HRVATSKE AUTOCESTE D.O.O. BUSINESS PLAN for the YEAR 2019

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HRVATSKE AUTOCESTE d.o.o. BUSINESS PLAN FOR THE YEAR 2019

Zagreb, March 2019

Hrvatske autoceste d.o.o. Business Plan for 2019

CONTENTS:

I. INTRODUCTION...... 3 II. RESTRUCTURING ...... 5 III. REVENUE AND EXPENDITURE PLAN ...... 9 1. PROFIT-AND-LOSS ACCOUNT PLAN FOR HAC d.o.o...... 11 AS WELL AS RECEIPT AND EXPENDITURE/REVENUE AND EXPENSES OF PUBLIC GOOD PLAN (changes to the public capital) 2. STRUCTURE OF THE PLANNED REVENUE AND EXPENSES AND PUBLIC GOOD ...... 12 IV. NUMBER OF EMPLOYEES, SALARIES COSTS AND EMPLOYEE BENEFITS PLAN ...... 17 V. FINANCING PLAN ...... 20 1. Funding sources plan for the intended activities in 2019 ...... 20 2. Cashflow plan ...... 22 3. Planned credit indebtedness ...... 24 VI. PLANNED BALANCE SHEET ...... 25 VII. CONSTRUCTION PLAN ...... 27 VIII. MAINTENANCE PLAN ...... 30 1. PERIODIC MAINTENANCE ...... 30 2. ROUTINE MAINTENANCE ...... 33 IX. MANAGEMENT STRUCTURE ...... 36

Hrvatske autoceste d.o.o. Business Plan for 2019

I. INTRODUCTION

Croatian company Hrvatske Autoceste d.o.o. was founded on the basis of the Act on Amendment to the Public Roads Act (Official Gazette No. 27/01.), by the Decision of the Government of the Republic of Croatia on the division and transformation of the Croatian Road Administration /HUC – Hrvatska Uprava za Ceste) into Hrvatske Autoceste d.o.o. (HAC) and Hrvatske Ceste d.o.o. (HC). The company was founded with the purpose of operating, constructing and maintaining motorways in Croatia, and started operating on 11 April 2001. Hrvatske Autoceste d.o.o. are 100% state-owned company which exercise their rights in the Assembly of the Company through the Government of the Republic of Croatia. Hrvatske Autoceste d.o.o. operate, build, reconstruct and maintain a motorway network except fot the motorway routes operated by concession companies under the provisions of the Roads Act.

The bases for the Business Plan of Hrvatske Autocesta d.o.o. for 2019 include:

 Business and financial restructuring of HAC as part of the project "Modernization and Restructuring of the Road Sector Infrastructure" that was undertaken by the Government of the Republic of Croatia in cooperation with the World Bank while the implementation is under competence of HAC and other companies in the road sector.

 Completion of the investment cycle started in the early years and new investments in motorways and other roads according to the programme planning documents of the Government of the Republic of Croatia, namely:

 Public Roads Construction and Maintenance Programme for the period 2017 – 2020 adopted by the Government of the RoC at the proposal of the Ministry of the Sea, Transport and Infrastructure and guidelines that will be implemented in the Amendments to the Public Roads Construction and Maintenance Programme for the period 2017 – 2020 (amendments to the programme are being drawn)  Motorway Construction and Maintenance Plan for 2019 which is passed by HAC with the consent of the Government of the RoC for the implementation of the Programme.

For the year 2019, a total of HRK 530,458,000 of investment in motorways and state roads is planned by HAC. Out of the total investment amount, HRK 267,682,000 are allocated for construction (out of which HRK 263,278,000 for motorways and HRK 4,404,000 for state roads), and HRK 262,776,000 is investment in periodic maintenance of motorways.

Hrvatske autoceste d.o.o. Business Plan for 2019

On A5 motorway route Beli Manastir - Osijek – B&H border in 2019 HAC will complete the construction of the 2.5 km long Bridge Drava that will not be opened to traffic until the entire motorway section from Osijek interchange to Beli Manastir has been completed which is planned in 2021, and the bridge Svilaj over the Sava will be completed. - Routine maintenance and toll collection on motorways operated by Hrvatske Autoceste d.o.o. (HAC) and company Autocesta Rijeka - Zagreb d.d. (ARZ):

From April 2013 to December 2017 these operations were carried out by HAC's daughter company Hrvatske Autoceste Održavanje i Naplata Cestarine d.o.o. (HAC ONC). In December 2017 within business restructuring of HAC the daughter company HAC ONC was merged which also included transfer of business operations of ARZ as well as ARZ's business interest in HAC ONC to HAC at a fee. Before the end of 2019 a total of HRK 132,500,000 shall be spent on material costs and routine maintenance services out of which HRK 96,519,000 for sections operated by HAC including Sveti Ilija Tunnel, and HRK 35,981,000 for sections under the competence of ARZ.

Pursuant to the Decision of the Government of the Republic of Croatia of 13 December 2017 on cessation of toll collection for Tunnel Sveti Ilija HAC ceased to be responsible for the management of that tolled structure for which they were authorized under the Roads Act, and the competence over the tunnel was transferred to HC by signing the Mutual Transfer Agreement. In 2019 HAC will continue to provide routine maintenance services in Sveti Ilija tunnel further to the Agreement with Hrvatske Ceste d.o.o. including fire extinguishing services and removal of fire induced consequences and damages to the vehicles in the tunnel. For the provision of routine motorway maintenance and toll collection services ARZ will pay to HAC a monthly fee pursuant to the Agreement on routine motorway maintenance, toll collection and traffic control and management for which HRK 155,498,265 is planned in 2019. 23,1% or HRK 35,981,000 of the total amount is intended for material costs and routine maintenance of ARZ managed motorway.

- Ensuring solvency - from the Company's own sources from the use and management of motorways and by ensuring loans for refinancing of the existing debts: HAC from the Company's own revenues (tolls, roadside services, ARZ fee for routine maintenance and toll collection and other income) fully finances the Company's operating costs (operation and routine maintenance) and a part of the interest on loans for public good and part of the loan principal repayment. Capital investment is planned to be financed from the fuel tax, EU funds grants and development bank loans.

Hrvatske autoceste d.o.o. Business Plan for 2019

II. RESTRUCTURING

In Hrvatske Autoceste d.o.o. in 2013, the Company's Corporate Restructuring Program was initiated with the aim of corporate and operational restructuring, to further streamline and harmonize HAC operations with European standards and with the purpose of preparing the project of privatization (monetization) of motorways for up to a 50-year period. In accordance with the objectives of the Programme, in 2013 the HAC singled out business units for the provision of routine motorway maintenance and toll collection to the daughter company Hrvatske Autoceste Održavanje i Naplata Cestarine d.o.o. (HAC ONC). In January 2014, the merger of the daughter company ARZ-ON of the company Autocesta Rijeka - Zagreb d.d. (ARZ) to the acquirer company of HAC ONC was carried out in order to rationalize business, increase the quality of service to the motorway users and the efficiency of the management function and reduce the costs of running and maintaining the motorways. The HAC and ARZ Company, as members of the HAC ONC Company, have concluded a Contract which defines the operation, management and control of HAC ONC in accordance with the business shares in the registered capital of the HAC ONC.

Further business and financial restructuring of the HAC is part fo the project "Modernization and Restructuring of the Road Sector Infrastructure" that was undertaken by the Government of the RoC and the implementation is under the competence of the Ministry of the Sea, Transport and Infrastructure and HAC in cooperation with the World Bank. During 2017, preparatory activities were carried out and the implementation of this project began; the process was continued throughout the year 2018 and is progressing in line with the set objectives. In order to implement this project, on the proposal of the Ministry of the Sea, Transport and Infrastructure ,the Government of the Republic of Croatia on March 16, 2017 reached the Decision on the Acceptance of the Business and Financial Restructuring of the Road Sector based on which the process of reorganization of companies in the motorway sector was initiated. In addition to the financial sustainability of the sector itself, operational improvements are needed in the following key areas: a) management of the road infrastructure sector b) planning, financing and implementation of investments in the road sector c) management of companies and their business.

Hrvatske autoceste d.o.o. Business Plan for 2019

Business restructuring involves the reorganization of companies in the motorway sector, i.e. the merger of the company HAC ONC with HAC, within which the transfer of ARZ operations performed by HAC ONC by December 1, 2017 belongs. The aim of this merger is to optimize business processes, to provide economies of scale, including reducing overall operating costs.

Further business reforms and operational measures include: - rationalization of core business functions with a gradual decrease in the number of employees, - reduction in maintenance and operation costs by defining a new maintenance standard in line with the European Union practice, - defining new toll collection system in the course of 2019 with the implementation in 2022 - introduction of the new road asset management system by 2020.

Regarding the implementation of the reform, the HAC was an expert support to the Ministry of the Sea, Transport and Infrastructure in the negotiation procedures of consultancy services for the implementation of business and technical restructuring of the Company, development of a study on the development of electronic toll collection and the development of a national standard of routine public road maintenance. The contracting phase is over, the consultants have begun work and are intensifying their activities so that the process could take place according to the agreed deadlines. The Operational Measures made so far have been implemented and carried out through the voluntary termination of employment contracts through the application of established forms of incentive measures to reduce the number of workers. Through retrenchment programme by voluntary termination of employment contracts in the period between 31 December 2017 and 31 December 2018 the number of employees was reduced by 232 employees (141 employee left the company in 2017 and 91 employee in 2018). Proceeds for the implementation of the restructuring process were provided with state aid of the Republic of Croatia in the amount of HRK 35,537,072, and were made on the basis of the Loan Agreement between the Republic of Croatia and the World Bank, which provided the Republic of Croatia with a loan of EUR 22 million for financing the "Modernization and Restructuring of the Road Infrastructure Sector". The continuation of the restructuring program is linked to the EUR 250m loan agreement concluded on March 30, 2016 between the HAC and the European Bank for Reconstruction and Development (EBRD), and part of the contracted amount is allocated to the workforce restructuring program. In May 2018, a new Decision on incentive measures to reduce the number of employees was adopted,

Hrvatske autoceste d.o.o. Business Plan for 2019

and an open type plan for reducing the number of employees was drafted for a period of five years, ie until the end of 2022, during which time employees may express their interest for the termination of the employment contract and the and the employer reserves the right to decide with which workers the termination of employment could be concluded based on the business needs and organizational structure. Furthermore, the consultant engaged in technical and business rationalization project conducted a functional analysis of the main business activities and provided recommendations and suggestions for improving business processes as well as measures to be taken for further optimization and rationalization of operating costs, including cost reduction for employees. In order to carry out business optimization of the Company, the following four categories of rationalization have been identified and quantified:

1. Optimization of levels of hierarchy within the Company by eliminating certain levels of hierarchy within organizational units and subunits and redistributing responsibilities to other employees. The implementation of this category would have the effect of reducing the costs for employees in 2019 in the amount of HRK 580,000.

2. Reorganization of organizational units, with termination of appointments which means reduction of organizational units (merging or transformation from departments to group) to achieve optimal organizational structure and range of control. The impact of implementation of this category would be reflected in the reduction of staff costs in 2019 for HRK 920,000.

3. Workforce optimization means adjusting the number of employees to the extent and requirements of business operations that are performed in individual organizational units. The implementation of this category implies the reduction of the number of employees as of September 2019 by 130 which will result in the employee cost reduction by HRK 6,650,000. At the same time, the redundancy costs through incentive measures for voluntary termination of employment (i.e. severance packages amounting to HRK 22,880,000) have been taken into consideration for which proceeds have been ensured through the EBRD loan.

4. Elimination of activities/outsourcing to an external service provider, which means elimination of part of a business activity or whole activity, ie separation of activities of an external provider of services with a view to reducing the cost of a particular business activity.

Hrvatske autoceste d.o.o. Business Plan for 2019

The overall financial impact of the proposed rationalization measures could amount to HRK 30 million a year while the effect of such measures considering the schedule of implementation in 2019 would amount to HRK 8,150,000. The proposed process of business transformation-reorganization as well as the implementation of the proposed measures will require full involvement of all key stakeholders in the HAC and social partners, along with a range of internal procedures and other documentation (rules, acts, etc.), while at the same time ensuring cost-cutting without disturbing the continuity and operational capability for the implementation of the current business processes. Financial restructuring encompasses optimization of HAC, ARZ and HC debts and is carried out on the basis of a strategy adopted at the state level, which is in line with the representatives of international financial institutions. The objective of the financial restructuring is to improve the structure of debt financing of companies in the road sector and to optimize the share of debt that the sector can repay from its own resources, progressively reduce the level of annual debt repayment, thereby reducing the road sector's impact on public finances. The first phase of financial restructuring was concluded in December 2017 when the Republic of Croatia and Hrvatske Autoceste d.o.o. have contracted the transfer of funds; the Republic of Croatia went into debt with the issuance of Eurobonds in the amount of 1.275 million EUR, and a total of €672,690,950 was given to Hrvatske Autoceste d.o.o. The net amount of the received funds was used for payment of the due amount of the Short-term Loan Agreement for the purpose of settling overdue obligations between the Republic of Croatia and the HAC and early repayment of earlier long-term lending agreements. The second phase of the financial restructuring was completed in April 2018, with the Croatian Government's Decision on granting approval for new borrowing from a group of domestic banks and with the Decision on granting sovereign guarantee in the amount of €1,141 billion. Seventeen existing loans were repaid early through a new loan to maximize the financial repercussions of restructuring a part of the Company's debt - lower interest rates and longer repayment terms.

In addition to this, the implemented financial measures also include an increase in revenues made by making a decision on the seasonal increase in toll rates by 10%, preceded by the adjustment of the HAC toll rates as of April 3, 2017 with the rates of the concessionaire ARZ, i.e. toll rate increase by 5%.

Hrvatske autoceste d.o.o. Business Plan for 2019

III. REVENUE AND EXPENDITURE PLAN

The Roads Act (Articles 85, 94, 95 and 96) stipulates how to record and monitor business changes, applying the capital approach to revenue and expenditure, in particular for the HAC and especially for the Public good and their impact on the increase and reduction of public capital. Article 96 of the Roads Act stipulates that a legal entity that manages public roads shall include depreciation of public roads (public good) managed by them in the company's operating expenses. If the Company can not cover the total depreciation of the public roads it manages, the part that can not be covered is charged to the public funds and as a result the Company reports the total expenditures in the amount of total revenues and the result of the business is zero. When the Company realizes its own revenues higher than the operating expense and the total depreciation of the public roads it manages, the profit is shown in the amount of surplus income. In this case, public capital will be increased for the amount of the reported profit for as long as the Republic of Croatia is the only member of the Company, ie the profit is used for the construction and maintenance of motorways managed by Hrvatske Autoceste d.o.o. (Articles 85 and 94 of the Roads Act. Within the project "Modernization and Restructuring of the Road Sector Infrastructure" a different system of monitoring should be established and the criteria for business and financial results of companies HAC and HC should be defined. To this end, it is necessary to improve the instruments of accounting and financial management and according to the recommendations of the expert consultant, a revised accounting policy has been developed. The adoption of the Amendment of the Roads Act Amendment is in progress for the implementation of the consultant's recommendations. The Amendment foresees exclusion of accounting provisions from the Roads Act which allows for the state aid, depreciation and financing costs that to date have been recorded directly in the public capital to to be accounted in the current operating result. By excluding accounting provisions from the Roads Act, the current performance of HC and HAC companies will include revenues from state aid (fuel tax), depreciation costs and public road financing costs. For the year 2017, the HAC has realized operating profit that is included in the income statement (profit and loss account) and the loss from public good management (shown in the Statement of Changes in Equity). Profit was realized due to the increase in toll prices, the expiry of the depreciation period and owing to business savings, and thus the realized profit belongs to the company HAC. At the same time, the public good loss was realized based on the expenditure for interest and fees for loans used to finance motorway construction and thus realised loss decreased the value of the public good and public capital. In addition, the profit realized by the HAC is taxable, which negatively affects cash flows and hampers loan repayments. In the coming years, the same

Hrvatske autoceste d.o.o. Business Plan for 2019

business trends are expected, primarily because of repayment plans, the interest rate participation in loan instalments in the first four to five years significantly and directly affects the loss of public good. By consolidating the Company's profit and loss account with the results of the Public Good operation (statement of the changes in capital) the public good loss expected over the next four to five years will be largely offset by the results of the Company's business, which will continue to be positive in the period under review. In the first years after the financial restructuring and refinancing of the loan, business losses are possible, while operating profit is expected in the forthcoming period, as a result of the acknowledged interest included in the repayment plan and movements of the kuna against the reference currency.

The adoption of the Amendment of the Roads Act is underway, and the HAC Business Plan for 2019 has been drafted by the current legal obligations and accounting policies to amend the legal regulations. The Roads Act also regulates financing of public roads from the state budget of the Republic of Croatia, and the proposed Amendment to the Act foresees a restriction of the fee for financing public road construction and maintenance that is paid from the state budget based on the collected fuel tax per litre of fuel, to the maximum amount that was foreseen in the budget for a particular fiscal year. In addition, the Amendment to the Act will prescribe precisely which vehicles with the priority of passing the motorway will not be charged and value added tax funds will be secured in the state budget.

Based on the HAC's business analysis in the previous period, the basis for drafting the Plan that was initially explained and in accordance with the HAC activities established by the Roads Act, the revenues and expenditures of the Company were planned, and for the Public Good receipts and expenditures and revenues and expenditures which are recorded as changes in the public capital in the HAC's business books, as shown in the following table:

Hrvatske autoceste d.o.o. Business Plan for 2019

1. PROFIT AND LOSS ACCOUNT OF HAC-a d.o.o. AND STATEMENT OF RECEIPTS AND EXPENSES / INCOME AND EXPENDITURE OF PUBLIC GOOD (changes in public capital)

in HRK

REALIZATION ESTIMATE PLAN FOR INDICES YEAR 2018 YEAR 2019

No. I T E M HAC d.o.o. PUBLIC GOOD HAC d.o.o. PUBLIC GOOD TOTAL TOTAL (PROFIT & LOSS (changes in (PROFIT & LOSS (changes in 6/3 7/4 8/5 (3 + 4) (6 + 7) ACC.) public capital) ACC.) public capital)

1 2 3 4 5 6 7 8 9 10 11 A. TOTAL INCOME 2.246.738.190 1.078.908.209 3.325.646.399 2.183.243.030 982.600.000 3.165.843.030 97,2 91,1 95,2 I. OPERATING INCOME 2.242.886.590 562.341.539 2.805.228.129 2.177.391.030 482.500.000 2.659.891.030 97,1 85,8 94,8 1. Income from sale (outside Group) 2.122.587.318 0 2.122.587.318 2.144.507.875 0 2.144.507.875 101,0 - 101,0 1.1. Toll income 1.891.908.000 0 1.891.908.000 1.919.786.420 0 1.919.786.420 101,5 - 101,5 1.2. Income from managing roadside land 44.181.900 0 44.181.900 44.830.000 0 44.830.000 101,5 - 101,5 Other income from sale (road maintenance service, rent, sale of surplus material, consents, 1.3. 24.424.500 0 24.424.500 24.393.190 0 24.393.190 99,9 - 99,9 income from sale of ENC) 1.4. Fee paid by ARZ for routine maintenance and toll collection services 162.072.918 0 162.072.918 155.498.265 0 155.498.265 95,9 - 95,9 2. Income based on the use of company's own products, goods and services (donations) 10.448.500 0 10.448.500 11.165.115 0 11.165.115 106,9 - 106,9 HAC d.o.o.: Other operating income - outside the Group 3. 74.313.700 45.406.354 119.720.054 21.718.040 0 21.718.040 29,2 0,0 18,1 Public good: Grants from EU funds 4. Operating income within the Group 0 0 0 0 0 0 - - - Budget support: 5. HAC d.o.o.: Grant from MSTI for severance packages 35.537.072 516.935.185 552.472.257 0 482.500.000 482.500.000 0,0 93,3 87,3 Public good: capital aid (fee from fuel tax) II. FINANCIAL INCOME 3.851.600 516.566.670 520.418.270 5.852.000 500.100.000 505.952.000 151,9 96,8 97,2 1. Income from interest and other financial income 727.000 743.670 1.470.670 752.000 100.000 852.000 103,4 13,4 57,9 2. Positive exchange rate differences 3.124.600 515.823.000 518.947.600 5.100.000 500.000.000 505.100.000 163,2 96,9 97,3 B. TOTAL OPERATING EXPENDITURE (without public good depreciation) 839.157.400 2.246.013.129 3.085.170.529 827.230.050 1.327.554.590 2.154.784.640 98,6 59,1 69,8 I. OPERATING EXPENDITURE 834.742.900 1.312.798.129 2.147.541.029 822.947.050 390.604.590 1.213.551.640 98,6 29,8 56,5 1. Material costs 260.723.000 0 260.723.000 236.029.520 0 236.029.520 90,5 - 90,5 1.1. Cost of raw material and materials 131.080.000 0 131.080.000 112.618.245 0 112.618.245 85,9 - 85,9 1.1.1. Costs of raw material and materials, spare parts and small inventory depreciation 60.938.000 0 60.938.000 44.199.265 0 44.199.265 72,5 - 72,5 1.1.2. Cost of utilities (electricity, gass, fuel) 70.142.000 0 70.142.000 68.418.980 0 68.418.980 97,5 - 97,5 1.2. Cost of sold goods 1.525.000 0 1.525.000 1.956.000 0 1.956.000 128,3 - 128,3 1.3. Other external costs 128.118.000 0 128.118.000 121.455.275 0 121.455.275 94,8 - 94,8 1.3.1. Routine maintenance cost 63.344.000 0 63.344.000 51.903.055 0 51.903.055 81,9 - 81,9 1.3.2. Other services and fees 64.774.000 0 64.774.000 69.552.220 0 69.552.220 107,4 - 107,4 2. Salaries (gross II) 470.681.200 0 470.681.200 463.840.260 0 463.840.260 98,5 - 98,5 incentive severance packages 5.547.033 0 5.547.033 8.580.000 0 8.580.000 154,7 - 154,7 payment of salary remuneration by court order 1.688.535 0 1.688.535 461.745 0 461.745 27,3 - 27,3 3. Employee benefits 59.616.200 0 59.616.200 63.573.835 0 63.573.835 106,6 - 106,6 nontaxable severance packages 9.617.889 0 9.617.889 14.300.000 0 14.300.000 148,7 - 148,7 4. Company's assets depreciation 14.670.000 0 14.670.000 16.389.575 0 16.389.575 111,7 - 111,7 5. Other cost 5.060.000 0 5.060.000 4.998.290 0 4.998.290 98,8 - 98,8 6. Value adjustment 2.026.500 0 2.026.500 1.679.000 0 1.679.000 82,9 - 82,9 7. Provisions 1.400.000 0 1.400.000 1.400.000 0 1.400.000 100,0 - 100,0 HAC d.o.o.: Other operating expenditure (extraordinary) 8. 20.566.000 1.312.798.129 1.333.364.129 35.036.570 390.604.590 425.641.160 170,4 29,8 31,9 Public good: transfer of built structures to HC d.o.o. II. FINANCIAL EXPENDITURE 4.414.500 933.215.000 937.629.500 4.283.000 936.950.000 941.233.000 97,0 100,4 100,4 1. Interest and fees 4.414.500 696.952.000 701.366.500 3.583.000 636.950.000 640.533.000 81,2 91,4 91,3 2. Negative exchange rate differences 0 236.263.000 236.263.000 700.000 300.000.000 300.700.000 - 127,0 127,3 C. DIFFERENCE BETWEEN TOTAL OPERATING INCOME AND TOTAL OP. EXPENDITURE (A. - B.) 1.407.580.790 -1.167.104.920 240.475.870 1.356.012.980 -344.954.590 1.011.058.390 96,3 29,6 420,4 D. DEPRECIATION AND CORRECTION OF THE PUBLIC GOOD VALUE 939.827.000 103.010.000 1.042.837.000 957.292.980 103.100.000 1.060.392.980 101,9 100,1 101,7 1. Depreciation of the public good managed by HAC 939.827.000 0 939.827.000 957.292.980 0 957.292.980 101,9 - 101,9 2. Correction of the public good (motorways) value in concession 0 103.010.000 103.010.000 0 103.100.000 103.100.000 - 100,1 100,1 E. EXPENDITURE GRAND TOTAL (B. + D.) 1.778.984.400 2.349.023.129 4.128.007.529 1.784.523.030 1.430.654.590 3.215.177.620 100,3 60,9 77,9 HAC d.o.o.: profit or loss before taxation F. 467.753.790 -1.270.114.920 -802.361.130 398.720.000 -448.054.590 -49.334.590 85,2 35,3 6,1 PUBLIC GOOD: increase or decrease of public good (A. - E.)

Hrvatske autoceste d.o.o. Business Plan for 2019

2. STRUCTURE OF THE PLANNED REVENUES AND EXPENSES OF HAC AND THE PUBLIC GOOD

a) HAC d.o.o.

in HRK % of share

 Total revenue plan...... 2,183,243,030 100,0 - toll collection...... 1,919,786,420 87,9 - revenue from managing roadside land...... 44,830,000 2,1 - ARZ fee for routine maintenance and toll collection 155,498,265 7,1

- all other operating renvenues...... 57,276,345 2,6 - financial revenues...... 5,852,000 0,3

Expenditure of HAC d.o.o. shall be covered by income as well as the overall depreciation of the public good managed by HAC d.o.o.:

 Expenditure grand total……………………………………………………………….. 1.784.523.030 100,0 Out of which: - total expenditure of the Company…………………………………………….. 827.230.050 46,4 operating expenditure HRK 822.947.050 or 99.5% financial expenditure HRK 4.283.000 or 0.5% - depreciation of the public good managed by HAC……………………. 957.292.980 53,6

The total operating income planned for 2019 is lower than the estimate of the realization in 2018 by 2.8%, mainly due to the fact that in 2018 significant revenues of a one-off, extraordinary nature such as: the revenue from the collected Penalty amounting to HRK 48,269,993 (based on a settlement agreement on mutual claims related to the construction of the Drava Bridge), incentive from the grant for incentive severance packages in an amount of HRK 35,537,072 and income from the cancellation of long-term provisions for incentive severance payments in the amount of HRK 11,272,756 (revenue of the accounting character). The revenue plan for toll collection is higher by 1.5% or HRK 27,878,420 compared to the realization estimate in 2018 given that in 2019 the trend of increase in number of vehicles and revenue realised in the previous year is expected. In the period from June 15 to September 15, seasonal toll prices will apply. Seasonal toll rates are introduced for I.A, I. and II. vehicle categories (motorcycles, passenger cars, trailer cars and campers), and the unit rate for the category increases by 10%. This Plan does not foresee an increase in toll-collection revenue from reductions of ENC (electronic toll collection) products.

Hrvatske autoceste d.o.o. Business Plan for 2019

Income from managing the roadside land is planned in an amount of 1.5% higher than in the realisation estimate in 2018 and it includes the planned fee for the use of the road land and for the provision of roadside services and for the right of use. The ARZ's fee income is planned under the Contract for the provision of routine motorway maintenance, toll collection and traffic control and management concluded on 14 December 2018 for a period of four years between ARZ and HAC companies, and the monthly fee for the routine motorway maintenance service, the toll collection and traffic control and management that the ARZ has to pay HAC for the first year amounts to HRK 12,958,188.75, which makes an annual income of HRK 155,498,265. The Contract foresees for the parties to review the amount of fee for the Service twice a year (beginning of May and beginning of November) and to compare it with the actually incurred costs. If it is established that there have been deviations that would be at the expense of one of the Contracting Parties, either because of the unfulfilled service or because of insufficient fees for the fulfilment of contractual obligations, a correction of the fee amount will be made.

Other HAC revenues consist of the following (income statement): Other sales revenues planned at the level of realization in 2018 include revenues from road maintenance services (Tunnel Sveti Ilija), rental income, ie rent from commercial parking space and optical infrastructure, income from sale of subscription for ENC service and other operating income related to the Company's business. Revenues based on the use of their own products, goods and services that are of a fiscal nature and have no monetary character, and are mainly based on free passage on motorways for given donations and are also shown in other operating expenses increased by the value added tax (users of these donations are public services with the priority of passage, associations and other organizations of humanitarian character, persons with disabilities, families with sick members or special needs members, etc.). Other operating income of periodic or one-off character include payment of damages from insurance companies, collection of disputed, credited and written-off claims, income from long-term provisions etc.

The financial income of the Company has been planned to be by 51.9% higher than in 2018 and it and it is accounted for by interest rates as well as a positive exchange rate difference mainly from the toll collection in foreign currency.

Hrvatske autoceste d.o.o. Business Plan for 2019

Total operating expenses of the Company (excluding depreciation of the Public good) are planned in the amount of HRK 827,230,050 which is by 1.4% less than the realization in 2018. The decrease in total operating expenses was due to the decrease in material costs related to the costs of material and routine motorway maintenance service. The total operating expenses of the Company include operating expenses of HRK 822,947,050 and financial expenses of HRK 4,283,000.

The Company's operating expenses comprise of:  28,5% material costs related to routine motorway maintenance and toll collection in an amount of HRK 236,029,520 and it includes the following groups of costs: costs of raw materials and materials in the amount of HRK 112,618,245 (electricity, salt strewing, fuel, maintenance supplies, spare parts, magnetic card and toll subscription charges (ENC)) costs of goods sold in the amount of HRK 1,956,000 other external expenses in an amount of HRK 121,455,275 (regular maintenance of machines and equipment, regular maintenance of roads, bridges and tunnels, commissions of card issuers, data processing and maintenance services, communal services and fees, telecommunications services, property and employee insurance premiums, intellectual services, attorney's and notary services )  56,1% salaries in the amount of HRK 463,840,260  7,7% employee benefits amounting to HRK 63,573,835 (transportation costs, annual awards, III pension pillar)  2,0% depreciation of the Company's assets amounting to HRK 16,389,575  0,6% other operating expenses in the amount of HRK 4,998,290, comprising compensations to employees (business travel, field work, vocational training), memberships to various associations, administrative and court expenses, scholarships to children of diseased workers, business entertainment funds, fees to members of the Supervisory Board and Audit Committee etc.  0,2% asset value adjustments in the amount of HRK 1,679,000 based on the corrected value of claims for disputed, credited and suspicious claims related to toll collection  0,2% of reservations in the amount of HRK 1,400,000 for jubilee awards and costs of initiated court disputes  4,2% other operating expenses (extraordinary) in the amount of HRK 35,036,570. The bulk of this group of expenditures is related to the cost of capital at the expected completion of court disputes (HRK 18,050,000) and to donations of free passage by motorway for public utility vehicles for general utility purposes and other vehicles and assistance, etc. total of HRK

Hrvatske autoceste d.o.o. Business Plan for 2019

11.489.400 with accompanying VAT. In accordance with the accounting standards, the toll calculated based on the donated right of free passage of the vehicle is also recorded in other revenues without VAT and the net effect of the tax amount is HRK 2,232,000.  0,5% of the company's financial expenses in the amount of HRK 4,283,000, including penalty interest on court verdicts, interest on loans, and interest on property rental with the right of use in an amount of HRK 3,583,000 and negative exchange rate differences of HRK 700,000 from toll collection transactions.

The total planned operating expense (for operation and routine maintenance of motorways) in the amount of HRK 827,230,050 is less than the planned total revenues of the Company for HRK 1,356,012,980. This planned surplus of the Company's revenue is sufficient to cover the total depreciation of motorways under the management of the HAC (Public good) planned for 2019 in the amount of HRK 957,292,980 which according to the Roads Act is included in the Company's expenses. Consequently, the planned profit in the amount of HRK 398,720,00 is shown as the Company's business results. In monetary terms, this surplus of income (profit and depreciation of the Public Good) is the source of financing for interest on loans to the Public good.

b) PUBLIC GOOD in HRK % of share  Planned revenues / receipts or increase of public capital in total……. 982,600,000 100,0 - capital aid from the budget (fuel tax fee )...... 482,500,000 49,1 - financial revenues...... 500,100,000 50,9 (in which positive exchange rate differences are HRK 500,000,000)

 Planned expenditure/expenses or decrease in public capital in total 1.430.654.590 100,0 - value of shares in which HAC invested that are managed by HC and are transferred without fee ...... 390.604.590 27,3 - interest and fees per loans...... 636.950.000 44,5 - negative exchange rate differences...... 300.000.000 21,0 - correction of value of the public good in concession...... 103.100.000 7,2

 Difference: total revenue – total expenditure...... -448.054.590

Hrvatske autoceste d.o.o. Business Plan for 2019

In the revenues / receipts of the Public good, a budget revenue from the fuel tax fee is planned, which according to the Roads Act represents funds by which the Republic of Croatia finances the expropriation of real estate, construction and maintenance of public roads and the repayment of credits which finance the construction of motorways. The fuel tax fee is planned in the amount of HRK 482,500,000 according to the proceeds allocated to HAC d.o.o. on this basis in the Expenditures Plan of the Ministry of the Sea, Transport and Infrastructure of the Republic of Croatia for 2019. Also, in the revenues of the Public Good, a financial income of HRK 500,000,000 was planned based on positive exchange rate differences based on the expected refinancing of part of the loan and HRK 100,000 on interest income and other financial income. The value of investments in section Vrbovec 2 - Farkaševac on DC12, and Gradec - Križevci on DC10, which also reduces the value of public capital in the HAC's business books was shown in the expenditures of Public Good. The process of handing over the operation and maintenance to Hrvatske Ceste d.o.o. for these sections will be completed in 2019 (free of charge) and they will be transferred from the ongoing investments and assets of the Public good registered in the HAC business books to the Public Good assets managed by Hrvatske Ceste d.o.o. Also, in the public good expenditure the investment value was shown related to the design activities on routes of the link road Nikolac interchange – D8 and link road Ravča – Drvenik and section Kloštar Vojakovački - Velika Mučna on DC10 for which the public capital value is decreased in the business books of HAC and the expressed value will be transferred from the current investment recorded in the business books of HAC to the current investment of Hrvatske Ceste d.o.o. (without compensation) because they are the investor of the future projects on these routes. The Public good expenditure also includes interest and loan fees, which are planned in the amount of HRK 636,950,000 or by 8.6% less than the realization in 2018. In planned expenditures that reduce public capital, there is also a correction of the value of the motorways in the concession that are recorded in the HAC's business books.

In the planned revenues and expenditures of the Public Good, positive or negative exchange rate differences are recorded, in accordance with the planned exchange rate trends, on the basis of the presentation of the loan in the Kuna equivalent, since all loans are contracted in foreign currency. On this basis, no adverse effect on equity is planned because the difference in income and expenses on this basis is positive in the amount of HRK 200,000,000.

The planned total revenues/receipts of Public good are not sufficient to cover the planned total expenditures of the Public goods in the amount of HRK 448,054,590. Bearing in mind the plan of

Hrvatske autoceste d.o.o. Business Plan for 2019

projected profit of HAC d.o.o. in the amount of HRK 398,720,000 that will be used to cover the expenditures of the Public good, it is planned to reduce the value of public capital in the amount of HRK 49,334,590. The main reasons for the reduction of public capital in 2019 are investments in the assets of others (which are transferred to Hrvatske Ceste) and the costs of interest and fees.

For the purpose of carrying out the project "Modernization and restructuring of the road infrastructure sector", Hrvatske Autoceste d.o.o. focused all their efforts on rationalization ie reduction of operating costs. The process of operational and business restructuring of the HAC covers a number of areas such as business planning, the introduction of a new toll collection system and a new maintenance standard, the development of road management system, and the restructuring and reorganization of maintenance, toll collection, traffic management and other activities. Part of the measures planned to be carried out to accomplish the objectives set by the project "Modernization and restructuring of the road infrastructure sector", which will lead to lower operating costs, are still under study preparation, so a significant reduction in operating costs is expected in the coming years. Independently of this, the HAC designs and plans to take measures to optimize business processes and reduce costs.

IV. PLANNED NUMBER OF EMPLOYEES, COST OF SALARIES AND EMPLOYEE BENEFITS

On 31 December 2018, 2,770 employees were employed in the Company, out of which 39 employees employed for a definite period of time. The Business Plan for 2019 foresees that as of 31 December 2019 the Company will employ 2,628 employees, including 39 employees with temporary employment contracts, which is 142 employees less than on 31 December 2018. The reduction of the number of permanent employees has continued with the reorganization and restructuring of the Company by establishing a collective redundancy based on the voluntary interest of the workers for termination of employment and the result of the proposed measures and recommendations of the consultant for optimizing the number of executives in the implementation of technical and business rationalization.

With the decision on incentive measures for retrenchment programme the incentive measures and severance packages were established for which funds from the European Bank for Reconstruction and Development loan were secured.

In addition to full-time employees, the business plan for 2019 foresees also 36 employees with temporary employment contracts in the Maintenance Department, mostly firefighters and drivers of

Hrvatske autoceste d.o.o. Business Plan for 2019

machinery directly involved in the maintenance operations both for winter maintenance (Winter Service) and summer maintenance (machine and manual mowing of grass, drainage cleaning, cleaning of open canals, cleaning and landscaping of service areas and similar). Three more employees with temporary employment contracts will continue to work in 2019: two info line operators and one traffic monitoring administrator in the Independent Traffic Division. In accordance with the needs of the Toll Collection Department, in 2019, seasonal recruitment of toll attendants is planned for a certain period time that will be allocated as necessary, and during the peak season from 1 July to 30 September the maximum number of toll attendants that can be hired is 164. At the end of the tourist season only full-time toll attendants will be employed in the Department. In order to ensure the maximum flow of peak traffic in the season, it is necessary to employ an appropriate number of toll collectors for a specified time in accordance with the dynamic plan arising from the calculation of the required number of toll attendants with the application of the rights under the Collective Agreement. By hiring toll attendants for a definite period at peak traffic periods, the Company's management manages labour costs while preserving the same quality of service to the motorway users.

Expenditures for salaries in 2019 are planned in the amount of HRK 463,840,260 which accounts for 56.1% of the total operating expenses. In the wage plan for employees for 2019, an increase in the coefficients of 0.5% is foreseen based on the past labour as well as the correction of the basic salary for consumer price growth in 2018 of 0.785%, pursuant to Article 61 of the Collective Agreement. The salary plan includes the cost of the taxable portion of the incentive severance packages in the amount of HRK 8,580,000 planned in accordance with the expected process of redundancy and payment of remuneration (following the court rulings) based on ongoing labour disputes. Employee benefits are planned in an amount of HRK 63,573,835 which accounts for 7,7% of the company's overall operating expenditure. Employee benefits include the cost of commuting, jubilee prizes, gifts to employee's children, benefit in kind and other other donations and supports to workers to the maximum non-taxable amount and payment into III pension pillar as stipulated in the relevant Collective Agreement. Most of the expenditures for employee benefits of HRK 20,430,235 is the cost of commuting fees and HRK 14,300,000 to the non-taxable portion of incentive severance payments. In the Business Plan for 2019, a payment of HRK 500 for Easter is planned and a gift in kind in the amount of HRK 600, annual leave bonus of HRK 1,000 and a one-off bonus for Christmas in the amount of HRK 1,000. Payment into 3rd pension pillar is planned in the amount of HRK 500 per

Hrvatske autoceste d.o.o. Business Plan for 2019

month per employee, a gift for children in the amount of HRK 600 as well as grants for the new-born child of employees in the maximum non-taxable amount and payment of non-taxable portion of severance packages.

Planned number of employees and planned cost of salaries and employee benefits

Estimate Plan Growth No. Item Difference 2018 2019 rate 0 1 2 3 4 (3/2) 5 (3-2) I. No. of employees - status as of the end of year 2.770 2.628 -5,13 -142 1. Full-time employees 2.731 2.589 -5,20 -142 2. Permanent staff 39 39 0,00 0 u kunama II. Cost for employees (1. + 2.) 530.297.400 527.414.095 -0,54 -2.883.305 1. Salaries - total 470.681.200 463.840.260 -1,45 -6.840.940 1.1. Salaries (gross II) 463.445.632 454.798.515 -1,87 -8.647.117 1.2. Incentive severance packages - taxable 5.547.033 8.580.000 54,68 3.032.967 1.3. Salary remuneration as per court order 1.688.535 461.745 -72,65 -1.226.790 2. Employee benefits - total 59.616.200 63.573.835 6,64 3.957.635 2.1. Employee benefits 49.998.311 49.273.835 -1,45 -724.476 2.2. Incentive severance packages - non-taxable 9.617.889 14.300.000 48,68 4.682.111

For the purpose of designing and implementing measures to reduce operating costs, the HAC will consider, in 2019, the purchase of 17 automatic toll payment machines. The purchase of these machines that would be placed at plazas with low traffic volume, would allow for reduction in the number of toll attendants by 76 by removing teams of toll attendants at the said toll plazas. In order to ensure a normal functioning of the machines it is necessary to provide a control centre where 10 workers should be employed, and additional 15 workers should be provided to operate these automated stations, the total surplus of workers would be 51. Business decision of the HAC on the procurement of automatic toll payment machines will largely depend on the Study on the Toll Collection System (contractor: IDOM SAU) which will define deadlines for implementing the new toll collection system.

Hrvatske autoceste d.o.o. Business Plan for 2019

V. PLAN OF FINANCING

For investment, business and financial activities that the Company plans to carry out in 2019 the sources of financing were established as well as the cash-flow plan and consequently the debt status at the end of the year.

1. Sources of financing for the planned activities in 2019 the accounting principle for the current year - in HRK

Plan Sources of financing

Loans No. Activities Expenditure Company's RoC budget EU funds - Cashflow Total ARZ fee New contracts/ value own sources (fuel tax fee) grants status Contracted (8+9) refinancing

0 1 2 3 4 5 6 7 8 9 10 1. Investment in motorways and other roads 530.458.000 0 0 449.351.500 49.133.500 0 9.473.000 22.500.000 31.973.000 1.1. Construction 267.682.000 0 0 222.628.000 13.081.000 0 9.473.000 22.500.000 31.973.000 1.2. Periodic maintenance 262.776.000 0 0 226.723.500 36.052.500 0 0 0 0 2. Operation and routine maintenance 860.586.560 618.818.695 155.498.265 0 0 71.769.600 14.500.000 0 14.500.000 2.1. Operation 656.316.960 522.299.695 119.517.265 0 0 0 14.500.000 0 14.500.000 2.2. Routine motorway maintenance 132.500.000 96.519.000 35.981.000 0 0 0 0 0 a) under management of HAC 96.519.000 96.519.000 0 0 0 0 0 0 0 b) under management of ARZ 35.981.000 0 35.981.000 0 0 0 0 0 0

2.3. Profit tax expenditure 71.769.600 0 0 0 0 71.769.600 0 0 0

3. Procurement of tangible and intangible company assets 28.738.895 28.738.895 0 0 0 0 0 0 0

4. Liabilities per loans 4.414.427.000 1.362.202.060 0 33.148.500 0 14.958.440 0 3.004.118.000 3.004.118.000 4.1. Interest and fees 628.208.000 557.971.500 0 33.148.500 0 0 0 37.088.000 37.088.000 4.2. Loan principal repayment 3.786.219.000 804.230.560 0 0 0 14.958.440 0 2.967.030.000 2.967.030.000 Total 5.834.210.455 2.009.759.650 155.498.265 482.500.000 49.133.500 86.728.040 23.973.000 3.026.618.000 3.050.591.000 (all values are without VAT)

u 000 HRK Expenditure structure

4.000.000 3.786.219

3.500.000 3.000.000 2.500.000 2.000.000 1.500.000 1.000.000 656.317 628.208 500.000 267.682 262.776 132.500 71.770 28.739 0 Construction Periodic Operation Routine Profit tax Procurement Interest and Loan principal maintenance motorway expenditure of tangible fees repayment maintenance and intangible company assets

Hrvatske autoceste d.o.o. Business Plan for 2019

Financing structure

Loans

52,3% Company's own sources RoC budget (fuel tax fee) 34,4%

ARZ fee

8,3% Cashflow status

EU funds -grants 0,8% 1,5% 2,7%

Financing of investment in public roads is mainly planned from the allocated fuel tax fee, EU grants, previously contracted loans from development banks and a new loan for financing the construction of the section Bijeli Manastir - Halasica Bridge, which will be contracted in 2019. The operation and routine maintenance expenditure and the acquisition of the Company's intangible and tangible assets as management function are planned to be entirely financed by the company's own income ie ARZ's revenues for providing routine maintenance services and toll collection for sections in the concession area of ARZ. Expenditure for incentive severance packages under the Retrenchment Plan will be paid out of the previously contracted loan with the European Bank for Reconstruction and Development. Procurement of intangible and tangible assets relates to the procurement of motor vehicles, machinery and equipment for the maintenance of motorways (road vehicles, fire trucks, hydraulic overhaul carriers, snow ploughs and strewers, lawn mowers), IT equipment and licenses and investments in the upgrade of the Traffic Flow System, Geotechnical Structures Management System, the Roads Database and the other. A significant part of the investment also refers to the modernization of the existing information system, relating to the introduction of document management systems, information security systems, business management solutions for human resources, archives digitization etc.

Hrvatske autoceste d.o.o. Business Plan for 2019

2. Cash flow plan

Based on the balance of obligations and receivables at the end of 2018, and the dynamics of the realization of the activities planned for 2019, the 2019 Cash Flow Plan is presented in the following table. From the planned cash flows it is apparent that HAC d.o.o. has secured sources of financing its liabilities to maintain current liquidity. The risks of cash flow projections are interest rate and currency risk, therefore the Company is obliged to continuously monitor the movements of cash inflows and outflows and to make operating projections based on the estimation of the movements of operating components that have the highest impact on the growth and value of the Company's assets: toll revenue growth, collection of receivables, amount of liabilities, change in number and structure of employees.

Cash Flow Plan for 2019 u HRK 2019. No. Item Total 2019. January February March April May June July August September October November December

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 I. OPERATING RECEIPTS 151.141.525 131.933.382 159.691.706 191.448.358 210.586.600 253.031.863 397.662.934 424.336.137 255.780.768 198.353.009 168.664.124 163.293.351 2.705.923.754 1. Cash receipts from sale (toll collection and roadside services) 130.279.099 111.082.469 139.371.380 171.261.038 190.656.424 232.649.430 373.647.933 403.223.698 234.469.331 178.453.401 148.033.735 142.062.365 2.455.190.302 2. Receipt from ARZ for the toll collection and maintenance services 16.359.204 16.359.204 16.197.736 16.197.736 16.197.736 16.197.736 16.197.736 16.197.736 16.197.736 16.197.736 16.197.736 16.197.736 194.695.771 3. Other revenue from core business 4.503.221 4.491.709 4.122.590 3.989.584 3.732.440 4.184.696 7.817.265 4.914.703 5.113.700 3.701.871 4.432.653 5.033.249 56.037.681 II. OPERATING EXPENSES 84.835.785 73.064.655 81.000.368 75.700.969 83.904.486 83.890.965 84.773.466 67.092.827 63.411.437 72.096.979 65.272.709 64.803.523 899.848.167 Expenses for operation and routine maintenance (without cost of 1. 29.084.464 29.948.968 26.294.424 26.622.364 26.929.070 25.499.077 24.281.955 21.628.680 21.787.192 23.852.479 25.108.267 25.942.315 306.979.252 staff and capital assets) 2. Expenses for employees (salaries and employee benefits) 41.052.676 43.115.687 37.828.944 41.578.605 43.189.461 45.151.601 60.491.511 43.964.147 41.624.245 48.244.500 40.164.442 38.861.208 525.267.027 3. Other operating expenses 14.698.645 0 16.877.000 7.500.000 13.785.955 13.240.287 0 1.500.000 0 0 0 0 67.601.887 A. (I. - II.) NET CASHFLOW FROM BUSINESS ACTIVITIES 66.305.740 58.868.727 78.691.339 115.747.389 126.682.115 169.140.898 312.889.468 357.243.310 192.369.331 126.256.030 103.391.415 98.489.828 1.806.075.588

III. CASH RECEIPTS FROM INVESTMENT ACTIVITIES 117.044.000 30.600.000 34.574.000 39.042.000 40.971.000 72.321.000 47.403.000 58.027.000 53.981.000 17.854.000 0 10.370.000 522.187.000 1. Receipts from fuel tax fee 117.044.000 30.600.000 34.574.000 39.042.000 40.971.000 44.405.000 47.403.000 58.027.000 51.431.000 17.854.000 0 0 481.351.000 2. Other receipts from capital investment (EU funds) 0 0 0 0 0 27.916.000 0 0 2.550.000 0 0 10.370.000 40.836.000 IV. CASH EXPENSES FORM INVESTMENT ACTIVITIES 189.392.560 17.677.530 184.131.000 28.384.188 67.361.000 71.296.250 49.742.544 54.692.794 247.807.794 57.659.794 111.692.919 70.760.169 1.150.598.540 Expenses for capital investment in construction and capital 1. maintenance of motorways and procurement of capital assets for 28.379.560 13.499.530 14.566.000 27.167.188 38.272.000 51.136.250 49.033.544 50.717.794 52.562.794 56.482.794 78.390.919 62.182.169 522.390.540 the Company Other cash expenses from investment activities (interest per loans 2. 161.013.000 4.178.000 169.565.000 1.217.000 29.089.000 20.160.000 709.000 3.975.000 195.245.000 1.177.000 33.302.000 8.578.000 628.208.000 for the public good) B. (III. - IV.) NET CASH FLOW FROM INVESTMENT ACTIVITIES -72.348.560 12.922.470 -149.557.000 10.657.813 -26.390.000 1.024.750 -2.339.544 3.334.206 -193.826.794 -39.805.794 -111.692.919 -60.390.169 -628.411.540

V. CASH RECEIPTS FROM FINANCIAL ACTIVITIES 43.295 26.000 46.000 46.000 56.000 19.682.400 46.000 66.000 2.993.037.600 31.046.000 4.056.000 6.526.000 3.054.677.295 1. Receipts from borrowing (contracted loans) 0 0 0 0 0 19.626.400 0 0 2.993.001.600 31.000.000 4.000.000 6.500.000 3.054.128.000 2. Other receipts from financial activities 43.295 26.000 46.000 46.000 56.000 56.000 46.000 66.000 36.000 46.000 56.000 26.000 549.295 VI. CASH EXPENSES FROM FINANCIAL ACTIVITIES 5.558.001 12.222.405 102.030.405 9.285.000 305.171.000 50.218.000 9.777.000 16.666.000 3.103.885.000 9.285.000 246.124.000 51.224.000 3.921.445.811 1. Expenses for loan principal repayment 2.464.000 9.350.000 99.158.000 1.969.000 237.061.000 42.902.000 2.461.000 9.350.000 3.096.569.000 1.969.000 239.058.000 43.908.000 3.786.219.000 2. Other financial expenses 3.094.001 2.872.405 2.872.405 7.316.000 68.110.000 7.316.000 7.316.000 7.316.000 7.316.000 7.316.000 7.066.000 7.316.000 135.226.811 C. (V. - VI.) NET CASH FLOW FROM FINANCIAL ACTIVITIES -5.514.707 -12.196.405 -101.984.405 -9.239.000 -305.115.000 -30.535.600 -9.731.000 -16.600.000 -110.847.400 21.761.000 -242.068.000 -44.698.000 -866.768.517

VII. RECEIPTS / EXPENSES FROM TAX -30.049.661 -24.604.763 -20.509.629 -24.941.135 -32.993.327 -36.010.434 -44.513.280 -74.532.616 -80.064.894 -45.691.066 -34.192.452 -27.130.636 -475.233.891 1. Reciepts from VAT ON INPUT 0 0 0 0 0 0 0 0 0 0 0 0 0 2. Expenses for VAT 30.049.661 24.604.763 20.509.629 24.941.135 32.993.327 36.010.434 44.513.280 74.532.616 80.064.894 45.691.066 34.192.452 27.130.636 475.233.891 D. TOTAL INCREASE/DECREASE OF CASHFLOW -41.607.188 34.990.030 -193.359.695 92.225.066 -237.816.213 103.619.615 256.305.644 269.444.901 -192.369.757 62.520.171 -284.561.956 -33.728.977 -164.338.360 E. CASH AT THE BEGINNING OF THE PERIOD 510.000.000 0 0 0 0 0 0 0 0 0 0 0 510.000.000 F. CASH AT THE END OF THE PERIOD 468.392.812 503.382.842 310.023.147 402.248.213 164.432.000 268.051.615 524.357.259 793.802.160 601.432.402 663.952.573 379.390.617 345.661.640 345.661.640

Hrvatske autoceste d.o.o. Plan poslovanja za 2019. godinu

3. Planned credit indebtedness

Following the planned activities of the Company for 2019 and the cash flow dynamics of inflows and outflows, the use of loans during the year is planned, so the balance of credit indebtedness at the end of 2019 is as follows: in EUR

1. ESTIMATED INDEBTEDNESS ON 31.12.2018. 2.831.330.480 2. Use of previously contracted loans from development banks 5.389.870 3. Withdrawing proceeds per loan contracted in 2019 4.533.340 4. Loan refinancing 403.500.000 5. TOTAL NEW BORROWING (2. + 3. + 4.) 413.423.210 6. LOAN REPAYMENT IN 2019 510.438.600 6.1. Repayment / Loan refinancing 400.000.000 6.2. Loan repayment 110.438.600 7. DEBT REDUCTION IN 2019. (5. - 6.) -97.015.390 8. ESTIMATED INDEBTEDNESS AS OF 31.12.2019. (1. + 7.) 2.734.315.090

ESTIMATED INDEBTEDNESS IN HRK as of 31.12.2019. 20.281.987.257

At the end of 2019, the indebtedness was planned in the amount of EUR 2,734,315,090 (HRK 20,281,987,255, with the application of the planned exchange rate EUR 1 = HRK 7.4176), which is less than by EUR 97,015,390 compared to the end of 2018. Given that all loans are contracted with a currency clause and a floating interest rate linked to the movement of the Euribor, the Company is exposed to currency and interest rate risk. Currency risk stems from the fluctuation of the inter-currency exchange rate between the kuna and the euro, and the interest rate risk is related to the movement of interest rates on the international and domestic financial markets. In the third quarter of 2019, a new loan is expected to be used to refinance the existing loan from Deutsche Bank AG London in the amount of 400,000,000 euros, which is entirely due in September 2019. With a new loan, the existing loan would be repaid, and according to the current state of the financial market, the new loan would have more favourable conditions, lower interest rate and a longer repayment period.

Hrvatske autoceste d.o.o. Business Plan for 2019

VI. PLAN BALANCE SHEET

Status as of 31.12. Growth rate No. Item Estimate Estimate 3/2 2018. 2019. 0 1 2 3 4 I. ASSETS 39.768.003.726 38.802.804.705 -2,43 1. Capital assets 38.880.516.141 38.168.631.745 -1,83 1.1. Tangible and intangible assets 38.848.116.116 38.136.346.720 -1,83 1.2. Non-current financial assets and liabilities 32.400.025 32.285.025 -0,35 2. Current assets (working capital) 791.294.985 546.722.360 -30,91 2.1. Stocks 41.830.000 41.200.000 -1,51 2.2. Receivables 234.550.950 155.128.930 -33,86 2.3. Current financial assets 4.914.035 4.731.790 -3,71 2.4. Cash in bank and cash office 510.000.000 345.661.640 -32,22 3. Paid costs for the future period and accrued income 96.192.600 87.450.600 -9,09 II. LIABILITIES 39.768.003.726 38.802.804.705 -2,43 4. Capital and reserves 17.762.448.825 17.609.177.800 -0,86

4.1. Called up capital 131.140.105 131.140.105 0,00 4.2. Capital reserves - public capital in operation 17.231.821.499 17.135.158.181 -0,56 4.3. Reserves from profit 567.506 567.506 0,00

4.4. Retained earning or transferred loss 15.361.607 15.361.607 0,00 4.5. Profit or loss from business year 383.558.108 326.950.400 -14,76 5. Long-term provisions 192.548.650 182.548.650 -5,19

6. Long-term liabilities 17.215.433.185 19.366.023.255 12,49 6.1. Liabilities towards banks and other financial institutions 17.215.387.185 19.365.987.255 12,49 6.2. Other long-term liabilities 46.000 36.000 -21,74

7. Current liabilities 4.201.881.965 1.294.365.000 -69,20 7.1. Obveze za zajmove, depozite, predujmove i slično 15.661.565 16.150.000 3,12 7.2. Liabilities towards banks and other financial institutions 3.786.219.000 916.000.000 -75,81

7.3. Liabilities towards suppliers 234.700.000 240.000.000 2,26 7.4. Other current liabilities 165.301.400 122.215.000 -26,07 8. Deferred payment of costs and income of the future period 395.691.100 350.690.000 -11,37

According to the Roads Act and Capital Access to Records on business changes, the balance sheet states the assets, liabilities and capital of the company and the public good. Assets Capital assets make for 98.37% of the total assets. In 2018 the asset value was decreased mostly because of the decreased value of the public good managed by HAC due to the fact that some built assets were handed over to Hrvatske Ceste d.o.o. (Tunnel Sv. Ilija, link road Karamatići - Luka Ploče and Ploče Port Gateway). In 2019 section Vrbovec 2 - Farkaševac on DC12 shall be completed and handed over to Hrvatske Ceste d.o.o. and in addition to this the value of the current investment will be handed over to Hrvatske Ceste d.o.o. (value of investment in design development activities on routes of the link road Nikolac interchange - D8 and link road Ravča - Drvenik and section Kloštar Vojakovački - Velika Mučna on DC10) which with the correction of value in the current year affects the decreased value of the asset. Investment activity affects the increase in the value of long-term

Hrvatske autoceste d.o.o. Business Plan for 2019

assets. Current assets are 1.41% of total assets and they include: stocks in the Company's operations; short-term receivables mainly from toll revenue and property management revenues; financial assets from cash on account. Short-term assets have a decreasing trend due to the reduction of cash by the end of 2019, in accordance with the planned cash flows.

Liabilities The balance of total capital and reserves at the end of 2019 is planned to be in the amount of HRK 17,609,177,800 and makes for 45.38% of the liabilities. The amount of the Company's capital and reserve is HRK 131,707,611 or 0.8% of the total capital. The value of the public capital which is the source of financing of motorways i.e. public good is planned at the end of 2019 to amount HRK 17,477,470,189 which is 99.3% of the total capital. Planned long-term liabilities are almost entirely related to long-term liabilities, and account for 49.91% of total liabilities. In the case of short-term liabilities, the greatest portion refers to the part of long-term loans that mature in the following year. At the end of 2018, a liability for loans maturing in 2019 is stated in the amount of HRK 3,786,219,000, while at the end of 2019 the balance of liabilities for loans maturing in 2020 should amount to HRK 916,000,000. As of 31 December 2018 in short term liabilities the loan principal per Deutsche Bank AG London loan was stated in an amount of HRK 2,967,030,000 (€400 mil.) which is due in September; the said loan in question is planned to be refinanced in a way that the new loan repays the existing one, and according to the current conditions in the financial market, the new loan would have more favourable conditions, a lower interest rate and a longer repayment term. Planned obligations towards suppliers at the end of 2019 will grow compared to the end of 2018, in line with the planned investment investment dynamics. In the planned deferred payment of costs and income for the future period, interest on loans, default interest, the unused annual leave and future revenue from pre-sold toll products and revenue from projects funded from EU funds are calculated. The balance sheet shows that the planned short-term assets do not cover short-term liabilities, resulting in a negative working capital or a lack of assets in the amount of long-term liabilities for investments reported in short-term liabilities in accordance with the due date for payment. Consequently, the current liquidity coefficient is low and amounts to 0.39. From the ratio of the balance of total liabilities and total assets of the Company and Public Goods, for the year 2019 the indicator coefficient of indebtedness level is 0.54 and the control measure of the degree of indebtedness is 0.50. According to the historical indicators, the maximum tolerance limit of this indicator is 0.70, indicating how much the assets are financed from other sources.

Hrvatske autoceste d.o.o. Business Plan for 2019

VII. CONSTRUCTION PLAN

Capital investment in public roads is planned as a continuation of the investment cycle started in the past period and is an integral part of the Public Roads Construction and Maintenance Programme for the period 2017 to 2020 as well as the guidelines to be implemented in the Amendment to the said Programme for the 2017 to 2020 period which is under preparation.

In 2019 HAC plans to invest the amount of HRK 267,682,000 in the construction of public roads. Sources of funding for planned investments are loans from development banks - the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) in the amount of HRK 31,973,000 (12%), grants from the EU funds in the amount of HRK 13,081,000 (5%) and excise tax on energy sources in the amount of HRK 222,628,000 (83%). Out of the total amount of HRK 267,682,000 of capital investment in the construction in 2019 HRK 4,404,000 or 1.6% refers to the road infrastructure financed and implemented by HAC and then according to the Roads Act transferred to further management and operation to HC.

The plan for the construction and maintenance of motorways in 2019 envisages activities on the construction of motorways and reconstruction on the existing network, with the majority of works being carried out on the following routes and projects:

 Motorway A1 Bosiljevo - Split - Dubrovnik which includes:

Reconstruction and upgrade of internal and external drainage on section Maslenica - Zadar 1 commencement of works on upgrade of Dugopolje interchange in addition to funds planned for the investment, Hrvatske Autoceste d.o.o. foresee within their operating expenses the preparation of project documentation (studies, analyses etc) for motorway Ploče – Dubrovnik.

 Motorway A3 Bregana - Zagreb - Lipovac which includes:

Installation of noise barriers in line with the action plan Works on construction and reconstruction of the existing service facilities to improve the quality of service and to introduce new services Activities related to the third traffic lane addition on the Zagreb Bypass

 Motorway A4 Zagreb - Goričan which includes:

Reconstruction of the connection to Goričan border crossing

Hrvatske autoceste d.o.o. Business Plan for 2019

 Motorway A5 Beli Manastir - Osijek – Bosnia and Herzegovina border which includes:

Commencement of works on the construction of motorway from Halasica Bridge to Beli Manastir in length of 16,7 km Continuation of works started last year on Halasica bridge and road crossings on sub- section Halasica Bridge - Beli Manastir Completion of works on the construction of bridge Svilaj over Sava River

 Motorway A7 Rupa - Rijeka - Žuta Lokva which includes:

Design development activities and implementation of administrative procedure for the phase I of Novi Vinodolski Bypass

 Motorway A11 Zagreb - Sisak which includes:

Completion of all construction works on maintenance and regulation of receiving watercourses and collectors Design development activities and implementation of administrative procedures for the construction of the overpass over the railway switchyard

 In 2019, activities will also be undertaken on the lighting rationalization projects on the motorway network which will include replacing the existing, now obsolete technologies, introduction of new LED technology and rationalization of solutions. This is primarily related to lighting in tunnels, at interchanges, service areas and toll plazas. This project will have a double positive effect that will be reflected in better quality and more lasting lighting type, and the other effect is reduction in electricity consumption, the positive effects of which will be immediately visible in the expenditure.

 One of the more important activities this year and in the coming years regards the reconstruction of the existing rest areas on the motorway network as well as the activities on development and construction of new areas to improve the quality and range of services for motorway users in line with the Plan and Programme for the Development of Service Areas managed by HAC.

 Other projects refer to the upgrade of the existing toll collection system.

 In addition to these activities resolution of disputes from the earlier period is also planned.

Hrvatske autoceste d.o.o. Business Plan for 2019

Capital investment in construction in 2019 is planned per activities and in the following amounts:

Activity Amount in HRK % share Construction 217.206.000 81,1 Design development 25.119.000 9,4 Land acquisition 18.905.000 7,0 Supervision 6.452.000 2,5 Utility relocation 0 0,0 Total 267.682.000 100,0

Planned amounts of capital investment into public roads per routes are shown in the table below:

Construction Plan for 2019 in HRK

Plan % No. Route Name 2019 share

0 1 2 3 4 I. Investment in motorway construction 263.278.000 98,4 1. A1 Bosiljevo - Split 10.620.000 4,0 1.1. A1 Bosiljevo - Sveti Rok interchange 200.000 1,9 1.2. A1 Sveti Rok interchange - Split 10.420.000 98,1 2. A1 Split - Ploče - Dubrovnik 3.696.000 1,4 3. A2 Zagreb - Macelj 800.000 0,3 4. A3 Bregana - Zagreb - Lipovac 60.337.000 22,9 5. A4 Zagreb - Goričan 21.231.000 8,1 6. A5 Beli Manastir - Osijek - B&H border 102.612.000 39,0 7. A7 Rupa - Rijeka - Žuta Lokva 9.050.000 3,4 8. A8 and A9 Istrian motorway "Y" 1.500.000 0,6 9. A10 B&H border - Metković - Ploče interchange 0 0,0 10. A11 Zagreb - Sisak 22.952.000 8,7 11. - New Zagreb bypass 0 0,0 12. - Other projects (toll collection system) 30.480.000 11,6 Investment in road infrastructure carried out by HAC, that is handed over to HC to II. 4.404.000 1,6 manage and maintain 13. DC10 Vrbovec2 interchange - Križevci - Koprivnica - Hungarian border 560.000 12,7 14. DC12 Vrbovec2 interchange - Bjelovar - Virovitica - Hungarian border 3.844.000 87,3 15. - Link road Zagvozd - Baška Voda and Sv.Ilija tunnel 0 0,0 16. - Link road Karamatići Frontal Toll Gate - Ploče Port 0 0,0 17. - Link road Nikolac interchange - D8 0 0,0 18. - Link road Ravča - Drvenik 0 0,0 III. OVERALL CAPITAL INVESTMENT IN CONSTRUCTION (I.+II.) 267.682.000 100,0

Hrvatske autoceste d.o.o. Business Plan for 2019

Overview of planned kilometres that will be opened to traffic or are under construction or preparation:

km in 2019

Completion of No. Route Section In preparation (design Opening to traffic construction development, land In construction /* Handing over to (without opening acquisition etc.) other road operator to traffic) M/way A3 1. Reconstruction of Zagreb Bypass by adding Jankomir - Ivanja Reka 24,5 the third traffic lane Drava Bridge 2,5

Halasica Bridge - Beli Manastir 16,7 M&way A5 2. Beli Manastir - Osijek - B&H border Beli Manastir - Hungarian border 5,0 Bridge Svilaj over Sava 0,7 M/way A7 3. Križišće - Novi Vinodolski - Senj 56,0 Rijeka - Žuta Lokva *DC 12 (state road) 4. Vrbovec2 interchange - Bjelovar - Virovitica - Vrbovec2 - Farkaševac 10,6 Hungarian border Total km 85,5 16,7 2,5 11,3

VIII. MAINTENANCE PLAN

1. PERIODIC MAINTENANCE

Periodic maintenance works are planned in line with the technical-technological, legal and ecological requirements, road traffic inspection decisions but also depending on financial resources.

The Periodic Maintenance Plan for 2019 includes HRK 262,776,000 total worth of works. These works include rehabilitation and reconstruction of pavement structure and structures, drainage system, electric, mechanical, traffic signs and works on centres for maintenance and traffic control, activities on introduction of intelligent transport systems in centres for maintenance and traffic control, and implementation of project CROCODILE II CROATIA and commencement of implementation of project CROCODILE III CROATIA. Also, one of the more important activities in the periodic maintenance plan is associated with the traffic safety through multiple projects (signs to prevent vehicles to enter the wrong traffic way on motorway, rehabilitation of potentially dangerous spots, replacement of variable traffic signs, activities within implementation of driving speed surveillance on motorway, activities on reconstruction of video surveillance and video detection systems).

All periodic maintenance works are implemented to extend the service life of assets and to improve quality and safety of road traffic.

Hrvatske autoceste d.o.o. Business Plan for 2019

For the implementation of intelligent transport systems in centres for maintenance and traffic control (CROCODILE II CROATIA and CROCODILE III CROATIA) two grants from the EU Funds have been agreed and scheduled from Connecting Europe Facility (CEF) Programme. In 2019, a total of HRK 39,100,000 shall be invested in those two projects and 85% of that amount for implementation and equipment would be a grant (non reimbursable). These two projects are in line with the Action plan of the European Commission whose goal is the development and implementation of the EU policy and is a necessary requirement for implementation of National Programme for Introduction and Development of Intelligent Transport Systems in Road Traffic (2014 - 2018). Furthermore, this year the commencement of works on project CROCODILE IV CROATIA is planned as well as the project of rehabilitation of green bridges on motorway A1, for which the application for EU funds financing was also submitted. A total of HRK 9,121,00 shall be invested in these two projects and if the EU fund application is successful, 20% of these funds would be non reimbursable for project CROCODILE IV CROATIA, and over 90% for the project of rehabilitation of green bridges (LIFE). Applications for grants from the Connecting Europe Facility (CEF) programme are planned for the project of Motorway Speed Monitoring System and Guarded Parking Places for Trucks. The already mentioned project of rehabilitation of green bridges is planned to be funded under the LIFE + Program, which is the European Union's financial instrument for the environment. Depending on the results of the application most of the implementation of these two projects will take place in the forthcoming years.

All other projects within periodic maintenance would be funded in the amount of HRK 226,723,500 of the capital aid from the budget (fuel tax).

The value of planned periodic maintenance works in 2019 is shown per projects in the table below:

Periodic maintenance plan for 2019 in HRK Plan No. Name of route/project 2019 0 1 2 1. A1 Bosiljevo - Split - Ploče 71.574.000 2. A3 Bregana - Zagreb - Lipovac 80.248.000 3. A4 Zagreb - Goričan 59.632.000 4. A5 Beli Manastir - Osijek - Hungarian border 1.887.000 5. A10 B&H border - Ploče 685.000 6. A11 Zagreb - Sisak 529.000 Introduction of intelligent transport systems in Maintenance and Traffic 7. 39.100.000 Control Centres (Project CROCODILE II and CROCODILE III CROATIA) Project CROCODILE IV CROATIA and rehabilitation of green bridges 8. 9.121.000 "programme LIFE +" TOTAL 262.776.000

Hrvatske autoceste d.o.o. Business Plan for 2019

The most important activities within periodic maintenance intended by the 2019 Plan per motorway routes include the following:

 Motorway A1 Bosiljevo - Split - Ploče Rehabilitation of worn out asphalt surfacing at Zir service area Rehabilitation of unstable slope at the exit from Sveti Rok tunnel in the zone of Marune service area Rehabilitation of structures (bridges, overpasses) and ancillary equipment to prevent further deterioration, and to ensure the stability of structure in already affected structures and to extend their service life Replacement of damaged manholes in tunnels Rehabilitation of drainage system on motorway route and at technical maintenance units

 Motorway A3 Bregana - Zagreb - Lipovac Rehabilitation of asphalt surfacing of carriageway with the expert supervision and control testing Rehabilitation of west overpass – arm 4 at Jankomir interchange on motorway A3 and west bridge at Jankomir interchange on motorway A2 Rehabilitation of Bridge Okoli Rehabilitation of the motorway overpass at km 110+944 Rehabilitation of the riverbed and the bridge substructure and continuation of works on replacement of expansion joints and bearings on Sava Bridge near Ivanja Reka

 Motorway A4 Zagreb - Goričan Rehabilitation of asphalt surfacing of carriageway with the expert supervision and control testing Rehabilitation of west overpass at Ivanja Reka interchange at km 96+360 Replacement of expansion joints on Plitvice structure at km 29 +400 Replacement of damaged manholes in tunnels Rehabilitation of drainage system and landslide along the motorway route

 Motorway A5 Beli Manastir - Osijek – B&H border Minor works on drainage system rehabilitation Minor works on building structures at Maintenance and Traffic Control Centres

 Motorway A11 Zagreb - Sisak

Hrvatske autoceste d.o.o. Business Plan for 2019

Design development activities related to video surveillance systems, speed monitoring, and project related to improving and increasing road safety as well as the commencement of activities on installation of speed monitoring system on motorway The 2019 Plan also envisages implementation of investigation works and the development of design documents as a prerequisite for the works planned for 2020. A part of the works intended in 2019 is planned in accordance with the Road Traffic Inspection of the Ministry of the Sea, Transport and Infrastructure (rehabilitation of asphalt pavement, rehabilitation of structures, development of design documents for rehabilitation of potentially dangerous areas).

2. ROUTINE MAINTENANCE

In 2018, the HAC completed the construction of the 3.8 km long sub-section Osijek interchange - the Drava River and 0.8 km from Drava Bridge to Halasica Bridge, and in 2019 Drava Bridge (2.5 km long) will be completed, but these sections will not be in traffic until the completion of the entire section from Osijek interchange to Beli Manastir. Also in 2019 Bridge Svilaj over the River Sava will be completed which will be followed by routine maintenance operations for the motorway network of 926,26 kilometres under the competence of HAC, 187 km of sections under the competence of ARZ and 7.3 km long link road D76 from Zagvozd interchange with Sveti Ilija tunnel that was handed over to HC as of 1 January 2018 for operation which in total makes up for the network of 1,120.56 km. In 2019 also HAC will continue to provide routine maintenance services in tunnel Sveti Ilija pursuant to the agreement with Hrvatske Ceste d.o.o. as well as provide fire protection services.

Routine motorway maintenance services are planned in line with the regulations and the Routine Maintenance Standard. Routine motorway maintenance foresees winter maintenance operations, road patrol, carriageway maintenance, maintenance of structures, drainage system, land around the motorways (grass mowing), maintenance of traffic signs, signals, and road furniture and system for traffic control and management, maintenance of electric power plants, specialist electric systems, installations etc.

For material costs and services of routine maintenance before the end of 2019 a total of HRK 132,500,000 shall be invested out of which HRK 96,519,000 for HAC-operated sections including tunnel Sveti Ilija, and HRK 35,981,000 for sections under the competence of ARZ.

Hrvatske autoceste d.o.o. Business Plan for 2019

The cost of routine maintenance for sections under the competence of HAC in 2019 are planned in an amount of HRK 96,519,000 and are lower by 19.3% than the realisation estimate in 2018 and by 6.7% higher than the planned cost for 2018. The cost of routine maintenance for sections under the competence of ARZ in 2019 are planned in an amount of HRK 35,981,000 and are lower by 11.3% than the realisation estimate in 2018 and by 20.6 % higher than the planned cost for 2018.

Out of the total planned amount of HRK 132,500,000 of cost for the routine maintenance, HRK 90,275,000 is for material costs consisting of: electric power, fuel and lubricants, strewers, motorway maintenance supplies (paint and plastic mass for road marking, electric material, cleaning devices, devices for fire fighting interventions), spare parts for maintenance and repair of work machines and other vehicles, depreciation of inventory (tools, road maintenance tools, landscaping tools, protective clothing and shoes, traffic signs, and equipment for temporary traffic regulation, tires for passenger cars and heavy vehicles) and protective chain fences and guard rails.

The remaining amount of HRK 42,225,000 is planned to be spent on routine maintenance of carriageway, structures and equipment on motorways and it consists of: routine maintenance of roads, bridges and tunnels, routine maintenance of buildings, maintenance of green surfaces, rental of machines and vehicles, sign-work and road marking, repair and maintenance of fire alarm system, ventilation, video surveillance, radio stations, traffic and information system etc. The said expenditure within routine motorway maintenance does not include expenses for staff working on maintenance or expenses for main resources and other expenses of Maintenance Department which are planned within operating expenditure.

All routine maintenance operations will be conducted with the aim of safe traffic flow, and to preserve and to improve technical and safety features of roads, to protect environment from harmful impact of road traffic, to preserve environment and to achieve high level of serviceability of motorways.

Here below there is a comparison of realisation estimate for 2017, routine maintenance plan in 2018, realisation estimate for 2018 and routine maintenance plan for 2019.

Hrvatske autoceste d.o.o. Business Plan for 2019

Plan of Motorway Routine Maintenance in total for sections under the competence of HAC and for sections under the competence of ARZ for 2019

in HRK TOTAL SECTIONS OF HAC and ARZ

NO. I T E M 2017. 2018. 2019. INDICES DIFFERENCE REALIZATION REALIZATION PLAN PLAN 5/2 5/3 5/4 5-4 ESTIMATE 0 1 2 3 4 5 6 7 8 9 1. MATERIAL AND POWER FOR ROUTINE MAINTENANCE 89.653.825 82.671.000 108.839.804 90.275.000 100,7 109,2 82,9 -18.564.804 1.1. MATERIAL SPENT FOR MAINTENANCE 9.630.193 6.895.000 9.387.332 7.645.000 79,4 110,9 81,4 -1.742.332 1.2. SALT FOR MAINTENACE 17.664.678 15.000.000 27.611.349 16.000.000 90,6 106,7 57,9 -11.611.349 1.3. FUEL AND LUBRICANTS 12.801.626 11.890.000 14.519.411 12.000.000 93,7 100,9 82,6 -2.519.411 1.4. GUARD RAILS 2.864.985 2.400.000 2.243.718 2.140.000 74,7 89,2 95,4 -103.718 1.5. ELECTRICITY FOR PRODUCTION AND UTILITIES, GAS AND HEATING 36.191.086 39.300.000 44.601.840 45.250.000 125,0 115,1 101,5 648.160 1.6. SPARE PARTS AND MAINTENANCE MATERIAL 5.346.048 3.906.000 6.117.532 3.940.000 73,7 100,9 64,4 -2.177.532 1.7. DEPRECIATION OF SMALL INVENTORY, PACKAGING AND TIRES 5.155.209 3.280.000 4.358.623 3.300.000 64,0 100,6 75,7 -1.058.623 2. ROUTINE MAINTENANCE SERVICES 47.077.081 37.590.000 51.360.196 42.225.000 89,7 112,3 82,2 -9.135.196 2.1. LEASE OF VEHICLES AND MACHINES FOR ROUTINE MAINTENANCE OF ROADS, BRIDGES AND TUNNELS 4.252.418 3.480.000 6.189.370 3.985.000 93,7 114,5 64,4 -2.204.370 2.2. TRAFFIC SIGNS AND ROAD MARKING 1.201.333 850.000 1.035.787 850.000 70,8 100,0 82,1 -185.787 2.3. MAINTENANCE OF GREEN SURFACES, CLEARANCE 298.331 160.000 1.058.141 900.000 301,7 562,5 85,1 -158.141 2.4. MAINTENANCE OF ROADS, BRIDGES AND TUNNELS 15.223.035 13.100.000 15.368.425 14.050.000 92,3 107,3 91,4 -1.318.425 2.5. MAINTENANCE OF MACHINES, VEHICLES AND EQUIPMENT 26.101.963 20.000.000 27.708.473 22.440.000 86,0 112,2 81,0 -5.268.473 3. TOTAL ( 1. + 2. ) 136.730.906 120.261.000 160.200.000 132.500.000 96,9 110,2 82,7 -27.700.000

Routine Motorway Maintenance Plan for 2019  sections under the competence of HAC

in HRK HAC SECTIONS

2017. 2018. 2019. INDICES DIFFERENCE NO. I T E M REALIZATION OSTVARENJE PLAN PLAN 5/2 5/3 5/4 5-4 ESTIMATE 0 1 2 3 4 5 6 7 8 9 1. MATERIAL AND POWER FOR ROUTINE MAINTENANCE 68.404.472 62.292.767 82.126.901 66.104.000 96,6 106,1 80,5 -16.022.901 1.1. MATERIAL SPENT FOR MAINTENANCE 7.492.530 5.144.381 6.744.670 5.651.000 75,4 109,8 83,8 -1.093.670 1.2. SALT FOR MAINTENACE 12.665.181 10.848.571 20.303.030 11.000.000 86,9 101,4 54,2 -9.303.030 1.3. FUEL AND LUBRICANTS 9.930.985 9.278.954 11.479.454 9.180.000 92,4 98,9 80,0 -2.299.454 1.4. GUARD RAILS 2.507.835 1.944.828 1.995.008 1.740.000 69,4 89,5 87,2 -255.008 1.5. ELECTRICITY FOR PRODUCTION AND UTILITIES, GAS AND HEATING 27.323.853 29.508.316 33.083.487 33.130.000 121,2 112,3 100,1 46.513 1.6. SPARE PARTS AND MAINTENANCE MATERIAL 4.251.958 3.076.838 4.993.114 2.945.000 69,3 95,7 59,0 -2.048.114 1.7. DEPRECIATION OF SMALL INVENTORY, PACKAGING AND TIRES 4.232.130 2.490.879 3.528.138 2.458.000 58,1 98,7 69,7 -1.070.138 2. ROUTINE MAINTENANCE SERVICES 35.612.985 28.135.479 37.528.099 30.415.000 85,4 108,1 81,0 -7.113.099 2.1. LEASE OF VEHICLES AND MACHINES FOR ROUTINE MAINTENANCE OF ROADS, BRIDGES AND TUNNELS 4.034.462 3.066.823 5.507.490 3.535.000 87,6 115,3 64,2 -1.972.490 2.2. TRAFFIC SIGNS AND ROAD MARKING 1.029.244 543.606 907.904 600.000 58,3 110,4 66,1 -307.904 2.3. MAINTENANCE OF GREEN SURFACES, CLEARANCE 285.172 128.627 1.051.608 700.000 245,5 544,2 66,6 -351.608 2.4. MAINTENANCE OF ROADS, BRIDGES AND TUNNELS 11.435.552 9.600.477 9.820.047 9.450.000 82,6 98,4 96,2 -370.047 2.5. MAINTENANCE OF MACHINES, VEHICLES AND EQUIPMENT 18.828.554 14.795.946 20.241.050 16.130.000 85,7 109,0 79,7 -4.111.050 3. TOTAL ( 1. + 2. ) 104.017.457 90.428.246 119.655.000 96.519.000 92,8 106,7 80,7 -23.136.000

Routine Motorway Maintenance Plan for 2019  sections under the competence of ARZ

in HRK ARZ SECTIONS

2017. 2018. 2019. INDICES DIFFERENCE NO. I T E M REALIZATION REALIZATION PLAN PLAN 5/2 5/3 5/4 5-4 ESTIMATE 0 1 2 3 4 5 6 7 8 9 1. MATERIAL AND POWER FOR ROUTINE MAINTENANCE 21.249.353 20.378.233 26.712.903 24.171.000 113,7 118,6 90,5 -2.541.903 1.1. MATERIAL SPENT FOR MAINTENANCE 2.137.663 1.750.619 2.642.662 1.994.000 93,3 113,9 75,5 -648.662 1.2. SALT FOR MAINTENACE 4.999.497 4.151.429 7.308.318 5.000.000 100,0 120,4 68,4 -2.308.318 1.3. FUEL AND LUBRICANTS 2.870.641 2.611.046 3.039.958 2.820.000 98,2 108,0 92,8 -219.958 1.4. GUARD RAILS 357.150 455.172 248.710 400.000 112,0 87,9 160,8 151.290 1.5. ELECTRICITY FOR PRODUCTION AND UTILITIES, GAS AND HEATING 8.867.232 9.791.684 11.518.353 12.120.000 136,7 123,8 105,2 601.647 1.6. SPARE PARTS AND MAINTENANCE MATERIAL 1.094.091 829.162 1.124.418 995.000 90,9 120,0 88,5 -129.418 1.7. DEPRECIATION OF SMALL INVENTORY, PACKAGING AND TIRES 923.079 789.121 830.484 842.000 91,2 106,7 101,4 11.516 2. ROUTINE MAINTENANCE SERVICES 11.464.096 9.454.521 13.832.097 11.810.000 103,0 124,9 85,4 -2.022.097 2.1. LEASE OF VEHICLES AND MACHINES FOR ROUTINE MAINTENANCE OF ROADS, BRIDGES AND TUNNELS 217.956 413.177 681.880 450.000 206,5 108,9 66,0 -231.880 2.2. TRAFFIC SIGNS AND ROAD MARKING 172.088 306.394 127.883 250.000 145,3 81,6 195,5 122.117 2.3. MAINTENANCE OF GREEN SURFACES, CLEARANCE 13.159 31.373 6.533 200.000 1.519,9 637,5 3.061,3 193.467 2.4. MAINTENANCE OF ROADS, BRIDGES AND TUNNELS 3.787.484 3.499.523 5.548.378 4.600.000 121,5 131,4 82,9 -948.378 2.5. MAINTENANCE OF MACHINES, VEHICLES AND EQUIPMENT 7.273.409 5.204.054 7.467.423 6.310.000 86,8 121,3 84,5 -1.157.423 3. TOTAL ( 1. + 2. ) 32.713.449 29.832.754 40.545.000 35.981.000 110,0 120,6 88,7 -4.564.000

Hrvatske autoceste d.o.o. Business Plan for 2019

IX. MANAGEMENT STRUCTURE

Owner: Republic of Croatia 100%

Assembly: As a founder, the Republic of Croatia realises its rights in the Assembly through the Government of the Republic of Croatia represented by the Minister of the Sea, Transport and Infrastructure Mr Oleg Butković.

Supervisory Board: Branimir Jerneić Chairman Nino Vela Chairman Deputy Darko Kasap Member Ladislav Turčinović Member Anđelko Kasunić Member, Workers' Representative

Audit Committee: Nataša Munitić President Ladislav Turčinović Deputy President Darko Kasap Member Rudi Grubišić Member

Management Board Ph.D. Boris Huzjan, BSc (Civ Eng) President Stjepan Baranašić, BSc (Civ Eng) Member

President of the Management Board:

______Ph.D. Boris Huzjan, BSc (Civ Eng)