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 1 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 2 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. 3 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. 4 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