with the submitted proposal as follows:
2015 2014 2013
Allocation to other funds from profit 0 8 000 8 000
Profit allocated to retained earnings 0 45 716 112 354
Compensation of profit and loss 0 6 351 0
Payment of dividends to shareholders 192 487 0 38 000
Profit after tax 192 487 60 067 158 354
annual report 2016 | Travel Service84
10. Financial derivatives
In accordance with the internal guideline, the Company classifies and records all its derivatives as the
derivatives held for trading. As at the balance sheet date, the change in the fair value of derivatives held
for trading is reflected in the Company’s profit/loss. The Company disclosed the change in fair value of
these derivatives reported in the current period in its Profit and Loss Account, under Other Financial
Expenses, or Other Financial Revenue. The reported figure may be analysed as follows:
The Company uses commodity swaps to hedge against the price of fuel that are made with Komerční
banka, a. s., UniCredit Bank Czech Republic and Slovakia and Česká spořitelna, a. s. As at 31 December
2016, the fuel in quantity ranging from 25,000 to 35,000 tons was hedged. The exact quantity hedged
under commodity swaps is subject to trade secret.
2016 2015 2014
Costs of the revaluation of securities and derivatives -4 094 -321 892 -304 107
Income from the revaluation of securities and derivatives 113 855 85 633 50 286
Net result of the revaluation and settlement of financial derivatives 109 761 -236 259 -253 821
annual report | Travel Service 85
annual report 2016 | Travel Service86
11. Provisions
Below you can find the overview of each provision and its changes between the balance sheet dates, i.e.
31 December 2015 and 31 December 2016:
* The Company recognised the provision for the income tax of CZK 56,670 thousand that was, at the level
of the Balance Sheet, reduced by the advance payments made of CZK 36,994 thousand.
Other provisions are created, in particular, for the incoming invoices received in respect of the accounting
period 2016.
Balance at 31 Dec 2015 Recognition of provisions Release of provisions Balance at 31 Dec 2016
Other provisions 29 937 9 000 29 937 9 000
Provision for the income tax* 18 952 19 676 18 952 19 676
Total 48 889 28 676 48 889 28 676
annual report | Travel Service 87
12. Payables
*Long-term payables reported on the Balance Sheet include, mainly, the payables owed to credit
institutions, such as credits provided by banks for the purchase of new aircraft.
**Following the change to the structure of the Balance Sheet that was enacted on 1 January 2016 when it
was decided that payables owed to credit institutions are to be included in payables, payables increased.
Balance at 31 Dec 2016 Balance at 31 Dec 2015 Balance at 31 Dec 2014
Short-term payables 2 280 015 1 466 551 1 316 667
Long-term payables 104 353* 3 981 3 474
Of which payables with the remaining maturity period exceeding 5 years 0 0 0
Total payables 2 384 368** 1 470 532 1 320 141
Trade payables Other payables Total
Before due date 161 731 1 666 497 1 828 228
- of which intragroup 17 674 413 677 431 351
Past due date 311 150 140 637 451 787
- of which intragroup 0 0 0
Total at 31 Dec 2016 472 881 1 807 134 2 280 015
Before due date 23 315 1 002 177 1 025 492
- of which intragroup 48 811 401 930 450 741
Past due date 294 879 146 180 441 059
- of which intragroup 0 0 0
Total at 31 Dec 2015 318 194 1 148 357 1 466 551
Before due date 383 956 542 309 926 265
- of which intragroup 29 076 31 881 60 957
Past due date 243 312 147 090 390 402
- of which intragroup 0 0 0
Total at 31 Dec 2014 627 268 689 399 1 316 667
Below you can find the overview of short-term payables sorted as per their due dates:
annual report 2016 | Travel Service88
At 31 Dec 2016 At 31 Dec 2015 At 31 Dec 2014
Other payables:
Payable to subsidiary Travel Service Slovensko 166 289 342 994 0
Payables to subsidiary Travel Service Polska 169 073 8 483 8 663
Payables to subsidiary T. S. Building 3 516 3 516 3 516
Payable arising from payment of dividends 74 799 70 741 13 741
Payables to employees 63 837 52 968 52 077
Social security and health insurance payables 31 021 19 433 17 025
State– tax payables and subsidies 11 466 8 280 11 049
- corporate income tax 0 0 0
- personal income tax from dependent activities and other 11 466 8 280 11 049
Payables to credit institutions 668 041 0* 0*
Short-term advances received 166 249 364 820 232 870
Accrued expenses 0** 41 154 25 966
Estimated payables 223 802 186 264 77 782
Sundry payables 229 041 49 704 246 710
Total other payables 2 280 015 1 148 357 689 399
*Following the change to the structure of the Balance Sheet that was enacted on 1 January 2016, payables owed to credit institutions were included in other payables.
** Following the change to the structure of the Balance Sheet that was enacted on 1 January 2016, accrued expenses are no longer included in other payables.
annual report | Travel Service 89
Below you can find the overview of payables due to state public bodies:
Social security Health insurance Tax payables
Before due date 20 380 10 641 11 466
Past due date (arrears) 0 0 0
Total at 31 Dec 2016 20 380 10 641 11 466
Before due date 9 943 7 175 8 280
Past due date (arrears) 0 2 315 0
Total at 31 Dec 2015 9 943 9 490 8 280
Before due date 9 653 7 372 11 049
Past due date (arrears) 0 0 0
Total at 31 Dec 2014 9 653 7 372 11 049
annual report 2016 | Travel Service90
annual report | Travel Service 91
13. Payables to credit institutions
To finance its operation and investment needs, the Company uses the business loans provided by
UniCredit Bank Czech Republic and Slovakia, a. s., Komerční banka, a. s., Raiffeisenbank a.s. and Česká
spořitelna, a. s. The loans to finance the operations are repaid in summer season or partly drawn due to
a surplus of funds in EUR and
non-suitability of their conversion into CZK. Medium-term loans granted by UniCredit Bank Czech
Republic and Raiffeisenbank, a. s. were used to finance the advance payments for the acquisition of
tangible fixed assets – purchase of new airplanes Boeing 737 – 8 Max.
Loan provider
Total loan amount/loan facility in TCZK
Outstanding portion CZK thousand
of which due in one year
CZK thousand
of which due in one year or more
CZK thousand
Komerční banka, a.s. 80 000 0 0
Overdraft 0
Komerční banka, a.s. 370 000 38 641 0
Revolving loan 38 641
Raiffeisenbank a.s. 200 000 200 000 0
Short-term loan 200 000
Raiffeisenbank a.s. 125 000 48 428 62 500
Medium-term loan 110 928
UniCredit Bank Czech Republic and Slovakia, a.s. 500 000 339 298 0
Overdraft 339 298
UniCredit Bank Czech Republic and Slovakia, a.s. 125 000
Medium-term loan 83 333 41 666 41 667
Česká spořitelna, a. s. 100 000
Overdraft 8 8 0
Total credit line facility 1 500 000
Total outstanding portion 772 208 668 041 104 167
annual report 2016 | Travel Service92
UniCredit Bank Czech Republic and Slovakia, a. s. and the Company entered into a loan agreement on
29 September 2004, as amended. The Company may use a revolving multipurpose line in the maximum
amount of CZK 550,000 thousand in the period from 1 November to 30 June or CZK 250,000 thousand in
the period from 1 July to 31 October to finance its operations, to issue bank guarantees or documentary
letters of credit or to pursue treasury transactions. Cash withdrawals are capped at CZK 500,000 thousand
in the period from 1 November to 30 June or at CZK 200,000 thousand in the period from 1 July to 31
October. The loan is due on 31 December 2017.
Shares issued by Travel Service a.s., namely a total of 1,250 ordinary shares in the nominal value of CZK
125,000 thousand were put in pledge for the benefit of UniCredit Bank Czech Republic and Slovakia, a. s.,
by the following pledgers:
1. UNIMEX GROUP, a. s. – 44 ordinary shares in the nominal value CZK 4,400 thousand;
2. Ing. Roman Vik –184 ordinary shares in the nominal value of CZK 18,400 thousand;
3. CANARIA TRAVEL, spol. s r. o. - 152 ordinary shares in the nominal value of CZK 15,200 thousand;
On 29 December 2015, the Company entered into LOAN AGREEMENT reg. no. 1327/15-120 with UniCredit
Bank Czech Republic and Slovakia, for a loan due by 31 December 2018, a. s. Under the agreement,
the Company received a credit to finance advance payments to buy fixed tangible assets – the airplane
Boeing 737 – MAX in the amount of CZK 125,000 thousand. The loan shall be repaid quarterly in regular
instalments starting from 31 March 2016. The payments at 31 March 2016, 30 June 2016, 30 September
2016 and 31 December 2016 in the amount of CZK 10,416,666.67 was settled by due dates specified by
the agreement. In 2016, the company paid a principal in the amount of CZK 41,667 thousand.
On 18 December 2014, the Company made with Komerční banka, a. s. a General Agreement for Provision
of Financial Services (General Agreement). On 30 November 2015, the parties entered into Amendment
3 to the General Agreement, which set the global credit line at CZK 500,000 thousand for the period
from 1 December 2015 to 31 May 2016 and for CZK 370,000 thousand for the period from 1 June 2016
to 30 November 2016. A total of CZK 80,000 thousand may be used in the form of an overdraft, and
CZK 370,000 thousand in the form of a revolving credit. Under the Agreement, the company may use
other products also so long as it does not exceed the sum of the foregoing limits. These include customs
guarantees (CZK 50,000 thousand), performance bond (CZK 150,000 thousand), payment guarantees
(CZK 200,000 thousand), documentary letters of credit (CZK 200,000 thousand) and standby letters of
credit (CZK 200,000 thousand).
After the balance sheet date, i.e. at 6 March 2017, the parties entered into Amendment 4, which set the
global credit line at CZK 600,000 thousand for the period from 31 May 2017 and from 1 December 2017
and at CZK 470,000 thousand for the period from 1 June 2017 to 30 November 2017.
The General Agreement and the products ensuing from it are secured by a pledged created for the
benefit of Komerční banka, a. s. as follows:
1. A letter of comfort issued by UNIMEX GROUP, a. s., Reg. No. 41693540;
2. A mortgage over real property – office building number 1068, Ruzyně, owned by the subsidiary T. S.
Building, s. r. o., registered office Praha 1, Václavské nám. 53/815, Reg. No. 645 83 970;
3. Securities – 694 shares serial number 359 -409, 668-707, 951-1036, 5308 – 5824 in the nominal value
CZK 100,000 per each, issued by Travel Service, a. s. owned by UNIMEX GROUP, a.s., Reg. No. 41693540.
The nominal value of secured shares is CZK 69,400 thousand;
4. Securities – 554 shares serial number 631-667, 4791-5307 in the nominal value CZK 100,000 per each,
issued by Travel Service, a. s. owned by Ing. Roman Vik. The nominal value of secured shares is CZK
55,400 thousand;
5. Securities – 1,670 shares serial number 0410-0434, 0772-0784, 5825-7456 in the nominal value
CKZ 100,000 per each, issued by Travel Service, a. s. owned by CANARIA TRAVEL, spol. s r.o., Reg. No.
49689428. The nominal value of secured shares is CZK 167,000 thousand;
annual report | Travel Service 93
6. Securities – 53,846 shares serial number 12.412-66257 in the nominal value CZK 1 per each, issued
by Travel Service, a. s. owned by CANARIA TRAVEL, spol. s r.o., Reg. No 49689428. The nominal value of
secured shares is CZK 54 thousand;
7. Securities – 3,288 shares serial number 1-242, 628-630, 1037-1057, 1101-1207, 1251-1530, 1626-1823,
1938-2084, 2501 – 4790, in the nominal value CZK 100,000 per each, issued by Travel Service, a. s.
owned by China International Group Corporation limited, registration number 1580628. The nominal
value of secured shares is CZK 328,800 thousand;
The nominal value of shares issued by Travel Service, a. s. and given in pledge to Komerční banka, a. s.
Praha is CZK 620,654 thousand, i.e. 50% of the Company’s registered share capital.
The Company cooperates with Raiffeisenbank a.s., which also assist in the arrangement of day-to-
day payment transactions and in financing the Company’s operations and investments. In the area of
operations financing, the bank granted the Company an overdraft credit in the amount of CZK 200,000
thousand under a loan contract No. 980466/2013/2. On 30 November 2016, the parties entered into
amendment No. 5 to the foregoing loan agreement which set the term for drawing the credit at 30 June
2017 or 30 November 2017 respectively, subject to the prior consent of the bank’s department in charge
of the loan agreement. The final due date is set at 30 November 2017.
On 27 May 2016, Raiffeisenbank a.s. and the Company entered into an investment credit contract which
granted the company a medium-term investment credit in the amount of CZK 125,000 thousand to
finance the advance payment for the purchase of the new airplane Boeing 737-8 MAX. The credit is
redeemed in quarterly payments in the amount of CZK 10,417 thousand since 30 September 2016. The
final due date of the credit is set at 31 May 2019.
The Company also cooperates with Česka spořitelna, a. s., which granted the Company an overdraft for
the amount of CZK 100,000 thousand under a contract for a credit line facility due by 28 February 2018.
The Company did not make use of the overdraft at the balance sheet date.
After the balance sheet date, the company received a medium-term credit in the amount of CZK 150,000
thousand to refinance the purchase of the new airplane Boeing 737-8 MAX. The credit was drawn on
22 February 2017. The credit is secured by a blank bill of exchange plus the Contract About the Right to
Complete a Blank Bill of Exchange. The credit is settled in monthly instalments in the amount of CZK 4,167
thousand. The last instalment in the amount of the outstanding part of the principle is scheduled on the
3rd anniversary of the execution date of the contract, i.e. on 22 February 2020.
COOPERATION WITH BANKS, INCLUDING THE INFORMATION ON INTEREST RATES
Interest rates charged on the credit are flexible; they are based on Pribor/Libor/EURIBOR rates, depending
on the currency of the loan, and a fixed mark-up in the range from 1.0% p. a. to 2.5% p. a. (the exact figure
is protected by trade secret).
The Company has current accounts in Komerční banka, a. s., in UniCredit Bank Czech Republic and Slovakia,
a.s., in Raiffeisenbank a.s., in Citibank Europe plc, organizační složka and in Československá obchodní
banka, a.s. For payment transactions in Slovakia, the Company also cooperates with Tatra Banka, a. s. and
a foreign bank branch – Komerční banka Bratislava, in Poland with PEKAO Bank, in Israel with Citi Bank
and in Ireland with Citi Bank.
annual report 2016 | Travel Service94
annual report | Travel Service 95
In 2016, the Company carried out 126,591 block hours of flight, in 2015 a total of 111,785 block hours of
flight, in 2014 a total of 126,036 block hours of flight. Compared to year 2015, the aircraft time increased
by 14,806 block hours of flight.
For details, please refer to the management’s Annual Report on the company’s business and financial
position.
The following table shows carried out block hours of the Company and their structure by products:
The following table shows year-on-year changes in products.
14. Operating revenue of the company
Block hours 2016
Product 12016 22016 32016 42016 52016 62016 72016 82016 92016 102016 112016 122016 2016
Total TVS 8 493 8 796 9 833 9 881 9 153 13 517 15 453 15 328 13 741 9 254 5 936 7 206 126 591
of which
Charter carriage 1 524 1 685 1 830 2 441 3 113 5 119 6 515 6 460 5 239 3 225 1 374 1 595 40 122
Scheduled carriage 708 613 898 1 037 1 557 5 366 6 539 6 346 5 595 2 218 1 646 1 578 34 102
Lease of aircraft 6 022 6 191 6 772 5 841 3 763 2 107 1 729 1 919 2 167 3 139 2 520 3 666 45 837
Other 238 307 333 562 719 925 669 603 739 672 396 367 6 530
Block hours – comparison of 2016 and 2015
Product 1_16_15 2_16_15 3_16_15 4_16_15 5_16_15 6_16_15 7_16_15 8_16_15 9_16_15 10_16_15 11_16_15 12_16_15 2016_2015
Total TVS 794 1 571 1 149 1 553 307 1 601 2 125 1 491 1 768 2 375 241 -169 14 806
of which
Charter carriage -131 -60 -373 26 -757 -820 -396 -827 -911 -143 -3 61 -4 335
Scheduled carriage 322 295 409 80 169 995 1 322 1 153 900 785 890 752 8 072
Lease of aircraft 539 1 248 1 050 1 357 672 1 002 940 1 020 1 549 1 683 -846 -1 038 9 176
Other 64 89 64 90 223 424 258 146 229 49 200 56 1 892
annual report 2016 | Travel Service96
Change in the structure of block hours affects the structure of revenue, as shown below.
*** In 2016, the following entries are included in the calculation I. Revenue from sale of goods and services
(classified as charter/scheduled carriage, lease of aircraft and other) in the amount of CZK 15,481,000, II.
Revenue from sale of goods in the amount of CZK 24,495 thousand and III. Other operating revenue of
CZK 53,171 thousand.
*The charter carriage revenue also includes revenue from Business Jet flights (aerotaxi)
**The scheduled carriage revenue includes also revenue from the sale of airplane tickets for shared flights
The foregoing operating revenue was accompanied by the following total operating cost:
*In 2016, the calculation includes all operating costs.
Operating revenue 2016 2015Year-on-year comparison in CZK
thousand Year-on-year comparison in %
Income from charter carriage* 6 678 528 7 626 701 -948 173 -12
Income from scheduled carriage** 5 618 595 4 247 377 1 371 218 32
Income from the lease of aircraft and services
2 659 556 2 010 934 648 622 32
Other operating income 601 987 587 862 14 125 2
Total operating revenue** 15 558 666 14 472 874 1 085 792 8
2016 2015Year-on-year comparison in CZK
thousand Year-on-year comparison in %
Operating cost * 15 486 897* 13 992 452 1 494 394 11
annual report | Travel Service 97
annual report 2016 | Travel Service98
The following table outlines the selected substantial costs.
2016 2015 Difference % 2014
Consumed fuel, material and energy 2 679 797 3 030 698 -1 416 302 -12% 4 447 000
- fuel 2 406 386 2 706 862 -300 476 -11% 4 100 899
- fuel - rebilling 196 414 240 421 -44 007 -18% 259 057
- printing 43 936 46 411 -2 475 -5% 48 469
- technical section 5 371 10 079 -4 708 -47% 3 726
- energy 6 265 6 636 -371 -6% 7 297
- other 18 425 20 289 -1 864 -9% 27 552
15. Costs of consumed material, energy and services
annual report | Travel Service 99
2016 2015 Difference % 2014
Services 11 382 311 10 474 247 908 064 9% 10 021 197
- lease of aircraft 3 692 955 3 363 293 329 662 10% 3 223 809
- handling, landing and other flight related costs 2 389 015 2 197 444 191 571 9% 2 294 974
- charges 1 642 407 1 497 687 144 720 10% 1 646 314
- aircraft repairs 2 206 630 1 936 280 270 350 14% 1 423 743
- catering 145 299 201 802 -56 503 -28% 295 441
- services for rebilling 85 138 126 550 -41 412 -33% 70 572
- travel costs and accommodation 408 223 302 075 106 148 35% 304 915
- commissions 130 441 107 085 23 356 22% 78 227
- promotion 25 033 25 160 -127 -1% 26 264
- connections and communication 89 794 70 468 19 326 27% 55 387
- leases 31 757 29 970 1 787 6% 33 755
- training 56 874 39 179 17 695 45% 57 515
- other than aircraft repairs 3 247 4 531 -1 284 -28% 1 168
- codeshare 177 291 375 350 -198 059 -53% 322 873
- other 298 207 197 373 100 834 51% 186 240
A substantial decrease in the price of commodities such as petroleum and natural gas on global
markets caused a substantial decline in costs associated with fuel consumption. Simultaneously, the
maintenance costs increased, particularly the costs of repairing and maintaining airplanes. The costs
can be classified as follows:
a) Costs related to the maintenance of airplanes, amounting to CZK 1,100,578 thousand in 2016 (2015 -
CZK 899,070 thousand)
b) Supplemental rent costs associated with the use of airplanes, amounting to CZK 1,099,896 thousand in
2016 (2015 - CZK 1,031,997 thousand)
annual report 2016 | Travel Service100
annual report | Travel Service 101
The tax liability (+) / asset (-) in the respective periods is outlined in the following table:
The income tax due in the respective periods is outlined below:
16. Income taxation
2016 2015 2014
Tax payable 61 230 54 870 10 946
Deferred tax -4 029 508 -508
Total 57 201 55 378 10 438
2016 2015 2014
Profit before tax 250 500 247 865 70 505
Net adjustment to the tax base 49 357 35 556 14 716
Tax base 299 857 283 421 85 221
Recognition of income tax provision (19 % of the tax base) 56 670 53 850 16 192
Income tax provision less discounts and tax credits abroad 56 670 53 850 14 557
Release of the income tax provision for the prior reporting period -53 850 -14 557 -58 152
Actual tax liability for the prior reporting period 58 410 15 577 54 219
Other impacts 0 0 322
Income tax payable (tax charge) 61 230 54 870 10 946
annual report 2016 | Travel Service102
2016 2015 2014
Intangible and tangible fixed assets -12 475 -9 500 -12 014
Other temporary differences 13 717 -10 463 -5 274
Total 1 242 -19 963 -17 288
Tax rate 19 % 19 % 19 %
Deferred tax 236 -3 793 -3 285
The deferred tax at 31 December 2016 or at 2015 and 2014 is calculated from temporary differences by a tax rate valid in the period when the deferred tax is expected to be realised. It may be outlined as follows:
annual report | Travel Service 103
annual report 2016 | Travel Service104
(in CZK thousand) Sale Purchase Balance at 31 Dec 2016
Travel Service Slovensko, s. r. o. 785 293 196 395 588 898
České aerolinie a. s. 595 038 196 025 399 013
CANARIA TRAVEL, spol. s r. o. 237 560 3 261 234 299
Travel Service, Kft. 203 134 18 817 184 317
Travel Service Polska, Sp. z o. o. 376 086 344 462 31 624
TS Building, s. r.o. 0 22 328 -22 329
UG Jet, s. r. o. 1 150 527 -150 526
Total 2 197 112 931 815 1 265 296
17. Related party transactions
In 2016, the company carried out all transactions with related parties at arm’s length. Related parties
include the subsidiaries Travel Service Slovensko, s. r. o., Travel Service Polska, Sp. z o. o., Travel Service, Kft,
TS Building, s. r. o., the Company’s shareholders CANARIA TRAVEL, spol. s r. o. and UNIMEX GROUP, a. s., and
the companies EHQ, s. r. o., UG Jet, s. r. o. and České aerolinie a.s.
The cooperation with related parties entail cooperation in the areas of passenger transport (Canaria
Travel, s. r. o.), lease of airplanes (Travel Service, Kft., Travel Service Slovensko, s. r. o, Travel Service Polska,
Sp. z o. o., UG Jet, s. r. o.), lease of commercial premises (TS Building, s. r.o.), financial services (Unimex
Group, a. s.), supply of materials and services, and trade agency services (Travel Service, Kft., Travel Service
Slovensko, s. r. o, Travel Service Polska, Sp. z o. o.).
As noted above, the Company provides a broad range of services to its subsidiaries. The services are charged in compliance with the arm’s length principle; the fair price is determined by calculating the costs and
based on a comparison with fair market prices at the same time and location.
annual report | Travel Service 105
annual report 2016 | Travel Service106
18. Analysis of development the number of employees and structure of staff costs
Compared to 2015, the average number of the Company’s employees increased from 1,082 employees in
2015 to 1,158 employees in 2016. This represents a 7.02% year-on-year increase.
The Company’s management include employees directly reporting to the Chief Executive Officer of
the Company. These executives include Deputy CEO, Executive Director, Sales Director, Flight Director,
Technical Director, Operations Director, HR Manager, spokesperson, IT Manager, Compliance Monitoring
Manager, Technical Quality Manager, Manager in charge of subsidiary Travel Service Polska, Sp. z o. o.,
Manager for scheduled flights and the Financial Director.
Number of employees 2016 2015 2014
Average recalculated management headcount 15 11 14
Average recalculated headcount of other employees 1 143 1 071 1 018
Total 1 158 1 082 1 032
annual report | Travel Service 107
Payroll costs can be divided as follows:
2016 Management Other Total
Payroll costs 31 263 850 600 881 863
Bonuses to members of Company’s bodies 63 0 63
Social security and health insurance 6 702 261 825 268 527
Other social costs 0 8 444 8 444
Total 38 028 1 120 869 1 158 897
2015 Management Other Total
Payroll costs 24 379 714 286 738 665
Bonuses to members of Company’s bodies 72 0 72
Social security and health insurance 5 738 220 863 226 601
Other social costs 24 8 941 8 965
Total 30 213 944 090 974 303
2014 Management Other Total
Payroll costs 24 642 701 235 725 877
Bonuses to members of Company’s bodies 72 0 72
Social security and health insurance 5 657 218 990 224 647
Other social costs 0 7 168 7 168
Total 30 371 927 393 957 764
annual report 2016 | Travel Service108
19. Other operating revenue and other operating costs
In 2016, the Company’s other operating revenue amounted to CZK 53,019 thousand (2015: CZK 240,462
thousand; 2014: CZK 109,076 thousand). The revenue comprised insurance indemnity in the amount of
CZK 1,164 thousand (2015: CZK 115,739 thousand; 2014: CZK 33,297 thousand); reversal of a public grant
for free emission allowances and revenue from the sale of emission allowances in the amount of CZK
12,845 thousand (2015: 34,874 thousand; 2014: 23,110 thousand); revenue from contractual penalties
and late-payment interest in the amount of CZK 12,291 thousand (2015: CZK 22,950 thousand; 2014: CZK
18,232 thousand), revenue from written-off receivables in the amount of CZK 523 thousand (2015: CZK
9,814 thousand; 2014: CZK 6,994 thousand), inventory differences etc.
Other operating costs in the amount of CZK 233,090 thousand (2015: CZK 261,666 thousand; 2014: CZK
117,912 thousand) consisted in costs associated with the recognition of emission allowances in the
amount of CZK 35,593 thousand (2015: CZK 67,988 thousand; 2014: CZK 27,066 thousand), insurance
premium costs of CZK 95,025 thousand (2015: CZK 89,624 thousand; 2014: CZK 76,014 thousand),
statutory employee insurance premium (Kooperativa), etc. In 2015 and in 2016, other operating costs
included also costs associated with the write-off of receivables in the amount of CZK 2,975 thousand
(2015: CZK 81,781 thousand).
annual report | Travel Service 109
annual report 2016 | Travel Service110
20. Financial revenue and costs
Financial revenue and costs may be classified as follows:
The net financial profit is largely due to the Company’s hedging policy against price fluctuations of aviation fuel by means of commodity swaps, and the recent development in fuel prices, i.e. a consequence of
comparing the fixed price with the flexible price.
2016 2015 2014
Net foreign exchange rate gains or losses 84 149 12 483 64 669
Result of derivative transactions (including revaluation to fair value) 109 761 -236 259 -253 821
Interest income 19 688 14 751 5 432
Interest expenses -23 732 -23 627 -8 844
Other financial costs and revenue (primarily banking fees) -11 219 -7 839 -11 115
Total net financial profit or loss 178 647 -240 491 -203 679
annual report | Travel Service 111
annual report 2016 | Travel Service112
21. Cash flow statement
The cash flow statement is an individual statement which is part of these financial statements. The
Company has prepared the cash flow statement using the indirect method. Cash equivalents include
current liquid financial assets that are convertible to cash anytime.
annual report | Travel Service 113
annual report 2016 | Travel Service114
22. Risk management
The Company is exposed to risks arising from potential insolvency of service purchasers. These risks are
covered by required payments relating to the provision of services before the rendering of services, or
issued bank guarantees (e.g. bank guarantees of CITY Group, Raiffeissen Polska, etc.), or deposits.
The Company is exposed to risks arising from the insolvency of its suppliers, primarily those who
require payments before the use of purchased services of the Company, or require security deposits.
The Company eliminates these risks by using hedging instruments as part of the cooperation with local
banks in the form of letters of credit and bank guarantees – refer to Note 11, which replace the payments
required in advance. However, even bank guarantees issued at the Company’s request involve certain
risks arising from the substance of guarantees themselves, as they represent a first-call payment and the
relationship is abstract rather than accessory.
The Company is exposed to foreign exchange rate risks which are covered by “natural hedging” when the
Company balances its revenues and expenses to be, if possible, balanced by individual currencies. Potential
differences are hedged by financial derivatives – call and put options, or forwards. The strengthening of
the natural hedging principle, primarily against fluctuations in the USD/CZK exchange rate, involves the
increase in sales with partners that settle their payables in American dollars. These predominantly include
clients from North America, Israel and Poland.
To cover an unanticipated increase in fuel prices, the Company enters in contractual arrangements,
containing a fuel clause, with business partners. At the end of 2016, the Company recorded concluded
commodity options for hedging the aviation fuel price in thousand tons of aviation fuel.
annual report | Travel Service 115
annual report 2016 | Travel Service116
23. Post balance sheet events
1. Česká spořitelna, a. s. provided an investment loan of CZK 150,000 thousand for financing the advance
payments made for supplies of new aircraft in accordance with concluded contracts with Boeing 737
– MAX;
2. After the balance sheet date, on 6 March 2017, the Company and Komerční banka, a.s. concluded
amendment no. 4 which stipulated a global credit line facility of CZK 600,000 thousand for the period
to 31 May 2017 and from 1 December 2017, and CZK 470,000 thousand for the period from 1 June
2017 to 30 November 2017;
3. The Company is taking steps to acquire the equity investments and the 20% investment in the
registered share capital of ALPHA FLIGHT a. s., corporate ID 278 80 427, with its registered office at K
Letišti 1018/55 Ruzyně, Praha 6, 161 00;
4. In accordance with concluded purchase contracts and aircraft fleet renewal strategy, the Company
makes advance payments to Boeing Company for their supplies;
5. Employees who met determined conditions receive contributions for a supplementary pension
insurance scheme; and
6. The Company, together with its subsidiaries, will operate 44 to 45 medium-route aircraft, primarily
Boeing 737-800 type, in the 2017 summer season.
Roman Vik
Member of the Board of Directors
Jiří Jurán
Member of the Board of Directors
Jiří Šimáně
Chairman of the Board of Directors
annual report | Travel Service 117
BETWEEN THE CONTROLLING ENTITY AND THE CONTROLLED ENTITY AND BETWEEN ENTITIES
CONTROLLED BYTHE SAME CONTROLLING ENTITY
FOR THE FISCAL YEAR FROM 1 JANUARY 2016
TO 31 DECEMBER 2016
UNDER § 82 OF THE BUSINESS CORPORATIONS ACT
in respect of
TRAVEL SERVICE, a. s.
1. GENERAL INFORMATION ON THE CONTROLLED ENTITY
Company name: Travel Service, a. s. (the „Company“)
Registered office: Prague 6, K Letišti 1068/30, postcode 160 08
Legal form: joint stock company
Commercial Register: Metropolitan Court in Prague
Date of incorporation: 28 April 1998
Identification number: 25663135
Business activities: - scheduled and unscheduled domestic and international commercial air
transportation of passengers, their luggage, animals, mail and cargo
- production, trade and services not listed in Annexes No. 1 to 3 of the Trades
Licensing Act
24. Report on related parties‘ transactions
2. DUTY TO PREPARE THE REPORT ON RELATED PARTIES‘ TRANSACTIONS
In the reported period, ownership interests in Travel Service, a. s. were owned by the following shareholders:
Ownership interests in %
UNIMEX GROUP, a.s., Prague 1, Václavské nám. 53 11.20
Ing. Roman Vik, Prg. 4 - Hodkovičky, Korandova 217/9, postcode 147 00 11.20
CANARIA TRAVEL, spol. s r.o., Prague 8, Horňátecká 5/481 27.68China International Group Corporation Limited, Room 4307-4312, 43/F, Convention Plaza Office Tower, 1 Harbour Road, Wan Chai, Hong Kong, Peoples Republic of China
49.92
annual report 2016 | Travel Service118
Under Section 74 of the Business Corporations Act, this gives rise to dependence between the ultimate
owners, i.e. UNIMEX GROUP, a. s. and Ing. Roman Vik, as the controlling entity, and Travel Service, a. s.,
as the controlled entity. Under Section 82 of the Business Corporations Act, the managing body of
the controlled entity is required to prepare a written report on relations and transactions between the
controlling entity and the controlled entity and on relations between the latter and all other entities
controlled by the same controlling entity.
3. STRUCTURE OF RELATIONS BETWEEN THE ENTITIES SPECIFIED IN POINT 2 AND THE ROLE OF THE
CONTROLLED ENTITY IN THESE RELATIONS
In 2016, the company entered into the following relations described in a Note to the Financial Statements
with the entities specified above (Point 2).
4. METHODS AND MEANS OF CONTROL
The controlling entity exercises influence over the controlled entity via the general meeting through
election of the company‘s statutory body.
5. LIST OF CONTRACTS AND AGREEMENTS MADE BY AND BETWEEN THE CONTROLLED ENTITY AND
THE CONTROLLING ENTITY OR BETWEEN THE CONTROLLED ENTITIES
In 2016, no contracts or agreements were concluded between the controlled entity and the controlling
entity or between entities controlled by the same controlling entity.
6. LIST OF ACTIONS PERFORMED IN THE LAST PERIOD AT THE INITIATIVE OR IN THE INTEREST OF THE
CONTROLLING ENTITY OR THE ENTITIES CONTROLLED BY THE CONTROLLING ENTITY, RELATING TO
ASSETS EXCEEDING 10% OF THE EQUITY REPORTED BY THE CONTROLLED ENTITY IN THE LAST FINANCIAL
STATEMENTS
With the exception of actions described in a Note to the Financial Statements, in the last period, no
other actions were performed at the initiative or in the interest of the controlling entity or the entities
controlled by the controlling entity that relate to assets exceeding 10% of the equity reported by the
controlled entity in the last financial statements and no other actions at the initiative or in the interest of
the controlling entity or the entities controlled by the controlling entity were discovered.
7. ASSESSMENT OF ANY DETRIMENT THAT MAY HAVE BEEN CAUSED TO THE CONTROLLED ENTITY;
ASSESSMENT OF ITS SETTLEMENT IN ACCORDANCE WITH SECTION 71 AND 72 OF THE BUSINESS
CORPORATIONS ACT
No detriment has been caused to the Company by the relations and the actions specified above.
8. ASSESSMENT OF ANY BENEFITS AND DRAWBACKS ARISING FROM THE RELATIONS BETWEEN THE
ENTITIES SPECIFIED IN POINT 2
No significant risks arise from the relations specified for the controlling entity; to the contrary, the
Company predominantly benefits from these relations.
9. FINAL REPRESENTATION
Information disclosed in this report is to the best of our knowledge complete and contains any and all
data required under Section 82 of the Business Corporations Act.
Prague, 31 March 2017
Signature of authorized representative
annual report | Travel Service 119
25. Independent auditor‘s report
annual report 2016 | Travel Service120
annual report | Travel Service 121
26. Balance sheet
BALANCE SHEET full version at 31. 12. 2016 (in TCZK)
Ident. ASSETS line Current period Prior period
Gross Adjustment Net Net
TOTAL ASSETS 001 4 698 547 -239 571 4 458 976 3 728 543
A. Receivables for subscribed shared capital 002 0 0 0 0
B. Fixed assets 1 413 542 -163 314 1 250 228 761 359
B. I. Intangible fixed assets 004 114 144 -49 847 64 297 29 400
B. I. 1. Research and development 006 510 -510 0 0
B. I. 2. Royalties 63 841 -49 337 14 504 14 043
B. I. 2. 1. Software 007 61 374 -46 908 14 466 14 011
B. I. 2. 2. Other Royalties 008 2 467 -2 429 38 32
B. I. 3. Goodwill 009 0 0 0 0
B. I. 4. Other intangible fixed assets 010 30 655 0 30 655 4 457
B. I. 5.Advances paid for intangible fixed assets and intangible fixed assets in the course of construction
19 138 0 19 138 10 900
B. I. 5. 1 Advances paid for intangible fixed assets 012 972 0 972 0
B. I. 5. 2 Intangible fixed assets in the course of construction 011 18 166 0 18 166 10 900
B. II. Tangible fixed assets 013 836 759 -113 467 723 292 274 481
B. II. 1. Land 7 294 -5 204 2 090 2 831
B. II. 1. 1. Land and buildings, halls and constructions 014 0 0 0 0
B. II. 1. 2. Buildings, halls and constructions 015 7 294 -5 204 2 090 2 831
B. II. 2. Movable items and sets of movable items 016 86 234 -48 120 38 114 39 022
B. II. 3. Adjustment to acquired fixed assets 022 60 143 -60 143 0 0
B. II. 4. Other fixed assets 0 0 0 0
annual report 2016 | Travel Service122
Ident. ASSETS line Current period Prior period
Gross Adjustment Net Net
B. II. 4. 1. Cultivated areas 017 0 0 0 0
B. II. 4. 2. Livestock 018 0 0 0 0
B. II. 4. 3. Other tangible fixed assets 019 0 0 0 0
B. II. 5.Advances paid for tangible fixed assets and tangible fixed assets in the course of construction
683 088 0 683 088 232 628
B. II. 5. 1. Advances paid for tangible fixed assets 021 664 255 0 664 255 217 284
B. II. 5. 2. Tangible fixed assets in the course of construction 020 18 833 0 18 833 15 344
B. III. Long-term financial investments 462 639 0 462 639 457 478
B. III. 1. Investments – controlled and controlling entities/subsidiaries 024 404 704 0 404 704 398 354
B. III. 2. Intragroup loans – controlling influence and controlled entities 027 0 0 0 0
B. III. 3. Investments in associates 025 57 935 0 57 935 59 124
B. III. 4. Intragroup loans in associates 023 0 0 0 0
B. III. 5. Other long-term investments in securities 026 0 0 0 0
B. III. 6. Intragroup loans– other 028 0 0 0 0
B. III. 7. Other long-term financial investments 0 0 0 0
B. III. 7. 1. Other long-term financial investments 029 0 0 0 0
B. III. 7. 2. Advances paid for long-term financial investments 030 0 0 0 0
C. Current assets 031 3 169 937 -76 257 3 093 680 2 655 584
C. I. Inventories 032 446 255 -4 717 441 538 329 189
C. I. 1. Materials 033 446 127 -4 717 441 410 329 099
C. I. 2. Work-in-progress and semi-finished products 034 0 0 0 0
C. I. 3. Finished products and goods for resale 128 0 128 90
C. I. 3. 1. Finished products 035 0 0 0 0
C. I. 3. 2. Goods for resale 037 128 0 128 90
C. I. 4. Livestock 036 0 0 0 0
annual report | Travel Service 123
Ident. ASSETS line Current period Prior period
Gross Adjustment Net Net
C. I. 5. Advances paid for inventories 038 0 0 0 0
C. II. Receivables 2 402 694 -71 540 2 331 154 2 138 172
C. II. 1. Long-term receivables 039 866 670 0 866 670 716 502
C. II. 1. 1. Trade receivables 040 0 0 0 0
C. II. 1. 2. Receivables – controlling influence or controlled entities 041 0 0 0 0
C. II. 1. 3. Receivables – significant influence (associates) 042 0 0 0 0
C. II. 1. 4. Deferred tax asset 046 236 0 236 0
C. II. 1. 5. Receivables – other 866 434 0 866 434 716 502
C. II. 1. 5. 1. Receivables from shareholders 043 0 0 0 0
C. II. 1. 5. 2. Long-term advances paid 067 0 0 0 0
C. II. 1. 5. 3. Estimated receivables 044 0 0 0 0
C. II. 1. 5. 4. Other receivables 045 866 434 0 866 434 716 502
C. II. 2. Short-term receivables 047 1 536 024 -71 540 1 464 484 1 421 670
C. II. 2. 1. Trade receivables 048 585 939 -71 540 514 399 397 096
C. II. 2. 2. Receivables – controlling influence or controlled entities 049 0 0 0 128 359
C. II. 2. 3. Receivables – significant influence 050 0 0 0 0
C. II. 2. 4. Receivables – other 950 085 0 950 085 896 215
C. II. 2. 4. 1. Receivables from shareholders 051 0 0 0 0
C. II. 2. 4. 2. Receivables for social security and health insurance 052 0 0 0 0
C. II. 2. 4. 3. Due from state – tax receivables 053 2 752 0 2 752 1 864
C. II. 2. 4. 4. Short-term advances paid 054 212 009 0 212 009 103 730
C. II. 2. 4. 5. Estimated receivables 055 484 733 0 484 733 563 498
C. II. 2. 4. 6. Other receivables 056 250 591 0 250 591 227 123
C. III. Short-term financial assets 057 0 0 0 0
C. III. 1. Investments – controlled and controlling entities/subsidiaries 060 0 0 0 0
annual report 2016 | Travel Service124
Ident. ASSETS line Current period Prior period
Gross Adjustment Net Net
C. III. 2. Other short-term financial assets 061 0 0 0 0
C. IV. Cash and Cash Equivalents 320 988 0 320 988 188 223
C. IV. 1. Cash 058 4 575 0 4 575 4 912
C. IV. 2. Cash in bank 059 316 413 0 316 413 183 311
D. Accruals and deferrals of asset 062 115 068 0 115 068 311 600
D. 1. Prepaid expenses 063 114 949 0 114 949 310 376
2. Complex deferred expenses 064 0 0 0 0
3. Accrued income 066 119 0 119 1 224
annual report | Travel Service 125
Ident. LIABILITIES line Current period Prior period
TOTAL LIABILITIES + EQUITY 070 4 458 976 3 728 543
A. Equity 071 1 981 301 982 903
A. I. Share capital 072 1 241 236 250 000
A. I. 1. Share capital 073 1 241 236 250 000
2. Own shares held 074 0 0
3. Changes in share capital 075 0 0
A. II. Share premiumn and capital contributions 076 38 603 32 253
A. II. 1. Share premium 077 10 149 10 149
A. II. 2. Capital contributions 28 454 22 104
A. II. 2. 1. Other capital contributions 078 1 0
A. II. 2. 2. Gains or losses from revaluation of assets and liabilities 079 28 453 22 104
A. II. 2. 3. Gains or losses from revaluation in corporate transformations 080 0 0
A. II. 2. 4. Differences from corporate transformations 080a 0 0
A. II. 2. 5. Gains or losses from valuation in company transformations 080b 0 0
A. III. Revenue reserves 081 42 090 42 090
A. III. 1. Other reserve fund 082 0 0
2. Statutory and other reserves 084 42 090 42 090
A. IV. Retained earnings 085 466 073 466 073
A. IV. 1. Retained earnings 086 466 073 466 073
2. Accumulated losses 087 0 0
3. Other retained earnings 087a 0 0
A. V. Profit / (loss) for the current period (+ / -) 088 193 299 192 487
A. VI. Decided about advances for profit distribution (-) 088a 0 0
B. + C. Liabilities 089 2 413 044 2 656 027
B. Provisions for future liabilities and charges 090 28 676 48 889
B. 1. Provisions for pensions and similar liabilities 092 0 0
2. Provisions for corporate income tax 093 19 676 18 952
annual report 2016 | Travel Service126
Ident. LIABILITIES line Current period Prior period
3. Tax deductible provisions 091 0 0
4. Other provisions 094 9 000 29 937
C. Liabilities 095 2 384 368 2 607 138
C. I. Long-term liabilities 104 353 87 314
C. I. 1. Debentures and bonds issued 101 0 0
C. I. 1. 1. Debentures and bonds issued 101a 0 0
C. I. 1. 2. Debentures and bonds issued 101b 0 0
C. I. 2. Long-term bank loans 119 104 167 83 333
C. I. 3. Long-term advances received 100 0 0
C. I. 4. Trade payables 096 186 188
C. I. 5. Long-term bills of exchange payable 102a 0 0
C. I. 6. Payables – controlling influence or controlled entities 097 0 0
C. I. 7. Payables – significant influence (associate) 098 0 0
C. I. 8. Deferred tax liability 105 0 3 793
C. I. 9. Liabilities – other 0 0
C. I. 9. 1. Payabl.to shareholders 099 0 0
C. I. 9. 2. Estimated payables 103 0 0
C. I. 9. 3. Other payables 104 0 0
C. II. Short-term liabilities 106 2 280 015 2 519 824
C. II. I. Debentures and bonds issued 115 0 0
C. II. 1. 1. Debentures and bonds issued 115a 0 0
C. II. 1. 2. Debentures and bonds issued 115b 0 0
C. II. 2. Other short-term borrowings 120 668 041 1 094 427
C. II. 3. Short-term advances received 114 166 249 364 820
C. II. 4. Trade payables 107 472 881 318 194
C. II. 5. Short-term bills of exchange payable 102b 0 0
annual report | Travel Service 127
Ident. LIABILITIES line Current period Prior period
C. II. 6. Payables - controlling influence or controlled entities 108 338 878 354 993
C. II. 7. Payables – significant influence (associate) 109 0 0
C. II. 8. Liabilities – other 633 966 387 390
C. II. 8. 1. Payabl.to shareholders 110 74 799 70 741
C. II. 8. 2. Other short-term borrowings 121 0 0
C. II. 8. 3. Payables to employees 111 63 837 52 968
C. II. 8. 4. Payabl. to social security and health insurance institutions 112 31 021 19 433
C. II. 8. 5. Due to state – taxes and subsidies payable 113 11 466 8 280
C. II. 8. 6. Estimated payables 116 223 802 186 264
C. II. 8. 7. Other payables 117 229 041 49 704
D. Accruals and deferrals of liabilities 122 64 631 89 613
D. 1. Accrued expenses 123 3 036 41 154
D. 2. Deffered income 124 61 595 48 459
Jiří Jurán
Member of the Board of Directors
annual report 2016 | Travel Service128
Profit and loss account full version at 31. 12. 2016 (in TCZK)
27. Profit and loss account
Ident.line
Reality in the accounting period
Current per. 1 Prior per. 2
I. Sales of own products and services 05 15 481 000 14 802 770
II. Sales of goods 01 24 495 45 764
A. Cost of sales 14 077 554 13 532 944
A. 1. Cost of goods sold 02 15 446 27 999
A. 2. Materials and energy consumption 09 2 679 797 3 030 698
A. 3. Services 10 11 382 311 10 474 247
B. Changes in inventories of finished goods and work-in-progress 06 0 0
C. Capitalization 07 -84 -94
D. Personnel costs 09 1 158 897 974 303
D. 1. Wages and salaries 13 881 926 738 737
D. 2. Social security and health insurance costs and other charges 276 971 235 566
D. 2. 1. Social security and health insurance costs 15 268 527 226 601
D. 2. 2 Other charges 16 8 444 8 965
E. Adjustments to values in operating actvities 36 800 -35 563
E. 1. Adjustments to values of intangible and tangible fixed assets 16 366 15 161
E. 1. 1. Adjustments to values of intangible and tangible fixed assets - permanent 18 16 366 15 161
E. 1. 2. Adjustments to values of intangible and tangible fixed assets - temporary 25a 0 0
E. 2. Adjustments to values of inventories 25b 43 4 760
E. 3. Adjustments to values of receivables 25c 20 391 -55 484
III. Other operating income 19 53 171 989 588
III. 1. Sale of fixed assets 20 152 749 126
annual report | Travel Service 129
Ident.line
Reality in the accounting period
Current per. 1 Prior per. 2
2. Sale of raw materials 21 0 0
3. Other operating income 26 53 019 240 462
F. Other operating expenses 213 646 878 176
F. 1. Net book value of fixed assets sold 23 194 575 752
F. 2. Net book value of materials sold 24 0 0
F. 3. Taxes and fees 17 1 290 1 407
F. 4. Provisions (operating activities) and complex deferred expenses 25 -20 928 39 351
F. 5. Other operating expenses 27 233 090 261 666
* Operating profit (loss) (+/-) 71 853 488 356
IV. Revenues from long-term financial investments - interests 0 0
IV. 1. Revenues from investments – controlled and controlling entities/subsidiaries 34a 0 0
2. Other revenues from interests 34b 0 0
G. Securities and ownership interests sold 32 0 0
V. Revenues from other long-term financial investments 0 0
V. 1.Revenues from other long-term financial investments – controlling influence and controlled entities
35 0 0
2. Other revenues from other long-term financial investments 36 0 0
H. Expenses from long-term financial investments 38 0 0
VI. Interest and similar income 19 688 14 751
VI. 1. Interest and similar income – controlling influence and controlled entities 42a 19 684 14 614
2. Other interest income and similar income 42b 4 137
I. Adjustments to values and reserves relating to financial activities 41 0 0
J. Interest and similer expense 23 732 23 627
J. 1. Interest and similer expense – controlling influence and controlled entities 43a 14 215 9 684
J. 2. Other interest and similer expense 43b 9 517 13 943
VII. Other financial income 44 493 751 614 919
annual report 2016 | Travel Service130
Ident.line
Reality in the accounting period
Current per. 1 Prior per. 2
K. Other financial expenses 45 311 060 846 534
* Financial profit / (loss) (+/-) 178 647 -240 491
** Profit / (loss) before taxation 250 500 247 865
L. Corporate income tax 57 201 55 378
L. 1. Corporate income tax – due 56 61 230 54 870
2. Corporate income tax – deferred 57 -4 029 508
** Profit / (loss) after taxation 193 299 192 487
M. Transfer of profit / (loss) to partners (+/-) 59 0 0
*** Profit / (loss) for the accounting period after taxation (+/-) 193 299 192 487
* Net turnover from the current period = I. + II. + III. + IV. + V. + VI. + VII. 16 072 105 16 467 792
Jiří Jurán
Member of the Board of Directors
annual report | Travel Service 131
Ident. Contens year/amount Prior period/amount
P. Cash and cash equivalents at the beginning of the accounting period 188 223 182 652
Cash flows from ordinary activities
Z. Net profit / (loss) on ordinary activities before taxation 250 500 247 865
A.1. Adjustments for non-cash transactions (figures A.1.1. to A.1.6.) -90 060 -383 089
A.1.1.Depreciation of fixed assets, excluding net book value of fixed assets sold, and amortization of adjustment to acquired fixed assets
20 823 17 504
A.1.2. Change in provisions for assets and future liabilities and charges -624 -20 863
A.1.3. Profit (loss) from disposal of fixed assets (adjustments to expenses or revenues) 42 -173 374
A.1.4. Income from dividends and shares in profit 0 0
A.1.5. Net interest income (expense), excluding capitalised interest 4 044 8 876
A.1.6. Other adjustments for non-cash transactions -114 345 -215 232
A.* Net cash flows from ordinary activities before tax, changes in working capital and extraordinary items (Z. + A.1.) 160 440 -135 224
A.2. Change in working capital (A.2.1. to A.2.4.) 94 155 -102 382
A.2.1. Change in receivabl.from ordinary activities, accruals, prepayments and estimat.receivables 82 440 -397 590
A.2.2. Change in short-term payables from ordinary activities, accruals and estimated payables 124 021 393 721
A.2.3. Change in inventories -112 306 -98 513
A.2.4. Change in short-term financial assets (if not under P. or R.) 0 0
A.** Net cash flows from ordinary activities before tax and extraordinary items (A.* + A.2.) 254 595 -237 606
A.3. Interest paid, excluding capitalized interest -23 732 -23 627
A.4. Interest received 19 688 14751
A.5. Corporate income tax on ordinary activities paid and additional tax payments for previous tax periods -60 991 -15 213
A.*** Net cash flows from ordinary activities (A.** + A.3. + A.4. + A.5.) 189 560 -261 695
Cashflow as at 31. 12. 2016 (in TCZK)
28. Cashflow
annual report 2016 | Travel Service132
Ident. Contens year/amount Prior period/amount
Cash flows from investing activities
B.1. Acquisition of fixed assets -511 201 -783 654
B.2. Proceeds from sale of fixed assets 152 749 126
B.3. Long-term loans 0 0
B.4. Income from dividends and shares in profit 0 0
B.*** Net cash flows from investing activities (B.1. to B.4.) -511 049 -34 528
Cash flows from financing activities
C.1 Change in long-term and short-term liabilities (financing activities) -405 553 301 794
C.2. Changes in equity, affecting cash and cash equivalents (C.2.1. to C.2.6.) 859 807 0
C.2.1.Cash inflow from the increase of share capital, share premium or reserve funds, including down payments on this increase in share capital
991 236 0
C.2.2. Disbursement from equity to shareholders 0 0
C.2.3. Other cash contributions to equity by shareholders 0 0
C.2.4. Redemption of retained loss by shareholders 0 0
C.2.5. Direct payments from contributions 0 0
C.2.6.„Dividends and shares in profit paid including withholding tax paid and revenue equalization (settlement) with shareholders of general partnerships (v.o.s.) and general partners of limited partnerships (k.s.)“
-131 429 0
C.*** Net cash flows from financing activities (C.1. + C.2. + C.3.) 454 254 301 794
F. Net increase / (decrease) in cash and cash equivalents (A.*** + B.*** + C.***) 132 765 5 571
R. Cash and cash equivalents at the end of the accounting period (P+F) 320 988 188 223
annual report | Travel Service 133
29. Contact
CZECH REPUBLIC
Travel Service, a.s.
K Letišti 1068/30
160 08 Praha 6
Česká republika
www.travelservice.aero
www.smartwings.com
SLOVAKIA
Travel Service Slovensko s.r.o.
Ivánska cesta 30/B
821 04 Bratislava
Slovenská republika
www.travelservice.aero
www.smartwings.com
HUNGARY
Travel Service, Kft.
Wesselényi u.16/A
1077 Budapešť
Maďarsko
www.travelservice.aero
www.smartwings.com
POLAND
TRAVEL SERVICE POLSKA sp. z o.o.
Ul. Gordona Bennetta 2B
02–159 Warsaw
Polsko
www.travelservice.aero
www.smartwings.com
annual report 2016 | Travel Service134