Air navigation services of the czech republic Annual Report 2011 Business name: Air Navigation Services of the Czech Republic Seat: Navigační 787, 252 61 Jeneč, Czech Republic Company ID number: 49710371 Tax ID number: CZ49710371 Registration in the Commercial Register: kept by the City Court in Prague under Section A, Insert: 10771 Bank: ČSOB Praha 5, A/C number: 88153/0300 E-mail: [email protected] Internet: http://www.ans.cz

Telephone and fax numbers: Reception: +420 2 2037 1111 +420 2 2037 3007 General Director Secretary: +420 2 2037 3201 +420 2 2037 4249 Operations Director Secretary: +420 2 2037 4401 +420 2 2037 3002 HR and Financial Director Secretary: +420 2 2037 2236 +420 2 2037 2011 ANS Planing and Development Director Secretary: +420 2 2037 2619 +420 2 2037 2066 Regional Services and Logistics Director Secretary: +420 2 2037 2713 +420 2 2037 3230 Director of the Strategy and Manager Support Unit Secretary: +420 2 2037 3261 +420 2 2037 3007 Head of Czech Air Navigation Institute Secretary: +420 2 2037 2165 +420 2 2037 2320 Head of Centre of Logistics Secretary: +420 2 2037 2042 +420 2 2037 2013 Spokesman: +420 2 2037 2093 +420 2 2037 3230

Consulting, design and production: © DAWSON Advertising, Ltd., 2012 Photo: © Archive of Lenka and Zdeněk Sýkora - Jaroslav Brabec (black and white - documentary), Gábina Fárová (portrait), Martin Polák (architecture), Petr Hrubeš (management). I am not going against something, but after something. Now I have the feeling, there is nothing standing in my way. I am standing on an open plain, all directions free, light and wind coming from all sides. zdeněk sýkora (1920 - 2011) Czech painter Selected Performance Indicators 04 A few words from our Guest 05 A Word of Introduction from the Director General 07 Senior Management of the Company 10 Company Profile 12 European Integration of ATM 15 Integrated Safety and Quality Management System 17 Security 17 Operations 21 Regional Services and Logistic 27 Development and Investment 29 Training Centre 32 Human Resources 35 Corporate Social Responsibility 37 Economic Development of the Company in 2011 41 Movements in the Airspace of the Czech Republic 2011 45

Lenka and Zdeněk Sýkora 57

Supervisory Board Report 61

Auditor’s Report - Czech Accounting Standards 62

Financial Statement According to Czech Accounting Standards 63

Auditor’s Report - IFRS 77

Financial Statement According to the IFRS 78

Auditor’s Report - Annual Report Verification 91

Organizational Structure Scheme 92

Glossary 93

01 Annual Report 2011 Air Navigation Services CR Selected Performence Indicators

Selected Performence Indicators 2007 2008 2009 2010 2011 Movements within FIR Prague 653 639 694 191 665 094 683 078 714 279 Movements at aerodromes in the CR 227 732 235 842 221 908 205 133 204 301 Turnover (CZK thousand) 3 108 000 2 975 680 2 886 165 3 130 374 3 212 000 En-route navigation charges (CZK) 1 240 1 141 1 161 1 203 1 134 Terminal navigation charges (CZK) 156 7 225/141 6 800/131 6 800/131 6 800/131* Total number of employees 905 886 882 899 913

Movements within FIR Prague

2007 653 639 2008 694 191 2009 665 094 2010 683 078 2011 714 279

0 300 000 400 000 500 000 600 000 700 000 800 000

Turnover (CZK billion)

2007 3,10 2008 2,97 2009 2,88 2010 3,13 2011 3,21

0,0 2,0 2,2 2,4 2,6 2,8 3,0 3,2 3,4 3,6

Movements at aerodromes in the CR

2007 227 732 2008 235 842 2009 221 908 2010 205 133 2011 204 301

0 100 000 140 000 180 000 220 000 260 000 300 000

* Note: the Terminal Navigation Charge was established for 2008 to 2011 using a different calculation unit (Terminal Service Unit) than in previous years when the calculation unit was 1 MTOW ton of the aircraft. With an approximate conversion of the cost base to the unit of 1 MTOW ton, the charge would correspond to CZK 141 per 1 ton in 2008 and CZK 131 per 1 tonne in 2009 - 2011. In spite of that, the impact on individual users of services was not divided equally and is dependent upon the composition of the air fleet and its weight.

Annual Report 2011 Air Navigation Services CR 04 A Few Words from our Guest

There is probably no other entity in civil aviation in the whole country that has a similar position, scope of activity, and influence on the safety, performance, and traffic flow of civil aviation, as does the Air Navigation Services of the Czech Republic, a state enterprise. For the Civil Aviation Authority, ANS CR is one of the most significant clients among all the subjects of regulatory and supervisory activities.

Cooperation between our organizations takes place on many levels and in many areas, such as the area of functional airspace blocks, cross-border provision of services, division and use of airspace, and last but not least the area of performance and the related pricing policy of services. The achievements of your enterprise don’t need to be detailed. We are fully aware that only by maintaining and declaring the standard of the services provided can the Czech Republic present itself as a competitive country with a usable potential for air traffic.

The CAA’s job is not to praise, but to guarantee safety of civil aviation to its clients. This goal has been successfully achieved in cooperation with a company such as ANS CR thanks to their professional approach. Everyone deserves to be thanked for this.

Josef Rada Director General Civil Aviation Authority of the Czech Republic

05 Annual Report 2011 Air Navigation Services CR A Word of Introduction from the Director General

Dear friends,

The year 2011 marked the one hundredth anniversary of the first public airplane takeoff in the Czech Lands by Jan Kašpar. In terms of the history of mankind, one hundred years represents just a tiny fraction; nevertheless, that same century spans the entire history of aviation, from its primitive beginnings to today’s newest technologies. What both the beginnings and the present state of aviation have in common though, is the effort to safely reduce the distances separating people. This effort is also reflected in the mission of our company, and the way we deal with it. I am pleased that the results presented herein prove we rank among the leading organizations and companies in our line of business. The global economic recovery in 2011 has brought the necessary stabilization and renewed demand for services of air carriers to the civil aviation sector. The trend was visible not just in Europe; positive news kept coming from other parts of the world throughout the year, especially from South East Asia, which is gradually becoming a key player in the global civil aviation market.

Insofar as ANS CR was concerned, it was very important that Czech airspace remained the focus of attention of air carriers. The volume of air traffic returned to the pre-recession level, i.e. to that of 2008, and our performance measured by the most important criteria is even better. Thanks also to the developments outlined above, the year 2011 became the first year in which the threshold of 700,000 movements in Czech airspace was exceeded. The significant increase of traffic notwithstanding, air traffic control services continued to be provided at the highest level of safety, which is what matters most. As to our capacity, our customers were particularly appreciative of the fact that Czech airspace showed practically no delays, even during summer traffic peaks. The situation at our most important airport in Prague, where the volume of traffic declined for the third consecutive year, is opposite to the trend described above. Last year, however, the decrease was compensated, to some degree, by an increase in the number of terminal service units, proof positive of the fact that air carriers use airplanes with a higher maximum take-off weight for flights to and from Prague.

As to our economic performance, we have, as usual, met or even significantly exceeded the criteria set by our founder, the Ministry of Transportation of the Czech Republic. As a matter of fact, it was our effective cooperation with government authorities, i.e. the Ministry of Transportation and the Civil Aviation Authority, which laid the groundwork for the smooth drafting and discussion of the “Performance Plan of the Czech Republic”, the essential strategic and planning document required by the European Commission for the purpose of implementing the Single European Sky project. The year 2011 also witnessed considerable progress in the civil-military integration of area navigation services. The signing and subsequent carrying out of the interdepartmental agreement between the relevant ministries have confirmed the high level of interest of both civil and military aviation authorities in the completion of the integration process.

In 2011, the company also made itself visible in the international scene. In the dynamic liberalization process of the European commercial aviation market, we achieved significant success in a tender seeking a supplier of air navigation services for regional airports in Spain. Together with our Spanish strategic partner, we will participate in the provision of air navigation services at some of the Canary Islands’ airports, namely Lanzarote, Fuerteventura and La Palma. In my opinion, this is an historical moment and an indication of the appreciation of the professional nature and outstanding quality of the services we can provide and warrant on a sustained basis together with our European strategic partners. An important milestone of international cooperation in 2011 was the signature of an agreement on the “Functional Airspace Block of Central Europe”. The involvement of ANS CR in the project, including a strong representation by the company in the project’s decision-making bodies, is a prerequisite of the company’s sustained development in the region of Central Europe, in accordance with processes of European integration of air navigation services.

We have been hearing bad news from both local and European sources regarding the consequences of the Eurozone debt crisis. In spite of this, I do not think that civil aviation in Europe will face developments similar to those which occurred three years ago, though we should be prepared for every possible scenario. The latest 2012 air traffic development forecasts of EUROCONTROL anticipate another slight increase in air traffic in Czech airspace, which is more or less in line with the anticipated average air traffic growth in the entire European airspace.

Naturally, we have to play an active role in shaping our future. ANS CR will therefore continue to implement a customer-oriented approach, particularly in the fields of capacities and pricing policy. With regard to the capacities and delays, there are no problems; as to the prices, the company has refrained from increasing its charges for quite a long time, or even reduced them slightly. I believe that a consistent approach to cost control combined with a customer-oriented pricing policy will continue to make Czech airspace attractive for air carri- ers.

By way of conclusion, I would like to thank all employees and partners for their professional work in 2011. It is them who should be thanked for the strong position of the company in both domestic and international markets, and our customers know they can rely on us. I hope the Annual Report will give you a comprehensive picture of what ANS CR achieved last year.

Jan Klas Director General

07 Annual Report 2011 Air Navigation Services CR Company Senior Management

Jan Klas Director General

Graduate of the Transport and Communications University in Žilina specializing in aviation. He has worked in the field of air navigation services since 1986, and he has served in several managerial positions. In 1999 he started working for Eurocontrol as manager of its organizational unit CSPDU (CEATS Strategy Planning and Development Unit) in Prague, which is responsible for the methodology and development of Central European air navigation services within the CEATS project. He was appointed Director General of ANS CR on 1 October 2007.

Jan Štindl Director of the Operations Division

Graduate of the Czech Institute of Technology, Faculty of Electrical Engineering. He has worked for the company since 1983, at first as aviation systems security engineer and since 1988 as the Head of Telecommunication Department. After the organizational changes within the company in 2001, he was appointed Deputy Operation Division Director for ATM Systems. On 12 September 2003 he was appointed Operations Division Director.

Luboš Hlinovský, MBA Director of the Finance Division

Graduate of the Prague University of Economics, Faculty of National Economy. In 2006 he graduated on Maastricht School of Management as the Master of Business Administration. He joined the company in 1990 from the Institute of Economics of the Czechoslovak Academy of Science. On 1 May 1998 he was appointed Deputy Finance Division Director. Since 1 January 2001 he has been the Finance Division Director.

Petr Fajtl Director of the ANS Planning and Development Division

Graduate of the West Bohemia University in Pilsen, Faculty of Law. He has been working for the company since 1987. In the period from 1987 to 1995 he was an air traffic controller at ACC Prague. From 1 December 1995 to 31 October 2000 he was the Head of the Training Center. On 1 November 2000 he was appointed Deputy ANS Planning and Development Division Director. Since 1 January 2001 he has been the ANS Planning and Development Division Director.

Miloslava Mezerová Director of the Human Resources Division

Graduate of the University of Economics, Faculty of Commerce. After graduation she worked in a company operating in international trade. She has been working for the company since 1998. From 2001 to 2008 she was the Head of the Labor and Wages Department at the Human Resources Division. She was appointed Director of the Human Resources Division on 1 February 2008.

Roman Náhončík Director of the Regional Services and Logistics Division

Graduate of the Faculty of Economics of the University of Defence in Vyškov. From 2004 – 2006, served as Executive Director for Social and Wage Policy for Czech Airlines. From 2007 to 2008 he worked as a Senior consultant for M.C. Triton. He has been employed at ANS CR since 1 April, 2008 when he was appointed the Transformation Project Office Director. Since 1 April 2009 he has been the Director of Regional Services and Logistics Division.

Note: Ivan Hubert, Director of the Corporate Development and International Coordination Division until October 31, 2011. In November 2011 he was appointed FAB CE In the photograph from the left: Jan Štindl, Luboš Hlinovský, Jan Klas, Petr Fajtl, Roman Náhončík, Mrs. Miloslava Mezerová Program Manager. The head of the Corporate Development and International Coordination Division from November 1, 2011 to December 31, 2011 was Luboš Straka, MBA.

Annual Report 2011 Air Navigation Services CR 10 Supervisory Board Company Profile

Lukáš Hampl History Chairman of the Supervisory Board Air Navigation Services of the Czech Republic (ANS CR), a state-owned enterprise, was established on January 1, 1995 under a Resolution He graduated from University of Economics in Prague. In July 2010 he became the Director for Economics and EU funds of the Ministry of of the Ministry of Transport and Communications dated December 28, 1994. ANS CR is registered in the Commercial Register administered Transport of the Czech Republic. He was appointed the First Deputy of the Minister of Transport of the Czech Republic in April 2011. by the Municipal Court of Prague, Section A, Entry No. 10771.

Jiří Nedoma Mission Deputy Chairman of the Supervisory Board The mission of ANS CR is to take part in the provision of cost effective, long-term sustainable aviation navigation services in an environment He completed follow-up studies in radar electrical engineering at the Secondary Technical School of Engineering. He was a member of the of evolving functional airspace blocks. In the dynamically evolving air transportation environment, its services are designed to meet the Senate of the Parliament of the Czech Republic for the ODS (Civic Democratic Party) from 2004 to 2010, Chairman of the Subcommittee expectations of all users with regard to current and future demand at both the national level and that of the European ATM development on Transport of the Committee on National Economy, Agriculture and Transport since 2006, and in 2007 he also became a member of context. the standing inter-parliamentary committee for NATO. He used to be the Mayor of Odolena Voda and inspection engineer of test piloting at Aero Vodochody. Vision

Petr Oršulík ANS CR is a reliable, predictable part of civil aviation in the Czech Republic, whose further dynamic development it actively supports. At Member of the Supervisory Board the same time, however, it is a confident component of the European integration and liberalization processes in the ATM environment, as part of which its total value and competitiveness will continue to rise. He graduated in Andragogy from the Faculty of Arts of Palacký University in Olomouc. He has worked in various managerial positions in the area of finance for the last twenty years, and he has worked in the area of transport since 2006. He has been a member of the Values supervisory board of ANS CR since July 2011. - Professional approach we are a team of experienced professionals backed by an established system of ongoing education. Jakub Hodinář our company’s employees are our most valuable assets. Member of the Supervisory Board - Maximum value for customers we provide our customers with comprehensive services using an optimum price/quality ratio. He graduated from the Metropolitan University Prague, where he majored in International Relations and European Studies. He worked - Customer satisfaction at the Office of the Government of the Czech Republic from 2005, then he worked as the Cabinet Director for the Minister for we listen to our customers. European Affairs, and after that as the Cabinet Director of the Minister of Transport. He was appointed Deputy Minister of Transport we monitor and evaluate reactions to the quality of our services. for Foreign Relations and Satellite Systems in November 2010. - Focus on key skills we focus on the things we do best. Milan Vondra - Quality partners Member of the Supervisory Board we work together with quality, reliable partners. - Innovation He graduated from the Czech Technical University in Prague, Faculty of Electrical Engineering. He joined the company in 1985, and has we keep up with industry trends and work to perfect our solutions and services. been working as the Air Traffic Services Inspector in the Audit and Investigation Department since 2005. we strive for continuous improvement, innovation and development. - Success Miroslav Jindra we aim for the top in the development and the quality of our services, comparable to the best providers in the industry. Member of the Supervisory Board Basic strategic objectives of ANS CR He finished his studies at the Secondary Technical School of Engineering in Prague. He joined the company in 1997, and has been working as an air traffic controller at the Area Control Centre in Prague since 1999. The strategic objectives of ANS CR have been set up with a view to dynamically changing external and internal circumstances. The key influence of the external environment lies in the effort being made to integrate and liberalize air navigation services. In the context of the internal environment, the stabilization of the HR situation in the operational area is key, as is the proper targeting of further ATM system development and a focus on performance that stresses cost effectiveness.

Given these conditions, the basic objectives of ANS CR are:

- to support the development of existing (core) services and expand their scope, where possible, while maintaining high quality for a reasonable price, - to aim ANS CR’s development activities at implementing Functional Airspace Block Central Europe and actively participate in project implementation, - to differentiate commercial activities with maximum employment of synergy and core services. Note: Martin Sýkora – Member of the Supervisory Board until June 30, 2011

11 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 12 To fulfil the basic strategies, strategic objectives have been defined under four perspectives: - in the area of the European integration of ATM

Perspective Strategic objective - active participation of ANS CR representatives in creation of SES implementing legislation and effective coordination with state authorities, Customer Provide safe, quality and transparent air navigation services that are sustainable in the long-term to all users of the airspace lying within the - arranging active participation in decision-making structures as part of the implementation phase of the FAB CE project, responsibility of ANS CR. Be a leader in creating and operating Functional Airspace Block Central Europe. Support the implementation of selected international programmes and projects. - in the area of human resources Financial Provide cost-efficient public aviation services to all users of the airspace within the responsibility of ANS CR, in keeping with the long-term Europe-wide trend towards cost cutting. Permanently maintain and strengthen the financial stability of the company and increase its overall value. Expand the portfolio of commercial services and their volume, primarily in ANS CR’s key competency areas. - setting up criteria for and supporting the evaluation of operating employees, Process Increase the level and efficiency of company processes by making use of best practices. - development of professional skills of company managers, Growth Develop the knowledge potential of company employees. Promote a customer and performance orientation on the part of company employees. Develop the organizational scheme with regard to the requirements of international cooperation. Develop the national ATM system in keeping with the development of European environment; in particular to develop the Functional Airspace Block Central Europe. - in the area of finance

- elaborating the economic part of the Business Plan of ANS CR, and successful debate about key performance indicators with CAA CR, Main Scope of Activities the ANS CR supervisory board, IATA, and the European Commission. - achieving the planned profit for 2011, The scope of ANS CR activities includes: - provision of Air Navigation Services in the airspace of the Czech Republic and at the Prague-Ruzyně, Brno-Tuřany, Ostrava-Mošnov and Membership of Organizations and Associations karlovy Vary Airports, - air Traffic Flow Management, ANS CR is a member of: - organizing and managing Use of Airspace, CANSO (Civil Air Navigation Services Organization) based in Amsterdam, since 1998. The primary mission of CANSO is the creation - providing a Search and Rescue Service, of a global platform for the exchange of information, and a focus on customers when providing air navigation services. ANS CR is - providing an Aeronautical Information Service, represented in twelve CANSO working groups with a broad range of activities, mostly involving exchanging and collecting air traffic control - ensuring the operation and maintenance of the infrastructure for the provision of services, information, such as information on safety, CNS/ATM, the environment, human resources, law, finance, etc. - organizing and providing specialized training and education for the employees of ANS CR in the Training Centre of ANS CR.

ATCA (Air Traffic Control Association, Inc.) based in Arlington (USA), since 1995. The objective of this association is to support the Major Customers further development of civil aviation, particularly in providing air navigation services.

Main users of the services of ANS CR in 2011 were the following airlines: Lufthansa, Czech Airlines, Emirates, British Airways, Travel Servis, Czech Chamber of Commerce since 2009. The Chamber is an entity representing Czech entrepreneurs, protecting the interests of its EasyJet, Air France, Swiss International Airlines, KLM, Smart Wings, Aeroflot, Ryanair, Alitalia, Austrian Airlines, etc. members associated via a regional network of chambers and incorporated trade associations. The main mission of the Chamber is to Major Partners and Suppliers create entrepreneurial opportunities, promote and support measures which contribute to the development of entrepreneurship in the Czech Republic and thus the overall economic stability of the country.

Major partners and suppliers of ANS CR include: Thales ATM, Park Air System, Rohde & Schwarz, CS SOFT, Ifield Computer Consultancy International Chamber of Commerce in the Czech Republic since 2009. The mission of ICC in the Czech Republic is to assist Czech Ltd., Teléfonica, Det Norske Veritas, AutoCont, Siemens, Catex Software, Artysis, ERA, ČSOB, Komerční banka, Kato - Busch, etc. enterprises and other companies in integration in global activities through this prestigious organization. The activities of ICC CR include Company Priorities in 2011 active cooperation in forming the opinions regarding the topics sent by the ICC headquarters for consideration, while influencing this agenda so that it corresponds to the interests of its members. The main tasks of ANS CR in 2011 were: ANS CR actively represents the Czech Republic in the following organizations and projects: - in the area of operational performance EUROCONTROL (European Organization for the Safety of Air Navigation) based in Brussels. The Czech Republic has been a member of the organization since 1996. EUROCONTROL is an international governmental organization which brings together 39 states and the - zero number of accidents caused by the provision of ATM and minimizing the number of events classified as serious incidents, European Community, whose main objective is the development of an ATM system on a pan-European scale. - providing for sufficient capacity and carrying capacity of Czech airspace in accordance with the Capacity Plan of ANS CR, with the goal of not exceeding the economically optimal value of delays at 0.33 min/flight in the entire year of 2011, ICAO (International Civil Aviation Organization), of which the Czech Republic has been a member since 1944. ICAO has an important status within the UN structure and is the most prestigious governmental organization in the area of civil aviation. - in the area of performance management Functional Airspace Block Central Europe (FAB CE) project since 2004. - elaborating the Business Plan of ANS CR for the first reference period in accordance with the valid European legislation, - elaborating the Annual Plan of ANS CR for 2012 as the prescribed new form of the company’s priorities,

- in the area of development

- implementation of the process of civil-military integration, especially signing and fulfilment of the interdepartmental agreement on integration of area control navigation services, - fulfilling the objectives set in the Training Centre Business Plan,

13 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 14 International Business Achievements In 2011, the programme moved to the implementation phase, which is controlled by the SESAR Joint Undertaking founded by the European Commission and EUROCONTROL. The SESAR Joint Undertaking is based on the partnership of public and private sectors The company enjoyed a significant achievement in 2011 in its participation in a competitive tender for the provision of air navigation including seventeen members and also over 80 other participants from third countries. According to the ATM Master Plan, the SESAR services at regional airports in Spain. The tender submitted by the Spanish company SAERCO, in which ANS CR owns a 20% interest, implementation programme will require total investments exceeding € 30 billion, but it will create significant economic worth and will received the best technical and economic rating. In this collaboration, the company plays the role of technical and training partner in the lead to improvements in safety, quality of services and the environment in Europe. These benefits depend to a large degree on the ability area of expert consultations and training. SAERCO, in cooperation with ANS CR, will provide air navigation services at the Canary Islands of participating parties to implement the programme in accordance with the schedule. airports in Lanzarote, Fuerteventura, and La Palma. The success in open international competitive tendering is a recognition of the profes- sionalism and quality of services which ANS CR together with its strategic partners can provide and guarantee in the long term. ANS CR is involved in the SESAR programme implementation through the Local Single Sky Implementation Plan in the Czech Republic. At the same time, it plans to achieve compliance with individual conceptions of the SESAR project as part of its development activities in the The basic contract period is five years, with a possible extension of an additional year. ANS CR will provide complete technical training form of modernization of its own infrastructure, which has a significant influence on achieving the defined performance goals. and expert support at airport control towers. Functional Airspace Block – Central Europe (FAB CE) Project SAERCO is the first private company in Spain that has received the State Aviation Safety Agency (AESA) certificate allowing it to provide air traffic services. Consistent with the aim to focus the development activities of ANS CR on implementation of the project for the creation of a functional airspace block in the region of Central Europe (FAB CE), representatives of the company actively participated in its implementation in 2011. Based on the implementation plan for the static scenario, the activities of the implementation phase are divided into fifteen separate but European Integration of ATM interconnected sub-projects. The main task in 2011 was therefore to carefully plan and gradually implement the activities in these areas.

The Social Dialogue Charter was signed in Vienna in February 2011, formally confirming the relations and principles of cooperation. It defines Single European Sky the procedures for the transfer of information and documents among representatives of trade unions and the project management. Following the approved procedures for information exchange, the Social Dialogue Forum took place in Prague in December 2011, led The aim of the European Commission’s Single European Sky (SES) initiative is to improve the existing air traffic safety standards, ensure together by the chairman of the CEO Committee and the chairman of Danube ATCU, the union of operating employees in FAB CE. sustainable development of the air traffic system, and improve overall performance of the system of air traffic and air navigation services in Europe so as to meet the requirements of all air space users. Financial support for implementation of the FAB CE project was approved in April 2011 through a decision by the European Commission. Nearly € 1.5 million was provided from the Trans European Network – Transportation (TEN-T) funds, with the proportional amount for Commission Regulation (EU) No. 677/2011, laying down detailed rules for the implementation of air traffic management (ATM) network ANS CR amounting about € 375 thousand. functions and amending Regulation (EU) No. 691/2010, laying down a performance scheme for air navigation services and network functions, was accepted in July 2011. These network functions should be “a service of general interest” exercised for the European aviation A very significant milestone in the continuation of the FAB CE project was the signing of two essential agreements in Slovenia in May 2011. network and contributing to the sustainable development of the air transport system by ensuring the required level of performance, The FAB CE Agreement determines the framework for cooperation on the level of participating countries. This agreement requires ratification compatibility and coordination of activities including those to ensure the optimal use of scarce resources. by the Parliament of the Czech Republic followed by the signature of the President of the Czech Republic. The agreement had been approved by both chambers of the Parliament of the Czech Republic by the end of 2011. The second agreement signed in May 2011, The regulation introduces the function of an airspace structure manager. This function has been entrusted to EUROCONTROL for the specifying the principles of cooperation on the level of air navigation services providers for fulfilling the aims of the FAB CE project on the first two reference periods. The aim is to support optimal use of air space in a single European sky, including provision of air navigation operating level, was the ANSP Cooperation Agreement. services (gate-to-gate principle). All phases of flight will therefore benefit from higher efficiency and safety while minimizing the environ- mental impact. The above - mentioned agreements have at the same time formed new bodies and organizational structures of the project. The following bodies have been formed for cooperation on the level of participating countries: FAB CE Council (FCC), Joint Civil-Military Airspace The adoption of the rules for the implementation of ATM network functions involved the establishment of a board for arrangement of air Coordination Committee (JCMACC), and National Supervisory Authorities Coordination Committee (NSA CC). The highest body on the space structure, or the Network Management Board (NMB), responsible for monitoring the activities and approving the air space structure level of air navigation services providers is the CEO Committee: Its first unanimously elected chairman for one year was the CEO of ANS CR. manager’s outputs. The elected members of the board with a right of vote included the ANS CR CEO as a representative of air navigation services providers within the Functional Airspace Block – Central Europe project. EUROCONTROL provided limited administrative support for the project during 2011. The scope of cooperation was defined by the EUROCONTROL Implementation Support (EIS) agreement which was signed in July. During 2011, employees of ANS CR worked, in close cooperation with the Ministry of Transportation of the Czech Republic, on processing a number of qualified documents and opinions regarding the discussed topics and suggestions as part of the talks of corresponding EU First contacts between FAB CE and other European initiatives in the area of creating functional airspace blocks took place in summer, bodies and EUROCONTROL. At the same time, cooperation continued on creating and implementing the Single European Sky legislation namely with the Baltic FAB (Poland, Lithuania) and BlueMED (Mediterranean countries). These talks resulted in establishing communication and on fulfilment of this legislation in the form of processing the Local Single Sky Implementation Plan in the Czech Republic (LSSIP CZ). channels for future cooperation. The opinions of ANS CR were continuously coordinated on a European level with the activities of the European CANSO office. In September, the CEO Committee decided to create the position of FAB CE Programme Manager. The manager’s main function is to SESAR Programme manage and support the FAB CE project and all its sub-projects, supervise the timely and high-quality performance of individual outputs, and analyse the risks etc. Effective from November 2011, the appointed Programme Manager was Ivan Hubert, who had worked until The Single European Sky ATM Research (SESAR) programme is the technological pillar of the single European sky. The SESAR programme October in ANS CR as the director of the Corporate Development and International Coordination Division. contributes to the implementation of the single European sky by developing the technologies and procedures for next generation ATM systems which will be able to increase performance by up to three times the current capacity while significantly increasing safety, reducing the costs of air carriers by 50 %, and reducing the impact of air traffic on the environment by 10 % for every flight (SES performance goals). The core of the SESAR programme is the European ATM Master Plan which constitutes the framework of cooperation connecting all corresponding participating parties. For the first time, all aviation participants are involved in defining, developing, and implementing a pan-European ATM modernization project.

15 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 16 Integrated Safety and Quality Management System (ISQMS)

ANS CR reached several milestones in the area of Integrated Safety and the Quality Management System. The successful external audit of the ČSN EN ISO 9001:2008 standard, focusing on basic processes of provided services, ensured legitimate confidence in the planned re-certification audit. The assessment using the international comparative methodology of ISRS, focusing in 2011 on the key areas of the enterprise in risk management, was very successful, with an average rating of 89.5%. In the assessment of the level of the safety management system, performed by EUROCONTROL, the enterprise also achieved high values, exceeding the defined limits.

The number of safety studies and analyses increased significantly, being a clear argument in favour of the high level of safety of ANS CR services and their sustainability. The development of the Integrated Safety and Quality Management System (ISQMS) continued, being expanded with the security management system. Application of methods for evaluation of the performance of selected technical systems was newly initiated in this area.

Two audits were performed in 2011 to support protection of the environment, aimed at assessing and increasing the efficiency of this area. The first audit, or the compliance audit, was focused on identification of potential environmental risks and identification of key facts. The second audit, or the preliminary assessment, verified the compliance of the enterprise’s systems with the requirements of the ČSN EN ISO 14001 standards. Furthermore, a registry of environmental aspects was initiated, identifying all activities of the enterprise that have actual or potential impacts on the environment.

In 2011, representatives of the enterprise continued to actively participate in the activities of the Collaborative Environmental Management (CME) work group, trying to solve the current issues in the area of environmental protection (especially the impact of air traffic around the Prague airport) together with ANS CR’s partners.

Security

In compliance with European and national legislation, ANS CR has a Security Management System in place against illegal acts in order to protect its equipment, employees, and operating data against illegal acts disrupting the provision of air navigation services. The basic document of the Security Management System against illegal acts is the Security Programme of ANS CR, which is based on the Act on Civil Aviation and the related regulations. This programme particularly regulates the procedures of protecting the facilities and equipment and employees, as well as the procedures for dealing with emergency security situations.

The security architecture of the enterprise includes security equipment, security measures, procedures and checks, security training, emergency planning, and measures to ensure the effectiveness of the security programme, especially inspection of the implementation and fulfilment of security measures and procedures, inspection of their effectiveness, and evaluation of effectiveness and updating of internal security regulations.

In compliance with the national security programme of the Czech Republic to check the quality of civil aviation security, ANS CR has a system of internal management of the quality of security measures in place. Inspections are performed by an auditor of ANS CR who is authorized to perform this activity based on permission from the Ministry of Transportation.

The aim of inspections in 2011 was to thoroughly map the current state in the area of protecting people and enterprise activities, with regards to both human and technical resources, and also to seek out any issues and to determine system remedies. This was focused exclusively on the architecture of enterprise security, its elements and systems. Furthermore, in the wide spectrum of enterprise security, organizational and technical measures were implemented, aimed at reducing security risks and increasing the protection of people and enterprise activities. Protection against illegal acts in 2011 was improved mainly in the following areas:

- Security elements, systems, and security measures. This included constructional and technical improvement of the perimeter protection of key enterprise facilities, development and improvement of surveillance systems with recording, as well as detection systems for detecting the movement of people. - Quality of the guarding of ANS CR facilities. The quality of security and guarding activities in the enterprise facilities was improved by utilizing of additional training.

17 Annual Report 2011 Air Navigation Services CR

Operations The trend of the average delay per flight in FIR Prague: 2006 0,89 2007 0,77 2008 0,44 2009 0,31 Safety 2010 0,14 2011 0,01 The most important criterion for assessing the performance of ANS CR is the safety of the air navigation services provided. As in previous 0 0,20 0,33 0,40 0,60 0,80 1,00 1,20 1,40 1,60 years, no case of ANS CR employees being involved in or directly causing an air accident or seriously endangering the safety of air transport was recorded in 2011. Area Control Navigation Services Section Incidents in air traffic caused by ANS CR when providing ATS show a long-term stable development in both the number of incidents and the seriousness of their impact on the safety of air traffic. Four incidents happened in 2011 in which ANS CR was directly involved. Two The operational results of ANS CR for 2011 confirmed the stabilization and recovery of demand for international air traffic, which was of them were rated in accordance with EUROCONTROL (ESARR2) classification as Significant Incidents (the second lowest level of serious- demonstrated by a further increase in air carriers’ interest in the use the enterprise’s services. For the first time in history, the number of ness on a five point scale), and two without impact on safety. This is historically the best result. The achieved result documents the high movements in Czech airspace exceeded 700,000 per year. Traffic in Czech airspace has therefore doubled in the last ten years. professionalism of air traffic controllers and a high level of system support with many safety functions (Safety Nets) that provide alerts to potentially dangerous situations. The technical facilities for supporting the provision of air navigation services were stable. The highest traffic in the summer season was traditionally in July when the Area Control Centre Prague provided its services to 73,065 movements, i.e. 2,350 flights on daily average. The record day with the historically highest traffic was 16th July 2011, when the Area A new system for reporting incidents in air traffic and processing the results of their investigation was successfully commissioned in 2011. Control Centre Prague provided its services to 2,565 flights. The achieved capacity therefore allowed provision of services to 161 flights The system not only enables the interconnection of all available records of investigation, but also contains mechanisms for electronic per hour without any delays incurred. communication between all involved internal and external entities that were directly involved in the incident, or that are part of the incident investigation process. Number of flights in FIR Prague Traffic increase Average delay / ACFT in min. Month 2010 2011 2011/2010 % 2010 2011 The system also includes functional feedback that informs the air traffic controllers about the causes of incidents and the remedial measures January 46 108 48 564 5,3 0,1 0,1 taken. The aim of this feedback is to provide assurance that reporting incidents in air traffic is a significant element in the process of February 42 416 44 875 5,8 0,0 0,0 increasing operation safety, and strengthening each individual’s sense that they are its valid parts. At the same time it is a necessary step March 51 425 53 075 3,2 0,1 0,0 towards increasing the corporate “Safety Culture”, to expanding the willingness to pass on information not only in the current mandatory April 46 170 56 807 23,0 0,1 0,0 reporting system but also in the upcoming optional reporting system as part of the procedures of a “Just Culture”. May 60 595 65 034 7,3 0,2 0,0 June 65 847 67 987 3,2 0,1 0,0 July 71 611 73 065 2,0 0,6 0,0 Number of incidents: August 70 421 71 535 1,6 0,2 0,0 2005 7 September 67 009 69 541 3,8 0,3 0,0 2006 7 October 64 916 64 633 -0,4 0,1 0,0 2007 7 November 50 503 50 108 -0,8 0,2 0,1 2008 5 December 46 048 49 055 6,5 0,3 0,0 2009 5 Total 682 971 714 279 4,6 0,2 0,01 2010 4 4 2011 The most significant activities of the Area Control Navigation Services Section in 2011 included the following: 0 1 2 3 4 5 6 7 8 Training of New Air Traffic Controllers – no effect – significant incident – major incident New air traffic controllers are trained at ACC Prague in the long term in order to help significantly improve the centre’s staffing level – serious incident and secure the required number of personnel with regards to the constantly growing volume of traffic. Twelve new air traffic controllers received their licences in 2011, and the ACC therefore has a total of 105 licensed air traffic controllers available. Traffic Flow - Fluency Establishment of New Routes and Procedures

The basic indicator used for evaluating the flow of air traffic is the average delay per flight. This delay in 2011 was 0.01 minute per one In 2011, new operating routes and procedures were established, leading mainly to the increased carrying capacity of the West sector, flight, with an annual increase in traffic by 4.6%, which means a year-on-year decrease in the delay value by 96%. ANS CR is therefore which ranks among the busiest parts of Czech airspace. As far as spaces are concerned, for example, one additional upper South-Western well below the level of 0.33 minute per flight, which is the recommended value determined for Czech airspace by the European sector (SWT) was added. As far as traffic flow is concerned, the flow capacity in the direction of Munich was increased in cooperation Organisation for the Safety of Air Navigation (EUROCONTROL). with the German provider Deutsche Flugsicherung.

21 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 22 Approach and Aerodrome Control Services Section ATM Systems Section

In the year 2011 the Prague airport was characterized by a further year-on-year decrease in air traffic volume. This trend had been The ATM Systems Section is responsible for the operation and maintenance of nearly a hundred ATM systems of various levels of scope and observed at the Prague airport since 2009, the main reason has been restructuring and the related decrease in operating performance significance in almost fifty locations throughout the Czech Republic. By the end of 2011, the ATM systems section employed 91 licensed of CSA as the biggest client of the enterprise in the approach and aerodrome control services. Despite this development, the section’s technicians in positions as supervisors, technical controllers, maintenance specialists, and 16 technical system administrators. priorities remained the same – a high degree of safety and high level of services provided. The section’s employees participated in all activities related to implementation of the Collaborative Decision Making (CDM) project. The corresponding procedures were deployed at Besides removing defects in ATM systems, the ATM Systems Section focuses mainly on regular maintenance and inspections in order to the control tower for a trial run in August, and the results are continuously evaluated. minimize system failures.

CDM represents modern procedures for air traffic control at airports which are based on a timely exchange of accurate and complete 72,499 regular inspections were performed in 2011, specifically: information about flights between all main entities involved in air traffic (airport, air carriers, air navigation services, and handling). - 47,344 - daily inspections Handling companies send the expected times of finishing the handling of individual aircraft at departure to the central operating database, - 7,521 - weekly and monthly inspections followed by a further specification of those times. The control tower then uses this data to calculate the optimum times for engine start, - 597 - quarterly/semi-annual/annual inspections so that aircraft taxi to the runway in an optimal sequence and, if possible, without delays at the waiting point. Aircraft traffic is therefore smoother and better organized, which also increases operational safety at the airport. Furthermore, 529 scheduled jobs were performed within the section, specifically: - 181 - without restrictions, in full operation Approach and Aerodrome Control Services Centre Prague - 206 - operation partially restricted - 142 - equipment/system out of operation Despite the significantly lower number of movements at the Prague airport in 2011, the number of aircraft at summer season traffic peaks remained high. This was reflected in the TMA capacity of the Prague airport (46 movements per hour) and the airport runway system Successfully completed activities that the ATM Systems Section either secured or contributed to within its centres included: (44 movements per hour). Radar Information Systems Centre – RIS Just as in the preceding year, intensive renovation of the operational surface was performed in 2011. The secondary runway 13/31 was closed for three months in the summer season, which increased the operation load of the main runway 06/24 to which the small aircraft - active cooperation on the project “Radar Renewal at Buchtův kopec (BUKOP)”, traffic had to be transferred. However, there was no increase in delays despite this complication in operation. - cooperation on the A1000 project, - application of a new method of verifying the performance of surveillance equipment. The centre’s personnel attended the required training on simulators for the ADI (Airport Control Instrument) qualification and the APS (Airodrome Control Surveillance) qualification. Training of new air traffic controllers continued in order to secure the centre’s future needs. Navigation and Radio Communication Systems Centre – NAVCOM Five of six students finished the local training; a total of eleven students continued in training in two groups, with the expected completion of training in 2012. - moving the SAR device from The Military Grammar School in Prague 6 to the Technical Block of the Prague airport, - installation of 135.460 MHz channel at Buchtův kopec and in Prague (backup), Air Traffic Service Reporting Office – ARO Prague - connecting of all non-monitored sites of the area and approach centre to the system of background recording, - upgrading of RCMS NAVSYS, RCMS RCOM, and RCMS NAVCOM systems (Brno, Ostrava, Karlovy Vary airports) from Citect 6 to Citect 7, The personnel of ARO Prague provided the required scope of services to representatives of air carriers and handling companies. ARO - installation of ILS 400 system at Vodochody airport, Prague moved to new facilities on the ground floor of the renovated Technical Block, which considerably improved the working conditions - general overhaul of the DVOR/DME OKX system counterpoise. for employees. Since the new ARO office is located outside the designated airport security zone, a separate unit was set up at the airport terminal to which an employee of ARO Prague comes upon request to provide aircraft crew with required assistance. The ARO personnel Air Telecommunication Service Centre attended the required refresher training in the course of the year. - upgrading of Central Monitoring System (CMOS) to CITEC version 7, Department of Surface Movement Control – SMC - commissioning the Messaging system at operating sites of the area and approach centres Prague, providing simple confirmed transmission of messages from shift leader to individual sites, Besides their standard activities, the SMC department personnel provided assistance for taxiing aircraft along routes during the closure of - preparation of specifications, followed by participation in evaluation and implementation of a public tender for “Telecommunication some parts of the operational surface at the Prague airport. This ensured the necessary airport operation capacity and partial decrease in services Provision – Fixed and Mobile Operator”. load on air traffic controllers. Aeronautical Information Service Centre SIMU IATCC Department In 2011, the Aeronautical Information Service (AIS) obtained the schedule for issuing aeronautical information. There were no delays The IATCC Simulator was used in 2011 in a standard way by both area and approach centres for local, continuous, and refresher training. or serious mistakes caused through its own fault. In accordance with the Data Provider Agreement signed with EUROCONTROL, it also FISO and FISA/ACC personnel attended refresher training at the simulator in March; this training was positively assessed for its benefit in continuously updated data in the European AIS Database (EAD) for the Czech Republic without serious errors or delays. improving the quality of service provided by this department. This type of practical training will be repeated periodically in the following period. A part of the free capacity of the simulator was provided in cooperation with CAA for activities connected with the safety Besides performing its basic activities, the AIS also focused on improving its services. In order to increase the stability and speed of the campaign “Flying Safely!”, for training of CS-SOFT programmers (in order to obtain a comprehensive view of the issues connected web version of the AisView application used mainly by general aviation pilots, it was necessary to put new servers into operation. Another with air traffic control), and in cooperation with the operating division to prepare and test the new colour scheme of the radar display. project aimed at spreading current information among the highest possible number of general aviation pilots was the distribution of the The total number of training hours at SIMU IATCC was 3,552. ICAO 1:500,000 aeronautical chart as a supplement to the “Database of Airports in the Czech Republic 2011” in cooperation with the Avion company.

23 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 24 The AIS also focused on internal customers. Provision of aeronautical data maintained by the centre for the needs of updating data in operating systems such as ESUP/IDP and E 2000 was expanded.

After obtaining approval from CAA for operating use, a modified version of the AisView application was put into regular operation at the FIC station in May.

The function of the AisView application was expanded in a trial run in the second half of the year with the possibility to submit data for navigation alerts issued by NOTAM and requests for creating a limited space sent to the AMC station where the system is being tested. Its regular operation will require monitoring by the CMOS system. That is why AIS servers were moved to the CST room and incorporated in ATC systems. The testing should be finished and the regular use of these functions should begin in the 2012 season.

Statistical data about issued publications 2009 Number of AIP changes published 37 Number of AIP SUPs published 48 Number of AICs published, A-series 11 C-series 34 Number of changes to aviation regulations 18 Number of national NOTAMs published 5 864 Number of foreign NOTAMs processed 385 628

In 2011 the air space of the Czech Republic was used by a record number of airplanes, the service was provided to 714 279 flights, which means an increase by 4.6 per cent compared to 2010. All this with the lowest delay rate in the airspace, which significantly contributes to the attractivity of the Czech air space and saves the costs of the air carriers.

25 Annual Report 2011 Air Navigation Services CR Regional Services and Logistics Central Logistics Section

The structure of the Central Logistics Section was modified at the beginning of the year by an organizational change, the aim of which was to implement a new competence model and to streamline the activities of individual departments.

Regional Airports Section In order to support the availability of provided services to internal customers, the original IT-HelpDesk was expanded to a client centre controlling the processing of client requests. At the same time, the possibility of on-line ordering of services via ServiceDesk, integrated Work on the “Rationalization of Provision of ANS at Regional Airports” project and the related effort to reduce costs continued in for users in the corporate Intranet, was implemented. 2011. A number of activities were performed in all parts of the project in order to deal with individual partial objectives. The number of personnel in the section was reduced, especially the number of technicians in the CNS/ATM departments. This contributed to the All IT services related to running the economic and managing administrative work of the enterprise, including document services and fact that the section costs were successfully maintained at the same level as in the preceding years. operation of the central corporate archive, were integrated into the Management Information Systems Department.

In the operation area, there was a slight increase in traffic in 2011 and therefore also in revenue from air traffic activities. The overall The Material-Technical Provisioning Department was transformed into the Purchasing Department, centrally providing for purchasing of economic results of the section were considerably better in 2011 than in the preceding two years. supplies, energy and necessary services. In order to support the Purchasing Department and to increase transparency of demand management, an electronic purchasing system was deployed in 2011 which helped to perform over 60 electronic auctions, or requests, and which made The first evaluation interviews with the licensed operating personnel were conducted in 2011 as part of ANS CR employee evaluation. it possible to reduce the amount of necessary warehouse stock by more than one fourth.

Air Traffic Services Department Brno The Technical Operations Services Department took over the newly reconstructed building of the Technical Block for regular operating management, including the connection of newly installed supervision systems to the central control room of the facility management in - the total number of movements on RWY was 29,932, which is the third highest number in the history of the airport, and represented Jeneč. an increase of 7% compared to 2010, - the total number of passengers served was 557,952, i.e. the highest number ever reached at the Brno airport. This was 51 thousand In the area of safety and fire systems, the renewal of individual parts of the systems was initiated in order to meet higher requirements for passengers more than the previous record from 2008, securing the operating facilities, based on the integration of ANS CR in the system of critical infrastructure of the Czech Republic. - the percentage of passengers in charter flights and regular flights was for the first time in history higher in regular flights with 55%, - preparations were started during the year for installation of a new primary radar at the Brno airport; there was an invitation to tender Construction Control Department and the commission for selecting the contractor started its work. The Construction Control Department centralizes the records of buildings and estates owned by ANS CR, including buffer zones, and Air Traffic Services Department Ostrava based on Act No.183/2006 Coll. on territorial planning and building regulations, and using the RLPGIS geographic information system it performs the following activities: - the airport is certified for operation under CAT II ICAO conditions, and it was operated under such conditions for the whole year of 2011, - provides information and territorial analytical background materials for territorial planning to regional and city governments in the Czech - air traffic in 2011 reached 21,176 movements, which is an increase by nearly 10% compared to 2010, with traffic on RWY increasing republic, by nearly 8%, - deals with requests by foreign investors and applicants for project documentation, - the 11th NATO Days were carried out very professionally at the Ostrava airport, attracting 225,000 visitors. Exceptional exhibits included - checks the processing of our comments in planning and building proceedings within the ANS CR area of interest, the B-52 Stratofortress, and Norwegian and Israeli aircraft, - monitors other investors’ constructions in ANS CR areas of interest and buffer zones for aeronautical ground equipment, - preparations were initiated during the year for installation of a new primary radar, - arranges the establishment of buffer zones for aeronautical ground equipment. - the end of the year was characterized by work on the project of a new ANS CR building that will provide the necessary new facilities for the control tower and personnel of the centre. In 2011, the department’s employees arranged the following: - provision of 5 passports (territorial analytical documents) for the territorial planning documentation, Air Traffic Services Department Karlovy Vary - issuing of 455 statements and opinions regarding project documentation for buildings and territorial plans in the areas of interest to ans CR, - there were a total of 8,091 movements, with a year-on-year increase in the number of movements of RWY by 10%, - monitoring and inspection of 301 initiated planning and building proceedings, - aside from the existing regular flights to Moscow and St. Petersburg, new regular year-round flights were established to Samara and - processing of 76 requests for establishing buffer zones for aeronautical ground equipment. yekaterinburg, plus regular seasonal flights to Baku, Kiev, Rostov-on-Don, and Antalya.

Traffic Development at Regional Airports 2005 - 2011:

2005 43 670 2006 46 164 2007 50 328 2008 57 411 2009 58 028 2010 48 913 2011 53 237

0 10 000 20 000 30 000 40 000 50 000 60 000 70 000 80 000

27 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 28 Development and Investment Mielec Project

The Mielec project was successfully completed. The project focused on presenting the possibilities of the EGNOS system in the region of Eastern Europe, and it was part of the programme of a trans-European traffic network financed by the European Commission. In this project, the enterprise focused on evaluation of the feasibility of implementing the APV SBAS type approach at Czech airports. Air Navigation Services Methodology Section The experience gained in this project contributed to the decision to join the ACCEPTA (Accelerating EGNOS Adoption in Aviation) project In keeping with its mission, the Air Navigation Services Procedures Department and the Air Navigation Services Development Department supported from European funds. The aim of the project is to support implementation of APV SBAS procedures. The ANS CR intends to as part of the Air Navigation Services Methodology Section took part in implementing the following activities: construct the APV SBAS approach at Brno and Ostrava airports and publish it in the Aeronautical Information Publication of the Czech Republic. The project activities are planned for 2012 and 2013. Airport Project – Collaborative Decision Making REACT CR - CDA Additional modifications to the tool for aircraft take-off order planning – Start-Up-Manager (SUM) – were made during 2011; these had been additionally defined based on several tens of days of testing and evaluation of the impact of A-CDM procedures on airport operation. The REACT CR project initiated in 2010 and financially supported by the SESAR enterprise focused on testing CDA (Continuous Descend The results were submitted to the CDM board and in August it was decided to initiate Phase II – in the form of a test run with operational Approach) procedures for runway 24 of the Prague airport. Between April and September 2011, this method of arrivals was tested for use. The operation was evaluated every week using an analytical tool. selected flights of CSA, and evaluation of the data obtained confirmed the possibility of reducing CO2 emissions and save fuel when using this method of descent. A total of 204 approaches with a stabilized descent profile were performed. The experience gained from At the same time, Phase III of the project continues – for this phase, the basic ICD document is being finished in cooperation with the testing flights will be used to prepare implementation of CDA in Prague and at other Czech airports. EUROCONTROL; implementation of changes is scheduled for June 2012, including support for exchange of messages between air traffic control and the Central Flow Management Unit in Brussels. Initiation of DPI messages exchange testing is expected in the second half of Documents and Regulations 2012.

Capacity Plan Rationalization of Provision of ANS at Regional Airports

Regular updating of the enterprise’s capacity plan was performed, specifying the capacity of Czech airspace for future periods. FIR Prague The aim of the project is to reduce costs for provision of navigation services at regional airports and therefore increase their efficiency while capacity is planned to be increased by 2.5% in 2012, by 1% in 2013, and by 3% in 2014. maintaining a high level of air traffic safety.

ATS Manual The project is based on the findings of the audit conducted by INTEGRA in 2009 and the following implementation of selected and management-approved recommendations leading to rationalization of the provision of air navigation services at regional airports, including a schedule of implementation steps. With respect to the requirements of EUROCONTROL and the European Commission as part of implementation of the Single European Sky Programme, the corresponding update of this regulation was performed. The project focuses on the following spheres: - restructuring of airspace and provision of air navigation services, Interoperability - training and licensing, - technical support, In accordance with European legislation on the interoperability of the European network of air navigation services, the corresponding internal - centralization of the aeronautical information service. directive was drawn up and a new system of certification was created, allowing a unified method of verifying ATM systems, based on Implementation of rationalization measures takes place continuously so that all project objectives will be met by the end of 2014. obtaining the “ATM Systems Verification Declaration” and complemented with “Technical Supplier Documentation”.

Integration of the Provision of Area Control Navigation Services Mid-term Plan for Air Navigation Services Development 2012 – 2016

This project involved an agreement between the Ministry of Transportation and the Ministry of Defence that was signed at the end of The mid-term development document was elaborated and approved, planning the development of systems supporting the activity of air 2011. Following these activities, preparation was initiated for the actual implementation of individual elements of civil-military integration. navigation services for a period of five years.

Electronic Environment at TWR Prague Project and Investment Realization Section

Section employees actively participated in finalizing user requests for the system of electronic strips for TWR Ruzyně. Implementation NEOPTERYX Project of this system is schedule for autumn 2012. The first testing on the testing platform of TWR Ruzyně was performed at the end of 2011. The NEOPTERYX project is among the most significant development projects of the company. Its aim is to secure the deployment of a new Approach of the Area Navigation Type (RNAV) master system for air traffic control by the end of 2015. At the beginning of 2011, Neopteryx project documentation for obtaining the new system was approved, the project structure was established, and representatives were nominated for the individual work groups. RNAV (Global Navigation Satellite System) type approach for runways 10 and 28 at Brno airport was implemented in 2011. The minimums for inaccurate approach by instruments as well as for APV Baro (Approach with Vertical Guidance) type approach were Preparation of specification continued in close cooperation with experts from EUROCONTROL for the whole year, while simultaneously published. Implementation of the APV Baro approach is very beneficial, especially for the approach to runway 10, which is not coordinating with partners in the FAB CE initiative. Elaborating the final version of the documentation and choosing the mandatory for equipped with the ILS system for precision approach. administration of the Tendering Dialogue thereafter completed the preparation work preceding the actual invitation to tender.

SUR Domain – Overview Systems

Radar renewal at Buchtův kopec was performed in accordance with the schedule and set budget.

29 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 30 COM Domain – Communication Training Centre – Czech Air Navigation Institute (CANI) The OBR project regarding the renewal of A/G radio communication technology reached the phase of preparing the documents for an invitation to tender. The original plan was expanded with the use of VoIP interface for radio connection with VCS.

DPS Domain – Flight Data Processing and Presentation Systems The ANS CR Training Centre is an educational institution accredited by the Civil Aviation Authority Czech Republic and recognized by the International Civil Aviation Organization (ICAO). The Training Centre ensures the professional training and education of ANS CR employees, Development of DPP systems continued with the aim of increasing the quality of system services and securing the fulfilment of and uses its free capacity for commercial training and consulting activities. Its services are used both by local clients and by customers requirements regarding the implementation of the Single European Sky programme. from over 30 countries around the world.

ESUP In keeping with the trend of previous years, there was a considerable increase in interest in the Training Centre’s services in 2011. The Training Centre conducted a total of 178 courses for 1 369 students in 2011, and as part of its consulting activities it participated in OLDI data exchange via FMTP protocol was put into operation. In this way the ANS CR, in cooperation with the German provider of services 7 foreign consulting projects, 1 local research project, and successfully participated in a competition for a grant of support for another Deutsche Flugsicherung, conformed to Decision 633/2009/EC on the scheduled date, as the only providers in Europe. Correlation according to local research project to be initiated in 2012. Mode S (using conspicuity code) started to be put into operation. The CDM module – Start-Up-Manager started to be put into operation as a key element of CDM that will enable completion of the project up to the EATMN level. OLDI coordination modules were prepared for Based on the feedback from customers, we can state that the ambitious objective of previous years – the successful establishment on the the working scheme and implemented at the beginning of 2012, ensuring compliance with the corresponding regulations of the European Commission in this area. market of the CANI brand, under which the Training Centre had been offering its services to foreign clients since 2009 – was definitely achieved. IDP

A user interface prototype was developed and prepared for functions whose implementation is compulsory by 2015 according to the SESAR Master Plan (IP1) and the European Commission regulation. This change means a fundamental reconstruction of the user interface for air traffic controllers at the Area Control Centre.

Mode S – EHS (Enhanced Mode) functions were added to the system – aircraft parameters presentation function, alert function for level bust.

EUROCAT 2000

After final testing and operation tests, correlation began to be put into operation, according to Mode S (using conspicuity code). Processing and presentation of Mode S EHS data (especially presentation of ACAS RA) was completed. Significant changes to trajectory processing were made in the system in order to remove existing problems.

Preparation and tests were performed to improve the function of the short-term conflict alert (STCA) in order to minimize the number of “false” reports. The change will be ready for implementation in operation in the first quarter of 2012.

The new colour scheme for the Area Control Centre was fine-tuned, which is necessary for the implementation of system coordination and implementation of CPDLC.

AIS Domain – Aeronautical Information Service In the period from January to December 2011 The AIS hardware platform was renewed in 2012. The new solution is fully virtualized, and characterized by high availability and functions the total revenues reached 3, 373 mil. CZK. for load distribution. The platform ensures sufficient computing performance for the operation of existing and prepared AIS applications. The year on year increase was especially caused Modifications were made to the AIS View application for graphic display of the planned use of airspace and selected NOTAMs and aviation by a favourable dynamics of development of meteorological information from FIR Prague. The modifications mainly involved increasing the application reliability and performance for external users. the air traffic and last but not least by the year on year increase in the income from Construction and Reconstruction Projects commercial activities. Comprehensive reconstruction of the Technical Block building at Prague airport was successfully completed in January 2011, providing a modern and comfortable environment for the needs of the airport control tower, the Air Traffic Services Reporting Office, and also for external cooperating organizations.

The Training Centre reconstruction project is being continuously prepared; the reconstruction started in February 2012 and completion is scheduled in January 2013.

An agreement was made with the Moravian-Silesian Region on the conditions for constructing a new TWR centre at the Ostrava airport. Project work is ready and construction is expected to begin in 2013.

31 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 32

Human Resources

Employee to 31. 12. 2011

In order to fulfil its mission and basic line of work, ANS CR has a long-term stabilized and highly professionally trained staff available, both 1 2 3 4 5 6 7 for providing air navigation services and for servicing of ATM systems and other, mainly supporting activities. 1 Blue-collar employees 69 The aim of the HR strategy of ANS CR is therefore to create a stable work environment and conditions for the permanent professional 2 Technical systems specialists 135 growth of current employees of the enterprise. Professional growth reflects progress in the constantly developing area of civil aviation, 3 AIS employees 23 both in terms of technical development and capacity and in terms of legislation. To that end, ANS CR creates motivational programmes 4 Executive and Administrative staff 268 in all areas of human resources management in order to engage, develop, and keep correspondingly eligible, qualified, and motivated 5 “S” category employees 59 employees. 6 TOP management 18 7 ANS personnel 341 At the same time ANS CR must react to a natural decrease in the number of professional staff and execution of its social policy, which is Total 913 why it develops recruitment activities under its own management, leading to obtaining new employees who will be capable of passing the actual, extraordinarily demanding selection procedure and also the following training.

To that end, a selection procedure for applicants to be enrolled in air traffic controller training in September 2011 was initiated in January Age Structure 2011. There were a total of 525 applicants for the selection procedure. Sixty-seven applicants successfully passed the selection procedure. 1 2 3 4 5 Based on the final selection round, which consisted of a selection interview, twelve applicants for the Area Control Centre were selected for the course. 1 29 years and younger 131 2 30-39 279 Selection procedures were also conducted to select employees for servicing of ATM systems, specifically for the Air Telecommunication 3 40-49 202 Service Centre and the NAVCOM Centre. There were a total of 109 applicants. 14 of which passed on to the last round, and 5 of which 4 50-59 223 were selected. 5 60 years and older 78 Total 913 In the area of relations with employee representatives, new wage regulations for 2012 were negotiated in collective bargaining, as part of collective agreements made by the end of 2012.

As far as the use of the cultural and social fund for recreation, sport, and culture was concerned, a total of 2,288 applications for Level of Education contributions were processed, both for employees of the enterprise and the members of their families. Four hundred fifty-two people were accommodated in the companie’s recreation resort in Albrechtice. The company does not forget about its former employees, for 1 2 3 4 5 whom a trip to the Duchcov castle was organized. Four summer camp sessions in Ledeč nad Sázavou were organized for 145 children of 1 Primary comprehensive education 19 employees as well as people outside the enterprise. 2 Secondary vocational education 66 3 Higher-level vocational education 466 Constant attention was paid to the development of human resources. All employees of the enterprise – both operating and non-operating 4 Higher-level vocation education 17 personnel – are included in one of its programmes for employee development, and as part of their operation they attended both internal and external courses and training. 5 University degree 345 Total 913 The operating personnel’s priority was to attend courses organized in the EUROCONTROL training institute in Luxembourg, language courses in Great Britain, and technical English courses designed to maintain English skills at the ICAO Level 4 for air traffic controllers.

Besides these courses, there was an updated Andragogy course for ANS CR Instructors in 2011. It is irreplaceable in raising the pedagogical Operational Staff Structure

abilities of instructors and lecturers who can then more effectively pass their knowledge and experience on, and increase the standard 1 2 3 4 of training. The programme for this course had been submitted for evaluation to the Civil Aviation Authority, which had certified it as comparable to the courses organized by EUROCONTROL at its training facilities. ANS CR is one of the few enterprises of its kind having 1 Air traffic controllers 234 its own training programme for its instructors, comparable to the courses organized by EUROCONTROL. 2 Technical systems specialists 135 3 Other ANS employees (auxiliary staff) 90 Non-operating personnel attended mainly management courses, English courses both in the Training Centre and in Great Britain, courses 4 AIS employees 23 in communication and presentation skills, and naturally courses and training focusing on refreshing and deepening their corresponding Total 482 expertise (finance, law, etc.). Attention was also paid to development of teamwork skills (team building); there were also individual courses that had been identified as necessary and desirable in the employee evaluation system.

Attention was paid to consolidating and expanding the CISM team’s knowledge even in 2011; a new training system was implemented, including both regular training and organizing of workshops that would considerably help increase the team members’ knowledge even in related subjects of their activity in the field of CISM.

35 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 36 Corporate Social Responsibility Sponsorship Programme Development 2000 - 2011 (in CZK):

2000 4 300 000 2001 3 625 000 2002 2 770 000 ANS CR carries out designated objectives in the area of corporate social responsibility on a long-term, methodical basis, helping to create 2003 3 455 000 a cultured business environment in the Czech Republic. The company is monitored and evaluated for its approach in non-commercial 2004 9 722 975 areas as well, such as environmental protection, employee care, and the implementation of its sponsorship program. Operational and 2005 1 140 000 financial results and quality of services should not be viewed as the only criterion for evaluating a company. By implementing principles 2006 1 650 000 2007 6 138 000 of corporate social responsibility, ANS CR continuously reinforces its own trustworthiness in its relations with others and builds employee 2008 4 970 000 loyalty. At the same time, the company communicates with its customers, partners and employees about their share in the implementa- 2009 2 260 000 tion of its long-term goals. 2010 3 500 000 2011 3 000 000 Sponsorship Programme in 2011 0 1 2 3 4 5 6 7 8 9 10

The ANS CR sponsorship policy follows applicable rules for donations according to the Resolution of the Government of the Czech Republic No. 334 of 14 April 1999, as amended. Even in 2011, the enterprise continued its long-developed tradition of sponsorships. Financial and Communication, Public Relations and Protocol material help was given to support both national and regional projects in charity, education, culture, and healthcare. The total volume of In accordance with the communication strategy, the good name and strategic importance of the Air Navigation Services of the Czech financial resources invested in sponsorship activities approved by the Supervisory Board of ANS CR in 2011 was CZK 3 million. Republic state enterprise was regularly strengthened in the media in 2011, especially with a focus on the professionalism of its employees, key abilities of the enterprise, and modern technological facilities. The enterprise’s internal and external communication was conducted Charity and healthcare on the basis of the Communication Plan of ANS CR for 2011, which concentrated both on professional media which focus on aviation, and on important national periodicals including electronic media. - charter 77 Foundation – contribution to handicapped people for assistive, rehabilitation, and re-education products, - autISTIK citizens association – purchase of educational aids for people with Autism Spectrum Disorder, The Communication Plan of ANS CR is one of the basic tools for its effective external and internal communications. It is drawn up with - motol Teaching Hospital – purchase of an examination chair with a camera system for the ear, nose and throat ward, respect to the long-term communication focus of the enterprise (regular communication events repeated every year), but it also respects - Institute for Clinical and Experimental Medicine (IKEM) Prague – support for the research programme “Diabetes Treatment Using the current communication need based on the development of the situation in civil aviation, including general events that have an influence transplantation and Regeneration of Insulin-producing Tissue”, on ANS CR activity from local and foreign points of view. After all revisions, the final version of the Communication Plan for 2011 - leontinka Foundation – for the activities of special pedagogical assistants for visually impaired children in the special Horáčkova contained 185 external and internal events. kindergarten, - zvířecí pohoda citizens association, helping people with mental, physical, or combined disabilities to develop and improve their overall As usual, standard external communication in 2011 was most often conducted by means of press releases, meetings with journalists, or condition through direct contact with animals, information on the ANS CR website. The Director General´s Office issued 15 press releases that mostly dealt with evaluation of the year, - duha society – purchase of a wheelchair access ramp with accessories for children with cerebral palsy, winter and summer seasons, economic results, or the pricing policy for 2011. Selected press releases are translated into English and sent - dědina long-stay rehabilitation and retraining centre for the blind – support for integrating the blind in society. for publication on the CANSO organization website and for further use by the foreign press.

Care for children, youth and sports During the year, the CEO participated in economic current affairs programmes on Czech Television and Prima TV several times, in which he gave interviews regarding the development of air traffic, the enterprise’s results, and expected development in future years. Far-ranging - dům tří přání Citizens Association – programmes in social and legal protection of children, interviews with the CEO were also published in printed periodicals – E15, Transport Newspaper, Ekonom, and Flying Revue. - přemysl Pittr House – crisis facility for children, support for the facility’s equipment, - Unhošť Children’s Home – programmes for education, The corporate journal STRIP maintained its high informative and graphic standards, as a popular source of information not only inside the - ac START Karlovy Vary – support for the table tennis club, enterprise but also with government authorities, universities, and individuals to which it is sent based on a growing number of requests. - sokol Jeneč sport club – support for the football club, The ANS CR spokesperson continuously gathered and presented the companie’s statements and comments in accordance with requests - civil Aviation Vocational School – for partial implementation of the project of a pilot flight Boeing 737 simulator, from journalists or the general public. No negative media situation or event occurred in 2011 that would damage the good name of the - baník Švermov sport club – for development of youth football, ANS CR and require the use of crisis communication procedures. - ČASPV Kladno sport club – for purchasing aids and equipment for developing children’s movement skills as part of the PlayWisely® training programme. Ceremonial inauguration of the reconstructed Technical Block of ANS CR at the Prague airport was prepared for media representatives in February 2011. This event was very attractive for journalists from Czech radio and TV stations, daily newspapers and professional journals, Culture because they also had the opportunity to familiarize themselves with operations at the airport control tower. The broadcast and published information presented the enterprise’s required message and contributed to a further positive perception of the enterprise’s activity and - prague Philharmonia – support for the Orchestral Academy project, significance by the Czech public. - fidlovačka Foundation – staging of the musical My Fair Lady, - national Theatre – unique project called “Obrazy”, combining motion, music, and screening. A new Intranet presentation of the enterprise was put into operation at the beginning of August 2011. Each employee can make their own individual settings and create the best user experience when using the necessary applications. The new Intranet serves, at the same Based on the ongoing renewal of computer technology, 19 separate monitors and 38 complete computer configurations were donated, now time, as an important tool of internal communication, and using the SharePoint feature also works, as a suitable workspace within partly serving for youth care, mainly at the Kladno Voluntary Centre and the Chomutov Children’s Home, and partly directly in education individual divisions or environments for dealing with individual steps in carrying out development projects. at the Elementary School for Visually Impaired in Prague 2, and also two charity organizations, Hrabyně local organization of the Union of the Physically Handicapped of the Czech Republic and the Centre for the Disabled of the Zlín Region. The Children’s Day of ANS CR was very successfully organized outside the IATCC Prague facility and attended by over 200 children along with their parents.

37 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 38 Similarly to previous years, 2011 saw continued interest from the public in excursions to IATCC Prague. Nearly 800 visitors came to the IATCC centre in Jeneč.

In accordance with the European Commission’s requirements for regular communication between air navigation services providers, state administration and air carriers, the 9th annual air carriers’ negotiations with representatives of ANS CR took place in November. The subject of the negotiations was the changes in financing of air navigation services beginning in 2012, the pricing policy for 2012, the state of the FAB CE project, and important operational changes in using the airspace of the Czech Republic.

Good operating and economic results allowed the enterprise to become the advertising partner of a number of important sporting and aviation events. The most significant activities of ANS CR in 2011 in this area included:

- nato Airshow 2011 in Ostrava - czech International Air Fest 2011 in Hradec Králové - official partnership of the Czech Athletic Federation - memorial Air Show in Roudnice nad Labem - aviation fair at the Pardubice Airport - official partnership of Czech representation in ultralight aviation - partnership with Czech badminton player Petr Koukal - partnership with the Historical Squadron of the Czechoslovak Republic in the Zlín XIII and Avia BH project - general partnership with the 20th Aviation Ball - grand partnership in discussions with the Ministers of Defence and Transportation organized by Commenius - support of Czech Television for the project “100 Years After and Over Again” devoted to pioneers of aviation in Czech countries

With respect to the preparation of the European Football Cup of air traffic controllers to be held in Prague in June 2012, the ANS CR became the general partner of the whole event, and in 2011 made a significant financial contribution to the organizer, the ECC 2012 citizens association.

In 2011 ANS CR reached the gross profit of 280.7 mil. CZK. The situation of ANS CR was stable and the company was able to meet all its obligations relating to the provision of its services and to all the obligations to the state budget. This fact gives a real assumption for a favourable development of economy in the following period.

39 Annual Report 2011 Air Navigation Services CR Report on the Economic Development of the Company in 2011 Revenues: in thousands CZK 2007 2008 2009 2010 2011 Revenues from air navigation services En-route navigation services 2 239 245 2 229 586 2 245 408 2 528 351 2 563 621 Terminal navigation services 811 285 682 432 583 821 558 923 570 772 From the point of view of the economic result, 2011 can be viewed as very successful. The pre-tax economic result in 2011 was CZK 280.7 Training flights 2 239 2 158 1 581 1 321 2 551 million, which is a year-on-year increase in this indicator of 38.1 %. It should also be noted that this was the best economic result since Other revenues the end of the economic recession in 2008. Other revenues from operations 66 302 284 730 168 801 104 962 136 562 Total financial revenues 133 206 92 391 215 971 114 857 99 542 Expenditures of the enterprise in 2011 were fully in compliance with the approved budget, and the approved budget plan was drawn Total revenues 3 252 277 3 291 297 3 215 582 3 308 414 3 373 048 up at 99.8%. Thanks to targeted cost management and budgetary discipline, the enterprise’s costs have been stable since 2008 and no increase has occurred. Company Costs

Revenues for 2011 reached the amount of CZK 3,373.0 million, which corresponds to fulfilment of the planned volume of revenues at In 2011, the company’s costs amounted to CZK 3,173.4 million. This corresponds to a slight year-on-year increase in costs of 0.7%. 107.2 %. These values were achieved mainly due to securing a sufficient capacity of airspace, which enabled filling the growing demand for air navigation services as a result of positive development in air traffic. Another factor of favourable development in revenues was the In the area of production consumption, which consists of consumed purchases and of services, expenditures reached CZK 461.8 million, significant increase in other commercial activities of the enterprise. The revenues also saw their best results since 2008. which is a year-on-year increase of 1.9%. This year-on-year increase was caused mainly by price fluctuations in energy consumption.

A record number of aircraft used Czech airspace in 2011, with services provided to 714,279 flights, which is a 4.6 percent increase Expenditures for personnel costs reached CZK 1,789.9 million, which is a year-on-year increase of 6.2%. The main factor of the year-on-year compared to 2010. All this occurred with the historically lowest delay rate in airspace, which significantly contributed to the attractiveness increase in this group of costs was the development of personnel costs following from collective agreements, and also the increase in the of Czech airspace while saving air space users’ costs. upper limit of the basis of assessment for calculation of social and health insurance contributions.

As a result of favourable development in the enterprise’s economic activities, i.e. as a result of non-growing development of costs, the Expenditures for other operating costs in 2011 amounted to CZK 179.2 million. The year-on-year decrease in costs of 22.0% was mainly costs per performance unit are constantly decreasing, which means that the unit rates for provided air navigation services are decreasing. caused by the decrease in payments of the membership fee for the Czech Republic to the EUROCONTROL budget. This fact has a favourable influence on all users of air navigation services, and therefore meets the requirements of air space users for stabilization of air traffic in the post-crisis period. CZK 601.9 million was spent in the cost group for asset write-offs and adjustments. This amount corresponds to a year-on-year decrease in costs of this item of 6.2%. This group of costs included the book transfer of the entry for reducing the cost bases in 2013 to the Company Revenues enterprise’s costs, with a total of CZK 80.0 million. This book entry was created in accordance with the principles for determining the cost bases of ANS. With respect to the development in air traffic, the revenues from air navigation services in 2011 exceeded the justified The company’s total revenues from January to December 2011 amounted to CZK 3,373.0 million. This value represents a year-on-year costs spent on this activity. The excess of revenues over justified costs, i.e. over-recovery, will be figured in as a decreasing entry of cost increase in revenues of CZK 64.6 million, i.e. an increase of 2.0%. The year-on-year increase in revenues was mainly caused by favourable bases in 2013 in accordance with Decision 1794/2006/EC. This operation will ensure returning the excess of revenues to ANS users dynamics in air traffic development, and last but not least, by the year-on-year increase in revenue from commercial activities. through unit rates in 2013.

The main source of the enterprise’s income is the provision of air navigation services (ANS). The revenues from ANS constituted 93% of The total cost volume for 2011 was CZK 58.4 million. This is a year-on-year decrease in this group of costs of 38.0%. The main cause of the enterprise’s total revenues in 2011. The strongest factor was revenues from en-route navigation services in the amount of CZK 2,563.6 the year-on-year decrease in costs was the decrease in the volume of passive exchange rate differences. million, i.e. 76.0% of total revenues. The second most significant revenue item in terms of volume was the revenues from terminal services amounting to CZK 570.8 million, i.e. 16.9% of total revenue. The revenues from training flights amounting to CZK 2.6 million signified Costs: less than 0.1% of total revenues.

in thousands CZK 2007 2008 2009 2010 2011 During 2011, ANS CR was provided with compensation for costs incurred in connection with the provision of services or flights exempted Consumed material and services 460 016 452 291 449 695 453 055 461 810 from fees in a total amount of CZK 50.4 million. This compensation is provided to ANS providers on the basis of European Commission Personnel costs 1 696 495 1 559 459 1 557 200 1 685 321 1 789 888 Regulation 1794/2006 dated 6 December 2006 designating a common fee system for air navigation services on the basis of CR Other operating costs 198 584 338 265 218 144 229 661 179 153 Government Regulation no. 1404 dated 2/11/2005. Depreciation of assets, adjustments, and reserves 458 930 612 161 648 908 641 428 601 950 Total financial costs 71 566 211 466 215 893 94 279 58 428 Extraordinary costs 0 0 0 0 0 Revenues in the amount of CZK 99.5 million were generated in 2011 by active exchange rate differences, in addition to income from the Taxes and charges 77 274 28 668 28 178 47 741 82 176 appreciation of temporarily free financial resources belonging to the enterprise. Active exchange rate differences in the amount of CZK Total costs 2 962 865 3 202 310 3 118 018 3 151 485 3 173 405 71.1 million were caused by the development of the exchange rate of the national currency to the euro. The revenue from the appreciation of temporarily free financial resources for 2011 was CZK 6.9 million. The most significant item in financial revenues was the book transfer Economic Result of the Company of the revaluation of the securing financial instruments from 2010 to the revenues in 2011 amounting to CZK 20.4 million.

ANS CR realized a pre-tax gross profit of CZK 280.7 million in 2011. Adjusted for the tax liability in the amount of CZK 81.1 million, The group of other revenues from operations in 2011 amounted to CZK 136.6 million. The most important and already mentioned item the disposable profit after tax equals to CZK 199.6 million. This positive result was achieved thanks to the favourable development in was the compensation for costs arising in connection with the provision of ANS to flights exempted from fees in a total amount of CZK air traffic, increase in revenues from commercial activities, and last but not least maintaining the costs at the level of previous years. The 50.4 million. The remaining CZK 86.2 million in revenues consists of a broad spectrum of revenue items. This includes revenues of the financial position of ANS CR in 2011 was stable, and the enterprise was able to meet all its obligations related to the performance of its Training School section at CZK 41.5 million, which is a year-on-year increase of 80.8 %, revenues of the Aeronautical Information Service activities and all its obligations to the state budget. This fact is a good prerequisite for the favourable development of economic results at CZK 2.8 million, revenues from re-invoicing of services, revenues from the lease of non-residential premises and equipment, revenues into the upcoming period. from participation in international projects etc.

41 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 42

Movements in the Airspace and at Airports in the Czech Republic was recorded. However, when making a year-on-year comparison for each month of 2011, it is possible to identify a negative trend at the end of the year, with a decrease in performance indicators at Czech airports in November 2011 (namely number of terminal service units at Prague – Ruzyně airport by 5.0%). There is a visible trend toward increasing the MTOW of landing aircraft – in 2011, the MTOW averaged 46.9 tonnes for airports controlled by ANS CR and 55.5 tonnes for the Prague airport.

Movements and Performance in the Airspace of the Czech Republic The most significant trend affecting the structure of users of terminal and approach services as well as the structure of flight connections to and from the Prague – Ruzyně airport is a substantial reduction in the share of the major user, Czech Airlines, in the total volume The total number of aircraft movements recorded in the Czech airspace in 2011 was 714,279, exceeding the historical record achieved in of services provided by ANS CR in 2011. On the other hand, there was an increase in intercontinental flights operated by foreign air 2008. In addition, the year-on-year increase of 4.6% was twice as high as that in 2010. Following the recession at the end of the previous carriers to and from the Prague – Ruzyně airport. decade, a positive trend indicating a revival of aviation business was thus reconfirmed, although year-on-year monthly developments offer a less optimistic view, especially in the second half of the year (increases of only 2.0% and 1.6% in July and August, respectively, and even Movements at FIR Prague and at Airports of the Czech Republic: decreases of 0.4% and 0.8% in October and November, respectively); December is the only exception, with growth of 6.5%. The April 300 400 500 600 700 800 Movements at FIR Prague 2011 figure is somewhat distorted, as the high increases in movements and service units must be put into context with the long-term 2004 closure of the airspace of the Czech Republic and other European countries due to the eruption of the Eyjafjällajökull volcano in Iceland 2005 and subsequent movements of volcanic ash in the atmosphere.

2006 An even more positive development could be seen in the performance expressed in terms of chargeable service units reflecting the distance flown and the weight of individual aircraft. The total year-on-year increase in the number of chargeable service units was 5.2%. The 2007 distribution curve in individual months of the year more or less copies that of the number of aircraft movements, including the extraordinarily 2008 high increase in April and the stagnation in the second half of the year – the only decline, equal to 0.3%, was recorded in November. A new factor affecting the development of air traffic in 2011 was the beginning of a visible trend of dwindling shares of some air 2009 carriers, including ČSA, in the total volume of services provided. On the other hand, the shares of other air carriers, particularly those from Southeastern Europe and the Middle East, showed a growing trend. 2010

2011 Performance in the Airspace of EUROCONTROL Member States in Service Units

0 100 150 200 250 300 350 Movements at Czech Airports All in all, the average year-on-year growth in the number of service units for all EUROCONTROL member states in 2011 was 4.7% compared to 2010. The year-on-year development of the number of service units in the Czech Republic matches the above trend. – Movements in FIR Prague (in thousands) Compared to 2010, there was lower volume of air traffic in Italy, Hungary and Cyprus; as to Italy, the decrease is attributable mainly to – Movements at Czech Airports (in thousands) the reaction to air traffic developments in the Mediterranean region as a result of events in Libya. Other EUROCONTROL member states – Movements at Prague Airport (in thousands) showed year-on-year increases, the highest of which were recorded by some countries of Eastern and Southeastern Europe (e.g. Slovenia - +16.3%; Armenia - +16.1%; Lithuania - +13.2%) and also Finland (+12.6%). Year-on-year Comparison of the Development of the Number of Movements at FIR Prague and at Czech Airports in individual months of 2011:

Aircraft Movements and Performance Units at Czech Airports Controlled by ANS CR 01.

02. The trend of movements at the airports controlled by ANS CR (Prague-Ruzyně, Brno-Tuřany, Ostrava-Mošnov, and Karlovy Vary) was 03. opposite to that demonstrated by the number of movements in the Czech airspace. In 2011, the number of movements was 204,311; since 2008, there has been a continuous series of year-on-year decreases. Compared to 2010, the year 2011 showed a drop of 0.4%. 04. For the first time ever, there was a decrease of the share of the Prague – Ruzyně airport in the total number of movements at all airports 05.

controlled by ANS CR from 76.2% in 2010 to 73.9% in 2011. This means that while the Prague airport showed a year-on-year decline 06. of 3.3%, all regional airports recorded a year-on-year increase of movements, altogether by 8.9%. In 2011, the Prague – Ruzyně airport 07. recorded 151,028 aircraft movements, which basically corresponds with the level of air traffic volume in 2004 and 2005. As to the regional airports, the fastest growth of 9.9% was shown by the Brno – Tuřany airport, a significant change in the declining trend between 08. 2009 and 2010. 09.

10. The development curve of the year-on-year comparison of the monthly numbers of aircraft movements at the Prague-Ruzyně airport in 11. 2011 shows a decrease in the number of movements in each month of the year except for April 2011, which, however, was exceptional 12. in that it was compared against April 2010, when the airport had been closed for several days because of volcano ash movements in the European skies. Just as in the case of the movements at FIR Prague, the biggest drops in air traffic at the most important airport of the -18,0 -16,0 -12,0 -8,0 -4,0 0,0 4,0 8,0 12,0 16,0 20,0 24,0 28,0 Czech Republic occurred in October and November 2011 (by 6.9% and 8.5%, respectively). – Movements in FIR Prague (in %) Compared to the number of movements at Czech airports, airport performance expressed in performance indicators, MTOW tonnes – Movements at Czech Airports (in %) – Movements at Prague Airport (in %) and terminal service units, which both reflect the weight of the landing aircraft and directly affect revenues of ANS CR for terminal and approach services, show an opposite trend. In 2011, there was an overall year-on-year increase of MTOW tonnes equal to 4.0%; as to the Prague – Ruzyně airport, the increase was 2.9%, and it was even 17.7% in the case of regional airports. The year-on-year increase of terminal service units was 2.1% (1.1% for the Prague – Ruzyně airport, 12.7% for the regional airports). All airports showed an increase in their performance indicators, except for the Ostrava – Mošnov airport, where a slight decrease in the number of terminal service units

45 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 46 Year-on-year Comparison of the Development of the Number of Service Units at FIR Prague in individual months of 2011: Development of Performances in Service Units (chargeable) of EUROCONTROL Member States, 2011/2010 (in %):

01. Italy -2,9 02. Hungary -1,2 03. Cyprus -0,3 04. Serbia / Montenegro 0,6 05. Switzerland 1,5 06. Greece 2,1 07. Austria 2,9 08. Romania 3,5 09. Germany 3,6 10. Malta 3,9 11. Inited Kingdom 4,0 12. Denmark 4,2 -18,0 -16,0 -12,0 -8,0 -4,0 0,0 4,0 8,0 12,0 16,0 20,0 24,0 28,0 Ireland 4,3 Belgium / Luxembourg 4,6 – Number of Service Units in FIR Prague (in%) The Netherlands 4,8 Czech Republic 5,2 Slovak Republic 5,2 Spain Continental 5,3 Major Customers of ANS CR in 2011 - Users of En-route Navigation Services in the Czech Airspace (% share in the total volume of services FYROM 5,9 provided in 2010 - 2011): France 6,3 Moldova 7,4 Malev 1,8 1,6 Portugal - Lisabon FIR 7,5 LOT 1,8 1,7 Portugal - Santa Maria FIR 7,8 easyJet 1,8 1,8 Turkey 7,8 Sweeden 7,9 Etihad Airways 2,0 2,2 Norway 8,2 1,9 2,4 Qatar Airways Spain - Canary Islands 8,2 KLM 2,1 2,4 Bulgaria 9,7 Albania 10,8 Ryanair 2,7 2,7 Poland 11,0 Wizz Air 2,6 2,8 Bosnia and Hercegovina 12,5

Turkish Airlines 2,2 3,1 Finland 12,6 Croatia 12,6 Air Berlin 3,3 3,2 Lithuania 13,2 Austrian Airlines 3,3 3,2 Armenia 16,1

British Airways 4,1 3,6 Slovenia 16,3

CSA 4,7 3,6 -3,0% 0,0% 3,0% 6,0% 9,0% 12,0% 15,0% 18,0% 20,0%

Emirates 4,4 4,1

9,8 10,3 Lufthansa Numbers of Performance Units at Czech Airports and at the Prague Airport (in 1,000 tonnes MTOW):

0,0% 2,0% 4,0% 6,0% 8,0% 10,0% 12,0% 2004

2005 – % share, 2010 – % share, 2011 2006

2007

2008

2009

2010

2011

0 2 400 2 900 3 400 3 900 4 400 4 900 5 400 5 900 6 400 6 900

– MTOW tonnes at Czech Airports – MTOW tonnes at Prague Airport

47 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 48 Numbers of Performance Units at Czech Airports and at the Prague Airport (Terminal Service Units): Major ANS CR Customers in 2011 - Users of Terminal Navigation Services at the Prague Airport (% of share in the total volume of Terminal Service Units in 2010 and 2011): 2004

2005 Turkish Airlines 1,1 1,2

2006 Norwegian.no 1,3 1,5

2007 Brussels Airlines 1,1 1,3

2008 Delta Airlines 1,2 1,3

2009 Emirates 0,7 1,4

2010 Austrian Airlines 0,0 1,5

2011 Holidays Czech Airl. 1,5 1,5

Swiss Int´l Air Lines 2,1 2,1 0 30 000 40 000 50 000 60 000 70 000 80 000 90 000 100 000 110 000 Aeroflot 1,9 2,3 – Terminal Service Units at Czech Airports British Airways 2,3 2,4 – Terminal Service Units at Prague Airport Air France 2,1 2,7

Wizz Air 3,9 3,5 Year-on-year Comparison of the Development of the Number of Performance Units at Czech Airports in individual months of 2011, in %: easyJet 3,6 4,1 01. Lufthansa 5,0 6,8 02. Travel Service 9,8 10,4 03. 04. CSA 44,4 37,6 05. 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 06. 07. – % share, 2010 08. – % share, 2011 09. 10. Charges for Air Navigation Services 11. 12. In 2011, the charges for en-route navigation services provided by ANS CR in the airspace of the Czech Republic, as well as for terminal -18,0 -15,0 -12,0 -9,0 -6,0 -3,0 0,0 3,0 6,0 9,0 12,0 16,0 18,0 navigation services at airports controlled by ANS CR were set in keeping with the rules of the International Civil Aviation Organization (ICAO) and EC regulations, namely Commission Regulation (EC) No. 1794/2006, which has been applied in the Czech Republic since 2008, – MTOW tonnes at Czech Airports – Number of Terminal Service Units at Czech Airports as amended by Commission Regulation (EC) No. 1191/2010.

Another EU regulation in the field of charging for air traffic management services is Commission Regulation (EC) No. 691/2010, laying down a performance scheme for air navigation services and network functions, approved in the framework of the Single European Sky Year-on-year Comparison of the Development of the Number of Performance Units at Prague Airports in individual months of 2011, in %: II project. The above piece of legislation considerably changes the process of establishing unit rates of air traffic service providers in EU 01. member states, including ANS CR, effective from 2012. As of January 1, 2012, the current principle of a full costs recovery incurred by ATS 02. providers has been abandoned and replaced with performance indicators and a shared risks principle with service users. The Performance 03. Plan is set for a reference period of five years, however the first reference period was defined as the three-year period between 2012 04. and 2014. The unit rates of charges for air traffic services are considered to be performance indicators and as such are approved by the 05. National Supervisory Authority and the European Commission. 06. 07. Yet another regulation governing the en-route navigation charges in 2011 was the document called “The principles for establishing 08. the cost-base for route facility charges and the calculation of the unit rates“, issued by the European Organization for the Safety of Air 09. Navigation (EUROCONTROL). It elaborates the EU regulations referred to above in greater detail. 10. 11. ANS CR has been consistently applying a customer-oriented policy in setting charges for air navigation services. One of the basic commit- 12. ments of the company in this respect was to optimize the budget in order to maintain the level of charges for terminal navigation services -18,0 -15,0 -12,0 -9,0 -6,0 -3,0 0,0 3,0 6,0 9,0 12,0 16,0 18,0 at the level of 2009 and 2010 in the form of optimizing the budget so that the impact of the development of the volume of air traffic is not transferred to service customers. Prior to their final approval, the charges are consulted on with users, i.e. organizations representing

– MTOW tonnes at Prague Airport the interests of air navigation service users. Consultations on charges for en-route navigation services in 2011 took place during the process – Number of Terminal Service Units at Prague Airport of establishing the charges at the EUROCONTROL level, including a bilateral consultation with the IATA. Consultations concerning charges for terminal navigation services were organized by the European Commission on the premises of EUROCONTROL.

49 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 50 Development of Annual Basic Unit Rates for Air Navigation Services (CZK): In 2011, the government decided to exempt the following flight categories from charges for en-route navigation services: - flights carried out exclusively under VFR rules; 0 600 700 800 900 1 000 1 100 1 200 1 300 1 400 - flights of aircraft the MTOW of which is up to 2 tonnes; 2003 (1/1–30/6) - flights of national importance (flights carried out exclusively for the purpose of transporting heads of state, heads of government and 2003 (1/7–31/12) government ministers during their official missions); 2004 (1/1–31/8) - search and rescue flights, authorized by a relevant RCC authority; - flights of state aircraft of the signatories of the North Atlantic Treaty Organization (NATO), with the exception of the Czech Republic; 2004 (1/9–31/12) - flights carried out to check and test ground navigation equipment; 2005 - flights carried out by customs and police bodies. 2006

2007 (1/1–30/6) Development of Monthly Unit Rates for En-route Charges Depending on Euro/CZK Exchange Rate:

2007 (1/7–31/12) 2011/1 45,28 2008 7 255* 2011/2 46,66 2009 6 800* 2011/3 46,92 2010 6 800* 2011/4 46,70 2011 6 800* 2011/5 46,96

2011/6 46,70 0 100 120 140 160 180 200 220 240 260 2011/7 46,93 – Terminal Navigation Services 2011/8 46,83 – En-route Navigation Services 2011/9 46,96

2011/10 46,39 * Between 2008 and 2011, the Terminal Navigation Charge was established using a different calculation unit (Terminal Service Unit) than in previous years, when the calculation unit had 2011/11 45,88 been 1 MTOW tonne of the aircraft. With an approximate conversion of the cost base to the unit of 1 MTOW tonne, the charge would correspond to CZK 141 per 1 tonne in 2008 2011/12 44,68 and CZK 131 per 1 tonne in 2009 - 2011. In spite of that, the impact on individual users of services was not divided equally and is dependent upon the composition of their aircraft fleet and its weight. 0 36,00 € 38,00 € 40,00 € 42,00 € 44,00 € 46,00 € 48,00 € 50,00 €

Charges for En-route Navigation Services – Monthly Unit Rate – BUR - Basic Unit Rate (46,21 €) The Czech Republic became a member of EUROCONTROL in 1996 and acceded to the Multilateral Agreement Relating to Route Charges. Consequently, the billing, collection, and recovery of charges for en-route navigation services provided are taken care of by the Central Route Charges Office (CRCO) based in Brussels. The basis for calculation of the en-route navigation charge is the rate per Service Unit. The Service Unit is defined as the number of kilometers flown in the airspace of the Czech Republic divided by 100, multiplied by the square root of one fiftieth of the maximum take-off weight of the aircraft (MTOW) in tonnes.

The basic unit rate for en-route navigation services in 2011 was set at CZK 1,134, i.e. € 46.21 per Service Unit, using the rules described above and for a period of one year. The cost base was calculated in CZK. Compared to the 2010 basic unit rate, the 2011 rate represented a year-on-year decrease of 5.7%.

However, the basic rate converted to the euro, which is valid for a period of one year, is used for reference only, as the actual rates paid by users of services for a single calendar month depend on Euro/CZK exchange rate fluctuations during the year. Just as in previous years, The airports in Prague, Brno, Ostrava and the rate was strongly influenced by CZK/Euro exchange rate developments in 2011 as well; because of this, customers were charged less than the 2011 basic unit rate (announced at the end of 2010) in January, November and December 2011. On the other hand, they were Karlovy Vary recorded 204, 301 movements charged more for the remaining months of 2011. The chart below shows the developments of monthly charges for en-route navigation in 2011 and since 2008 the traffic in Czech services against the basic reference rate announced for 2011, depending on the exchange rate movements. airports has been steadily declining. A comparison of the 2011 basic unit rate applicable in the Czech airspace with basic rates for en-route navigation services charged by other EUROCONTROL members shows that the Czech basic unit rate falls into the middle of the unit rate range. The chart below provides an overview of basic unit rates for en-route navigation services charged by EUROCONTROL member states.

51 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 52 Comparison of Basic Unit Rate Levels for En-route Navigation Services in EUROCONTROL Member States (in Euros) in 2011: Development of Monthly Unit Rates for Terminal Navigation Services Depending on Euro/CZK Exchange Rate:

Portugal - Santa Maria FIR 12,21 2011/1 270,63 Malta 20,90 2011/2 278,89 Armenia 27,24 2011/3 280,44 Latvia 29,59 Turkey 30,82 2011/4 279,11 Ireland 33,16 2011/5 280,69 Cyprus 35,37 2011/6 279,13 Bosnia and Herzegovina 36,38 Moldova 37,18 2011/7 280,49

Greece 37,72 2011/8 279,93 Poland 39,46 2011/9 280,71 Bulgaria 39,77 Hungary 39,86 2011/10 277,30

Serbia/Montenegro 40,22 2011/11 274,24 Finland 40,38 2011/12 267,05 Croatia 40,49 Albania 43,80 0 210,00 € 220,00 € 230,00 € 240,00 € 250,00 € 260,00 € 270,00 € 280,00 € 290,00 € Romania 44,48 Czech Republic 46,21 – Monthly Unit Rate including the influence of CZK/Euro Exchange Rate Portugal - Lisabon FIR 47,58 – BUR - Basic Unit Rate 2011 (276,20 €) Lithuania 49,73 Slovak Republic 54,04 In 2011, the following flight categories were exempted from charges for terminal navigation services:: FYROM 56,48 - flights of aircraft the MTOW of which is up to 2 tonnes; Spain - Canary Islands 63,18 flights of national importance (flights carried out exclusively for the purpose of transporting heads of state, heads of government and The Netherlands 65,81 - France 67,08 government ministers during their official missions); Norway 67,19 - search and rescue flights, authorized by a relevant RCC authority; Denmark 67,94 - flights of state aircraft of the signatories of the North Atlantic Treaty Organization (NATO), with the exception of the Czech Republic; Sweden 68,86 - flights carried out to check and test ground navigation equipment; Austria 69,15 - flights of air rescue services, including secondary and repatriation flights and flights directly connected with human life rescue; Italy 70,51 - flights of aircraft forced to return to the aerodrome of departure due to meteorological conditions or because of a defect/malfunction, Germany 71,99 and flights of aircraft that have executed a forced or an emergency landing; Slovenia 73,63 - flights carried out by customs and police bodies. Belgium / Luxembourg 76,59 Spain Continental 77,83 Charges for Training Flights United Kingdom 78,78 Switzerland 90,99 Just as in previous years, training flights in TMA of the airports controlled by ANS CR in 2011 were subject to a flat rate charge per training 0 10 20 30 40 50 60 70 80 90 100 flight hour or a proportion thereof and one tonne of the MTOW of the aircraft. The actual charge applicable to a training flight was based on the exact duration of the flight in minutes. Flights of aircraft the MTOW of which was up to and including 2 tonnes were charged at Charges for Terminal Navigation Services a different rate than flights of aircraft with a higher MTOW. To make a larger volume of training flights conducted at regional airports by a single operator during one calendar month more commercially attractive, a system of preferential rates subject to achieving a specific Pursuant to Commission Regulation (EC) No. 1794/2006, rates for terminal navigation services have since 2008 been based on the aggregate number of training hours was applied. The user can aggregate the training hours at all 3 regional airports altogether in order to Terminal Service Unit, which is defined as a weight factor, described as one fiftieth of the certified MTOW of the aircraft powered by a be entitled to achieve one of the preferential rates. factor of 0.7. Charges for terminal navigation services provided at Praha – Ruzyně, Karlovy Vary, Brno - Tuřany and Ostrava – Mošnov are billed and collected by ANS CR. Rate per 1 hour of training flight and 1 MTOW tonne:

Karlovy Vary 370 440 As in 2009 and 2010, the 2011 terminal navigation service rate was CZK 6,800.00 per Terminal Service Unit, a rate which ANS CR has undertaken to maintain in spite of air traffic volume fluctuations. Just as in the case of charges for en-route navigation services, CZK/Euro Ostrava-Mošnov 370 440 exchange rate developments influenced the actual monthly rates charged to customers who chose to pay their invoices in Euros. The chart Brno-Tuřany 370 440 below illustrates effects of the CZK/Euro exchange rate movements on rates quoted in Euros: Prague-Ruzyně 740 880

0 200 300 400 500 600 700 800 900 1 000

– Aircraft with MTOW up to and including 2 t – Aircraft with MTOW over 2 t

53 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 54 Reduced basic training flight rates at regional airports depending on the number of the training hours flown by a single operator in a calendar month:

No. of hours of training flights/month Reduction in the basic 0 to 5 0% 5 to 10 20% 10 to 20 45% 20 to 30 55% over 30 65%

Recovery of Receivables for Air Navigation Services Provided

Since the Czech Republic acceded to the Multilateral Agreement Relating to Route Charges, the collection of receivables from users of en-route navigation services provided by ANS CR in the airspace of the Czech Republic, and, if applicable, their recovery once they have become overdue is, just as in the case of other member states, a direct responsibility of CRCO EUROCONTROL. ANS CR collects and if necessary recovers charges for terminal navigation services provided at the Prague-Ruzyně, Karlovy Vary, Brno-Tuřany and Ostrava-Mošnov airports from their users. An overwhelming majority of receivables for terminal navigation services in 2011 have been settled by their due date. In cases of default on the part of customers, ANS CR used a standard recovery mechanism and standard recovery tools. Any delayed or overdue payments were subject to late charges in accordance with applicable legislation in effect. In exceptionally serious cases the company also resorted to selected legal measures to retrieve debts arising from unpaid terminal navigation services, including filing a bankruptcy petition, cooperating with state administration bodies, or collaborating with international organizations.

In the long term Lufthansa, the German air carrier, is the biggest customer of ANS CR in providing of route navigations services, followed by Emirates and Czech Airlines.

55 Annual Report 2011 Air Navigation Services CR Lenka and Zdeněk Sýkora The paintings themselves are again created in a traditional way – oil on canvas, later acrylic materials on canvas. Throughout his whole life, Zdeněk Sýkora kept returning to landscape paintings, drawing from his earlier works dating back to the 1950s. He invariably started painting his landscapes in the countryside, where he started venturing in 1960 together with members of a group of amateur artists which he founded in Louny and led for twenty years. In addition to river and valley motifs, he was also interested in Zdeněk Sýkora (1920 Louny – 2011 Louny) studied fine arts and descriptive geometry at the horizons. Sýkora often finished his landscapes in his studio, where they were placed alongside half-finished structures or lines. Faculty of Education of the Charles University in Prague, where he also worked as a lecturer In the late 1980s and early 1990s, Sýkora created a series of paintings known as “The Stains” – several dozens of abstract studio works, (from 1947) and later as a senior lecturer (from 1966 to 1980). In his free creations, he gradually which illustrate the search for relationships between coloured planes. advanced from landscape paintings to geometrical abstraction; in 1962, he painted his first structural work, and the year 1964 saw his first programmed structures based on the use of For almost half a century now, his work has remained alive and vivid; moreover, it is interesting to see how ideas embodied in his works a computer; from 1973 onwards he devoted his attention to linear paintings. In 1963, Sýkora are updated in different sets of circumstances. became a member of the Prague group of artists known as the Crossroads. In the mid-1960s, his works started appearing at major international exhibitions of constructivist art, and he Zdeněk Sýkora is also the author of various architectural creations, including the mosaic facework of ventilation stacks of the Letná Tunnel was one of the few Czechs represented at the prestigious Documenta exhibition in Kassel in in Prague (completed in 1969), the pavement design for the city square in Gorinchen, the Netherlands (1974, renovated in 2005), the 1968. As of 1985 he was collaborating with his wife Lenka on his paintings. In 1991, he was sidewalk and wall in Litvínov (1977), and the entrance hall/lobby of Selmoni AG in Basel (1993). named an honorary citizen of Louny. The French minister of culture decorated him with the Order of Arts and Letters in 2003; two years later, he received the Austrian Herbert Boeckl The idea of installing two paintings by Zdeněk Sýkora in the entrance hall/lobby of the new building of the National Integrated Centre of Award for his lifelong work. Sýkora’s paintings can be seen in many international and Czech the Air Navigation Services of the Czech Republic in Jeneč was conceived early in 2004, during an exhibition of Sýkora’s paintings in the museums and galleries, as well as in private art collections; the painting “Line No. 24” is part gallery of Zdeněk Sklenář in Prague. It was largely the brainchild of Petr Materna, then the Chief Executive Officer of the company, who of the permanent exhibition of the Centre Pompidou in Paris. took part in the selection of the winning proposal, coordinated the arrangements and was a point of contact for all parties concerned – from architects and contractors to the gallery owner and students who took part in transferring the selected paintings as murals on Lenka Sýkorová (1957 Plzeň) studied Czech and art education at the Faculty of Arts of the Charles University in Prague from 1976 to the walls of the building in the summer of 2005. This project represents the first official collective work by Lenka Sýkorová and Zdeněk 1981. She then worked as a proof-reader and language editor at the State Pedagogical Publishing House until 1984. In 1983, she married Sýkora. Zdeněk Sýkora; from 1985 onwards, they worked together. Since the mid-1980s, she has also worked on compiling the archive and documentation of the complete works of Zdeněk Sýkora, organizing exhibitions and drafting catalogues. She is the co-author of the conception of Sýkora’s monograph, and the editor of both of its volumes that have been published so far (Graphics, Conversations).

The complete works of Zdeněk Sýkora stem from nature and landscape. After a spell of surrealist and cubistic works in the 1940s, he began to focus on realistic landscape paintings. As a rule, he sought his themes in the surroundings of his birthplace, especially along the Eger River. In 1952, he had his first solo exhibition in the Aleš Hall in Prague.

During the 1950s, his painting style underwent various changes, ultimately getting simpler; although still based on the depiction of reality, the author deals mainly with relationships between coloured areas in his paintings. These efforts culminate in the series of paintings known as The Gardens (1958 –1960).

In 1960, his creations start showing a trend toward abstraction. It is the beginning of the road towards geometric, large-area paintings known as the “hard-edge”. It was in this spirit that he painted the fireproof iron curtain of the municipal theatre in Louny (1962–1963), which later disappeared during the theatre’s renovation. One of the paintings from that period, “The Red Arrow”, became the predecessor of independent elements that could be turned, rotated and combined or linked with others. In 1962, Sýkora began painting his first work consisting of the above-mentioned elements – “The Grey Structure”. He finished the painting in 1963, and started working on similar structures immediately afterwards, their purpose being to examine all possible combinations of all relative positions of the elements. At the same time, however, he was considering a new approach – he devised a set of rules for his structures, which governed combinations of the elements, thus affecting the visual appearance and impact of the structure.

The next phase of his work starting in 1964 is characterized by the use of a computer, which brings with it new opportunities; in particular, it can speed up the fairly complex process of painting preparations. At that time, he was cooperating with Jaroslav Blažek, a mathematician who had access to one of the first computers in Czechoslovakia, LGP 30, installed at the Faculty of Mathematics and Physics of the Charles University. While Sýkora’s paintings of structures dating back to 1963 were created intuitively and with an effort aimed at avoiding any repetition of combinations, the work with the computer required a strict rational logic. All input parameters (shapes, positions and colours of elements, and rules governing their combinations) had to be accurately defined and transformed into numerical codes so that the computer could handle them. The author inserted several elements into an otherwise empty grid and simple calculations were subsequently used to determine elements suitable for neighbouring positions and meeting the rules. All inputs and results were recorded. The computer proved to be, first and foremost, a fast and reliable helper – it was only used to make calculations for a pre-defined concept. As a rule, the paintings themselves were created in a traditional way – oil on canvas – and their dimensions were often monumental.

The structures were evolving and, following several modifications (with respect to their colours, shapes and sizes of elements, grid position, materials used etc.), Sýkora advanced to so-called macrostructures in 1971. These were produced by enlarging the elements, thus basically representing detailed blow-ups of existing structures. In 1973, the contour lines marking the borders between white and black areas on these paintings prompted the concept of so-called linear paintings, which Sýkora kept devoting his attention to until the end of his life. Early into the development of the concept, links tying the lines to the grid are abandoned, the lines thus being given freedom of movement on the canvas and the painting becoming a mere excerpt from a notional and imaginary whole. Initial coordinates, width, length, course and colour of every line are determined randomly – by a throw of the dice or through random numbers generated by a computer. Colour lines are set against a white backdrop representing emptiness as a natural environment in which randomly created lines can freely proliferate.

57 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 58

Supervisory Board Report Auditor´s Report - Czech Accounting Standards

Independent auditor’s report on verification of the financial statements of the company Air Navigation Services of the Czech Republic as of 31 December 2011.

The audit of the accompanying financial statements of the state enterprise Air Navigation Services of the Czech Republic identification number 497 10 371, was carried out by the company HAYEK, spol. s r.o., holding, address Jindřišská 5/901, Praha 1, license number 29. Auditor responsible for submitting the report is Jan Řehák, certificate number of the auditor 1692.

We have audited the enclosed financial statement of the state enterprise Air Navigation Services of the Czech Republic), consisting of the balance as of 31. 12. 2011, the profit and loss statement for the year ending 31. 12. 2011, the change in equity capital statement for the year ending 31. 12. 2011 and the cash-flow statement for the year ending 31. 12. 2011 and the enclosures to this financial statement, containing the description of the major accounting methods used and other explanatory information. For data on the state enterprise Air Navigation Services of the Czech Republic, see point 1 of the enclosure to this final statement.

Responsibility of the statutory authority of the accounting entity for the financial statement The Statutory Body of the Air Navigation Services of the Czech Republic is responsible for the preparation of the final statement, presenting The Supervisory Board of the company held a regular meeting on 23 March 2012 to discuss, in the meaning of Section13 of Act 77/1997 a true and fair picture in compliance with Czech accounting regulations, and for the internal inspection systems which the authority Coll. on Stateowned Enterprises, the annual financial statement of ANS CR for 2011. considers necessary for the preparation of the final statement in such a way that it does not contain any serious (material) incorrectness caused by fraud or error. The Supervisory Board, composed of Lukáš Hampl (Chairman), Jiří Nedoma, Petr Oršulík, Milan Vondra and Miroslav Jindra (Members) studied the submitted statement. The Supervisory Board also studied the auditor’s report and the assessment of the fulfilment of the Responsibility of the auditor economic performance indicators stipulated for the Director General through his managerial contract. The Supervisory Board, after studying Our responsibility is to express, on the basis of our audit, an opinion on this financial statement. We conducted the audit in compliance with the appropriate material, states that the 2011 planned economic performance indicators have been fulfilled, the company’s financial situ- the Act on Auditors, International Auditing Standards and related application clauses of the Chamber of Auditors of the Czech Republic. ation is stable and it has fulfilled all of its obligations. In compliance with these directives, we are obliged to conform to ethical requirements and to plan and carry out the audit in such a way as to have reasonable certainty that the final statement does not contain any serious (material) inaccuracies. The Supervisory Board also discussed the proposal for distributing the disposable profit and states that the submitted proposal is in The audit includes the implementation of the auditor´s procedures for the collection of the conclusive information on the sums and accordance with valid legal regulations. The Supervisory Board has charged the Director General with submitting the Annual Financial data published in the financial statement. The selection of the procedures depends on the opinion of the auditor, also covering the risk Statement to ANS CR’s founder and recommends its approval. assessment of serious (material) incorrectness of the data specified in the financial statement caused by fraud or error. While assessing such risks, the auditor will evaluate the internal control system relevant for the final statement preparation, providing a fair and true The Supervisory Board has also charged the Director General with submitting the proposal for distributing the disposable profit to ANS picture. The objective of such an evaluation is to propose appropriate auditor´s procedures, and not to express a standpoint as to the CR’s founder and recommends its approval. The representative of the founder and auditor have been informed of the conclusions of the efficiency of the internal control system of the accounting entity. Moreover, the audit also includes the evaluation of the appropriateness Supervisory Board. of the accounting methods used, the adequacy of the accounting estimations made by the management as well as the evaluation of the overall presentation of the final statement. We are sure that the validated information which we received provides an adequate and appropriate basis for the expression of our opinion.

Auditor´s statement In our view, the financial statement in all serious (material) respects presents an accurate and true picture of the assets and liabilities of the state enterprise Air Navigation Services of the Czech Republic to the date of December 31, 2011, and the costs and income and the result of its economic activity and the financial flows for the year ending on December 31, 2011, in compliance with Czech Accounting Standards.

Prague, 28th February, 2012 Lukáš Hampl Chairman of the Supervisory Board

HAYEK, spol. s r.o., holding Jan Řehák Licence No. 029 Certificate No. 1692

61 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 62 Balance Sheet According to Czech Accounting Standards (in thousands CZK) 2011 2010 2009 C.III.8. Estimated receivables 12 447 8 616 8 528 C.III.9. Other receivables 84 209 248 C.IV. Financial assets 893 548 556 312 308 082 C.IV.1. Cash in hand 2 969 1 494 1 614 (in thousands CZK) 2011 2010 2009 C.IV.2. Cash at bank 890 579 554 818 201 268 Total Assets 4 947 820 4 668 493 4 487 697 C.IV.3. Short-term investments 105 200 A. Receivables for the subscribed equity C.IV.4. Unfinished short-term investments B. Fixed assets 3 370 705 3 465 728 3 559 754 D.I. Accruals and deferrals 56 126 49 406 65 428 B.I. Intangible fixed assets 552 787 421 309 459 069 D.I.1. Accrued expenses 56 126 49 406 65 428 B.I.1. Establishment costs D.I.2. Complex accrued expenses B.I.2. Intangible results of research and development 191 1 063 D.I.3. Anticipated revenues B.I.3. Software 232 983 256 863 337 922 B.I.4. Royalties and other acknowledgement in law (in thousands CZK) 2011 2010 2009 B.I.5. Goodwill Total Labilities 4 947 820 4 668 493 4 487 697 B.I.6. Other intangible fixed assets 45 556 30 042 27 189 A. Equity 4 323 960 4 184 339 4 085 344 B.I.7. Unfinished intangible assets 274 248 127 096 92 139 A.I. Common stock 1 087 503 1 087 503 1 087 503 B.I.8. Advances paid for intangible assets 7 117 756 A.I.1. Common stock 1 082 822 1 082 822 1 082 822 B.II. Tangible fixed assets 2 812 758 3 044 419 3 100 685 A.I.2. Own shares and ownership interests B.II.1. Land 11 229 11 229 11 229 A.I.3. Changes of equity 4 681 4 681 4 681 B.II.2. Buildings and constructions 1 757 236 1 548 950 1 659 167 A.II. Capital contributions 33 828 33 540 33 540 B.II.3. Equipment 864 734 1 009 314 1 034 531 A.II.1. Share premium B.II.4. Cultivated areas of permanent growth 8 10 13 A.II.2. Other capital contributions 33 540 33 540 33 540 B.II.5. Livestock and draught animals A.II.3. Differences from assets and liabilities revaluation 288 B.II.6. Other tangible fixed assets 715 715 715 A.II.4. Differences from revaluation, which results from changes B.II.7. Tangible assets in the course of construction 140 587 417 917 332 189 A.II.5. Differences from the company conversions B.II.8. Advances paid for tangible fixed assets 38 249 56 284 62 841 A.III. Reserves 2 902 986 2 906 367 2 860 273 B.II.9. Adjustments to acquired fixed assets A.III.1. Legal reserve 222 392 216 565 216 565 B.III. Long-term investments 5 160 A.III.2. Statutory and other reserves 2 680 594 2 689 802 2 643 708 B.III.1. Investments into subsidiaries A.IV. Retained earnings 100 000 6 464 B.III.2. Investments into associated companies 5 160 A.IV.1. Retained profits 100 000 6 464 B.III.3. Other capital investments A.IV.2. Retained losses B.III.4. Intragroup loans A.V. Profit (loss) for the year 199 643 156 929 97 564 B.III.5. Other investments B. Liabilities 623 684 484 154 402 205 B.III.6. Unfinished long-term investments B.I. Provisions 247 346 130 802 B.III.7. Prepayments for long-term investments B.I.1. Tax-deductible provisions C. Current assets 1 520 989 1 153 359 862 515 B.I.2. Provisions for pensions and similar obligations C.I. Inventories 11 201 12 197 13 435 B.I.3. Income tax provisions 81 996 45 452 C.I.1. Raw materials 11 029 12 017 13 215 B.I.4. Other provisions 165 350 85 350 C.I.2. WIP and semi-finished products B.II. Long-term liabilities 90 430 91 341 132 187 C.I.3. Finished goods B.II.1. Trade liabilities C.I.4. Animals B.II.2. Long-term liabilities to subsidiaries C.I.5. Goods for resale 172 180 220 B.II.3. Long-term liabilities to associated companies C.I.6. Prepayments for stock B.II.4. Long-term liabilities to partners, association members C.II. Long-term receivables B.II.5. Long-term advances received C.II.1. Long-term trade receivables B.II.6. Debentures and bonds issued C.II.2. Long-term receivables from partners and consortia B.II.7. Long-term drafts payable C.II.3. Long-term receivables from subsidiaries B.II.8. Estimated liabilities C.II.4. Long-term receivables from associated companies B.II.9. Other long-term liabilities 42 006 C.II.5. Estimated receivables B.II.10. Deferred tax liability 90 430 91 341 90 181 C.II.6. Unbilled revenue B.III. Short-term liabilities 285 908 262 011 270 018 C.II.7. Other receivables B.III.1. Trade creditors 49 472 61 165 68 873 C.II.8. Deferred tax B.III.2. Short-term liabilities to subsidiaries C.III. Short-term receivables 616 240 584 850 540 998 B.III.3. Short-term liabilities to associated companies C.III.1. Trade receivables 527 452 526 088 479 148 B.III.4. Short-term liabilities to partners, association members C.III.2. Receivables from partners and consortia B.III.5. Liabilities to employees 125 808 121 011 114 802 C.III.3. Receivables from subsidiaries B.III.6. Liabilities to social security and health insurance 29 725 26 506 14 774 C.III.4. Receivables from associated companies B.III.7. State - tax liabilities and subsidies 26 374 24 483 21 660 C.III.5. Social security and health insurance B.III.8. Short-term advances received 13 540 240 C.III.6. State – tax receivables 60 727 47 755 48 608 B.III.9. Debentures and bonds issued C.III.7. Other prepayments 15 530 2 182 4 466 B.III.10 Estimated liabilities 34 618 5 467 7 167

63 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 64 (in thousands CZK) 2011 2010 2009 (in thousands CZK) 2011 2010 2009 B.III.11 Other labilities 6 371 23 139 42 742 XI. Other financial income 72 243 31 581 99 238 B.IV. Bank loans and overdrafts O. Other financial expense 58 428 73 855 127 217 B.IV.1. Long-term bank loans XII. Adjustments to financial income B.IV.2. Short-term bank loans P. Adjustments to financial expense B.IV.3. Short-term overdrafts * Results from financial transactions 41 114 20 577 77 C.I. Accruals and deferrals 176 148 Q. Tax on profit or loss from ordinary activities 81 013 46 249 26 036 C.I.1. Deferred expenses Q.1. Due 81 922 45 091 9 263 C.I.2. Deferred revenues 176 148 Q.2. Deferred -909 1 158 16 773 ** Profit or loss on ordinary activities after taxation 199 643 156 929 97 564 XIII. Extraordinary income R. Extraordinary expense Profit and Loss Account According S. Tax on extraordinary profit or loss S.1. Due to Czech Accounting Standards S.2. Deferred * Extraordinary profit or loss after taxation (in thousands CZK) 2011 2010 2009 T. Profit share apportioned to partners (+/-) I. Sales of purchased goods *** Net profit or loss from the financial period 199 643 156 929 97 564 A. Cost of goods sold **** Profit or loss for the financial period before tax 280 656 203 178 123 600 + Gross profit II. Sale of production 3 212 001 3 130 375 2 886 165 II.1. Sales of own products and services 3 212 001 3 130 375 2 886 165 II.2. Change in stocks of finished goods II.3. Own work capitalised Cash Flow Statement According B. Cost of sales 461 811 453 055 449 696 B.1. Raw materials and consumables 73 556 68 794 72 272 to Czech Accounting Standards B.2. Services 388 255 384 261 377 424 + Added value 2 750 190 2 677 320 2 436 469 (in thousands CZK) 2011 2010 2009 C. Staff costs 1 789 888 1 685 321 1 557 200 P. Cash at the beginning of the period 556 312 308 082 304 836 C.1. Wages and salaries 1 361 833 1 305 083 1 228 602 Z. Net profit/loss on ordinary activities before taxation 280 655 203 178 123 600 C.2. Emoluments of members of boards A.1. Adjustments for non-cash movements 594 713 637 330 646 327 C.3. Social security and health care costs 366 438 344 445 270 581 A.1.1 Depreciation and write-offs of receivables and adjustments to acquired F/As 521 392 554 565 625 185 C.4. Other social costs 61 617 35 793 58 017 A.1.2 Change in general provisions, accruals and prepayments 80 530 86 843 23 724 D. Taxes and charges 1 163 1 493 2 142 A.1.3 Profit/loss from disposal of fixed assets -333 -543 -7 817 E. Depreciation of fixed assets 521 392 554 564 625 184 A.1.4 Dividend and profit sharing income 0 0 0 III. Sales of fixed assets and materials 1 875 1 358 9 497 A.1.5 Net interest income/expense excl. capitalised interest -6 876 -3 535 5 235 III.1. Sales of fixed assets 968 561 8 458 A.* Net cash from operating activities before taxation, working capital 875 368 840 508 769 927 III.2. Sales of materials 907 797 1 039 changes and extraordinary items F. Net book value of F/As and raw materials sold 635 17 641 A.2. Working capital changes 9 116 -84 663 -88 637 F.1. Net book value of F/As sold 635 17 641 A.2.1 Change in receivables from operating activities -15 681 -35 267 -20 817 F.2. Raw materials sold A.2.2 Change in short-term payables from operating activities 23 838 -50 160 -68 296 G. Change in reserves and adjustments in operations 80 557 86 863 23 723 A.2.3 Change in inventories 959 764 476 and deferred complex costs A.** Net cash from operating activities before taxation and extraordinary items 884 484 755 845 681 290 IV. Other operating income 59 630 61 825 103 950 A.3. Interest paid excluding capitalised interest 0 -1 -8 937 H. Other operating expenses 178 518 229 644 217 503 A.4. Interest received 6 876 3 535 3 701 V. Transfer of operating income A.5. Income tax paid -68 066 6 779 35 356 I. Transfer of operating expenses A.6. Extraordinary income/revenue 0 0 0 * Operating result 239 542 182 601 123 523 A.7. Dividends and profit sharing received 0 0 0 VI. Income from sales of securities and shares A.*** Net cash from operating activities 823 294 766 158 711 410 J. Securities and shares sold B.1. Acquisition of fixed assets -426 716 -460 556 -503 325 VII. Income from long-term investments B.2. Proceeds from sale of fixed assets 968 561 8 458 VII.1. Income from shares in group undertakings B.3. Credits and loans to related parties 0 0 0 B.*** Net cash from investing activities -425 748 -459 995 -494 867 VII.2. Income from shares in other participating interests C.1. Change in long and short term liabilities 0 0 -134 650 VII.3. Income from other long-term investments C.2. Change in equity -60 310 -57 933 -78 647 VIII. Income from short-term investments C.3. Dividend and profit sharing income 0 0 0 K. Costs of financial assets C.*** Net cash flow from financing activities -60 310 -57 933 -213 297 IX. Revenue from revaluation of stocks and bonds 20 423 79 740 113 032 F. Net increase in cash 337 236 248 230 3 246 L. Costs from revaluation of stocks and bonds 20 423 79 740 R. Cash at the end of the period 893 548 556 312 308 082 M. Provisions written back to financial income X. Interest income 6 876 3 535 3 701 N. Interest expense 1 8 937

65 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 66 Summary of Changes of Equity According Appendix to the 2011 Annual Financial Statements to the Czech Accounting Standards of ANS CR Prepared as on 31 December 2011

(in thousands CZK) 2011 2010 2009 1. General Information on the Accounting Unit A. common stock recorded in the Commercial 1. Opening balance 1 082 822 1 082 822 1 082 822 register (account No. 441) 2. Increase 0 0 0 Name of the accounting unit: air Navigation Services of the Czech Republic, state company 3. Reduction 0 0 0 Abbreviated name: ans CR 4. Closing balance 1 082 822 1 082 822 1 082 822 Seat: navigační 787, 252 61 Jeneč B. unrecorded common stock (account No. 419) 1. Opening balance 4 681 4 681 4 681 Company registration No (IČ): 49710371 2. Increase 0 0 0 Legal form: state enterprise 3. Reduction 0 0 0 4. Closing balance 4 681 4 681 4 681 Main business activity: C. a.+/-B. with consideration of account No. 252 1. Opening balance A.+/-B. 1 087 503 1 087 503 1 087 503 Providing air navigation services including aerodrome services in the airspace of the Czech Republic and at airports of Praha – Ruzyně, 2. Change in registered capital 0 0 0 Brno-Tuřany, Ostrava – Mošnov and Karlovy Vary. 3. Opening balance of account No. 252 0 0 0 4. Closing balance of account No. 252 0 0 0 5. Closing balance A.+/-B. 1 087 503 1 087 503 1 087 503 Date of establishment: D. legal Reserves 1. Opening balance 0 0 0 ANS CR was established by the decision of the Minister of Transport on 28 December 1994, Ref. No. 4283/94-KM on 1 January 1995. 2. Increase 0 0 0 By this decision, all the assets, which were administered by the state-allowance organization called Air Navigation Services of the Czech 3. Reduction 0 0 0 Republic until 31 December 1994, were transferred to the state enterprise including all rights and obligations. The state enterprise is 4. Closing balance 0 0 0 registered in the Companies Register administered by the Municipal Court in Prague, section A, entry No. 10771. E. share premium 1. Opening balance 216 565 216 565 216 565 2. Increase 5 827 0 0 Description of the organization structure of the company and the changes thereof during the previous accounting period: 3. Reduction 0 0 0 The head of the company is the Director General, who is the statutory body. The Director General has two supporting units that report 216 565 4. Closing balance 222 392 216 565 to him directly. The company is organizationally divided into specialized divisions managed by division directors; the operating division is F. other reserves 1. Opening balance 2 689 802 2 643 708 2 628 608 divided into specialized sections managed by deputy directors. The company is further divided into centers managed by managers. Total 2. Increase 58 696 151 392 162 805 number of the above mentioned specialized units as of 31 December 2011 was 18. 3. Reduction 67 905 105 298 147 705 4. Closing balance 2 680 594 2 689 802 2 643 708 First and last names of the members of statutory bodies and supervisory bodies of the company as at 31 December 2011: G. capital contributions 1. Opening balance 33 540 33 540 33 540 2. Increase 0 0 0 3. Reduction 0 0 0 Statutory body: Jan Klas (Director General of ANS CR), Jan Štindl (Deputy Director General) 4. Closing balance 33 540 33 540 33 540 Supervisory Board: lukáš Hampl (Chairman of Supervisory Board), Jiří Nedoma (Deputy Chairman of Supervisory Board), H. differences from revaluation 1. Opening balance 0 0 0 petr Oršulík, Jakub Hodinář, Miroslav Jindra, Milan Vondra (Members of Supervisory Board) not included in earnings 2. Increase 288 0 0 3. Reduction 0 0 0 Employees 2011 2010 2009 4. Closing balance 288 0 0 Average headcount in the accounting period, converted 895,08 880,06 882,16 I. Retained profits (account No. 428 + balance 1. Opening balance 0 6 464 11 225 Of which managerial positions 18,83 18 17,92 on credit side of account No. 431) 2. Increase 100 000 2 992 207 3. Reduction 0 9 456 4 968 Personnel Costs (in thousand CZK): 2011 2010 2009 4. Closing balance 100 000 0 6 464 Personnel costs of the company’s employees 1 789 888 1 685 321 1 557 188 J. retained losses (account No. 429 + balance 1. Opening balance 0 0 0 Of which managers 75 905 66 264 69 453 on debit side of account No. 431) 2. Increase 0 0 0 Members of the statutory and supervisory bodies received no other remunerations. 3. Reduction 0 0 0 4. Closing balance 0 0 0 K. Profit/loss for accounting period after taxation 199 643 156 929 97 564 Other Payments: Managers were provided with company cars also for private use, which increased the basis for assessment of the personal income tax of these persons pursuant to Act No. 586/1992 Coll., as amended, by the amount of:

(in thousands CZK) 2011 2010 2009 2 873 2 405 2 219

In accordance with the collective bargain agreement, the managers received capital insurance, which increased the basis for assessment of the personal income tax of these persons pursuant to Act No. 586/1992 Coll., and also a contribution to the supplemental pension insurance and life insurance. The amount of contributions was:

(in thousands CZK) 2011 2010 2009 2 982 1 430 2 902

67 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 68 Other non-monetary benefits to managers: 3. Suplementary Information to the Balance Sheet and the Profit and Loss Account

(in thousands CZK) 2011 2010 2009 Long-Term Intangible Assets: 1 432 1 318 1 609

2011 (in thousands CZK) Software Other Total long-term 2. Accounting Methods and Standards Used intangible assets Accounting was prepared with the help of computer technology pursuant to the Accounting Act No. 563/1991 Coll., Decree No. 500/2002 Acquisition value Coll., implementing some provisions of the Accounting Act No. 563/1991 Coll., as amended, for accounting units, which are businesses Balance as of 1 Jan. 2011 1 327 273 94 786 1 422 059 Increases using the double-entry accounting system. The EUS software used was developed by UK-based Ifield Computer Consultancy. 138 666 24 445 163 111 Decreases 14 679 0 14 679 Balance as of 31 Dec. 2011 1 451 260 119 231 1 570 491 Company accounts are maintained in the national currency – Czech Koruna (CZK). During 2011 the daily exchange rate announced by the Czech National Bank was exclusively used. Accumulated depreciation Balance as of 1 Jan. 2011 1 070 410 1 070 410 1 134 963 General accounting principles used by the accounting unit: Depreciations 2011 162 545 162 545 171 668 1. Inventories were posted using the A method Decreases 14 679 14 679 14 679 2. Depreciations of tangible and intangible assets were posted on monthly basis Balance as of 31 Dec. 2011 1 218 276 1 218 276 1 291 952 3. Costs and revenues were posted on accrual basis as of 31 December 2011, according to Guideline D300 of the Ministry of Finance of the Czech Republic and according to the Guideline GFŘ-D6 Net book value as of 1 Jan. 2011 256 863 30 233 287 096 4. Statutory reserves were not created Net book value as of 31 Dec. 2011 232 984 45 555 278 539

2010 (in thousands CZK) Software Other Total Valuation method: long-term 1. Inventories are valued at the purchase price, which includes the costs related to the acquisition (transport, insurance, customs and duties). intangible assets Supplies on stock are valued at weighted average Acquisition value 2. Low-value tangible assets and low-value intangible assets were valued exclusively at their purchase prices, i.e.,including the acquisition- Balance as of 1 Jan. 2010 1 199 490 83 249 1 282 739 related cost. Increases 128 394 11 537 139 931 3. Long-time financial assets were valued exclusively at their purchase prices Decreases 611 0 611 4. No livestock additions were accounted for. Balance as of 31 Dec. 2010 1 327 273 94 786 1 422 059 Replacement purchase prices were not used in 2011.

Accumulated depreciation The company has been using the same depreciation methods and procedures and accounting procedures since 1995, so the financial Balance as of 1 Jan. 2010 861 568 54 996 916 564 results were not affected in this respect. Provisions for receivables were created in 2011 pursuant to the Reserves Act No. 593/92 Coll., as Depreciations 2010 209 453 9 557 219 010 amended. Decreases 611 0 611 Balance as of 31 Dec. 2010 1 070 410 64 553 1 134 963 Compilation of the depreciation plans is based on the following categorization: 1. Tangible fixed assets category Net book value as of 1 Jan. 2010 337 922 28 253 366 175 - Low-value tangible assets with purchase price exceeding CZK 40,000 Net book value as of 31 Dec. 2010 256 863 30 233 287 096 - Low-value long-term tangible assets - computers + furniture with purchase price over CZK 3,000 and not more than CZK 40,000 Low-value long-term tangible assets - other (purchase price over CZK 3,000 and not more than CZK 40,000) are recorded in account 2009 (in thousands CZK) Software Other Total - long-term 501, recorded in off-balance sheet account 796 intangible assets - Low-value tangible assets with (purchase price over CZK 1,000 and not more than CZK 3,000) are recorded in account 501; the individual Acquisition value centers keep operational records of these assets Balance as of 1 Jan. 2009 1 018 045 66 288 1 084 333 Increases 195 244 16 961 212 205 2. Intangible fixed assets category Decreases 13 799 0 13 799 - Low-value intangible assets with purchase price exceeding CZK 60,000 Balance as of 31 Dec. 2009 1 199 490 83 249 1 282 739 - Low-value long-term tangible assets with purchase price up to CZK 60,000 are recorded in account 518

Accumulated depreciation All depreciations were made on monthly basis. Depreciations were taken equally, taking into account the economic life of individual Balance as of 1 Jan. 2009 624 190 44 381 668 571 items, in keeping with EUROCONTROL document No. 10.60.01 - Principles for Establishing the Cost-Base for Route Facility Charges Depreciations 2009 251 177 10 615 261 792 and the Calculation of the Unit Rates. Decreases 13 799 0 13 799 Balance as of 31 Dec. 2009 861 568 54 996 916 564

Net book value as of 1 Jan. 2009 337 922 28 253 415 762 Net book value as of 31 Dec. 2009 256 863 30 233 366 175

69 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 70 Long-Term Tangible and Intangible Assets: Liquidated Long-Term Tangible and Intangible Assets by Depreciation Groups:

2011 (in thousands CZK) Land Machinery Vehicle Inventory Other Total (in thousands CZK) 2011 2010 2009 and buildings and long-term equipment tangible Purchase Accumulated Purchase Accumulated Purchase Accumulated assets Price depreciation Price depreciation Price depreciation Acquisition value Depreciation group 1 79 064 0 62 529 0 217 828 0 Balance as of 1 Jan. 2011 2 183 913 2 913 229 58 053 194 485 149 225 5 498 905 N2 Software 1 143 0 0 0 0 0 Increases 292 013 119 430 489 1 211 8 464 421 607 Depreciation group 2 16 347 387 8 069 0 7 222 0 Decreases 804 77 493 3 687 8 327 7 146 97 457 Depreciation group 3 444 0 310 4 4 058 855 Balance as of 31 Dec. 2011 2 475 122 2 955 166 54 855 187 369 150 543 5 823 055 Depreciation group 4 215 0 0 0 0 0 Depreciation group 5 589 73 69 17 1 417 273 Accumulated depreciation Group 0 (land) 0 0 0 0 368 368 Balance as of 1 Jan. 2011 623 735 2 029 950 48 972 116 893 109 138 2 928 688 Depreciations 2011 83 549 226 125 2 826 23 049 14 174 349 723 Long-term Financial Assets: Excluded assets 2011 73 0 387 0 0 460 Changes in assets 701 72 713 3 502 5 869 6 953 89 738 2011 Deposit Value in thousand Euro Deposit Value in thousand CZK Balance as of 31 Dec. 2011 706 656 2 183 362 48 683 134 073 116 359 3 189 133 Shares in accounting units 200 5 160

Net book value as of 1 Jan. 2011 1 560 178 883 279 9 081 77 592 40 087 2 570 217 Considering liberalisation of the market in the area of air navigation services ANS CR has set itself as one of its strategies to continue in Net book value as of 31 Dec. 2011 1 768 466 771 804 6 172 53 296 34 184 2 633 922 the expansion of commercial acitivities, especially in the area of ATM consulation services and providing air navigation services abroad. Within this strategy ANS CR gained a 20% share (200 thous. EUR) in a Spanish company of Servicios Aeronauticos Control y Navegacion

2010 (in thousands CZK) Land Machinery Vehicle Inventory Other Total S.L. (SAERCO) in March 2011, which provides air navigation services to local airports. and buildings and long-term equipment tangible assets Financial investment into SAERCO is fully secured by a bank guarantee provided for ANS CR by a bank of La Caja de Ahorros y Pensiones Acquisition value de Barcelona - „la Caixa“. Balance as of 1 Jan. 2010 2 270 872 2 692 219 58 935 205 056 145 811 5 372 893 Increases 11 826 178 678 2 204 186 7 224 200 118 Further financial benefit besides providing ANS will be training of ATCOs and consultation services provided by CANI (Czech Air Navigation Decreases 98 785 -42 332 3 086 10 757 3 810 74 106 Institute) for SAERCO. During 2011 SEARCO won a contract for providing ANS in three Spanish airports, which gives a real assumption Balance as of 31 Dec. 2010 2 183 913 2 913 229 58 053 194 485 149 225 5 498 905 that the value of this investment will rise in the future.

Accumulated depreciation Specified Assets: Balance as of 1 Jan. 2010 600 476 1 824 326 47 775 96 305 98 357 2 667 239 Pursuant to the state enterprise act No. 77/1997 Coll., a special group of assets is recorded in the accounting books – specified assets. Depreciations 2010 87 371 204 184 4 283 25 121 14 591 335 550 These assets are indispensable for the accounting unit in terms of performance of the activities, for which the accounting unit (company) Excluded assets 2010 1 0 0 3 0 4 was established. These assets are registered in the companies register. The company may use and dispose of the specified assets only with Changes in assets 64 113 -1 440 3 086 4 536 3 810 74 105 the founder’s consent. The following specified assets are recorded in the company’s books as of 31 December 2012: Balance as of 31 Dec. 2010 623 735 2 029 950 48 972 116 893 109 138 2 928 688

Assets name Inventory No. Acquisition value (CZK thousands) Net book value as of 1 Jan. 2010 1 670 396 867 893 11 160 108 751 47 454 2 705 654 Building IATCC Prague 2016743 882 960 Net book value as of 31 Dec. 2010 1 560 178 883 279 9 081 77 592 40 087 2 570 217 Operations building of the technical unit of Prague airport 51062 485 767 Operations building with control tower Brno Tuřany 52012 86 319 2009 (in thousands CZK) Land Machinery Vehicle Inventory Other Total and buildings and long-term Secondary radar RSM970 at the Prague airport 2011917 75 783 equipment tangible Secondary radar RSM970 at Buchtův kopec 2012804 66 474 assets Primary radar TA 10 MTD at the Prague airport 2012317 66 180 Acquisition value Operations building at the site Praha Jih 51150 58 543 Balance as of 1 Jan. 2009 2 227 037 2 762 247 60 903 191 231 138 794 5 380 212 Secondary radar RSM970S at Písek 2016499 51 402 Increases 45 621 141 888 3 523 14 222 13 833 219 087 Operations building with control tower Karlovy Vary 54004 42 001 Decreases 1 786 211 916 5 491 397 6 816 226 406 Primary radar RL-64 at the Brno Tuřany airport 2011822 37 483 Balance as of 31 Dec. 2009 2 270 872 2 692 219 58 935 205 056 145 811 5 372 893 Operations building at the site Buchtův kopec 52011 28 287 Real estate underneath the building of technical block LKPR 2563 1 349 Accumulated depreciation Real estate underneath the operating building TWR LKTB 3882 261 Balance as of 1 Jan. 2009 513 572 1 805 096 48 386 71 879 90 607 2 529 540 Real estate underneath the operating building TWR LKKV 2258 122 Depreciations 2009 88 049 230 376 4 879 24 737 14 496 362 537 Real estate underneath the building IATCC Praha 569 45 Excluded assets 2009 273 770 0 86 0 1 129 Real estate underneath the operating building Praha Jih 34890 2 Changes in assets 1 418 211 916 5 490 397 6 746 225 967 Real estate underneath the operating building Buchtův kopec 130 2 Balance as of 31 Dec. 2009 600 476 1 824 326 47 775 96 305 98 357 2 667 239

Net book value as of 1 Jan. 2009 1 713 465 957 151 12 517 119 352 48 187 2 850 672 Net book value as of 31 Dec. 2009 1 670 396 867 893 11 160 108 751 47 454 2 705 654

71 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 72 Sumary of Receivables After Maturity Date (exclusive of receivables in bankruptcy proceedings): Based on the founder-approved 2010 annual financial statements, the profit after tax for the year 2010 in the amount of CZK 156,929,000 was distributed as follows. Allocation to the reserve fund was 5,827 thousand CZK, although the company fullfilled the amount given by the (in thousands CZK) 2011 2010 2009 law in recent years. Amount allocated to the cultural and social needs fund was CZK 46,102,000 (basic and supplementary contribution). Receivables due from 31.12.2004 to 30.12. 2006 0 0 4 451 The funds of other social expenses were allocated by 5,000 thousand CZK. There was no allocation to the fund for development and Receivables due from 31.12.2005 to 30.12. 2007 0 2 968 3 301 rewards in 2010. The remaining part of the usable gain of 100 mil. CZK in 2010 was accounted to the account of retained earnings of Receivables due from 31.12.2006 to 30.12. 2008 11 001 10 956 11 570 the recent years. Receivables due from 31.12.2008 to 30.12. 2009 17 834 19 315 xxx Receivables due from 31.12.2009 to 30.12. 2010 4 477 xxx xxx In 2011 an accounting item was created to cover decreased cost bases for flight navigation services in 2013 in the total amount of 80,000 thousand CZK. This accounting item was entered into accounts as follows – MD 554/D 459. Creation and cancellation of accounting items Created adjusting entries: of this type in accordance with the document of the EUROCONTROL agency no. 10.60.01 – Principles for Establishing the Cost-Base for Tax-Deductible Provisions [created pursuant to the Reserves Act No. 593/92 Coll., Section 8 and Section 8, paragraph a)]: Route Facility Charges and the Calculation of the Unit Rates.

(in thousands CZK) 2011 2010 2009 A reserve for the income tax was created in the amount of 81,996 thousand CZK corresponding to the calculated income tax for the year (bankruptcy proceedings) 5 652 5 626 17 913 of 2011. After the correction in the amount of -74 thousand CZK for 2010 has been included the income tax levy for 2011 corresponds 20 % of 2006 0 0 890 to the amount of 81,922 thousand CZK. 20 % of 2007 0 594 660 20 % of 2008 2 200 2 191 2 314 Deferred tax income – is recorded in the company’s accounting as a deferred tax obligation. The amount of the deferred tax current to 20 % for the 1st half of 2009 0 0 1 125 the date of 31st December 2010 was 91,341 thousand CZK, the amount of the deferred tax current to 31st December 2011 was 90,430 20 % of 2009 3 567 3 863 xxx thousand CZK. The balance is composed of the calculation of deferred tax arising on the basis of calculating the difference between 20 % for the 1st half of 2010 0 371 xxx 20 % of 2010 896 xxx xxx accounting and tax book value of the fixed tangible and intangible assets and of the sum of an accounting item created for future correction 20 % for the 1st half of 2011 926 xxx xxx of cost bases.

Tax-Deductible Provisions [created pursuant to the Reserves Act No. 593/92 Coll., Section 8, paragraph c)]: In 2011 ANS CR received compensation from the state budget to cover the costs the company incurred in relation to the provision of services for flights exempted from payment in the total amount of 50,350 thousand CZK. This compensation is granted to the providers (in thousands CZK) 2011 2010 2009 of flight navigation services in accordance with the Regulation of the European Commission no. 1794/2006 dated 6th December 2006, 100% of 2006 0 0 0 which establishes a common system of fees for flight navigation services, and on the basis of the Resolution of the Government of the 100% of 2007 0 0 13 CR no. 1404 dated 2nd November 2005. 100% of 2008 24 22 328 100% of 2009 79 462 xxx Subsequent events – by the day the statement of balances for 2011 was composed no events had happened that would have had any 100% of 2010 248 xxx xxx significant impact on the activity and economy of the accounting unit. Non-Deductible Provisions: Revenues from the sale of goods, products and services according to the main business activity of the company divided into Czech (in thousands CZK) 2011 2010 2009 Republic and foreign countries (in thousand CZK). from 2006 0 0 3 561

from 2007 0 2 374 2 641 Income from Czech Income from foreign Total income from 2008 8 801 8 765 9 256 customers customers from 2009 14 267 15 452 xxx 2011 2010 2009 2011 2010 2009 2011 2010 2009 from 2010 3 581 xxx xxx Total income 480 384 499 335 525 434 2 731 617 2 631 040 2 360 731 3 212 001 3 130 375 2 886 165 Income from traffic 444 543 477 579 498 061 2 692 401 2 611 016 2 332 749 3 136 944 3 088 595 2 830 810 In 2011 no long-term tangible assets in the form of financial leases were acquired. No long-term tangible assets are burdened with En-route charges 148 690 160 550 162 792 2 414 931 2 367 801 2 082 616 2 563 621 2 528 351 2 245 408 a right of lien or servitude. Terminal charges 294 680 316 394 334 426 276 092 242 529 249 395 570 772 558 923 583 821 Training flights 1 173 635 843 1 378 686 738 2 551 1 321 1 581 Changes to the company’s equity capital in 2011 occurred only as a result of generating the profit/loss for the current year and distribution Other income 35 841 21 756 27 373 39 216 20 024 27 982 75 057 41 780 55 355 of profits for the previous year.

No payables after maturity date were recorded on 31 December 2011. No obligations are covered with the right of lien. The company records no payable other than those in the accounting books.

In the course of 2011 the company’s economy was free of any credit burden.

Provided bank guarantees – as of the day of the annual final accounts ANS CR provided the following bank guarantees: Global customs guarantee of 10 million CZK for the Customs Office Ruzyně – the Pague Airport. Bank guarantee of 95 thousand EUR for ANTA Albania – validity till 30 April 2012 Bank guarantee of 20 thousand EUR for Prishtina Int. Airport, Kosovo – validity till 31 January 2012 Bank guarantee of 5 thousand EUR for Prishtina Int. Airport, Kosovo – validity till 31 March 2012 Bank guarantees were provided to the foreign customers involved in the realization of the training courses of CANI.

73 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 74

Auditor´s Report - IFRS Balance Sheet According to International Financial Reporting Standards

Independent auditor’s report on verification of the financial statements of the company Air Navigation Services of the Czech (in thousands CZK) 2011 2010 2009 Republic as of 31 December 2011. Fixed assets 3.2 Tangible fixed assets in use 2 633 922 2 570 218 2 705 655 The audit of the accompanying financial statements of the state enterprise Air Navigation Services of the Czech Republic identification Unfinished tangible fixed assets 178 836 474 201 395 030 number 497 10 371, was carried out by the company HAYEK, spol. s r.o., holding, address Jindřišská 5/901, Praha 1, license number 29. + advances paid for tangible fixed assets Auditor responsible for submitting the report is Jan Řehák, certificate number of the auditor 1692. Total tangible fixed assets 2 812 758 3 044 419 3 100 685 3.1 Intangible fixed assets in use 278 539 287 096 366 174 We have audited the enclosed financial statement of the state enterprise Air Navigation Services of the Czech Republic), consisting of the Unfinished intangible fixed assets 274 248 134 213 92 895 balance as of 31. 12. 2011, the profit and loss statement for the year ending 31. 12. 2011, the change in equity capital statement for the + advances paid for intangible fixed assets year ending 31. 12. 2011 and the cash-flow statement for the year ending 31. 12. 2011 and the enclosures to this financial statement, Total intangible fixed assets 552 787 421 309 459 069 containing the description of the major accounting methods used and other explanatory information. For data on the state enterprise Air 3.4 Long-term financial assets 5 160 Navigation Services of the Czech Republic, see point 1 of the enclosure to this final statement. Total fixed assets 3 370 705 3 465 728 3 559 754 Current assets Responsibility of the statutory authority of the accounting entity for the financial statement 4. Inventories 11 201 12 197 13 435 The Statutory Body of Air Navigation Services of the Czech Republic is responsible for the preparation of the final statement, presenting 5. Short-term receivables 616 240 584 850 540 998 a true and fair picture in compliance with International Financial Reporting Standards and for the internal inspection systems which the 6. Cash in hand and its equivalents 893 548 556 312 308 082 authority considers necessary for the preparation of the final statement in such a way that it does not contain any serious (material) Total current assets 1 520 989 1 153 359 862 515 incorrectness caused by fraud or error. Accruals and deferrals 56 126 49 406 65 428 Total assets 4 947 820 4 668 493 4 487 697 Responsibility of the auditor Equity Our responsibility is to express, on the basis of our audit, an opinion on this financial statement. We conducted the audit in compliance with 7. Registered capital 1 087 503 1 087 503 1 087 503 the act on auditors, international auditing standards and related application clauses of the Chamber of Auditors of the Czech Republic. In 7. Legal reserve fund 222 392 216 565 216 565 compliance with these directives, we are obliged to conform to ethical requirements and to plan and carry out the audit in such a way as 7. Other company funds 2 679 428 2 679 140 2 647 787 to have reasonable certainty that the final statement does not contain any serious (material) inaccuracies. 7. Retained earnings from previous years 100 000 6 464 7. Profit (loss) of current accounting period 199 643 156 929 97 564 The audit includes the implementation of the auditor´s procedures for the collection of the conclusive information on the sums and Total equity 4 288 966 4 140 137 4 055 883 data published in the financial statement. The selection of the procedures depends on the opinion of the auditor, also covering the risk Long-term liabilities assessment of serious (material) incorrectness of the data specified in the financial statement caused by fraud or error. While assessing such 8. Provisions 247 346 130 802 risks, the auditor will evaluate the internal control system relevant for the final statement preparation, providing a fair and true picture. The 9. Deferred tax liability 90 430 91 341 90 181 objective of such an evaluation is to propose appropriate auditor´s procedures, and not to express a standpoint as to the efficiency of the Other liabilities 42 006 internal control system of the accounting entity. Moreover, the audit also includes the evaluation of the appropriateness of the accounting 10. Accepted bank loans methods used, the adequacy of the accounting estimations made by the management as well as the evaluation of the overall presentation Total long-term liabilities 337 776 222 143 132 187 of the final statement. We are sure that the validated information which we received provides an adequate and appropriate basis for the 11. Short-term liabilities 320 902 306 213 299 479 expression of our opinion. Accruals and deferrals 176 148 Total equity and liabilities 4 947 820 4 668 493 4 487 697 Auditor´s statement In our view, the financial statement in all serious (material) respects presents an accurate and true picture of the assets and liabilities of the state enterprise Air Navigation Services of the Czech Republic to the date of December 31, 2011, and the costs and income and the result of its economic activity and the financial flows for the year ending on December 31, 2011, in compliance with International Financial Profit and Loss Account to International Reporting Standards. Financial Reporting Standards Prague, 28th Fubruary, 2012 (in thousands CZK) 2011 2010 2009 13.1 Sale of production 3 212 001 3 130 375 2 886 165 12.1 Cost of sales 461 811 453 055 449 696 Added value 2 750 190 2 677 320 2 436 469 12.2 Staff costs 1 789 888 1 685 321 1 557 200 3.3 Depreciation of fixed assets 521 932 554 564 625 184 13.1 Other operating income 61 505 63 183 113 447 12.3 Other operating expenses 260 873 318 017 244 009 Operating results 239 542 182 601 123 523 13.2 Financial income 99 542 114 856 215 971 HAYEK, spol. s r.o., holding Jan Řehák 12.4 Financial expense 58 428 94 279 215 894 Licence No. 029 Certificate No. 1692 Results from financial transactions 41 114 20 577 77 Profit and loss for the financial period before taxation 280 656 203 178 123 600 9. Income tax 81 013 46 249 26 036 7. Net profit after taxation 199 643 156 929 97 564

77 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 78 Cash Flow Statements According to International Summary of Changes of Equity According Financial Reporting Standards to International Financial Reporting Standards

(in thousands CZK) 2011 2010 2009 (in thousands CZK) 2011 2010 2009 P. Cash at the beginning of the period 556 312 308 082 304 836 Common stock 1. Opening balance 1 087 503 1 087 503 1 087 503 Z. Net profit/loss on ordinary activities before taxation 280 655 203 178 123 600 2. Increase 0 0 0 A.1. Adjustments for non-cash movements 594 713 637 330 646 327 3. Reduction 0 0 0 A.1.1 Depreciation and write-offs of receivables and adjustments to acquired F/As 521 392 554 565 625 185 4. Closing balance 1 087 503 1 087 503 1 087 503 A.1.2 Change in general provisions, accruals and prepayments 80 530 86 843 23 724 Legal reserves 1. Opening balance 216 565 216 565 216 565 A.1.3 Profit/loss from disposal of fixed assets -333 -543 -7 817 2. Increase 5 827 0 0 A.1.4 Dividend and profit sharing income 0 0 0 3. Reduction 0 0 0 A.1.5 Net interest income/expense excl. capitalised interest -6 876 -3 535 5 235 4. Closing balance 222 392 216 565 216 565 A.* Net cash from operating activities before taxation, working 875 368 840 508 769 927 Other reserves 1. Opening balance 2 679 140 2 647 787 2 625 433 capital changes and extraordinary items 2. Increase 288 75 785 116 491 A.2. Working capital changes -51 194 -84 663 -88 637 3. Reduction 0 44 432 94 137 A.2.1 Change in receivables from operating activities -15 681 -35 267 -20 817 4. Closing balance 2 679 428 2 679 140 2 647 787 A.2.2 Change in short-term payables from operating activities -36 472 -50 160 -68 296 Retained profits 1. Opening balance 0 6 464 11 225 A.2.3 Change in inventories 959 764 476 2. Increase 100 000 2 992 207 A.** Net cash from operating activities before taxation and extraordinary items 824 174 755 845 681 290 3. Reduction 0 9 546 4 968 A.3. Interest paid excluding capitalised interest 0 -1 -8 937 4. Closing balance 100 000 0 6 464 A.4. Interest received 6 876 3 535 3 701 Profit/loss for accounting period after taxation 199 643 156 929 97 564 A.5. Income tax paid -68 066 6 779 35 356 Total equity 4 288 966 4 140 137 4 055 883 A.6. Extraordinary income/revenue 0 0 0 A.7. Dividends and profit sharing received 0 0 0 A.*** Net cash from operating activities 762 984 766 158 711 410 B.1. Acquisition of fixed assets -426 716 -460 556 -503 325 B.2. Proceeds from sale of fixed assets 968 561 8 458 B.3. Credits and loans to related parties 0 0 0 B.*** Net cash from investing activities -425 748 -459 995 -494 867 C.1. Change in long and short term liabilities 0 0 -134 650 C.2. Change in equity 0 -57 933 -78 647 C.3. Dividend and profit sharing income 0 0 0 C.*** Net cash flow from financing activities 0 -57 933 -213 297 F. Net increase in cash 337 236 248 230 3 246 R. Cash at the end of the period 893 548 556 312 308 082

79 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 80 Apendix to the Annual Report Financial Statements Year 2011 The estimated period of life of the individual groups of long-term intangible property is as follows:

Compiled on 31 December According to the IFRS Audiovisual work 5 years Software 4 – 10 years Intangible results of research and development 3 years 1. General Information Formation expenses 5 years Other assets (e.g., projects and studies, valuable rights, trademarks) 7 years Air Navigation Services of the Czech Republic is a state-owned company established pursuant to Act No. 77/1997 Coll. having its registered office at Navigační 787, 252 61 Jeneč. Air Navigation Services of the Czech Republic, state company (hereinafter referred to as ANS CR) was Long-term financial assets were valued at costs. established by the decision of the Minister of Transport on 28 December 1994, Ref. No. 4283/94-KM on 1 January 1995. By this decision, all the assets, which were administered by the state-allowance organization called Air Navigation Services of the Czech Republic until 31 Inventories – are valued at the purchase price, which includes the costs related to the acquisition (transport, insurance, customs and December 1994, were transferred to the state enterprise including all rights and obligations. The state enterprise is registered in the Com- duties). Supplies on stock are valued at weighted average. panies Register administered by the Municipal Court in Prague, section A, entry No. 10771. Trade receivables – are recorded at nominal value. Adjustments to receivables are created in compliance with the Reserves Act No. ANS CR provides air navigation services including aerodrome services in the airspace of the Czech Republic and at airports of Prague– 593/1992 Coll. Ruzyně, Brno–Tuřany, Ostrava–Mošnov and Karlovy Vary. Cash and cash equivalents – cash and cash equivalents consist of cash, bank deposits collected and other high-liquidity investments. First and last names of the members of statutory bodies and supervisory bodies of the company as at 31 December 2011: Registered capital, statutory reserve fund and other funds of the company – The registered capital of ANS CR consists of the Statutory body: Jan Klas (Director General of ANS CR), Jan Štindl (Deputy Director General) assets invested in the company by its founder as of the date of its establishment. The statutory reserve fund of the company is made up of Supervisory Board: lukáš Hampl (Chairman of Supervisory Board), Jiří Nedoma (Deputy Chairman of Supervisory Board), allocations from its disposable profit. Pursuant to Act No. 77/1997 Coll., the company also creates a development fund, also made up of petr Oršulík, Jakub Hodinář, Miroslav Jindra, Milan Vondra (Members of Supervisory Board) allocations from the disposable profit.

2. Overview of Basic Accounting Standards and Procedures Bank loans received – received bank loans are recorded at nominal value. The interest on the loans is posted in financial costs.

Short-term trade payables – trade payables are recorded at nominal value. Principles used in the preparation of the financial statements The ANS CR Financial Statement for the year ended 31 December 2011 was prepared in accordance with the International Financial Reserves – are created if there is, as a result of past events, a statutory or contractual obligation and at the same time the company is likely Reporting Standards (hereinafter referred to as “IFRS”) and pursuant to the requirements of the International Accounting Standards Board to need financial resources to settle such obligation. (IASB). The Financial Statement was produced under the historical price convention. The basic rules and procedures are specified herein below. The Financial Statement was prepared on the presumption of the uninterrupted existence of the accounting unit. Figures provided Income tax – Income tax consists of tax due and tax deferred. The due tax consists of tax calculated from the basis for assessment using the in this Financial Statement are expressed in Czech Crowns (CZK) and the balances are rounded to the nearest thousand. tax rate applicable in the current year and all additional tax assessments and refunds from the previous periods. Deferred tax is calculated using the liability method. Summary of significant accounting principles Long-term tangible assets - are valued at acquisition price reduced by accumulated depreciations. Depreciations are calculated based on Reporting by segments – ANS CR is authorized to provide air navigation services in airspace and at four airports specified herein above. the acquisition value using the straight-line method according to the Income Tax Act No. 586/1992 Coll., with the exception of categories The company considers air navigation services to be one segment of its activities. Other additional activities carried out by the company are of assets specified below whose expected lifetime period is determined in the document of the European Organization for the Safety of Air auxiliary activities, closely related to the provision of air navigation services. Navigation (hereinafter referred to as EUROCONTROL) No. 10.60.01 – Principles for Establishing the Cost-Base for Route Facility Charges and the Calculation of the Unit Rates. Currency conversions – assets and liabilities denominated in a foreign currency are converted into the Czech currency at the time of the transaction using the daily exchange rate of the Czech National Bank (CNB) and valued at the end of the balance sheet day using the valid The Estimated Life Cycles for the Defined Assets Groups are as Follows: exchange rate as of 31 December published by the Czech National Bank (CNB). Exchange rate gains and losses arising from the settlement of these transactions and from the valuation cash assets and liabilities in foreign currencies as of the balance date are reported in the profit Land Not depreciated and loss account. Buildings 30 – 50 years Furniture 10 years Costs and revenues – are recorded on accrual basis, i.e. in the period they relate to both in material and time terms. Air traffic service Passenger vehicles 5 years provision costs comprise costs of everyday operation of air navigation sites, costs of operation and maintenance of surveillance infrastructure, Electronic and communication equipment 7 years costs of operation and maintenance of telecommunication equipment, aeronautical information service provision costs, costs of training Energy consumption and other equipment 7 years and further education of employees, air meteorological service costs, administrative costs, and EUROCONTROL membership fee. Computers and accessories 4 years Revenues from the provision of air traffic services are recorded on the basis of unit prices set according to the internationally recognized Long-term intangible assets - recorded at purchase price and decreased by accumulated depreciation – is kept. Intangible assets at principles. Unit prices are set for a period of one calendar year. Revenues from air traffic services provided are recorded as income on a purchase price of up to CZK 60,000 are accounted for in the costs upon acquisition. Long-term intangible assets with a purchase price a monthly basis according to the invoices issued. Air traffic services in the area of aerodrome and approach services are invoiced by ANS CR. higher than CZK 60,000 whose usability time is longer than one year are written off linearly on a monthly basis with no interruption. The Invoices for air traffic services in the area of en-route services are issued by the EUROCONTROL agency on behalf of ANS CR. length of depreciation is based upon the estimated lifetime. Employee benefits – the company pays regular contributions to the state budget for the basic pension plan. The amount of these contributions is based on the amount of salaries paid and is expensed in the same accounting period as the respective wage base. Under the collective-bargain agreements signed, the company also contributes to its employees’ supplemental pension insurance provided by commercial entities. The amount of these contributions is defined in the provisions of the collective-bargain agreement.

81 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 82 The contributions to these funds are recorded as the company’s costs at the maturity date. Under the collective-bargain agreements, the 2009 (in thousands CZK) Software Other Total company also contributes to its employees’ private life insurance and pays the employees’ capital insurance premiums. The private life insurance long-term intangible contributions and the employees’ capital insurance premiums recorded as the company’s costs at the maturity date. assets Acquisition value Use of estimates – the compilation of financial statements according to the International Financial Reporting Standards requires that the Balance as of 1 Jan. 2009 1 018 045 66 288 1 084 333 accounting unit make estimates and projections that have impact on the recorded asset and liability values as of the date of the financial Increases 195 244 16 961 212 205 statement and on the amount of the reported costs and revenues. The management of the accounting unit is convinced that the estimates Decreases 13 799 0 13 799 and projections used will not differ significantly from the values of the following accounting periods. Balance as of 31 Dec. 2009 1 199 490 83 249 1 282 739

3. Long-Term Assets Accumulated depreciation Balance as of 1 Jan. 2009 624 190 44 381 668 571 Depreciations 2009 251 177 10 615 261 792 3.1 Long-Term Intangible Assets Decreases 13 799 0 13 799 Balance as of 31 Dec. 2009 861 568 54 996 916 564 2011 (in thousands CZK) Software Other Total long-term Net book value as of 1 Jan. 2009 393 855 21 907 415 762 intangible assets Net book value as of 31 Dec. 2009 337 922 28 253 366 175 Acquisition value Balance as of 1 Jan. 2011 1 327 273 94 786 1 422 059 3.2 Long-Term Tangible Assets Increases 138 666 24 445 163 111 Decreases 14 679 0 14 679 Balance as of 31 Dec. 2011 1 451 260 119 231 1 570 491 2011 (in thousands CZK) Land Machinery Vehicle Inventory Other Total and buildings and long-term equipment tangible Accumulated depreciation assets Balance as of 1 Jan. 2011 1 070 410 64 553 1 134 963 Acquisition value Depreciations 2011 162 545 9 123 171 668 Balance as of 1 Jan. 2011 2 183 913 2 913 229 58 053 194 485 149 225 5 498 905 Decreases 14 679 0 14 679 Increases 292 013 119 430 489 1 211 8 464 421 607 Balance as of 31 Dec. 2011 1 218 276 73 676 1 291 952 Decreases 804 77 493 3 687 8 327 7 146 97 457 Balance as of 31 Dec. 2011 2 475 122 2 955 166 54 855 187 369 150 543 5 823 055 Net book value as of 1 Jan. 2011 256 863 30 233 287 096 Net book value as of 31 Dec. 2011 232 984 45 555 278 539 Accumulated depreciation Balance as of 1 Jan. 2011 623 735 2 029 950 48 972 116 893 109 138 2 928 688 2010 (in thousands CZK) Software Other Total Depreciations 2011 83 549 226 125 2 826 23 049 14 174 349 723 long-term Excluded assets 2011 73 0 387 0 0 460 intangible assets Changes in assets 701 72 713 3 502 5 869 6 953 89 738 Acquisition value Balance as of 31 Dec. 2011 706 656 2 183 362 48 683 134 073 116 359 3 189 133 Balance as of 1 Jan. 2010 1 199 490 83 249 1 282 739 Increases 128 394 11 537 139 931 Net book value as of 1 Jan. 2011 1 560 178 883 279 9 081 77 592 40 087 2 570 217 Decreases 611 0 611 Net book value as of 31 Dec. 2011 1 768 466 771 804 6 172 53 296 34 184 2 633 922 Balance as of 31 Dec. 2010 1 327 273 94 786 1 422 059

2010 (in thousands CZK) Land Machinery Vehicle Inventory Other Total Accumulated depreciation and buildings and long-term equipment tangible Balance as of 1 Jan. 2010 861 568 54 996 916 564 assets Depreciations 2010 209 453 9 557 219 010 Acquisition value Decreases 611 0 611 Balance as of 1 Jan. 2010 2 270 872 2 692 219 58 935 205 056 145 811 5 372 893 Balance as of 31 Dec. 2010 1 070 410 64 553 1 134 963 Increases 11 826 178 678 2 204 186 7 224 200 118 Decreases 98 785 -42 332 3 086 10 757 3 810 74 106 Net book value as of 1 Jan. 2010 337 922 28 253 366 175 Balance as of 31 Dec. 2010 2 183 913 2 913 229 58 053 194 485 149 225 5 498 905 Net book value as of 31 Dec. 2010 256 863 30 233 287 096

Accumulated depreciation Balance as of 1 Jan. 2010 600 476 1 824 326 47 775 96 305 98 357 2 667 239 Depreciations 2010 87 371 204 184 4 283 25 121 14 591 335 550 Excluded assets 2010 1 0 0 3 0 4 Changes in assets 64 113 -1 440 3 086 4 536 3 810 74 105 Balance as of 31 Dec. 2010 623 735 2 029 950 48 972 116 893 109 138 2 928 688

Net book value as of 1 Jan. 2010 1 670 396 867 893 11 160 108 751 47 454 2 705 654 Net book value as of 31 Dec. 2010 1 560 178 883 279 9 081 77 592 40 087 2 570 217

83 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 84 2009 (in thousands CZK) Land Machinery Vehicle Inventory Other Total Assets name Inventory No. Acquisition value (CZK thousands) and buildings and long-term Building IATCC Prague 2016743 882 960 equipment tangible assets Operations building of the technical unit of Prague airport 51062 485 767 Acquisition value Operations building with control tower Brno Tuřany 52012 86 319 Secondary radar RSM970 at the Prague airport 2011917 75 783 Balance as of 1 Jan. 2009 2 227 037 2 762 247 60 903 191 231 138 794 5 380 212 Secondary radar RSM970 at Buchtův kopec 2012804 66 474 Increases 45 621 141 888 3 523 14 222 13 833 219 087 Primary radar TA 10 MTD at the Prague airport 2012317 66 180 Decreases 1 786 211 916 5 491 397 6 816 226 406 Operations building at the site Praha Jih 51150 58 543 Balance as of 31 Dec. 2009 2 270 872 2 692 219 58 935 205 056 145 811 5 372 893 Secondary radar RSM970S at Písek 2016499 51 402 Operations building with control tower Karlovy Vary 54004 42 001 Accumulated depreciation Primary radar RL-64 at the Brno Tuřany airport 2011822 37 483 Balance as of 1 Jan. 2009 513 572 1 805 096 48 386 71 879 90 607 2 529 540 Operations building at the site Buchtův kopec 52011 28 287 Depreciations 2009 88 049 230 376 4 879 24 737 14 496 362 537 Real estate underneath the building of technical block LKPR 2563 1 349 Excluded assets 2009 273 770 0 86 0 1 129 Real estate underneath the operating building TWR LKTB 3882 261 Changes in assets 1 418 211 916 5 490 397 6 746 225 967 Real estate underneath the operating building TWR LKKV 2258 122 Balance as of 31 Dec. 2009 600 476 1 824 326 47 775 96 305 98 357 2 667 239 Real estate underneath the building IATCC Praha 569 45 Real estate underneath the operating building Praha Jih 34890 2 Net book value as of 1 Jan. 2009 1 713 465 957 151 12 517 119 352 48 187 2 850 672 Real estate underneath the operating building Buchtův kopec 130 2 Net book value as of 31 Dec. 2009 1 670 396 867 893 11 160 108 751 47 454 2 705 654

4. Inventories 3.3 Amortization of Long-Terms Assets

(in thousands CZK) 2011 2010 2009 (in thousands CZK) 2011 2010 2009 Material 11 029 12 017 13 215 Amortization of long-term tangible assets 349 723 335 550 362 537 Goods 172 180 220 Amortization of long-term intangible assets 171 669 219 010 261 792 Total 11 201 12 197 13 435 Depreciation of fixed assets due to liquidation 0 4 855 Total 521 392 554 564 625 184 5. Receivables

3.4 Long-term Financial Assets: (in thousands CZK) 2011 2010 2009 Trade receivables 567 666 565 809 517 849 2011 Deposit Value in thousand EUR Deposit Value in thousand CZK Tax receivables 60 727 47 755 48 608 Shares in accounting units 200 5 160 Prepayments 15 530 2 182 4 466 Other receivables 12 531 8 825 8 776 Considering liberalisation of the market in the area of air navigation services ANS CR has set itself as one of its strategies to continue in Total receivables (gross) 656 454 624 571 579 699 the expansion of commercial acitivities, especially in the area of ATM consulation services and providing air navigation services abroad. Adjustments -40 214 -39 722 -38 701 Within this strategy ANS CR gained a 20% share (200 thous. EUR) in a Spanish company of Servicios Aeronauticos Control y Navegacion Total receivables (net) 616 240 584 849 540 998 S.L. (SAERCO) in March 2011, which provides air navigation services to local airports. Financial investment into SAERCO is fully secured by a bank guarantee provided for ANS CR by a bank of La Caja de Ahorros y Pensiones de Barcelona - „la Caixa“. Trade receivables consist of receivables from the users of air navigation services (97.2 %) and from other customers (2.8 %). Tax receivables consist exclusively of the outstanding statutory VAT liability and of overpayment of corporate income tax. Other receivables consist of active Further financial benefit besides providing ANS will be training of ATCOs and consultation services provided by CANI (Czech Air Navigation conjectural accounts. Institute) for SAERCO. During 2011 SEARCO won a contract for providing ANS in three Spanish airports, which gives a real assumption that the value of this investment will rise in the future. Provisions for receivables were created in accordance with the reserves act No. 593/1992 Coll., in the following amount:

3.5 Specified Assets Tax-Deductible Provisions [created pursuant to the reserves act No. 593/92 Coll., Section 8 and Section 8 paragraph a)]:

Pursuant to the state enterprise act No. 77/1997 Coll., a special group of assets is recorded in the accounting books – specified assets. (in thousands CZK) 2011 2010 2009 These assets are indispensable for the accounting unit in terms of performance of the activities, for which the accounting unit (company) Bankruptcy proceedings 5 652 5 626 17 913 was established. These assets are registered in the companies register. The company may use and dispose of the specified assets only with 20 % of 2006 0 0 890 the founder’s consent. The following specified assets are recorded in the company’s books as of 31 December 2011: 20 % of 2007 0 594 660 20 % of 2008 2 200 2 191 2 314 20 % for the 1st half of 2009 0 0 1 125 20 % of 2009 3 567 3 863 xxx 20 % for the 1st half of 2010 0 371 xxx 20 % of 2010 896 xxx xxx 20 % for the 1st half of 2011 926 xxx xxx

85 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 86 Tax-Deductible Provisions [created pursuant to the reserves act No. 593/92 Coll., Section 8, paragraph c)]: 9. Income Tax

(in thousands CZK) 2011 2010 2009 Income tax due – the company has reported legal entity income tax due in the amount of 81,922 thd. CZK in 2011. 100 % of 2006 0 0 0 100 % of 2007 0 0 13 Deferred tax income – is recorded in the company’s accounting as a deferred tax obligation. The amount of the deferred tax current to 100 % of 2008 24 22 328 the date of 31st December 2010 was 91,340 thousand CZK, the amount of the deferred tax current to 31st December 2011 was 90.430 100 % of 2009 79 462 xxx thousand CZK. The balance is composed of the calculation of deferred tax arising on the basis of calculating the difference between 100 % of 2010 248 xxx xxx accounting and tax book value of the fixed tangible and intangible assets.

Non-Deductible Provisions: (in thousands CZK) 2011 2010 2009 Zůstatek odložené daně k 1. 1. 91 340 90 181 73 408 Celkem změna odložené daně -910 1 159 16 773 (in thousands CZK) 2011 2010 2009 z toho vlivem změny sazby daně 0 - 4 746 - 3 670 100 % of 2006 0 0 3 561 Zůstatek odložené daně k 31. 12. 90 430 91 340 90 181 100 % of 2007 0 2 374 2 641 100 % of 2008 8 801 8 765 9 256 100 % of 2009 14 267 15 452 xxx 10. Bank Loans Received 100 % of 2010 3 581 xxx xxx In 2011, the company operated without any credit burden.

6. Cash and Cash Equivalents Provided bank guarantees – as of the day of the annual final accounts ANS CR provided the following bank guarantees: Global customs guarantee of 10 million CZK for the Customs Office Ruzyně – the Pague Airport.

(in thousands CZK) 2011 2010 2009 Bank guarantee of 95 thousand EUR for ANTA Albania – validity till 30 April 2012 Cash and tokens of value 2 969 1 494 1 614 Bank guarantee of 20 thousand EUR for Prishtina Int. Airport, Kosovo – validity till 31 January 2012 Bank accounts 890 579 554 818 201 268 Bank guarantee of 5 thousand EUR for Prishtina Int. Airport, Kosovo – validity till 31 March 2012 Short-term securities 0 0 105 200 Bank guarantees were provided to the foreign customers involved in the realization of the training courses of CANI. Total 893 548 556 312 308 082 11. Short-Term Trade Paybles and Other Liabilities 7. Registered Capital, Statutory Reserve Fund and Other Funds of the Company (in thousands CZK) 2011 2010 2009 Trade payables 49 472 61 164 68 873 Registered capital of ANS CR consists of the assets invested in the company by its founder as of the date of its establishment on Payables to employees 160 801 165 214 144 263 1 January 1995. Payables to the state 56 099 50 989 36 434 of which corporate income tax 26 355 24 451 21 641 The statutory reserve fund of the company in made of contributions from available profit. The contribution in the reserve fund reached other taxes 19 32 19 the level required by the law already at the moment the company was established. This fund can only be used to cover losses. social and health insurance 29 725 26 506 14 774 Advance payments received 13 540 240 0 Other funds of the company – pursuant to Act No. 77/1997 Coll., the company also creates a development fund, also made up of Other payables 40 990 28 606 49 909 allocations from the disposable profit. This fund is used to fund important projects of financing the company’s infrastructure. Total 320 902 306 213 299 479

Undivided profit – the undivided profit account is meant for the remainder of the available profit after taxation that has not been used Trade payables consist of outstanding supplier invoices within the maturity period. There are no payables after due date in the company’s as contributions in the company’s funds. records.

Profit/loss in the current accounting period (profit after tax) – in accordance with the state enterprise act No. 77/1997 Coll., the profit Payables to employees – consists of employee wages for December 2011 paid out in January 2012. Pursuant to Act No. 77/1997 Coll., is, once the financial statements have been approved by the founder, allocated to the company’s funds. the company creates cultural and social needs fund that is recorded as payables to employees according to the international financial reporting standards. The fund consists of basic and supplemental allocations, both from the company’s disposable profit. The use of the 8. Reserves fund is regulated by decree No. 310/1995 Coll. In accordance with international accounting standards the obligations towards employees also include the rewards fund and the fund for other social expenditures. In 2011 an accounting item was created to cover decreased cost bases for flight navigation services in 2013 in the total amount of 80,000 thousand CZK. This accounting item was entered into accounts as follows – MD 554/D 459. Payables to the state – this item includes the prescribed employees’ individual income tax paid on behalf of the employees for the payroll period of December 2011. It also includes the prescribed payments of the social and health insurance on behalf of the employees for the Creation and cancellation of accounting items of this type in accordance with the document of the EUROCONTROL agency no. payroll period of December 2011 and also the assessed road tax payment and the property transfer tax. 10.60.01 – Principles for Establishing the Cost-Base for Route Facility Charges and the Calculation of the Unit Rates. A reserve for the income tax was created in the amount of 81,966 thousand CZK corresponding to the calculated income tax for the year of 2011. After Other liabilities – this item consists of the payment of supplemental pension insurance and private life insurance of the employees for the the correction in the amount of -74 thousand CZK for 2010 has been included the income tax levy for 2011 corresponds to the amount period of December 2011. It also includes the balance of account 389 - estimated payables (non-invoiced supplies). of 81,922 thousand CZK.

87 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 88 12. Costs The total sum of financial costs in the year of 2011 was 58,428 thousand CZK. The main item in financial costs is passive exchange rate differences in the amount of 57,616 thousand CZK caused by the volatility of the national currency in relation to EUR. 12.1 Material, Energy, and Services Costs 13. Revenues

(in thousands CZK) 2011 2010 2009 Material consumed 22 560 21 721 21 275 13.1 Revenues from Operation Energy consumed 50 234 46 349 50 158 Other non-storable items consumed 761 724 840 (in thousands CZK) 2011 2010 2009 Repairs and maintenance 57 327 60 234 75 288 Traffic revenues 3 136 944 3 088 595 2 830 810 Travel expenses 21 786 19 818 21 022 - en-route services 2 563 621 2 528 351 2 245 408 SW system support 79 423 78 871 63 965 - terminal services 570 772 558 923 583 821 Telecommunication charges and data networks 35 060 36 206 35 174 - training flights 2 551 1 321 1 581 Aeronautical meteorology 69 304 67 923 65 452 Other revenues from the sale of goods and services 75 057 41 780 55 355 CAA verification flights 8 506 10 212 10 532 Total performance 3 212 001 3 130 375 2 886 165 Other services 116 849 110 997 105 990 Other revenues from operations 61 505 63 183 113 447 Total 461 810 453 055 449 696 - earnings from long-term tangible and intangible assets sales 968 561 8 458 - costs compensation for exempted flights 50 350 50 350 85 000 12.2 Personnel Costs - other operating income - others 10 187 12 272 19 989 Revenues from operations 3 273 506 3 193 558 2 999 612

(in thousands CZK) 2011 2010 2009 A year-to-year increase in operating revenues in 2011 was caused by the favourable dynamics of the route operation. In other revenue Salaries 1 361 833 1 305 083 1 228 602 items the increase was also recorded, mainly thanks to the revenues of the Training Centre, which rose by 81 % in 2011. Statutory social insurance 366 438 344 445 270 581 Statutory social expenses 59 422 34 034 55 905 Other social expenses 2 195 1 759 2 111 13.2 Financial Revenues Total 1 789 888 1 685 321 1 557 199

(in thousands CZK) 2011 2010 2009 In 2011, the executive personnel costs amount to CZK 75,905,000. According to the collective agreement, the executive employees were Interest income 6 876 3 535 3 701 reimbursed capital life insurance premiums, which resulted in increase of these employees’ individual income tax base, pursuant to Act No. Exchange-rate difference gain 71 126 30 916 97 909 586/1992 Coll. In addition, they received contribution to supplemental pension insurance and life insurance. The amount of the contribu- Revaluation-related revenues 20 423 79 740 113 032 tions in 2011 was CZK 2,982,000. The managers have been provided with company cars that they can also use for private purposes, which Other financial revenues 1 117 666 1 329 Total 99 542 114 857 215 971 increased the natural person income tax base of these employees by 2,873,000. CZK. The company has also granted the managers other non-monetary benefits in the amount of 1,432,000. CZK. The interannual decline of the financial incomes in 2011 was due to the lagged effect of the inclusion of the exchange rates variations arisen in 2010 out of the overestimate of the hedging instruments totalling 20 423 thd. CZK into the financial returns of 2011. On the 12.3 Other Operational Costs contrary, a significant exchange rate volatility of the national currency caused an increase of the active exchange rate differences.

14. Risk Management (in thousands CZK) 2011 2010 2009 Taxes and charges 1 163 1 492 2 142 Credit risks – as of 31 December 2011 the company is not exposed to any significant credit risks. Financial assets consist primarily of bank Balance price of the sold long-term tangible and intangible assets 635 17 641 deposits and receivables. The company’s resources are deposited with first-class banks. Risks related to trade receivables are limited due to the Reserves and provisions 80 557 86 863 23 724 Contributions to EUROCONTROL 123 211 167 360 169 295 large number of customers of air navigation services. The risks related to trade receivables are also limited due to the effective system of debt Insurance 22 517 23 786 24 744 recovery applied by EUROCONTROL. Other 32 790 38 499 23 463 Total 260 873 318 017 244 009 Currency risks – due to monthly conversion of the unit prices of the air navigation services provided based on applicable exchange rates, the risk of exchange rate development that the company is exposed to is limited only to the payment deadline. Currency-related risks are thus minimized. However, in view of the volatile development of the CZK/EUR currency exchange pairing, they are not completely eliminated. The accounting item to cover decreased cost bases for flight navigation services in 2013 in the amount of 80,000 thousand CZK was entered into accounts in the sphere of reserves creation and adjusting entries. 15. Labilities Not Shown in the Accounting Records

12.4 Financial Costs Litigations – as of 31 December 2011 there were no legal actions against the company that could have significant impact on the financial statements. Environmental liabilities – all environmental standards are complied with and no proceedings are taken against the company in respect of the (in thousands CZK) 2011 2010 2009 protection of the environment, which could have significant impact on the financial statements. Interest expense 0 1 8 937 Exchange-rate difference loss 57 616 72 848 126 111 16. Subsequent Event Revaluation-related costs 0 20 423 79 740 Other financial costs 812 1 007 1 105 No events occurred on the date of compilation of the 2011 financial statements, which could have significant impact on the activities and financial Total 58 428 94 279 215 893 situation of the accounting unit.

89 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 90 Organisational Structure Scheme Auditor´s Report - Annual Report Verification

To 31 December 2011 From 1 January 2012 Independent auditors report on verification of the Annual Report of the Air Navigation Services of the Czech Republic as of 31 December 2011. Director General Director General The audit of the annual report of the state enterprise Air Navigation Services of the Czech Republic identification number 497 10 371, Director’s General Office Strategy and Manager Support Unit was carried out by the company HAYEK, spol. s r.o., holding, address Jindřišská 5/901, Praha 1, license number 29. Auditor responsible for Security Director Unit Audit and Investigation Department submitting the report is Jan Řehák, certificate number of the auditor 1692. Audit and Investigation Department

Operations Division The auditor´s report is intended for the shareholders of the state enterprise Air Navigation Services of the Czech Republic. Operations Division area Control Navigation Services Section area Control Navigation Services Section approach and Aerodrome Control Services Section We have audited the annual report of the state enterprise Air Navigation Services of the Czech Republic for consistency with the financial approach and Aerodrome Control Services Section atm Systems Section statements for the year ended 31 December 2011 which are included in this Annual Report on pages 41 to 42 and 62 to 90. The atm Systems Section aeronautical Information Services correctness of the annual report is the responsibility of the state enterprise Air Navigation Services of the Czech Republic statutory body. aeronautical Information Services simulator E2000 Department Our responsibility is to express an opinion on the consistency of the annual report and the financial statements based on our audit. simulator E2000 Department Regional Services and Logistics Division We conducted our audit in accordance with International Standards on Auditing and the related application guidelines issued by the Chamber of Auditors of the Czech Republic. Those standards require that the auditor plan and perform the audit to obtain reasonable Regional Services and Logistics Division regional Airport Air Navigation Services Section assurance about whether the information included in the annual report describing matters that are also presented in the financial regional Airport Air Navigation Services Section central Logistics Section statements is, in all material respects, consistent with the relevant financial statements. We believe that our audit provides a reasonable central Logistics Section basis for our opinion. ANS Planning and Development Division Corporate Development and International air Navigation Services Methodology In our opinion, the information included in the annual report of the state enterprise Air Navigation Services of the Czech Republic for the Coordination Division project and Investments Implementation Section year ended 31 December 2011 is consistent, in all material respects, with the financial statements referred to above. training Centre Section ANS Planning and Development Division Prague 5 June, 2012 air Navigation Services Methodology Human Resources and Financial Division project and Investments Implementation Section training Centre Section

Human Resources Division

Financial Division

HAYEK, spol. s r.o., holding Ing. Jan Řehák Licence No. 029 Certificate No. 1692

91 Annual Report 2011 Air Navigation Services CR Annual Report 2011 Air Navigation Services CR 92 Glossary

ACC Area Control Centre RIS Radiocommunications Radar ACFT Aircraft and Information Systems AFTN Aeronautical Fixed RMCDE Radar Message Conversion Telecommunication Network and Distribution Equipment AIC Aeronautical Information Circula RRR Radar Record and Replay AIP Aeronautical Information Publication RSR En-route Surveillance Radar ANS Air Navigation Services RVSM Reduced Vertical Separation Minimum APP Approach Control RWY Runway ARO Air Traffic Services Reporting Office SAT Site Acceptance Test ATC Air Traffic Control SC Senior Controller ATCA Air Traffic Control Association SES Single European Sky ATCO Air Traffic Control Officer SID Standard Departure ATIS Automatic Terminal Information Service Chart – Instrument ATM Air Traffic Management SIMU Simulator ATMS Air Traffic Management Systems SMC Surface Movement Control ATPL (A) Airline Transport Pilot Licence (Airplanes) SSR Secondary Surveillance Radar ATS Air Traffic Services STAR Standard Arrival BCN Beacon TAR Terminal Area Surveillance Radar BO Briefing Officer TMA Terminal Control Area CAA Civil Aviation Authority TWR Aerodrome Control Tower CANSO Civil Air Navigation Services Organisation UAC Upper Area Control Centre CAPA CEATS ANS Providers Association UHF Ultra High Frequency CAPS CEATS ANS Providers Support UIR Upper Flight Information Region CEATS Central European Air Traffic Services VCS Voice Communication System CFL Cleared Flight Level VFR Visual Flight Rules CFMU Central Flow Management Unit VHF Very High Frequency CISM Critical Incident Stress Management VOR VHF Omnidirectional Radio Range CMOS Central Monitoring and Control System WS Watch Supervisor CNS Communications/Navigation/Surveillance Incident Event in air operation other than COM Communications an air accident CRCO Central Route Charges Office Instructor Air traffic controller responsible for CTA Control Area proposal and requirements for new ATS CTR Control Zone systems and procedures. Checks their CZATCA Czech Air Traffic Control Association practical application. Prepares training DG Director General documentation for ATS personnel. DME Distance Measuring Equipment DPS Data Processing Systems E2000 EUROCAT 2000 – ATM System EATMP European Air Traffic Management Programme EC European Commission ECAC European Civil Aviation Conference ESUP EUROCAT Support EUROCONTROL European Organisation for the Safety of Air Navigation FAT Factory Acceptance Test FIR Flight Information Region FL Flight Level FTO Flight Training Organisation FUA Flexible Use of Airspace HMI Human-Machine Interface IATA International Air Transport Association IATCC Prague National Integrated Air Traffic Control Center ICAO International Civil Aviation Organization IDP Information Display Processor IFR Instrument Flight Rules ILS Instrument Landing System IPT IP Telephone Exchange IR Instrument Rating ISO International Standards Organization ISQMS Integrated Safety and Quality Management System JAA Joint Aviation Authorities JAR Joint Aviation Requirements L Rules and Regulations in the Czech Language LIS Astronautical Information Service LKKV Karlovy Vary Airport LKMT Ostrava – Mošnov Airport LKPR Prague – Ruzyně Airport LKTB Brno –Tuřany Airport LLZ Localizer LNS Air Navigation Services LTS Air Telecommunication Service MSSR Monopulse Secondary Surveillance Radar MTOW Maximum Take-Off Weight NAV Navigator NAVCOM Navigation/Communication NDB Nondirectional Radio Beacon NOTAM Notice to Airmen OJT On-the-job Training OPMET Operational Meteorological Information PRE-OJT Pre-On-the-job Training RCC Rescue Coordination Centre RCOM Radiocommunication

93 Annual Report 2011 Air Navigation Services CR