OPERATIONS PLAN OF HRVATSKE AUTOCESTE d.o.o. FOR 2020

Zagreb, December 2019

Hrvatske autoceste d.o.o. Operations Plan for 2020

CONTENTS:

I. INTRODUCTION ...... 3 II. RESTRUCTURING ...... 7 III. REVENUE AND EXPENDITURE PLAN ...... 10 1. PLAN FOR THE HAC d.o.o. PROFIT AND LOSS ACCOUNT AS WELL AS ...... 11 INCOME AND EXPENSES / REVENUE AND EXPENDITURE OF THE PUBLIC GOOD (changes to the public capital) ...... 11 2. STRUCTURE OF PLANNED REVENUE AND EXPENDITURE OF HAC AND THE PUBLIC GOOD OF ...... 12 IV. PLANNED NUMBER OF EMPLOYEES, SALARY COSTS AND EMPLOYEES’ MATERIAL RIGHTS...... 17 V. FINANCING PLAN ...... 19 1. Financing sources plan for the activities planned in 2020 ...... 19 2. Planned loan debt status ...... 21 VI. CONSTRUCTION PLAN ...... 22 VII. MAINTENANCE PLAN ...... 24 1. EXTRAORDINARY MAINTENANCE ...... 24 2. ROUTINE MAINTENANCE ...... 25 VIII. MANAGEMENT STRUCTURE ...... 29

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Hrvatske autoceste d.o.o. Operations Plan for 2020

I. INTRODUCTION

The Company Hrvatske autoceste d.o.o. was established pursuant to the Act on the Amendment of the Public Roads Act (Official Gazette No 27/01), and the Decision of the Government of the Republic of Croatia on the Allocation and Reconstitution of the Croatian Road Administration (HUC) into the companies Hrvatske autoceste d.o.o. (HAC) and Hrvatske ceste d.o.o. (HC). The Company was established with the aim of managing, building and maintaining the motorways in Croatia. It commenced its business operations on 11 April 2001. Hrvatske autoceste d.o.o. are entirely owned by the Republic of Croatia, which exercises its rights in the General Meeting of the Company through the Government of the Republic of Croatia. The Hrvatske autoceste d.o.o. Company manages, builds, reconstructs and maintains motorways apart from those managed by the concession holder pursuant to the Roads Act.

Pursuant to the Roads Act, the planning of motorway construction and maintenance is set out in the following programming and planning documents:  in the long term, in the Public Roads Development Strategy adopted by the Croatian Parliament,  in the medium term, in the four-year public road construction and maintenance programmes adopted by the Government of the Republic of Croatia,  annually, in motorway construction and maintenance plans adopted by Hrvatske autoceste d.o.o. with the approval of the Government of the Republic of Croatia.

Baseline for the creation of the Operations Plan of Hrvatske autoceste d.o.o. for 2020:

 The business and financial restructuring of HAC within the scope of the project titled “Modernisation and Restructuring of the Road Infrastructure Sector”, launched by the Government of the Republic of Croatia in cooperation with the World Bank; its implementation falls within the purview of HAC and other companies in the road sector

 The continuation of the investment cycle that began in the previous years as well as new investments in the motorways in accordance with the programming and planning documents of the Government of the Republic of Croatia, namely:

 The Public Roads Construction and Maintenance Programme for the period 2017-2020, adopted by the Government of the Republic of Croatia on a proposal by the Ministry of Maritime Affairs, Transport and Infrastructure.

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Hrvatske autoceste d.o.o. Operations Plan for 2020

 The Motorway Construction and Maintenance Plan for 2020, adopted by HAC with consent of the Government of the Republic of Croatia for the implementation of the Programme.

A total of HRK 603,783,000 is planned for investments in the motorways for 2020. Out of the total amount of the investments for 2020, a total of HRK 292,937,000 concerns construction, and HRK 310,846,000 extraordinary maintenance of the motorways.

 Routine maintenance and toll collection on the motorways managed by Hrvatske autoceste d.o.o. (HAC) and Autocesta Rijeka – Zagreb d.d. (ARZ):

By 2020, a total of HRK 129,400,000 is planned for the material costs and routine maintenance services, out of which HRK 96,029,000 are reserved for the sections managed by HAC, and HRK 33,371,000 for the sections managed by ARZ.

 Ensuring liquidity – from the company’s own revenue from the use and maintenance of the motorways as well as by ensuring its own credit sources for the continuation of the construction of the projects that are underway:

Financed through its own revenue generation (tolls, road property management, fee paid by ARZ for the routine maintenance and toll collection services as well as other own revenue), HAC covers the entire costs of the business operations of the Company (management and routine maintenance) as well as interest for the Public Goods loan and payment of the principal. The investments will be financed from the excise duty on energy products, grants from EU funds, development bank loans and own funds.

 The Guidelines for the Economic and Fiscal Policy for the 2020-2022 period, as adopted by the Government of the Republic of Croatia at its 173rd session on 1 August 2019 on a proposal by the Ministry of Finance

The Republic of Croatia Convergence Programme for the 2019-2022 Period, as adopted by Decision of the Government of the Republic of Croatia on 16 April 2019, lays down that the Croatian Parliament shall approve the Financial Plan of Hrvatske autoceste d.o.o. as an extrabudgetary user from the transport sector during the adoption of the State Budget of the Republic of Croatia for 2020. The Guidelines for the Economic and Fiscal Policy define the target values of the balance that

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Hrvatske autoceste d.o.o. Operations Plan for 2020

extrabudgetary users must achieve in the coming medium-term period during the creation of their financial plans.

Those Guidelines created by the Ministry of Finance ensure an additional control of the financial sustainability of business operations. They are the framework within which Hrvatske autoceste d.o.o. must ensure a surplus as a difference between the cash flow of the business revenue and expenditure. The surplus increased by the cash deposit from the previous year plus loan drawdown are used for the repayment of the debt principal that will be due in the current year.

Therefore, Hrvatske autoceste d.o.o. created the Financial Plan for 2020 as well as the projection for 2021 and 2022, accepted by the Decision of the Supervisory Board of 25 October 2019, which the Croatian Parliament approved on 14 November 2019 at its 14th session, along with the adoption of the State Budget of the Republic of Croatia for 2020 and the projection for 2021 and 2022.

A. REVENUE AND EXPENDITURE ACCOUNT

Plan projection for Plan projection for No Description Plan for 2020 2021 2022 1. OPERATING REVENUE 2,779,087,865 2,780,580,540 2,816,585,430 2. REVENUE FROM NON-FINANCIAL ASSETS 0 0 0 3. TOTAL REVENUE (1+2) 2,779,087,865 2,780,580,540 2,816,585,430 4. OPERATING EXPENDITURE 1,274,625,675 1,214,129,070 1,142,663,200 5. EXPENDITURE FOR NON-FINANCIAL ASSETS 648,671,350 533,450,000 610,921,000 6. TOTAL EXPENDITURE (4+5) 1,923,297,025 1,747,579,070 1,753,584,200 7. DIFFERENCE – SURPLUS/DEFICIT (3-6) 855,790,840 1,033,001,470 1063,001,230

SURPLUS / DEFICIT ACCORDING TO THE GUIDELINES OF THE ECON. POLICY 2020-2022 855,000,000 1,033,000,000 1,063,000,000

B. FINANCING ACCOUNT

Plan projection for Plan projection for No Description Plan for 2020 2021 2022 8. PROCEEDS FROM FINANCIAL ASSETS AND DEBT 81,160,000 400,000,000 430,000,000 9. EXPENDITURE FOR FINANCIAL ASSETS AND LOAN REPAYMENT 928,906,720 1,322,830,790 1,605,825,000 10. DEPOSIT BOOK TRANSFER FROM THE PREVIOUS PERIOD 556,200,000 564,244,120 674,414,800 11. DEPOSIT BOOK TRANSFER TO THE NEXT PERIOD (-(7+8+9+10)) -564,244,120 -674,414,800 -561,591,030 12. NET FINANCING -855,790,840 -1,033,001,470 -1,063,001,230

The Financial Plan of Hrvatske autoceste d.o.o. for 2020 along with the projection for 2021 and 2022 was created according to the Guidelines by the Ministry of Finance for the Economic and Fiscal Policy in the 2020-2022 period for the purpose of ensuring the sustainability of business operations and financial stability of the Company.

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Hrvatske autoceste d.o.o. Operations Plan for 2020

The surplus of Hrvatske autoceste d.o.o. set out in the Guidelines as adopted by the Ministry by years is as follows:  2020 HRK 855,000,000  2021 HRK 1,033,000,000  2022 HRK 1,063,000,000

The draft for the Financial Plan of HAC for 2020, as well as projections for 2021 and 2022, provide for a total income of HRK 2,779,087,865 in 2020, HRK 2,780,580,540 in 2021 and 2,816,585,430 in 2022. The largest part relates to the toll collection revenue, which will amount to HRK 1,998,855,490 in 2020, HRK 2,055,825,835 in 2021 and HRK 2,091,680,125 in 2022. In accordance with the provisions of the project titled “Modernisation and Restructuring of the Road Infrastructure Sector”, the business expenditure will be reduced in the following years, therefore the planned amounts are as follows: HRK 1,274,625,675 for 2020, HRK 1,214,129,070 for 2021 and HRK 1,142,663,200 for 2022. A total of HRK 603,783,000 of investments in the motorways for construction and routine maintenance are planned for 2020. The projection for 2021 provides for investment in the motorways in the amount of HRK 507,166,000, with HRK 596,465,000 provided for 2022.

The key investment projects will be the completion of the construction of the A5 motorway (Beli Manastir – Osijek – Svilaj) from the Hungarian border to the Halašica bridge, the completion of the construction of a bridge across the river Sava near Svilaj as a part of the Pan-European corridor that will attract transit traffic into the Republic of Croatia and create the conditions for the further development of Slavonia, and an investment in a new toll collection system as an integral part of the technical and business restructuring of Hrvatske autoceste d.o.o.

To finance the realisation of the investment projects, along with the funds from the excise duty on energy and own funds, the funds used will be those from the loan by the European Investment Bank (EIB) contracted earlier for the completion of the bridge over the river Sava near Svilaj, the funds from the loan planned to be contracted in 2020 for the construction of the A5 motorway section (Beli Manastir – Osijek – Svilaj) from the Hungarian border to the Halašica bridge, and the EU grant for the bridge over the river Sava near Svilaj and the implementation of the Crocodile 2 Croatia and Crocodile 3 Croatia for the introduction of intelligent transport systems into traffic surveillance & control centres.

Moreover, the extraordinary motorway maintenance projects, such as facility repairs and carriageway structures, including the renewal of the traffic equipment in order to provide a high level

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Hrvatske autoceste d.o.o. Operations Plan for 2020

of safety, will continue, and the total investments in the extraordinary motorway maintenance will amount to HRK 310,846,000 in 2020, HRK 87,463,000 in 2021 and HRK 144,400,000 according to the projection for 2022.

The Financial Plan of Hrvatske autoceste 2020 for the 2020-2022 period ensures a long-term sustainability of the business operations of the Company, and includes restructuring effects by means of a reduction of operating expenses and reduction of the financial expenditure for interest, which enables the surplus set out in the Guidelines for the Economic and Fiscal Policy to be met for the purpose of ensuring the ability of the Company to meet its loan repayment obligations.

II. RESTRUCTURING

The business and financial restructuring of Hrvatske autoceste d.o.o. falls within the scope of the project titled “Modernisation and Restructuring of the Road Infrastructure Sector”, launched by the Government of the Republic of Croatia, while its implementation falls within the purview of the Ministry of Maritime Affairs, Transport and Infrastructure and HAC in cooperation with the World Bank. In 2017, the preparatory activities were carried out and the implementation of the Project commenced; the process was continued throughout 2018, and is carried out on an ongoing basis in accordance with the aims that were set out. For the purpose of the implementation of that Project, the Government of the Republic of Croatia adopted on 16 March 2017, on the proposal by the Ministry of Maritime Affairs, Transport and Infrastructure, the Decision on the Approval of the Business and Financial Restructuring of the Road Sector, pursuant to which the reorganisation process of motorway sector companies was initiated.

Business restructuring The operative measures carried out to date include the implementation of the voluntary redundancy programme, with incentives for the reduction of the number of employees. The voluntary redundancy programme and natural labour outflow in the period from 31 December 2017 to 31 December 2019, the number of permanent employees was reduced by 320. The consultant hired for the technical and business rationalisation project carried out a functional analysis of the main business operations and gave a set of recommendations to improve the business processes as well proposed measures to be taken to further optimise and rationalise operating costs, including to reduce the labour costs. The optimisation of the number of employees in 2020, namely the harmonisation of the number of employees with the scope and requirements of the business

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Hrvatske autoceste d.o.o. Operations Plan for 2020

activities carried out in each individual organisation unit, provides for 85 fewer employees, which will, in turn, reduce the labour costs by HRK 6 million in the current year. At the same time, the redundancy costs were taken into account through incentives, namely severance packages in the amount of HRK 14,240,000, for which HAC has obtained funds from the loan by the European Bank for Reconstruction and Development.

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Hrvatske autoceste d.o.o. Operations Plan for 2020

Financial restructuring

The aim of financial restructuring is to improve the structure of debt repayment of road sector companies and to optimise the proportion of debt that those companies are able to repay from their own sources as well as to progressively reduce the annual debt repayment level and, in turn, the impact on the road sector on the public finances.

The first phase of financial restructuring was carried out in November 2017, when the Republic of Croatia and Hrvatske autoceste d.o.o. concluded an agreement regarding the transfer of funds: the Republic of Croatia issued eurobonds in the amount of EUR 1,275,000,000, while HAC received EUR 672,690,950 with an interest rate of 2.75%. The funds received were used for the repayment of the debt, with the average interest rate of 4.28%, which is EUR 10.3 million saved annually.

The second phase of the financial restructuring ended in April 2018, when a loan agreement was concluded for the drawn-down amount of HRK 1,137,715,157 and interest rate of 1.95% + six- monthly Euribor, which was used to repay 17 existing loans with an average annual interest rate of 3.72%, which is EUR 20.1 million saved annually. The above refinancing was carried out on the domestic market with the consortium of eight Croatian banks.

The third phase of the financial restructuring was carried out in September 2019, when a loan agreement was concluded for the amount of EUR 400,000,000 at the interest rate of 1.6% + six- monthly Euribor, which was used by the Company to refinance its debt to Deutsche Bank AG London with an interest rate of 4.25%, which is EUR 10.6 million saved annually. The above refinancing was carried out on the domestic market with the help of eleven Croatian banks, including, for the first time, the Croatian Bank for Reconstruction and Development (HBOR), whose credit line from the position of the public issuer of loans, does not increase the public debt. The total annual savings in all three rounds of refinancing amount to EUR 41 million annually.

Moreover, the financial measures that were carried out also include a revenue increase, which was achieved by adopting the decision on the seasonal tol increase by 10%, which was preceded by a harmonisation of the HAC tolls of 3 April 2017 with the tolls of the concession holder ARZ, i.e. a toll increase by 5%. The application of the above measures and an increase in the number of vehicles in the 2016-2019 period of 5 % on average, in comparison with the previous year, led to an increase in the toll revenue by 21,5% in comparison to 2016. Consequently, the planned toll revenue in 2020, when the precautionary principle is applied, is 3% higher when compared to the 2019.

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Hrvatske autoceste d.o.o. Operations Plan for 2020

III. REVENUE AND EXPENDITURE PLAN

The Roads Act (Articles 85, 94, 95 and 96) lays down the manner of recording and monitoring business changes, with the application of the capital approach when reporting revenue and expenditure, separately for HAC and separately for the Public Good, as well as their impact on the increase or decrease of the public capital. According to Article 96 of the Roads Act, a legal entity managing a public road shall include the depreciation of public roads (Public Good) it manages into the Company’s business expenditure. If the Company is unable to cover the total depreciation of the public roads it manages, the part that it is unable to cover shall be charged to the public capital funds, while the company shall express its total expenditure in the amount of the total revenue, with the business result being zero. If the Company’s own revenues of the company are higher than the business expenditure and the total depreciation of the roads it manages, its income is expressed in the amount of the surplus revenue. In that case, the public capital is increased by the amount of the calculated income, i.e. the income is used for the construction and maintenance of the motorways managed by HAC (Articles 85 and 94 of the Roads Act).

In accordance with the project titled “Modernisation and Restructuring of the Road Infrastructure Sector”, the adoption of the amendment of the Roads Act is pending, stipulating an exclusion of the accounting provisions from the Roads Act, which enables state aid, depreciation and financing costs, which were hitherto recorded directly in relation to the public capital, to be reported within the current operating result. The adoption of the amendment of the Roads Act is pending, and the HAC Operations Plan for 2020 is created according to the current legal obligations and accounting policies in force until the the regulations are amended.

In 2019, since it meets the requirements laid down in Article 70 of the General Tax Code, the Company submitted to the Tax Administration a request for the approval of a special tax status in order to promote a voluntary payment of tax obligations and reduction of the administrative burden of the tax inspection for the purpose of actively involving the Tax Administration in the creation of financial reports of the Company in accordance with the new accounting policies.

Based on the analysis of HAC operations for the previous period, the baseline for the creation of the Plan explained in the introduction, as well as in accordance with the business activities of HAC laid down in the Roads Act and Guidelines for the Economic and Fiscal Policy by the Ministry of Finance, a plan has been created for the revenue and expenditure of the Company, including the revenue and

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Hrvatske autoceste d.o.o. Operations Plan for 2020

expenditure for the Public Good and the revenue and expenditure recorded as changes in the public capital in the HAC financial records, as shown in the following table: 1. PLAN FOR THE HAC d.o.o. PROFIT AND LOSS ACCOUNT AS WELL AS INCOME AND EXPENSES / REVENUE AND EXPENDITURE OF THE PUBLIC GOOD (changes to the public capital) in HRK

REALISATION ESTIMATE PLAN INDICES 2019 2020 PUBLIC GOOD PUBLIC GOOD HAC d.o.o. TOTAL HAC d.o.o. (changes to TOTAL No (changes to the 5/2 6/3 7/4 DESCRIPTION (RDG) (2 + 3) (RDG) the public (5 + 6) public capital) capital) 0 1 2 3 4 5 6 7 8 9 10 A. TOTAL REVENUE 2,205,284,110 709,130,000 2,914,414,110 2,247,145,245 774,530,000 3,021,675,245 101.9 109.2 103.7 I. OPERATING REVENUE 2,194,660,965 509,000,000 2,703,660,965 2,241,742,745 524,380,000 2,766,122,745 102.1 103.0 102.3 1. Revenue from sales (outside the Group) 2,163,684,000 0 2,163,684,000 2,216,979,125 0 2,216,979,125 102.5 - 102.5 1.1 Revenue from toll collection 1,940,400,000 0 1,940,400,000 1,998,855,490 0 1,998,855,490 103.0 - 103.0 1.2 Revenue from land property management 47,684,000 0 47,684,000 45,289,405 0 45,289,405 95.0 - 95.0 Other revenue from sales (road maintenance service, 1.3 rent, waste material sales, approvals, revenue from the 20,101,735 0 20,101,735 16,795,365 0 16,795,365 83.6 - 83.6 sales of ENC) Fee from ARZ for the routine maintenance and toll 1.4 155,498,265 0 155,498,265 156,038,865 0 156,038,865 100.3 - 100.3 collection services Revenue based on the use of own products, goods and 2. 10,872,570 0 10,872,570 11,412,985 0 11,412,985 105.0 - 105.0 services (donations) HAC d.o.o.: Other operating revenue – extraordinary 3. (outside the Group) 20,104,395 0 20,104,395 13,350,635 49,880,000 63,230,635 66.4 - 314.5 Public Good: EU grants 4. Operating revenue within the Group 0 0 0 0 0 0 - - - Aid from the budget: 5. Public Good: Capital aid (from the excise duty on 0 509,000,000 509,000,000 0 474,500,000 474,500,000 - 93.2 93.2 energy products) II. FINANCIAL REVENUE 10,623,145 200,130,000 210,753,145 5,402,500 250,150,000 255,552,500 50.9 125.0 121.3 1. Revenue from interest and other financial revenue 1,395,455 130,000 1,525,455 516,000 150,000 666,000 37.0 115.4 43.7 2. Positive exchange rate differences 9,227,690 200,000,000 209,227,690 4,886,500 250,000,000 254,886,500 53.0 125.0 121.8 B. TOTAL OPERATING EXPENDITURE 1,775,342,310 1,195,999,000 2,971,341,310 1,703,509,080 764,220,440 2,467,729,520 96.0 63.9 83.1 I. OPERATING EXPENDITURE 1,770,903,350 495,999,000 2,266,902,350 1,700,609,080 101,255,000 1,801,864,080 96.0 20.4 79.5 1. Material costs 233,213,530 0 233,213,530 231,777,170 0 231,777,170 99.4 - 99.4 1.1 Costs of raw materials and materials 105,069,450 0 105,069,450 106,271,100 0 106,271,100 101.1 - 101.1 Costs of raw materials and materials, spare parts, small 1.1.1 37,301,810 0 37,301,810 38,693,510 0 38,693,510 103.7 - 103.7 inventory write-downs 1.1.2 Energy costs (electrical energy, gas, fuel) 67,767,640 0 67,767,640 67,577,590 0 67,577,590 99.7 - 99.7 1.2 Costs of sold goods 3,337,735 0 3,337,735 1,978,300 0 1,978,300 59.3 - 59.3 1.3 Other external costs 124,806,345 0 124,806,345 123,527,770 0 123,527,770 99.0 - 99.0 1.3.1 Costs for routine maintenance services 58,993,760 0 58,993,760 54,752,885 0 54,752,885 92.8 - 92.8 1.3.2 Other services and fees 65,812,585 0 65,812,585 68,774,885 0 68,774,885 104.5 - 104.5 2. Salaries (gross II) 460,985,000 0 460,985,000 458,423,450 0 458,423,450 99.4 - 99.4 out of which taxable redundancy incentives 4,517,313 0 4,517,313 5,340,000 0 5,340,000 118.2 - 118.2 out of which salary remuneration based on court rulings 2,816,012 0 2,816,012 1,300,000 0 1,300,000 46.2 - 46.2 3. Employees’ material rights 60,819,250 0 60,819,250 71,754,330 0 71,754,330 118.0 - 118.0 out of which tax-free redundancy incentives 6,614,500 0 6,614,500 8,900,000 0 8,900,000 134.6 - 134.6 4. Total depreciation 924,877,970 101,287,000 1,026,164,970 889,560,015 101,255,000 990,815,015 96.2 100.0 96.6 4.1 Depreciation of d.o.o. assets 16,741,530 0 16,741,530 19,560,015 0 19,560,015 116.8 - 116.8 4.2 Depreciation of the Public Good managed by HAC 908,136,440 0 908,136,440 870,000,000 0 870,000,000 95.8 - 95.8 Correction of the Public Good value (motorways) under 4.3 0 101,287,000 101,287,000 0 101,255,000 101,255,000 - 100.0 100.0 concession 5. Other costs 6,236,870 0 6,236,870 4,956,715 0 4,956,715 79.5 - 79.5 6. Value adjustments 6,834,840 0 6,834,840 5,000,000 0 5,000,000 73.2 - 73.2 7. Provisioning 15,400,000 0 15,400,000 21,000,000 0 21,000,000 136.4 - 136.4 HAC d.o.o.: Other operating expenditure (extraordinary) 8. 62,535,890 394,712,000 457,247,890 18,137,400 0 18,137,400 29.0 0.0 4.0 Public Good: Transfer of constructed buildings of HC d.o.o. II. FINANCIAL EXPENDITURE 4,438,960 700,000,000 704,438,960 2,900,000 662,965,440 665,865,440 65.3 94.7 94.5 1. Interest and fees 2,380,530 550,000,000 552,380,530 900.000 442,965,440 443,865,440 37.8 80.5 80.4 2. Negative exchange rate differences 2,058,430 150,000,000 152,058,430 2,000,000 220,000,000 220,000,000 97.2 146.7 146.0 HAC d.o.o.: profit or loss before taxes C. PUBLIC GOOD public capital increase or decrease 429,941,800 -486,869,000 -56,927,200 543,636,165 10,309,560 553,945,725 126.4 -2.1 -973.1 (A-B)

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Hrvatske autoceste d.o.o. Operations Plan for 2020

2. STRUCTURE OF PLANNED REVENUE AND EXPENDITURE OF HAC AND THE PUBLIC GOOD OF

a) HAC d.o.o.

% of in HRK participation

 Total revenue plan...... 2,247,145,245 100.0 - toll...... 1,998,855,490 89.0 - revenue from the road property 45,289,405 2.0 management...... - fee from ARZ for the routine maintenance and toll collection 156,038,865 7.0 services... - all other business 41,558,985 1.8 revenue...... - financial 5,402,500 0.2 revenue......

The revenue will cover the expenditure of HAC d.o.o. and the entire depreciation of the Public Good under the management of HAC d.o.o. In accordance with the capital approach for the revenue and expenditure reported separately for HAC and the Public Good, the capital aid from the excise duty on energy products, in the amount of HRK 474,500,000, is recorded as a Public Good revenue and not reported as a Company revenue item. The public capital, along with funds from the excise duty, also includes revenue based on the exchange rate differences, interest and other revenue generated from the management of the money constituting the public capital, while the public capital is reduced by the amount of interests and other fees connected with the financing of the construction and maintenance of public roads as well as negative exchange rate differences. The total revenue planned for HAC and the Public Good in 2020 amounts to HRK 3,021,675,245, the total expenditure for HAC and the Public Good amounts to HRK 2,467,729,520, while, pursuant to the Roads Act (articles 94, 95 and 96), Public Good revenue and expenditure have no impact on the operating result of the Company and are fiscally neutral.

 Total expenditure of the 1,703,509,080 100.0 Company...... Out of which: - operating 1,700,609,080 99.8 expenditure...... out of which depreciation of the Company assets and Public Good

HRK 889,560,015 or 52.3% - financial expenditure of the 2,900,000 0.2 Company*...... *(the financial expenditure of the Public Good are not included in the Company’s operating expenditure)

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Hrvatske autoceste d.o.o. Operations Plan for 2020

The total revenue from the business operations will be 1.9% higher compared to the estimate for 2019, that is by 3.0% (HRK 58,455,490) with respect to the planned increase of the revenue from tolls, considering that the number of vehicles and revenue compared to the previous year is expected to continue rising in 2020. The planned revenue from road property management is the same as in 2019, and includes the planned fee for the use of the road property in connection with ancillary catering activities as well as easement. The estimate for the revenue from road property management for 2019 also includes the revenue generated from court rulings or out-of-court settlements in the amount of HRK 2,681,521, which is why it is higher than the planned revenue for 2020. The revenue from ARZ is planned pursuant to the Agreement on Routine Motorway Maintenance, Toll Collection and Traffic Supervision and Regulation services, concluded on 14 December 2018 for a period of four years, between the companies ARZ and HAC, while the monthly fee for the routine motorway maintenance, toll collection and traffic surveillance and regulation services that ARZ must pay to HAC for the second year amounts to HRK 13,003,238.75, which brings the annual revenue to a total of HRK 156,038,865.

Other revenue from HAC business operations are, by groups (profit and loss account), as follows: ­ Other planned revenue from sales are 16.4% lower in comparison with 2019, and include revenue from the road maintenance services (Sveti Ilija tunnel), revenue from rents for business parking lots and optical fibre infrastructure, revenue from the sales of means of subscription for ENC, and other business revenue connected with the business activities of the Company, Other revenue from sales is lower in comparison with the previous year due to a reduced scope of the provisions of the Sveti Ilija tunnel maintenance service and an anticipated lower revenue from the sales of motorway toll subscription. ­ Revenue based on the use of own products, goods and services that accrue and are not money-related (donations in the form of toll-free passage for public services with the right of way, associations and other humanitarian organisations, persons with a disability, families with sick or special-needs family members etc.). ­ Other business revenue that have extraordinary or one-time characteristics, namely enforcement of damages from insurance companies, unpaid disputed, claimed and written- down receivables, long-term reserves etc.

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Hrvatske autoceste d.o.o. Operations Plan for 2020

The planned financial revenue of the Company is lower in comparison with 2019, and includes interest related ti invoices, default interest and positive exchange rate differences, mostly from tolls paid in foreign currencies.

The total operating expenditure of the Company planned (with the depreciation of the Public Good) amounts to HRK 1,703,509,080, which is 4.0% less than the actual expenditure in 2019. The reduction in the total operating expenditure is a result of the reduction in the number of employees, other (extraordinary) operating expenditures (depreciated value of expensed fixed assets from investment maintenance, costs of the principals based on court rulings), reduction in the costs of the depreciation of the Public Good, and lower material costs, which is mostly related to the lower costs of the materials and services for routine motorway maintenance. The total business expenditure of the Company includes operating expenditure in the amount of HRK 1,700,609,080 and financial expenditure in the amount of HRK 2,900,000.

The operating expenditure of the Company includes:  13.6% of material costs connected with routine motorway maintenance and toll collection in the amount of HRK 231,777,170, which include the following groups of costs: ­ costs of raw materials and other materials in the amount of HRK 106,271,100 (electric energy, fuel, consumables for maintenance, spare parts, costs of magnetic cards and means of toll subscription (ENC)) ­ costs of sold goods in the amount of HRK 1,978,300 ­ other external costs in the amount of HRK 123,527,770 (routine maintenance of the machinery, vehicles and equipment; routine maintenance of roads, bridges and tunnels; card company commissions, data processing and software maintenance services, utility services and fees; telecommunication services, insurance premiums for assets and employees, intellectual services, attorney and notary public services)  26.9%: costs for the salaries of employees amounting to HRK 458,423,450  4.2%: material rights of employees amounting to HRK 71,754,330 (costs of transport, annual bonuses, third pension pillar, tax-free redundancy incentives)  52.2%: depreciation of the assets of the Company and Public Good amounting to HRK 889,560,015.  0.3%: other operating expenses in the amount of HRK 4,956,715, which include fees for employees (business trips, work in the field, professional training), memberships for various associations, administrative and court fees, scholarships and support for the education of

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Hrvatske autoceste d.o.o. Operations Plan for 2020

children of deceased employees, hospitality costs, fees for members of the Supervisory Board and Board of Auditors etc.  0.3%: value adjustment of assets in the amount of HRK 5,000,000 based on a corrected value of receivables for doubtful and disputed claims as well as claimed receivables, mostly toll claims  1.2%: reservation of costs in the amount of HRK 21,000,000 for length-of-service awards, costs of initiated court proceedings and reservation of due claims pending litigation  1.1%: other operating expenditure (extraordinary) in the amount of HRK 18,137,400 (granting of the right of free passage for public service vehicles – police, army, fire brigade, ambulance – amounting to HRK 11,000,000 as well as for other vehicles in the amount of HRK 360,000, VAT included, costs of principals based on court rulings, depreciated value of expensed fixed assets from investment maintenance)  0.2%: financial expenditure of the company in the amount of HRK 2,900,000, which includes interest based on court rulings amounting to HRK 900,000 and negative exchange rate differences amounting to HRK 2,000,000 related to toll collection operations.

The planned operating result of the Company reports income in the amount of HRK 543,636,165 as a difference between the total planned revenue in the amount of HRK 2,247,145,245 and total planned expenditure in the amount of HRK 1,703,509,080, with the depreciation of the Public Good in the amount of HRK 870,000,000 included. b) PUBLIC GOOD in HRK % of participation  Planned total revenue/receivables or public capital increase...... 774,530,000 100.0 - capital aid from the budget (from the excise duty on energy 474,500,000 61.3 products) - EU grants...... 49,880,000 6.4 - financial revenue...... (out of which HRK 250,000,000 of positive exchange rate 250,150,000 32.3 differences)

 Total planned expenditures/payables or public capital 764,220,440 100.0 reduction...... - interest and fees for loans...... 442,965,440 58.0 - negative exchange rate 220,000,000 28.8 differences...... - correction of the Public Good value under 101,255,000 13.2 concession......

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Hrvatske autoceste d.o.o. Operations Plan for 2020

 Difference: total revenue – total expenditure...... 10,309,560

The Public Good revenue/expenditure includes a planned receipt from the budget in relation to the excise duty on energy products, which, pursuant to the Roads Act, represents the funds by means of which the Republic of Croatia finances land expropriation, construction and maintenance of public roads, and repayment of the loans used for the financing of motorway construction. The funds from the excise duty on energy products planned amount to HRK 474,500,000, in accordance with the funds earmarked for HAC on this basis within the Expenditure Plan of the Ministry of Maritime Affairs, Transport and Infrastructure in the budget of the Republic of Croatia for 2020. EU grants planned as revenue for the Public Good in 2020, in the amount of HRK 49,880,000, consitute the financial base for the construction of a bridge across the river Sava near Svilaj. Construction works on the bridge commenced in 2016, and the project represents a joint investment by the Republic of Croatia and Bosnia and Herzegovina, each country contributing with 50% of the project value. The project was successfully applied for an EU grant, with funds approved for co- financing from the Connecting Europe Facility (CEF) in the amount of up to 58% of the works performed. Furthermore, within the Public Good revenue/receivables, there is a planned financial revenue in the amount of HRK 250,000,000 based on positive exchange rate differences, and HRK 150,000 based on revenue from interest and other financial revenue.

The expenditure items of the Public Good also include interest and fees for loans, and the planned amount is HRK 442,965,440, which is 19.5% less than the estimated amount for 2019. The planned expenditure that reduces the public capital also includes the corrected value of the motorways under concession, recorded in the financial records of HAC. The planned Public Good revenue and expenditure include positive and negative exchange rate differences in accordance with the expected exchange rate trends and based on the loan reporting in the HRK value since all of the loans are contracted in a foreign currency. With regard to that, no negative effect on the capital is planned because the difference between the revenue and expenditure in the same item is positive and amounts to HRK 30,000,000. The planned total Public Good revenue/receivables exceed the planned Public Good expenditure by 10,309,560, with a capital increase planned by the same amount. With regard to the projected income of HAC in the amount of HRK 543,636,165, the planned public capital increase amounts to HRK 553,945,725.

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Hrvatske autoceste d.o.o. Operations Plan for 2020

IV. PLANNED NUMBER OF EMPLOYEES, SALARY COSTS AND EMPLOYEES’ MATERIAL RIGHTS

The expected number of employees on 31 December 2019 is 2,715, out of which 79 work under a fixed-term employment contract. The Operations Plan for 2020 foresees a total of 2,630 employees working on 31 December 2020. The reduction of the number of employees with permanent employment contracts represents a continuation of the ongoing reorganisation and restructuring process of the Company by determining the collective surplus of employees based on employees’ voluntary notices, and as a result of the implementation of measures proposed by consultants for the optimisation of the number of employees within the scope of the technical and business rationalisation.

The business restructuring process began in 2017. Given the voluntary redundancy programme and natural labour outflow, a total of 320 employees left the company so far, which is in agreement with the guidelines issued by the World Bank regarding the number of employees per motorway kilometre. This was reduced from the initial 2.76 workers per kilometre in 2019 to 2.49, with the expected 2.42 workers per kilometre by 2020, as well as plans to achieve the figure of 2.1 employees per kilometre by the end of the restructuring process and introduction of the new toll collection system.

The Operations Plan for 2020 provides for 79 employees under fixed-term contracts – mostly firefighters and drivers/engineers as well as toll booth cashiers, this alongside the permanent employees. In accordance with the reported needs of the Toll Collection Division, there are plans in 2020 as well to seasonally employ cashiers under fixed-term contracts and with a suitably dynamic allocation, with a total of 150 cashiers employed for peak tourist season (1 June to 30 September). In order to ensure the maximum traffic flow in peak loads during the season, it is necessary to employ a suitable number of toll booth cashiers under fixed-term contracts in accordance with the dynamic plan, which is based on the calculation of the necessary number of cashiers, all the while in respect to the Collective Agreement. The planned expenditure for salaries in 2020 amounts to HRK 458,423,450, which is 26.9% of the total operating costs. The planned material rights of employees amount to HRK 71,754,330, which is 4.2% of the total expenditure of the Company. The material rights of employees include costs of transport to and from work, length-of-service awards, tax-free awards, gifts in kind, gifts for children of employees, salary bonuses, lump-sum food allowance, other aid and support to workers up to the maximum tax-free

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Hrvatske autoceste d.o.o. Operations Plan for 2020

amounts, payments to the third pension pillar as well as the payment of the tax-free part of severance incentives, all in accordance with the Collective Agreement in force.

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Hrvatske autoceste d.o.o. Operations Plan for 2020

V. FINANCING PLAN

With regard to investment, operating and financial activities planned by the Company to be carried out in 2020, it has set out a revenue and expenditure plan, the sources of financing as well as the debt situation for the end of the year.

1. Financing sources plan for the activities planned in 2020 – current-year accrual basis – in HRK

Plan Sources of financing State Budget Loans (from the No Activities Expenditure Company’s Status of New Total ARZ fee excise duty EU grants value own funds cash assets Contracted contract/refi (8+9) on energy nancing products) 0 1 2 3 4 5 6 7 8 9 10 Investment in motorways and other 1. 603,783,000 30,244,262 0 474,500,000 43,038,738 0 0 56,000,000 56,000,000 roads 1.1 Construction 292,937,000 30,244,262 0 206,692,738 0 0 0 56,000,000 56,000,000 1.2 Extraordinary maintenance 310,846,000 0 0 267,807,262 43,038,738 0 0 0 0 2. Management and routine maintenance 831,466,811 626,566,974 156,038,865 0 0 35,332,972 13,528,000 0 13,528,000 2.1 Management 637,966,811 501,770,946 122,667,865 0 0 0 13,528,000 0 13,528,000 2.2 Routine motorway maintenance 129,400,000 96,029,000 33,371,000 0 0 0 0 0 0 a) under the management of HAC 96,029,000 96,029,000 0 0 0 0 0 0 0 b) under the management of ARZ 33,371,000 0 33,371,000 0 0 0 0 0 0 2.3 Income tax expenditure 64,100,000 28,767,028 0 0 0 35,332,972 0 0 0 Procurement of tangible and intangible 3. 49,460,000 49,460,000 0 0 0 0 0 0 0 assets of the Company 4. Loan obligations 1,371,872,160 1,371,872,160 0 0 0 0 0 0 0 4.1 Interest and fees 442,965,440 442,965,440 0 0 0 0 0 0 0 4.2 Loan principal repayment 928,906,720 928,906,720 0 0 0 0 0 0 0 TOTAL 2,856,581,971 2,078,143,396 156,038,865 474,500,000 43,038,738 35,332,972 13,528,000 56,000,000 69,528,000

(all amounts are VAT-exclusive)

in HRK 000

ExpenditureStruktura izdataka structure

1.000.000 928.907 900.000 800.000 700.000 637.967 600.000 500.000 442.965 400.000 292.937 310.846 300.000

200.000 129.400 100.000 64.100 49.460 0 Construction Extraordinary Management Routine Income tax Procurement Interest and Loan principal Izgradnja Izvanredno Upravljanje Redovno Izdatak za Nabava Kamate i Otplate maintenance motorway expenditure of Company fees repayment održavanje održavanje porez na imovine naknade glavnica maintenance19 assets autocesta dobit Društva kredita

Hrvatske autoceste d.o.o. Operations Plan for 2020

StrukturaFinancing izvora sources financiranja structure

VlastitaCompany’s sredstva own Društvafunds

ProračunState Budget RH (from the excise duty on energy products) 72,7% (naknada iz trošarina na energente) NaknadaARZ fee ARZ-a 16,6%

KreditiLoans 5,5% EUEU fondovi grants - bespovratna sredstva

StanjeStatus novčanih of cash assets sredstava 2,4% 1,2% 1,5%

The financing of the investment in public roads is, for the most part, planned partly from the excise duty on energy products, EU grants, own funds and new loan for the financing of the section from Beli Manastir to the Halašica bridge, i.e. the continuation of the construction of the A5 motorway from the Hungarian border to the Halašica bridge, which will be contracted in the course of 2020. The expenditure for the management and routine maintenance as well as procurement of current and fixed assets of the Company within the scope of management will be financed entirely from the Company’s own funds, i.e. the revenue of ARZ for the routine maintenance and toll collection services on the sections under concession granted to ARZ. The expenditure for the redundancy incentives for employees according to the Redundancy Plan will be paid out from the loan contracted earlier with the European Bank for Reconstruction and Development. The procurement of current and fixed assets concerns the procurement of vehicles, machinery and equipment for motorway maintenance (road maintenance vehicles, a cargo vehicle with a hydraulic superstructure for the sinter service, silo spreaders for trucks and snow ploughs, mowers, workshop equipment), IT equipment and licences as well as investment in the Traffic Flow System upgrade. A significant part of the investment also concerns the modernisation of the existing IT system in relation to the introduction of a document management and archive digitisation system, introduction of a system for the monitoring and management of technical means, IT security system, business solution for human potential management etc.

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Hrvatske autoceste d.o.o. Operations Plan for 2020

2. Planned loan debt status

Based on the planned activities of the Company for 2020 and cash flow dynamic in the revenue and expenditure plan, the loans will be used throughout the year. Therefore, the planned loan debt status at the end of 2020 is as follows: in HRK 1. DEBT STATUS ESTIMATION AS OF 31 DECEMBER 2019 20,216,295,470 2. Use of loans from development banks contracted earlier 25,160,000 3. Drawdowns from loans taken out in 2020 56,000,000 4. Loan refinancing 0 5. TOTAL NEW DEBT (2+3+4) 81,160,000 6. LOAN REPAYMENT IN 2020 928,906,720 6.1 Loan repayment/refinancing 0 6.2 Loan repayment 928,906,720 7. DEBT REDUCTION IN 2020 (5-6) -847,746,720 8. DEBT STATUS ESTIMATION AS OF 31 DECEMBER 2020 (1+7) 19,368,548,750

DEBT STATUS ESTIMATION AS OF 31 DECEMBER 2020 IN EUR 2,617,371,453

In 2020, the loan principal amounting to HRK 928,906,720 will be repaid, while a new loan is planned in the amount of HRK 81,160,000, based on the loan drawdown for the completion of the construction of the bridge over the river Sava near Svilaj and the commencement of the construciton of the section from Beli Manastir to the Halašica bridge, which means the total projected debt status at the end of 2020 will amount to HRK 19,368,548,750 (EUR 2,617,371,453 at the planned exchange rate of EUR 1 = HRK 7.4), which is smaller by HRK 847,746,720 when compared to the end of 2019. Since all of the loans are contracted with a foreign currency clause and variable interest rate pegged to the Euribor, the Company is exposed to the foreign currency and interest risk. The foreign currency risk arises from the fluctuation of the exchange rate between HRK and EUR, while the interest risk is connected with the fluctuation of the interest rates on the international and domestic financial markets. In 2020, a new loan will be contracted with development banks in order to finance the completion of the construction of the Vc corridor from the Hungarian border to the Halašica bridge, while no new loans are planned for the refinancing of the existing ones.

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Hrvatske autoceste d.o.o. Operations Plan for 2020

VI. CONSTRUCTION PLAN

Investment in public roads are planned as a continuation of the investment cycle that started in the previous period, and is an integral part of the Public Roads Construction and Maintenance Programme for the 2017-2020 period.

In 2020, HAC will invest HRK 292,937,000 in motorway construction. The sources of financing of the planned investments are loans from development banks – European Bank for Reconstruction and Development (EBRD) and Croatian Bank for Reconstruction and Development (HBOR) in the amount of HRK 56,000,000 (19.1%), funds from the excise duty on energy products in the amount of HRK 206,692,738 (70.6%) and own funds in the amount of HRK 30,244,262 (10.3%).

The Motorway Construction and Maintenance Programme for 2020 provides for motorway construction activities and reconstruction works on the existing network, with most of the activities planned for the following routes and projects:

 A1 motorway A1 motorway, Bosiljevo – Split – Dubrovnik

­ the reconstruction and extension of the internal and external drainage on the Maslenica – Zadar 1 section ­ the commencement of the works on the extension of the Dugopolje junction, second and third phases ­ apart from the funds earmarked for the investments, Hrvatske autoceste d.o.o. plans to create study documents for the Ploče – Dubrovnik motorway through operating expenses

 A3 motorway Bregana – Zagreb – Lipovac

­ the construction of noise barriers in accordance with the action plan ­ the construction and reconstruction of the existing ancillary service facilities for the purpose of improving their quality and introducing new services ­ activities connected with the project for the construction of the third lane of the “Zagreb bypass”

 A4 motorway Zagreb – Goričan

­ the reconstruction of the connection to the Goričan border crossing ­ the construction of a hydrant network, water reservoir and pump station for the Hrastovec and Vrtlinovec tunnels on the Novi Marof – Varaždin section

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Hrvatske autoceste d.o.o. Operations Plan for 2020

 A5 motorway Beli Manastir – Osijek – Bosnian and Herzegovinian border

­ the construction planning of the Hungarian border – Beli Manastir section ­ the commencement of the works on the construction of the 17.5 km motorway section from the Halašica bridge to Beli Manastir ­ continuation of the works on the construction of the Halašica bridge, overpasses and crossings on the Halašica bridge – Beli Manastir subsection ­ the completion of the works on the construction of the bridge over the river Sava near Svilaj

 A7 motorway Rupa – Rijeka – Žuta Lokva

­ the construction planning, administrative procedure and construction of the first phase of the Novi Vinodolski bypass

 A11 motorway Zagreb-Sisak

­ construction planning and administrative procedures for the construction of an overpass over the marshalling yard ­ continuation of the works on the moving of the facilities on the Lekenik-Sisak section

 In 2020, only the necessary investments are planned in the existing toll collection system. In 2021, the introduction of a new toll collection system will commence.

 Moreover, HAC will also commence activities for the rationalisation of the lighting on the motorway network – the replacement of the existing, obsolete technology with the new LED technology as well as the rationalisation of the solution. The project will yield a double positive effect in terms of a higher-quality and more durable type of lighting as well as a reduction in the consumption of electric energy, whose positive effects will be seen immediately in the expenditure.

 Some more important activities in this year and in the following years are certainly those related to the reconstruction of the existing service areas on the motorway network as well as those for the development and construction of new ones in order to improve the quality and scope of services offered, all in accordance with the Plan and Programme of the Development of Service Facilities on the Motorway Network Falling within the Purview of HAC d.o.o.

 Apart from the above, HAC will also address disputes that arose during the previous periods.

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Hrvatske autoceste d.o.o. Operations Plan for 2020

A detail description of the investment in the motorway construction and extraordinary maintenance is given in the Motorway Construction and Maintenance Plan for 2020.

Investments in construction for 2020 are planned according to specific activities in the following amounts: in HRK % of Plan No Activity type participati 2020 on 0 1 2 3 1. Land 22,290,000 7.6 2. Installation relocation 6,000,000 2.0 3. Construction planning 16,552,000 5.7 4. Construction 241,733,000 82.5 5. Monitoring 6,362,000 2.2 TOTAL 292,937,000 100.0

The planned investment in the construction of motorways by sections is given in the following table: in HRK Code Plan % of No Name AC 2020 participation 0 1 2 3 4 1. A1 Bosiljevo-Split 17,253,000 5.9 1.1 A1 Bosiljevo – Sveti Rok junction 3,504,000 20.3 1.2 A1 Sveti Rok – Split junction 13,749,000 79.7 2. A1 Split-Ploče-Dubrovnik 7,654,000 2.6 3. A2 Zagreb-Macelj 653,000 0.2 4. A3 Bregana-Zagreb-Lipovac 46,623,000 15.9 5. A4 Zagreb-Goričan 26,118,000 8.9 6. A5 Beli Manastir – Osijek – BiH border 133,427,000 45.6 7. A7 Rupa – Rijeka – Žuta Lokva 12,941,000 4.4 8. A8 and A9 Istrian Y 1,600,000 0.5 9. A10 BiH border – Metković – Ploče junction 0 0.0 10. A11 Zagreb-Sisak 35,076,000 12.0 11. - Other projects (toll collection system) 11,592,000 4.0 GRAND TOTAL INVESTMENT IN CONSTRUCTION 292,937,000 100

VII. MAINTENANCE PLAN

1. EXTRAORDINARY MAINTENANCE

The Extraordinary Maintenance Plan for 2020 provides for works in the total amount of HRK 310,846,000, out of which HRK 267,807,262 (86.2 %) will be financed from the excise duty, while HRK 43,038,738 (13.8 %) will be financed from EU grants.

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Hrvatske autoceste d.o.o. Operations Plan for 2020

The 2020 Plan foresees extraordinary maintenance works, which include the reconstruction of the carriageway structure, bridges, overpasses, viaducts, repair works on rifts and landslides, refurbishment of the road drainage system, replacement of the traffic equipment and signals, works on buildings, works on the maintenance and traffic control centres, works on toll collection booths, activities for the introduction of intelligent transport systems into the maintenance and traffic control centre, and implementation of the Crocodile 2 Croatia and Crocodile 3 Croatia projects. EU grants from the Connecting Europe Facility (CEF) have been contracted for the implementation of the projects aimed at introducing intelligent transport systems into the maintenance and traffic control centres (Crocodile 2 Croatia and Crocodile 3 Croatia); 85% of the funds for the implementation activities and equipment fall under grants.

Furthermore, some of the more important activities under the Extraordinary Maintenance Plan are certainly all those activities that will be implemented in connection with the road traffic safety through multiple projects (signals for the prevention of vehicles entering the wrong direction, addressing potentially hazardous places, replacement of replaceable traffic signals, activities connected with the implementation of the systems for speed monitoring on motorways, activities connected with the reconstruction of video surveillance and video detection systems).

The investments planned for extraordinary motorway maintenance by sections and projects are provided in the following table: in HRK Plan No Route/project name 2020 0 1 2 1. A1 Bosiljevo-Split-Ploče 93,538,000 2. A3 Bregana-Zagreb-Lipovac 116,179,000 3. A4 Zagreb-Goričan 45,147,000 4. A5 Beli Manastir – Osijek – BiH border 4,295,000 5. A10 BiH border – Ploče 978,000 6. A11 Zagreb-Sisak 1,899,000 7. Introduction of intelligent transport systems into the traffic control centres (CROCODILE II project) 27,800,000 8. CROCODILE III project 19,495,000 9. “LIFE programme” – wildlife bridge improvement 1,515,000 TOTAL 310,846,000

2. ROUTINE MAINTENANCE

Hrvatske autoceste d.o.o. currently maintain a network of 918.5 km of functioning motorway sections which are under the management of HAC, 187 km of sections under the management of Autocesta Rijeka – Zagreb d.d. (ARZ) and 7.3 km of the D76 connecting road from the Zagvozd junction to the Sveti Ilija tunnel, which is under the management of Hrvatske ceste d.o.o. from 1 January 2018, constituting a total of 1,112.8 km.

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Hrvatske autoceste d.o.o. Operations Plan for 2020

Routine motorway maintenance works are planned in accordance with the regulations and Routine Maintenance Standard. Routine maintenance involves the usual activities of motorway maintenance in wintertime, motorway surveillance and inspection (patrols), maintenance of the carriageway, facilities, drainage system, earthen parts of the motorway (grass cutting); traffic signs, signals and equipment; traffic surveillance and control system, power facilities, specialist electrical systems, electrical and engineering systems and installations etc. For material costs and routine maintenance services, HAC plans to spend a total of HRK 129,400,000 by the end of 2020, out of which HRK 96,029,000 is planned for the sections under the management of HAC and HRK 33,371,000 for the sections under the management of ARZ.

The costs of routine maintenance for the sections under the management of HAC, planned for 2020 in the amount of HRK 96,029,000, are lower than the 2019 estimate by 4.4% and lower by 0.5% than the planned amount for 2019. The costs of routine maintenance for the sections under the management of HAC, planned for 2020 in the amount of HRK 33,371,000, are lower than the 2019 estimate by 4.9% and lower by 7.3% than the planned amount for 2019.

Out of the total planned cost amount of HRK 129,400,000 for routine maintenance, a total of HRK 85,025,000 relates to material costs, namely: electrical energy, fuel and lubricant, salt and sand, consumables for motorway maintenance (paint and plastics for repairing the horizontal traffic signals, electric materials, cleaning detergents, equipment for fire operations), spare parts for the maintenance and repairs of cargo, working and other machinery, inventory write-downs (manual road and garden tools, work and protective clothes and footwear, traffic signs and equipment for temporary traffic regulation, tyres for cars and lorries) as well as protective chain-link fences and elastic guard rails.

The remaining HRK 44,375,000 is planned for routine maintenance of the carriageway, facilities and motorway equipment, which includes: routine maintenance of roads, bridges and tunnels, routine maintenance of buildings, maintenance of green areas, routine maintenance of machinery and equipment, rental of vehicles and machinery, vertical and horizontal signals, fire alarm equipment servicing and maintenance, ventilation, video surveillance, radio stations, traffic and information system etc. The above routine motorway maintenance expenditure does not include neither the expenditure for workers hired for the maintenance nor the expenditure for the procurement of basic supplies and

26

Hrvatske autoceste d.o.o. Operations Plan for 2020

other operating expenditures of the Maintenance Sector which were planned within the scope of the management expenditure.

All routine maintenance works will be carried out with the aim of ensuring safe traffic, maintaining and improving the technical and safety characteristics of roads, protecting the environment from the harmful impact of road traffic, environmental protection and achieving a high standard of motorway service.

The following is a comparison of the attainment for 2018, Routine Maintenance Plan in 2019, estimation for 2019 as well as the Routine Maintenance Plan for 2020.

Routine Motorway Maintenance Plan in total for the sections under the management of HAC and sections under the management of ARZ for 2020

in HRK TOTAL HAC AND ARZ SECTIONS Realisation Realised Plan Plan Index Index Difference No Description estimate 2018 2019 2020 5/3 5/4 5-4 2019 0 1 2 3 4 5 6 7 8 1. MATERIALS AND ENERGY FOR ROUTINE MAINTENANCE 110,187,387 90,275,000 86,545,313 85,025,000 94.2 98.2 -1,520,313 1.1 Materials spent for maintenance 10,048,458 7,645,000 7,509,276 4,215,000 55.1 56.1 -3,294,276 1.2 Salt for maintenance 27,611,349 16,000,000 13,759,003 15,300,000 95.6 111.2 1,540,997 1.3 Fuel and lubricants 14,819,253 12,000,000 12,478,624 12,000,000 100.0 96.2 -478.624 1.4 Bumpers 2,418,887 2,140,000 1,928,182 2,140,000 100.0 111.0 211.818 Electric energy for manufacture and overhead, gas and 1.5 44,601,840 45,250,000 43,972,483 44,250,000 97.8 100.6 277,517 steam 1.6 Spare parts and materials for maintenance 6,215,496 3,940,000 4,176,989 3,890,000 98.7 93.1 -286,989 Small inventory, packaging material and car tyre draw- 1.7 4,472,104 3,300,000 2,720,756 3,230,000 97.9 118.7 509,244 down 2. ROUTINE MAINTENANCE SERVICES 51,273,291 42,225,000 49,054,687 44,375,000 105.1 90.5 -4,679,687 Rental of vehicles and machinery for routine road, bridge 2.1 6,189,370 3,985,000 4,804,845 3,985,000 100.0 82.9 -819,845 and tunnel maintenance 2.2 Horizontal and vertical signals 1,035,787 850,000 1,085,030 5,300,000 623.5 488.5 4,214,970 2.3 Green area maintenance, deforestation 1,058,141 900,000 1,169,978 1,000,000 111.1 85.5 -169,978 2.4 Road, bridge and tunnel maintenance 15,296,660 14,050,000 15,260,604 12,250,000 87.2 80.3 3,010,604 2.5 Machinery, vehicle and equipment maintenance 27,693,333 22,440,000 26,734,230 21,840,000 97.3 81.7 -4,894,230 3. TOTAL (1+2) 161,460,678 132,500,000 135,600,000 129,400,000 97.7 95.4 -6,200,000

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Hrvatske autoceste d.o.o. Operations Plan for 2020

Routine Motorway Maintenance Plan for 2020  sections under the management of HAC

in HRK HAC SECTIONS Realisation No Description Realised Plan Plan Index Index Difference estimate 2018 2019 2020 5/3 5/4 5-4 2019 0 1 2 3 4 5 6 7 8 1. MATERIALS AND ENERGY FOR ROUTINE MAINTENANCE 83,199,753 66,104,000 63,867,367 62,324,000 94.3 97.6 -1,543,367 1.1 Materials spent for maintenance 7,384,620 5,651,000 5,269,939 2,321,000 41.1 44.0 -2,948,939 1.2 Salt for maintenance 20,303,030 11,000,000 9,666,375 10,500,000 95.5 108.6 833.625 1.3 Fuel and lubricants 11,583,608 9,180,000 9,837,817 9,230,000 100.5 93.8 -607.817 1.4 Bumpers 2,146,370 1,740,000 1,680,788 1,860,000 106.9 110.7 179,212 Electric energy for manufacture and overhead, gas and 1.5 33,083,487 33,130,000 32,270,981 32,955,000 99.5 102.1 684,019 steam 1.6 Spare parts and materials for maintenance 5,058,086 2,945,000 3,041,834 2,905,000 98.6 95.5 -136,834 Small inventory, packaging material and car tyre draw- 1.7 3,640,552 2,458,000 2,099,633 2,553,000 103.9 121.6 453,367 down 2. ROUTINE MAINTENANCE SERVICES 37,439,635 30,415,000 36,632,633 33,705,000 110.8 92.0 -2,927,633 Rental of vehicles and machinery for routine road, bridge 2.1 5,507,490 3,535,000 4,353,418 3,605,000 102.0 82.8 -748,418 and tunnel maintenance 2.2 Horizontal and vertical signals 907,904 600,000 1,003,504 5,150,000 858.3 513.2 4,146,496 2.3 Green area maintenance, deforestation 1,051,608 700,000 838,438 800,000 114.3 95.4 -38,438 2.4 Road, bridge and tunnel maintenance 9,748,301 9,450,000 10,171,708 8,320,000 88.0 81.8 -1,851,708 2.5 Machinery, vehicle and equipment maintenance 20,224,332 16,130,000 20,265,565 15,830,000 98.1 78.1 -4,435,565 3. TOTAL (1+2) 120,639,389 96,519,000 100,500,000 96,029,000 99.5 95.6 -4,471,000

Routine Motorway Maintenance Plan for 2020  sections under the management of ARZ in HRK ARZ SECTIONS Realisation Description Realised Plan Plan Index Index Difference No estimate 2018 2019 2020 5/3 5/4 5-4 2019 0 1 2 3 4 5 6 7 8 1. MATERIALS AND ENERGY FOR ROUTINE MAINTENANCE 26,987,634 24,171,000 22,677,946 22,701,000 93.9 100.1 23,054 1.1 Materials spent for maintenance 2,663,838 1,994,000 2,239,337 1,894,000 95.0 84.6 -345,337 1.2 Salt for maintenance 7,308,318 5,000,000 4,092,628 4,800,000 96.0 117.3 707,372 1.3 Fuel and lubricants 3,235,645 2,820,000 2,640,807 2,770,000 98.2 104.9 129,193 1.4 Bumpers 272,517 400,000 247,394 280,000 70.0 113.2 32,606 Electric energy for manufacture and overhead, gas and 1.5 11,518,353 12,120,000 11,701,502 11,295,000 93.2 96.5 -406,502 steam 1.6 Spare parts and materials for maintenance 1,157,410 -995,000 1,135,155 -985,000 99.0 86.8 -150,155 Small inventory, packaging material and car tyre draw- 1.7 831,553 842,000 621,123 677,000 80.4 109.0 55,877 down 2. ROUTINE MAINTENANCE SERVICES 13,833,656 11,810,000 12,422,054 10,670,000 90.3 85.9 -1,752,054 Rental of vehicles and machinery for routine road, bridge 2.1 681,880 450,000 451,427 380,000 84.4 84.2 -71,427 and tunnel maintenance 2.2 Horizontal and vertical signals 127,883 250,000 81,526 150,000 60.0 184.0 68,474 2.3 Green area maintenance, deforestation 6,533 200,000 331,540 200,000 100.0 60.3 -131,540 2.4 Road, bridge and tunnel maintenance 5,548,359 4,600,000 5,088,896 3,930,000 85.4 77.2 -1,158,896 2.5 Machinery, vehicle and equipment maintenance 7,469,000 6,310,000 6,468,665 6,010,000 95.2 92.9 -458,665 3. TOTAL (1+2) 40,821,290 35,981,000 35,100,000 33,371,000 92.7 95.1 -1,729,000

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Hrvatske autoceste d.o.o. Operations Plan for 2020

VIII. MANAGEMENT STRUCTURE

Owner: Republic of Croatia 100%

General Meeting: As the founder, the Republic of Croatia exercises its rights in the General Meeting of the Company through the Government of the Republic of Croatia, represented by Oleg Butković, Minister of Maritime Affairs, Transport and Infrastructure.

Supervisory Board: Branimir Jerneić Chairperson Nino Vela Deputy Chairperson Darko Kasap member Ladislav Turčinović member Anđelko Kasunić member, employees’ representative

Board of Auditors: Nataša Munitić Chairperson Ladislav Turčinović Deputy Chairperson Darko Kasap member Rudi Grubišić member

Management Board: Boris Huzjan, PhD, BSc in Civil Engineering President of the Management Board Stjepan Baranašić, BSc in Civil Engineering member of the Management Board

President of the Management Board:

______Boris Huzjan, PhD, BSc in Civil Engineering

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