Public Disclosure Authorized
HRVATSKE AUTOCESTE d.o.o. Sirolina ulica 4, Zagreb
Annual Financial Statements and Independent Auditors’ Report for 2019 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized CONTENT
Page
Responsibility for the Annual financial statements 1
Independent Auditors’ Report 2 - 7
Statement of Comprehensive income 8
Statement of Financial Position 9
Statement of Changes in equity 10
Statement of Cash flows 11-12
Notes to the Annual financial statements 13-58
APPENDIX - Financial statements of company Hrvatske autoceste d.o.o. 59 - 61 and the Public Good
Standard annual financial statements as at and for the year ended 31 62 - 71 December 2019 RESPONSIBILITY FOR THE ANNUAL FINANCIAL STATEMENTS
The Management Board of Hrvatske autoceste d.o.o., Zagreb, Sirolina 4 („the Company") is responsible for ensuring that the annual financial statements for the year 2019, are prepared in accordance with the International Financial Reporting Standards as determined by the European Commission and published in the Official Journal of the EU; and the Roads Act, to give a true and fair view of the financial position, the results of operations, the changes in equity and the cash flows of the Company for that period.
After making enquiries, the Management Board reasonably expects the Company to have adequate resources to continue to operate in the foreseeable future. Accordingly, the Management Board prepared the annual financial statements using the going concern basis of accounting.
In preparing the annual financial statements, the Management Board is responsible for:
• selection and consistent application of suitable accounting policies in accordance with the applicable financial reporting framework;
• giving reasonable and prudent judgments and estimates;
• the annual financial statements are prepared on the going concern basis unless it is inappropriate to presume that the Company will continue to operate as a going concern.
The Management Board is responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the financial position, the results of operations, the changes in equity and the cash flows of the Company and their compliance with the Accounting Act (Official Gazette No. 78/15, 120/16 and 116/18) and the International Financial Reporting Standards as determined by the European Commission and published in the Official Journal of the EU; and the Roads Act. The Management is also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Signed for and o ' ehalf of the Management Board: /
Boris Huzjan, Presf ent of the B Barahasic, “board Member
Hrvatske autoceste d.o.o. Sirolina ulica 4 10 000 Zagreb Republic of Croatia
19 May 2020
1 Tel: +385 1 2395 BOO Croatia FACT revizija d.o.o. URED ZAGREB UREO SLAVONSKI8ROD FACT I revizija Revlzcrska tvrtka za ZacJarika 8C ibmo Skalsce a 35 000 Stevcnski Biod IBDO ravizliu I flnancl'sko IB OOQ Zagreb M-.t385 (0)98 743 993. +38S <0391 239 5836 ratunovocistvene usluge T: iJ95 <0)14400 012 URED KARLOVAC 018: 66533066056 Vladlmira Nazura 8,47000 Karlovac MB: 041554S M: t-385 (0)98 284 554. *335 <0)98 246 573 E: lnfoafact.hr
INDEPENDENT AUDITORS’ REPORT
To the Owner of Hrvatske autoceste d.o.o., Zagreb
Report on the audit of the annual financial statements
Opinion We have audited the annual financial statements of HRVATSKE AUTOCESTE d.o.o., Zagreb, Sirolina 4 (the „Company”) for the year ended 31 December 2019 which comprise the Statement of financial position as at 31 December 2019, the Statement of Comprehensive Income, the Statement of Changes in Equity and the Statement of Cash flows for the year then ended as well as the accompanying Notes to the Annual Financial Statements, including a summary of significant accounting policies. In our opinion, the accompanying annual financial statements, give a true and fair view of the financial position of the Company as at 31 December 2019 and of its financial performance and cash flows for the year then ended in accordance with the International Financial Reporting Standards (IFRSs) as determined by European Commission and published in Official Journal of EU; and the Roads Act.
Basis for Opinion We conducted our audit in accordance with the International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in our Independent Auditors’ report in the section about auditor’s responsibilities for the audit of annual financial reports. We are independent of the Company in accordance with the Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained are sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter We draw attention to Notes 2.10 b), 6/i/ 13 and 16 to the financial statements which explain certain deviations from the IFRSs required under the Roads Act. Our opinion has not been modified regarding this matter.
We draw attention to Note 38 to the financial statements which explains events after the balance sheet date and expected decrease of business activities in the next business year because of COVID-19 virus influence. Our opinion has not been modified regarding this matter.
2 BDO Croatia d.o.o. FACT REVIZUA d.o.o. upisana u registar Trgovackog suda pod br. MBS - 050001274 Registrirano kod Trgovackog suda u Zagrebu 1BAN: HR81234Q0091100068593 SWIFT: PBZGHR2X pod brojem 080044149 Temeljni kapital 65.600,00 kn. upiacen u cijelosti. Predsjednica uprave: Daniela Sunjic. OIB 76394522236 BDO Croatia d.o.o. IBPO FACT revizija
Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the annual financial statements of the current period and include most significant identified risks of material misstatement due to error or fraud with the highest impact on our audit strategy, on our resources available and the time spent by the engaged audit team. These matters were addressed in the context of our audit of the annual financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below as the key audit matters to be communicated in our Independent Auditors’ report.
Key audit matter How we addressed key audit matter
Legal Disputes and Contingent liabilities Our audit procedures related to this area, among other things, included: As of 31 December 2019, the Company had provisions for legal disputes and contingent - Receiving and analysing the lawyer's liabilities. During the Company's regular business, response to our written inquiries potential exposure to legal disputes may arise. Any addressed to lawyers and considering liabilities disclosed or disclosed contingent certain issues with them; liabilities, or non-disclosures in the financial - Critical review of the used assumptions statements, are inherently uncertain and depend on and estimates pertaining to the claims. a number of significant assumptions and judgments. This includes assessing the likelihood These are potentially significant amounts in which of unfavourable outcome of court the determination of the amount for disclosure in proceedings and the reliability of the the financial statements, if applicable, is subject to a subjective assessment. Further to the assessment of the related amount of aforementioned, the Management assesses future liability according to IAS 37 - outcomes and amounts of contingent liabilities that Provisions, Contingent Liabilities and may arise as a result of these disputes according to Contingent Assets; IAS 37 - Provisions, Contingent Liabilities and - Assessing the adequacy of the Contingent Assets. disclosure in the financial statements, taking into account sensitivity and Because of the above mentioned, this area has been the subject of our increased focus during the audit possible prejudice in the disclosure of and we considered it a key audit matter. detailed information.
Related Disclosures in Related Annual Financial Statements See Notes 2.15 and 2.16 (Accounting Policies) and Notes 26 and 37.
Other matters The audit of the Company's annual financial statements for the year ended 31 December 2018, was performed by the auditing company BDO Croatia d.o.o., Zagreb, which in its Independent Auditor's Report dated 31 May 2019 expressed an unmodified opinion on these annual financial reports.
3 BDO Croatia d.o.o. I BDO FACT revizija
Other Information in the Annual Report The Management Board of the Company is responsible for other information. Other information includes information included in the Annual report, but do not include the annual financial statements and our Independent auditors’ report on them. Our opinion on the annual financial statements does not include other information, except to the extent explicitly stated in the part of our Independent auditors’ report, entitled Report on compliance with other legal or regulatory requirements, and we do not express any kind of conclusion with assurance on them. In connection with our audit of the annual financial statements, it is our responsibility to read the other information and consider whether other information have significant contradictions to annual financial statements, or our knowledge gained while performing the audit, or otherwise appear to be materially misstated. If, based on the work we have performed, we conclude that there is material misstatement of other information we are required to report this fact. In this sense, we do not have anything to report. The Management Board is responsible for preparing the Company's Management Report as an integral part of the Company's Annual Report. Regarding the Management Report, we also carried out the procedures required by the Croatian Accounting Act. These procedures include considering: • whether the Company's Management Report has been prepared in accordance with Article 21 of the Accounting Act; Based on the procedures required to be performed as part of our audit of the annual financial statements and the above procedures, in our opinion: • The information contained in the Company's Management Report for the financial year for which the financial statements have been prepared comply, in all significant aspects, with the annual financial statements of the Company presented on pages 8 to 61 on which we expressed our opinion as set out in the Opinion section above; • The Management Report has been prepared, in all significant aspects, in accordance with Articles 21 and 22 of the Accounting Act; Furthermore, taking into account the knowledge and understanding of the Company's operations and the environment in which it operates, and which we acquired during our audit; it is our duty to report whether we have identified material misstatements in the Management Report. In that sense, we have nothing to report. Responsibilities of the Management and Those Charged with Governance for the annual financial statements
The Management is responsible for the preparation of annual financial statements that give a true and fair view in accordance with IFRS; and for such internal controls as Management determines are necessary to enable the preparation of annual financial statements that are free from material misstatement, whether due to fraud or error. In preparing the annual financial statements, the Management Board is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s financial reporting process.
4 IBDO FACT | revizija
Auditors’ Responsibilities for the audit of the annual financial statements Our objectives are to obtain reasonable assurance about whether the annual financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Independent Auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the annual financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management Board. • Conclude on the appropriateness of the Management’s Board use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Independent Auditors’ report to the related disclosures in the annual financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Independent Auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the annual financial statements, including the disclosures, and whether the annual financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • We obtain sufficient appropriate audit evidence regarding financial information from individuals and business activities within the Company to express an opinion on the annual financial statements. We are responsible for directing, overseeing and performing the audit. We are solely responsible for expressing our opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
5 BDO Croatia d.o.o. I BDO FACT revizija
Auditors’ Responsibilities for the audit of the annual financial statements (continued) We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and that we will communicate with them all relationships and other matters that may reasonably be considered to influence our independence, and where applicable, related safeguards. Among the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the annual financial statements of the current period and are therefore the key audit matters. We describe these matters in our Independent Auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our Independent Auditors’ report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. BDO Croatia d.o.o. and FACT Revizija d.o.o. are jointly responsible for performing the audit and for the audit opinion, according to the requirements of the Audit Act applicable in Croatia.
Report on Other Legal Requirements On 12 September 2019, we were appointed by the General Assembly of the Company, based on the proposal of the Supervisory Board, to audit the annual financial statements for 2019. At the date of this Independent Auditors' Report, BDO Croatia d.o.o. is continuously engaged in performing the legal audit of the annual financial statements of the Company for 2001 until the audit of the annual financial statements of the Company for 2019, which is total 19 years, while FACT revizija d.o.o. is engaged for the legal audit of the annual financial statements of the Company for 2019, which is a one-year engagement. In the audit of the Company's annual financial statements for 2019, we determined the materiality for the financial statements as a whole in the amount of HRK 33,347 thousand, which represents approximately 1.5% of the realized sales revenue for 2019. Our audit opinion is consistent with the supplementary report for the Company's Audit Board drawn up in accordance with the provisions of Article 11 of Regulation (EU) no. 537/2014. During the period between the initial date of the audited annual financial statements of the Company for the year 2019 and the date of this Report, we did not provide the Company with prohibited non-scheduled services, and in the business year prior to the aforementioned period, did not provide services for the design and implementation of internal control procedures or risk management related to preparation and/or control of financial information or the design and implementation of technological systems for financial information, and we have maintained independence in relation to the Company. The Company's non-financial report on corporate social responsibility for 2019 is compiled in accordance with the provisions of the Accounting Act (OG 78/15, 134/15, 120/16 and 116/18) and forms an integral part of the Company's Annual Report for 2019. The non- financial report will be published as an integral part of the Annual Report accordingly.
6 BDO Croatia d.o.o. I BDO FACT revizija
Report on Other Legal Requirements (continued) The Management Board is responsible for preparing the annual financial statements of the Company for the year ended 31 December 2019 in the prescribed form pursuant to the Ordinance on the structure and content of annual financial statements (OG 95/16), and in accordance with other regulations governing the Company's operations. ("Standard annual financial statements") which are presented on pages 62 to 71. The financial information presented in the standard annual financial statements of the Company is in accordance with the information presented in the annual financial statements of the Company presented on pages 8 to 61 to which we have expressed an opinion as set out in the Opinion section above. The partners engaged in the audit of the Company's annual financial statements for 2019, which results in this Independent Auditors' Report, are the certified auditor Ivan Stimac for BDO Croatia d.o.o. and certified auditor Jeni Krsticevic for FACT Revizija d.o.o.
Zagreb, Zagreb, 19 May 2020 19 May 2020
BDO Croatia d.o.o. FACT Revizija d.o.o. Trg J. F. Kennedy 6b Zadarska 80 10000 Zagreb 10000 Zagreb
IBDO CROATIA BDO Croatia d.o.o. JxSC. za pruianje revizorsldh, konzalting i raiunovodstvenih usluga Zagreb, J. F. Kennedy 6/b Ivan Stimac, Certified Auditor
l NfcViifAo_____ Vedrana Stipic, Member of the Daniela S j q, President of the Management Board M anagement Board
7 Hrvatske autoceste d.o.o., Zagreb STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2019
DECSCRIPTION Note 2019 2018 HRK '000 HRK '000 OPERATING INCOME Sales income 3 2,223,140 2,136,105 Other operating income 3 61,493 282,157 Total operating income 2,284,633 2,418,262
OPERATING EXPENSES Material costs 4 (243,762) (260,403) Staff costs 5 (460,039) (469,107) Depreciation 6 (905,756) (954,055) Other costs 7 (70,806) (64,764) Impairments 8. (14,018) (17,854) Provisions 9. (35,901) (28,295) Other operating expenses 10 (73,443) (20,447) Total operating expenses (1,803,725) (1,814,925)
PROFIT FROM OPERATING ACTIVITIES 480,908 603,337
FINANCIAL INCOME 11. 11,474 3,788 FINANCIAL EXPENSES 12 (4,485) (5,069)
PROFIT/(LOSS) FROM FINANCIAL ACTIVITIES 6,989 (1,281)
TOTAL INCOME 2,296,107 2,422,050 TOTAL EXPENSES (1,808,210) (1,819,994)
DIFFERENCE BETWEEN TOTAL INCOME AND EXPENSE 487,897 602,056
PROFIT BEFORE TAXATION 487,897 602,056 Corporate income tax 13. (89,353) (109,470) PROFIT FOR THE YEAR 398,544 492,586 Other comprehensive income/loss before taxation 0 0 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 14 398,544 492,586
The accompanying notes from 1 to 39, set out below, form an inseparable part of these financial statements.
8 Hrvatske autoceste d.o.o., Zagreb STATEMENT OF FINANCIAL POSITION As at 31 December 2019
DESCRIPTION Note 31 Dec 2019 31 Dec 2018 HRK '000 HRK '000 ASSETS
Fixed assets Intangible assets 15. 6,993 9,582 Property, plant and equipment 16 37,778,704 38,851,574 Non-current financial assets 17 23,523 26,413 Receivables 2,230 2,487 Total fixed assets 37,811,450 38,890,056
Current assets Inventories 18. 41,208 41,211 Trade receivables 19. 109,113 124,191 Receivables from employees and company members 603 257 Receivables from State and other institutions 20 135,194 82,829 Other receivables 21 1,598 1,591 Current financial assets 22 230,640 8,081 Cash and cash equivalents 23 441,438 522,112 Prepaid expenses and accrued income 24 86,964 96,202 Total current assets 1,046,758 876,474
TOTAL ASSETS 38,858,208 39,766,530
EQUITY AND LIABILITIES
Equity 25 Subscribed capital 131,140 131,140 Public capital - Public capital on management 19,582,712 19,582,712 - Public capital from fuel fee 19,847,379 19,313,019 - Public capital from other sources (22,209,352) (21,645,450) Legal reserves 568 568 Retained earnings 15,362 15,362 Profit for the year 398,544 492,586 Total equity 17,766,353 17,889,937
Provisions 26 71,584 50,719 Long-term liabilities 27 19,485,251 17,217,434
Short-term liabilities Loans, deposits and similar 28 14,816 14,932 Liabilities to banks and other financial institutions 29. 938,107 3,784,220 Prepayments 212 212 Trade payables 30 136,486 236,502 Liabilities to employees 31 29,365 25,530 Taxes, contributions and similar 32 54,861 134,802 Other current liabilities 174 179 Accrued expenses and deferred income 33 360,999 412,063 Total short-term liabilities 1,535,020 4,608,440
TOTAL EQUITY AND LIABILITIES 38,858,208 39,766,530
The accompanying notes from 1 to 39, set out below, form an inseparable part of these financial statements.
9 Hrvatske autoceste d.o.o., Zagreb STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2019
Public Public Subscribed capital capital from Public cap from Legal Retained Profit for stock TOTAL under gas other fin sources reserves earnings the year capital DESCRIPTION management reimburs HRK '000 HRK ’000 HRK '000 HRK '000 HRK '000 HRK '000 HRK '000 HRK '000 Balance as at 31 December 2017 131,140 19,582,712 18,796,084 (19,998,377) 568 15,362 139,667 18,667,156 Allocation of profit 0 0 0 139,667 0 0 (139,667) 0 Public capital from gas reimbursement 0 0 516,935 0 0 0 0 516,935 Public capital - guarantees collection 0 0 0 153 0 0 0 153 Public capital - deposit interests 0 0 0 32 0 0 0 32 Public capital - income from share portion in investment funds 0 0 0 558 0 0 0 558 Public capital - EU co-financing- entry to port Ploce 0 0 0 45,406 0 0 0 45,406 Public capital - foreign exchange gams 0 0 0 516,740 0 0 0 516,740 Public capital - foreign exchange losses 0 0 0 (237,819) 0 0 0 (237,819) Public capital - financing costs 0 0 0 (696,954) 0 0 0 (696,954) Public capital- transfer to HC d o o 0 0 0 (1,312,798) 0 0 0 (1,312,798) Public capital - impairment of the public property under concession 0 0 0 (102,058) 0 0 0 (102,058) Profit for the year 0 0 0 0 0 0 492,586 492,586 Balance as at 31 December 2018 131,140 19,582,712 19,313,019 (21,645,450) 568 15,362 492,586 17,889,937 Allocation of profit 0 0 0 492,586 0 0 (492,586) 0 Public capital from gas reimbursement 0 0 534,360 0 0 0 0 534,360 Public capital - guarantees collection 0 0 0 114 0 0 0 114 Public capital - deposit interests 0 0 0 22 0 0 0 22 Public capital - income from share portion m investment funds 0 0 0 0 0 0 0 0 Public capital - EU co-financing- project Crocodile III 0 0 0 19 0 0 0 19 Public capital - foreign exchange gains 0 0 0 215,640 0 0 0 215,640 Public capital - foreign exchange losses 0 0 0 (284,645) 0 0 0 (284,645) Public capital - financing costs 0 0 0 (517,943) 0 0 0 (517,943) Public capital - other expenses due to public good management 0 0 0 (8,027) 0 0 0 (8,027) Public capital - impairment of the public property out of use 0 0 0 (1,365) 0 0 0 (1,365) Public capital- transfer to HC d o o 0 0 0 (360,002) 0 0 0 (360,002) Public capital - impairment of the public property under concession 0 0 0 (100,301) 0 0 0 (100,301) Profit for the year 0 0 0 0 0 0 398,544 398,544 Balance as at 31 December 2019 131,140 19,582,712 19,847,379 (22,209,352) 568 15,362 398,544 17,766,353
The accompanying notes from 1 to 39, set out below, form an inseparable part of these financial statements.
10 Hrvatske autoceste d.o.o., Zagreb STATEMENT OF CASH FLOWS For the year ended 31 December 2019
DESCRIPTION 2019 2018 HRK '000 HRK '000 Cash flows from operating activities Profit before tax 487,897 602,056 Depreciation and impairments of public goods 905,756 954,055 Other changes on public goods (52,433) (284,632) Net foreign exchange differences 9,827 (3,065) Expenditures from provisions 35,901 28,295 Impairments of current asset 14,019 17,854 Income from the sale of assets 557 (626) Interest income 0 (722) Interest expenses 0 5,069 Increase/decrease in inventories 3 1,804 Increase/decrease in trade receivables 1,059 (27,668) Increase/decrease in receivables from related companies 0 943 Increase/decrease in receivables from employees and company members (347) 517 Increase/decrease in receivables from the State and other institutions (52,365) (51,492) Increase/decrease in other receivables (6) (263) Increase/decrease in prepayments and accrued income 9,238 10,906 Provisions (15,035) (143,479) Increase/decrease in trade payables (184,611) 26,619 Increase/decrease in liabilities to employees 3,834 (22,430) Increase/decrease in liabilities for taxes, contributions and similar (259,114) 28,353 Increase/decrease in other current liabilities (5) 10 Increase/decrease in accrued expenses and deferred income (51,064) 83,179 Interest paid (4,485) (5,069) Interest collected 1,645 722 Inflows from dividends and profit shares 1 0 Profit tax 89,820 (109,470) Cash flows from operating activities 940,092 1,111,466
Cash flows from investing activities Inflows Inflows from the sale of fixed assets 0 2,227 Inflows from the collection of non-current receivables 257 469 Inflows from the sale of financial assets 2,890 127,149 Outflows Outflows for financial assets (222,558) (2,742) Purchase of fixed tangible and intangible assets (215,954) (348,734) Cash flows from investing activities (435,365) (221,631)
11 Hrvatske autoceste d.o.o., Zagreb STATEMENT OF CASH FLOWS - continued For the year ended 31 December 2019
DESCRIPTION 20192018 HRK '000 HRK ’000 Cash flows from financial activities Inflows Increase in short-term and long-term financial liabilities 0 8,527,299 Outflows Payments of long-term and short-term financial liabilities (585,401) (9,344,233) Cash flows from financial activities (585,401) (816,934)
Net cash flow (80,674)______72,901 CASH AND CASH EQUIVALENTS AT THE BEGINING OF THE YEAR 522,112 449,211 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 441,438 522,112
The accompanying notes from 1 to 39, set out below, form an inseparable part of these financial statements.
12 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS For the year ended 31 December 2019
1. GENERAL
1.1. Legal framework and activities The company Hrvatske autoceste d.o.o. Zagreb, Sirolina 4 was registered at the Commercial Court in Zagreb based on the Decision No. Tt-01/2180-2 dated 11 April 2001. The Company was founded based on the Decision reached by the Republic of Croatia, on Division and Transformation of the company Hrvatska uprave za ceste (HUC) into Hrvatske autoceste d.o.o. Zagreb and Hrvatske ceste d.o.o. and based on the Founder’s Statement on the Establishment of the Company dated 9 April 2001. Subscribed capital amounts to HRK 102,071 thousand. The Republic of Croatia is the sole founder of the Company. Since the subscribed capital was determined based on the partition balance sheet as at 11 April 2001, the Company made corrections of the opening balance during 2001 and 2003, which increased subscribed capital by HRK 29,069 thousand. The difference in the amount of HRK 29,069 thousand was registered at the Commercial Court in Zagreb pursuant to Decision Tt-04/7025-3 dated 16 July 2004. After the increase, the subscribed capital amounts to HRK 131,140 thousand. Operating subject - activities: • Designing and procuring of Location and Building Permits and certificate of occupancy for motorways, • Construction of motorways and road facilities with collection of road tolls on state roads, « Maintenance of motorways and road facilities with collection of road tolls on other state roads, • Other tasks of maintenance of motorways and road facilities with road toll collection on other state roads and other.
1.2. Operating and financial restructuring of the road sector In early 2017, the Croatian Government adopted a Decision on the Business and Financial Restructuring of the Roads Sector. This decision aims to enable the road sector reform, strengthen the supervision and planning for the sector, increase operational efficiency and improve the finances of the sector. The main restructuring elements are: • managing the road sector • planning, financing and investments implementation in the road sector • managing companies and their operating The planned measures of managing roads sector refer to the merger of Hrvatske autoceste odrzavanje i naplata cestarine d.o.o. and the Company. Pursuant to the Decision of the Government of the Republic of Croatia on the Acceptance of Business and Financial Restructuring of the Road Sector Idas: 022-03 / 17-04 / 77 Ur. No .: 50301-25 / 25-17-4 of 16 March 2017, point a) Management of the road sector section iv) Reorganization of the companies in the motorway sector and Decision of the General Assembly of Hrvatske autoceste d.o.o. No. 4/17 of 12 April 2017, the procedure of merging the company HAC ONC d.o.o into the Company was done.
13 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
1.2. Operating and financial restructuring of the road sector - continued Pursuant to the Merger Agreement of 13 November 2017 and the Decision of the General Assembly of the Company and the General Assembly of HAC-ONC d.o.o. from the 13 November 2017, on 1 December 2017, the Commercial Court in Zagreb recorded the merger in the court register.
1.3. Employees On 31 December 2019, the Company had 2,728 employees (31 December 2018: 2,700). The employee qualification structure is the following:
Structure 31 Dec 2019 31 Dec 2018 Doctor's/Master's degree 16 17 University degree 293 303 Two-year post-secondary diploma 306 309 Secondary school certificate 1,667 1,800 Skilled workers 360 251 Unskilled workers 86 90 TOTAL 2,728 2,770
1.4. Company Bodies The Company Bodies are the Assembly, Supervisory Board and Management Board. The Republic of Croatia, as the founder, exercises its rights through the Government of the Republic of Croatia. Pursuant to the decision on representing the Croatian Government in the Assembly of Hrvatske autoceste d.o.o. dated 8 November 2004, the Minister (Ministry of Maritime, Transport and Infrastructure) represents the Croatian Government in the Company’s Assembly. The Supervisory Board consists of 5 members, 4 of which are elected by the Assembly: one at the proposal of the Ministry of Maritime Affairs, Transport and Infrastructure; Ministry of Environmental and Nature Protection, Ministry of Construction and Physical Planning; Ministry of Finance and Ministry of Economy) while the fifth member is elected by the employees. Members’ mandate is 4 years. Supervisory Board Branimir Jerneic - President Nino Vela - Deputy President Darko Kasap - Member Ladislav Turcinovic - Member Andelko Kasumc - Member, Representative of employees Management Board Boris Huzjan Director Stjepan Baranasic Board Member
14 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Summary of significant accounting policies is set out below.
2.1. Statement of compliance and basis of presentation Financial statements of the Company for 2019 are prepared in accordance with the, International financial reporting standards ("IFRSs") determined by the European Commission and published in the Official Journal of the EU and Roads Act. Financial statements of the Company for 2019 are also in accordance with the Accounting Act (OG No 78/15, 120/16, 116/18) referring to IFRS and determined by the European Union and published in the Official Journal of the EU. Financial statements have been prepared using the basic accounting assumption of the transaction in which the effects of transactions are recognized when they occur and reported in financial statements for the period to which they relate and with the application of fundamental accounting assumption of going concern. The Company’s financial statements are prepared in Croatian Kuna (HRK) as the Company’s measuring and reporting currency. Financial statements are presented in HRK ‘000. As on 31 December 2019 the exchange rate of 1 USD and 1 EUR amounted to HRK 6,45 and HRK 7,44 (31 December 2018: HRK 6,47 and HRK 7,42). On 8 July 2011 new Roads Act came in force (OG 84/11,22/13, 54/13, 148/13, 92/14 and 110/19) in which Articles 94, 95 and 96 define roads as assets belonging to the Republic of Croatia which is kept in separate business records of the company which manages roads. These assets of the republic of Croatia are presented in these financial statements as public capital, as prescribed by law; the accounting approach to the recognition of certain operating events is the following: the application of the capital approach as defined by enacting clause. The capital approach includes keeping records of certain operating events in the following way: • Funds from the annual fees for the use of public roads, user charges and fees to finance the construction and maintenance of public roads by which the Republic of Croatia finances the construction, maintenance and other management services of public roads, constitute the Croatian property (public capital), which is recorded separately in the ledgers of legal entity that manages public road. • A legal entity that manages public roads includes depreciation of public roads managed in its operating expenses. Part of the depreciation that is not covered by own income is accounted at the expense of public capital. • Public capital also includes income based on foreign exchange differences, interest and other income generated on the basis of money management that makes the public capital and public capital is reduced by interest and other fees associated with financing the construction and maintenance of public roads and for foreign exchange losses. • The difference between own income and expenditures realized in fiscal year shall be compensated at the expense of public capital in accordance with the approved business plan of the Company. • The fee to finance the construction and maintenance of public roads, paid by manufacturers and importers of petroleum products and the competent government authority for the department stores, is paid on the account of the Company and represents the capital by which the Republic of Croatia finances the construction
15 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
2.1. Statement of compliance and basis of presentation - continued and maintenance of public roads, payment of loans used to finance the construction of state roads and the recapitalization of the Company, in accordance with the program. • Public capital is increased by the profit realized by the Company and the Republic of Croatia is the only member of the Company. ® Funds collected from fees to fund construction and maintenance of public roads, paid by manufacturers and importers of petroleum products and the competent government authority for the department stores, are used for the purposes in accordance with annual plans for construction and maintenance of motorways, which, with the consent of the Government, is prepared by the Company.
2.2. First application and amendments of existing standards effective in the current reporting period Adoption of new and revised International Financial Reporting Standards Standards and Interpretations effective in the current period The following new standards and amendments to the existing standards issued by the International Accounting Standards Board and interpretations issued by the International Financial Reporting Interpretations Committee and adopted by the European Union are effective for the current period. The new standard, which does not affect the Company and was adopted in the annual financial statements for the year ended 31 December 2019, and has resulted in changes in the Company's accounting policies is: • IFRS 16 Leases IFRS 16 replaced IAS 17 Leases and IFRIC 4 - Determining whether an agreement contains a lease, SIC 15 Operating leases - incentives and SIC 27 Evaluating the Substance of Transactions in the Legal Form of a Lease. The adoption of IFRS 16 resulted in changes in the Company's accounting policies. IFRS 16 introduces a single accounting model for lesees, and requires the recognition of assets and liabilities for all leases, with possible options for exempting leases with a period of 12 months or less, or when the property concerned is of little value. The lessee recognises the property in the form of the right to use the property which is the subject to lease and an adequate lease liability, which is an obligation to pay the lease. IFRS 16 maintains in principle the accountancy of the lessor as well as in IAS 17, while maintaining the difference between the operating lease and the financial lease. Application of the new standard from 1 January 2019 had no significant impact on the Company’s financial statements.
16 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
2.2. First application and amendments of existing standards effective in the current reporting period - continued Adoption of new and revised International Financial Reporting Standards - continued Standards and Interpretations effective in the current period - continued The following amended standards effective from 1 January 2019 but without significant influence on Company: • IFRIC 23 Uncertainty over Income Tax Treatments (issued on 7 June 2017 and effective for annual periods beginning on or after 1 January 2019) • Prepayment Features with Negative Compensation - Amendments to IFRS 9 (issued on 12 October 2017 and effective for annual periods beginning on or after 1 January 2019) • Long-term Interests in Associates and Joint Ventures - Amendments to IAS 28 (issued on 12 October 2017 and effective for annual periods beginning on or after 1 January 2019) • Annual Improvements to IFRS Standards for 2015-2017 Cycle - Amendments to IFRS 3, IFRS 11, IAS 12 and IAS 23 issued on 12 December 2017 and effective for annual periods beginning on or after 1 January 2019) • Amendments to IAS 19 - Plan Amendment, Curtailment or Settlement (issued on 7 February 2018 and effective for annual periods beginning on or after 1 January 2019) New Standards and Interpretations not yet adopted: Several new Standards and Interpretations were issued but are not mandatory for the reporting periods ending 31 December 2019 and are not yet adopted by Company: Appendices to the Conceptual Framework for Financial Reporting (effective for annual periods beginning on or after 1 January 2020). The revised conceptual framework includes a new chapter on measurement; guidelines for reporting the financial result; improved definitions and guidelines - in particular, the definition of liability; and clarifications in important areas, such as the role of governance, prudence, and uncertainty of measurement in financial reporting. Definition of materiality - Amendments to IAS 1 and IAS 8 (effective for annual periods beginning on or after 1 January 2020). The amendments clarify the definition of materiality and how it should be applied to encompass guidelines that have hitherto been contained elsewhere in IFRSs. Furthermore, the explanations along with the definition itself have been improved. Finally, the amendments ensure the consistency of the definition of materiality in all IFRSs. Information is material if it can reasonably be expected that its omission, misstatement or lack of clarity will affect the decisions made by the primary users based on those financial statements that provide financial information about a particular reporting entity.
17 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
2.2. First application and amendments of existing standards effective in the current reporting period - continued Adoption of new and revised International Financial Reporting Standards - continued New Standards and Interpretations not yet adopted - continued Reform of reference interest rates - Amendments to IFRS 9, IAS 39 and IFRS 7 (issued on 26 September 2019 and effective for annual periods beginning on or after 1 January 2020) The amendments are derived from substitution of reference interest rates such as LIBOR and other interbank bid interest rates (“IBORs”) The amendments provide a temporary exemption from the application of certain hedge accounting requirements to hedging relationships directly affected by the IBOR reform. Cash flow hedge accounting under IFRS 9 and IAS 39 requires that future hedged cash flows be “highly probable”. If these cash flows depend on the IBOR, the exemption provided for in the amendments requires the entity to apply the assumption that the interest rate on which the cash flows are based will not change as a result of the reform. IAS 39 and IFRS 9 require an estimate of expected future events for the application of hedge accounting. Although the cash flows to which IBOR interest rates apply and the interest rates that replace it are currently expected to be broadly equal, thus minimizing any inefficiencies, this may no longer be the case as the reform date approaches. According to the amendments, an entity may assume that the reference interest rate on which the cash flows of a hedged item, hedging instrument or hedged risk are based has not been affected by the reform of the IBOR. Due to the reform of the IBOR, hedging could be found outside the range of 80-125%, which is mandatory for retroactive testing in accordance with IAS 39. IAS 39 has therefore been amended to allow exemption from retroactive testing of effectiveness in such a way that hedging is not interrupted during a period of uncertainty caused by the IBOR simply because retroactive inefficiency is outside this range. However, even then, other requirements for the application of hedge accounting should still be met, including an assessment of expected events. For some hedges, the hedged item or hedged risk refers to a non-contractual component of the IBOR. In order to apply hedge accounting, IFRS 9 and IAS 39 require that the identified risk component can be determined separately and measured reliably. According to the appendices, the risk component should be able to be determined separately at the beginning of the determination of the hedging relationship, and not continuously. In the context of a macro hedge, where the subject often harmonizes the hedging relationship, the exemption applies from the moment the hedged item was originally established within that relationship. Any ineffectiveness of hedging will continue to be recognized in the statement of profit or loss in accordance with IAS 39 and IFRS 9. The appendices set out the reasons for the cessation of the exemption, including the uncertainty arising from the reference interest rate reform, which is no longer applicable. The amendments require entities to provide additional information to investors about their hedging relationships directly affected by these uncertainties, including the nominal amount of hedging instruments to which the exemptions apply, any significant assumptions or judgments made during the application of the exemption, and qualitative disclosure of how the entity is affected by the IBOR reform and how it manages the transition process. Sale or entry of assets between an investor and its associate or joint venture - Amendments to IFRS 10 and IAS 28 (issued on 11 September 2014 and effective for annual periods beginning on or after the date to be determined by the IASB, not yet approved by the European Union). These amendments address the inconsistency between the requirements of IFRS 10 and the requirements of IAS 28 relating to the sale or contribution of assets between an investor and its associate or joint venture.
18 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
2.2. First application and amendments of existing standards effective in the current reporting period - continued Adoption of new and revised International Financial Reporting Standards - continued New Standards and Interpretations not yet adopted - continued The main consequence of allowances is that full profit or loss is recognized when the transaction involves business. Partial gain or loss is recognized when the transaction involves non-business assets, even if they are subsidiary assets. IFRS 17 “Insurance Contracts” (issued on 18 May 2017 and effective for annual periods beginning on or after 1 January 2021, not yet approved by the European Union). IFRS 17 replaces IFRS 4 which has allowed companies to continue to present insurance contracts using existing practices. For this reason, it was difficult for investors to compare the financial performance of otherwise similar insurance companies. IFRS 17 is a standard that applies a single principle to the presentation of all types of insurance contracts, including reinsurance contracts. The standard requires the recognition and measurement of groups of insurance contracts at: (i) the present value of future cash flows attributable to the risk (cash flows intended to perform the contract) that includes all available information about the cash flows intended to fulfil the contract to match market information; increased (if this value is a liability) or decreased (if this value is an asset) by (ii) the amount representing the unrealized gain of the group of contracts (contract service margin). Insurers will recognize profits for a group of insurance contracts during the coverage period and as they are hedged. If a group of contracts incurs or will incur a loss, the entity shall recognize that loss as incurred. Definition of operations - Amendments to IFRS 3 (issued on 22 October 2018 and effective for acquisitions from the beginning of the annual reporting period beginning on or after 1 January 2020, not yet approved by the European Union). The appendices change the definition of business. A business must have inputs and a detailed process that together significantly contribute to the ability to generate results. The new guidelines provide a framework for assessing if the input and a detailed process exist, including early- stage entities that have not generated results. In the absence of results, there should be an organized workforce for the purposes of classification as a business. The definition of ‘results’ is narrowed to focus on goods and services provided to customers, generating investment income and other income, and excludes returns in the form of lower costs and other economic benefits. It is also no longer necessary to assess whether market participants are able to replace missing elements or integrate acquired activities and assets. The subject may apply a "concentration test". Acquired assets would not be business if almost the entire fair value of gross assets acquired was concentrated in a single asset (or group of similar assets). Unless otherwise stated above, the new standards and interpretations are not expected to have a material impact on the Group's consolidated financial statements. Company’s Management assume that implementation of mentioned standards, amendments and interpretations will not have materially significant impact on Company’s financial statements in the period of first application.
19 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
2.3. The key estimates and uncertainty of estimates In preparing financial statements, it is necessary to apply certain estimates which have an influence on the Company and related companies’ assets and liabilities, revenues and expenses as well as disclosure of the Company's contingent liabilities. Future events and their effects can’t be predicted with certainty; therefore actual results could differ from those estimated. The estimates used in preparing the financial statements are subject to change as new events occur, additional experience is gained, additional information and insights obtained and if there are changes in the environment in which the company operates. The key estimates used in applying accounting policies in preparing the financial statements relate to the depreciation of fixed tangible and intangible assets, assets’ impairments, impairment of inventories, receivables and provisions and disclosure of contingent liabilities.
2.4. Reporting currency Financial statements of the Company are stated in Croatian Kuna as measuring and reporting currency. Financial statements are presented in the thousands of HRK.
2.5. Revenue recognition a) Operating income Revenue consists of the fair value of the received consideration or receivables for the goods or services sold during the Company's business operations. Revenues are stated in amounts deducted for value added tax, estimated returns, rebates and discounts. The Company recognizes revenue when the amount of revenue can be measured reliably when the Company has future economic benefits and when specific criteria for all the Company's activities are met. Sales revenue is recognized when the customer acquires control over the product, i.e. when the Company and the Group makes deliveries of goods to the buyer and when there is no outstanding obligation that could affect the acceptance of the product by the buyer. The delivery is done when the goods are shipped to a specific location, the risk of loss is transferred to the buyer and when the buyer accepts the products according to the contracted terms. The products are sold at discounts and fees for realized traffic, and buyers are entitled to refund of defective goods. Sales revenues are stated on the basis of the sale price, reduced by discounts and fees for turnover and returns. In accordance with the new IFRS 15, the Company applies a five-step model for recognizing a contract with customer: 1) Identification of the contract with the customer 2) Identification of the separate performance obligations in the contract 3) Determination of the transaction price 4) Allocation of the transaction price to the separate performance obligations 5) Recognition of revenue as each performance obligation is satisfied Revenue is recognized for each separate contract delivery obligation in the amount of the transaction price. The transaction price is the amount of contractual remuneration that the Company expects to be entitled to in return for the transfer of the promised goods to the buyer.
20 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
2.5. Revenue recognition - continued a) Operating income - continued Revenue from Sale of Services Provided that the amount of revenue can be measured reliably and if the Company is likely to receive a fee, the service revenues are recognized in the period in which they are provided. The service contract revenue is recognized in relation to the level of performance of the contract. The levels of performance of the contract are as follows: « the services performed are recognized in relation to the level of execution, determined as a percentage of the time spent over the balance sheet date, in relation to the total estimated time of service; ® maintenance fees included in the price of the goods sold are recognized in proportion to the share in the total cost of maintaining the sold product, taking into account the number of previous maintenance services for the previously sold goods; and • contract revenue based on time and material expense is recognized at agreed prices in the period in which the hours worked and in which direct costs were incurred. The most significant revenues of the Company are revenues from toll collection. b) Financial income Interest income is derecognised on a timely basis, on the basis of unpaid principal and at the applicable effective interest rate, which accurately discounts estimated future cash receipts through the expected life of the financial instrument or the net book amount of financial assets. Interest income is recognized as a financial income in the statement of comprehensive income.
2.6. Leases All leases are calculated by recognizing assets with the right of use and lease liabilities, except for low value leases and leases when lease term ends within a period of 12 months or less from the date of first application. Assets with the right of use are initially measured at the amount of the lease liability, less any lease incentives received and increased by: - all lease payments made on or before the lease start date; - all initial direct costs; and - the amount of the provision recognized in the event that the Company contractually bears the costs of dismantling, removing or rebuilding the site. The right to use asset is reduced by the accumulated depreciation calculated on a straight-line basis over the term of the lease, or the remaining economic life of the asset, if it is considered to be shorter than the lease term.
21 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
2.6. Leases - continued The lease liability is calculated at the present value of the contractual future payments discounted using incremental borrowing rate of the Company on 1 January 2019. The Company’s incremental borrowing rate is the rate at which, in the similar period and on the basis of a similar guarantee, the company would pay for the borrowing of funds necessary to acquire assets with value similar to the value of right-of-use assets in a similar economic environment, under comparable terms and conditions. At the date of initial recognition, the carrying amount of the lease liability includes: - amounts expected to be paid by the lessee under residual value guarantees; - the cost of executing the purchase option if it is certain that the lessee will use that option; and - payment of fines for termination of the lease if the lease period reflects that the lessee will take the opportunity to terminate the lease After the initial measurement, the lease liability increases to reflect interest on lease liabilities and decreases to reflect lease payments made. The lease liability is subsequently measured when there is a change in future lease payments resulting from a change in the index or rate, or when there is a change in the estimate of the term of any lease.
2.7. Recognition of expenses a) Operating expenses Expenses are recognized based on the direct connection between occurred expenses and certain realized items of income (Matching principle). Based on the mentioned, operating expenses represent all expenses in relation to invoiced income from providing services. Recognition of expenses is deferred to further accounting periods if the realization of revenues is expected in the next several accounting periods. Operating expenses include the costs of materials, small tools and services, maintenance services, the costs of gross wages and salaries, depreciation of own assets, depreciation of public goods (roads) and other operating expenses covered directly by operating income. b) Maintenance costs Expenses for repairs or maintenance of property, plant and equipment, resulting from recovery or maintenance of future economic benefits that can be expected from the originally estimated useful life of assets. These costs are recognized as an expense when occurred. c) Gross salaries and wages Employee benefits include wages, salaries and social security contributions, fees for use of annual leave and sick leave, participation in profits and bonuses and monetary benefits of current employees, and benefits after termination of employment, such as severance and life insurance, and are recorded as expenses as incurred regardless of whether the current obligation is settled. All pertaining tax levies directly connected to accrued salaries and compensations are included in employees’ expenses and represent their constituent part.
22 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
2.7. Recognition of expenses - continued c) Gross salaries and wages - continued Reimbursement to employees in accordance with collective contracts, are included in employees’ expenses and are their constituent. If the period of certain right is different than the payment period and longer than one year (non-current), liabilities are discounted by the average interest rate on government bonds of similar maturities. d) Depreciation Intangible assets, property, plant and equipment with indefinite life are depreciated. The amount of investment in fixed assets shall be compensated by the depreciation according to agreed or appropriate period of use of individual right, respectively property, plant and equipment. When assessing the depreciable amount, the expected residual value at the end of useful life is determined. If this is insignificant compared to the total value of assets, it is not respected when calculating depreciation. The expected residual value of assets related to the road is usually zero. Estimated useful life is estimated for each asset item separately, and is dependent on the technical characteristics of the asset, the speed of its economic obsolescence, as well as the expected use. Typically, the expected useful lives of assets are: USEFUL LIFE 2019 2018 DESCRIPTION (year) (year) Buildings 40 40 Semi-motorways and motorways - upper layer 33 33 Equipment 4-10 4-10 Intangible assets 5 5 Depreciation is calculated using a method which corresponds to the realization of economic benefits from assets. For road and the property it is expected to be equally used throughout the year, therefore, a linear method of depreciation of these assets is applied. Depreciation is calculated individually for all assets. Depreciation begins to accrue after the month in which the use of assets started. Depreciation of public good (roads) and accompanying equipment, in part which may be covered by own income, is credited to the expenses of the period, while the difference of the part of depreciation that is not covered will be covered by debiting public capital. e) Financial expenses Interest expenses resulting from business relations payables are stated within financial expenses. Interest is recognized as expense in the period in which it occurs and is stated as accruals until the balance sheet date. The conversion of monetary items (cash and receivables and liabilities) denominated in foreign currencies in HRK is done at the spot rate on balance sheet date, which corresponds to the agreed rate of certain activities (mostly middle rate of Croatian National Bank). Foreign exchange differences are recorded separately as positive and negative in the general ledger, and because of their significance are presented separately in the profit and loss.
23 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
2.8. Recognition of assets a) Inventories Inventories are measured at cost. Value adjustment of inventories (due to the damage, decrease in value or other justified reasons is performed once a year at the suggestion of persons responsible for inventories), as to be measured at the balance sheet date, at cost or net realizable value, whichever is lower. Inventory of raw material and material, spare parts, small inventory, packaging and car-tires are stated at the actual cost that comprise invoicing value of the supplier increased by all attached acquisition costs (customs fees, taxes, transportation costs and all other costs that may be attributed to procurement). Commercial discounts and similar items are deducted when determining the purchase expenses. Items are recorded as small inventory provided their duration of use is shorter than one year and their individual value does not exceed HRK 3,500 HRK. When putting small inventory, packaging and car-tires in use, they are written off at one-time. Inventories are measured by the weighted average cost method. b) Financial assets Initial Recognition and Measurement The Company recognizes financial assets in its financial statements when it becomes a party to the contractual provisions of the instrument. Depending on the business model for asset management and the contractual characteristics of cash flows of financial assets, the Company measures financial assets at amortized cost, fair value through other comprehensive income or fair value through profit or loss. Asset items are classified and measured as shown below:
Classification and measurement Classification and measurement Assets Fixed assets Loans granted Held for collection / amortized cost Current assets Cash and cash equivalents Held for collection / amortized cost Trade receivables and other receivables Held for collection / amortized cost Financial assets Deposits Held for collection / amortized cost The Company's business models reflect the way in which the Company manages its assets with the aim of generating cash flows. Trade and other receivables Trade receivables and other short-term receivables are held with a contractual cash flow collection strategy. Trade receivables that do not have a significant financial component on initial recognition are measured in accordance with IFRS 15 at their transaction price.
24 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
2.8. Recognition of assets - continued b) Financial assets - continued Impairment The Company recognizes an impairment of financial assets based on expected credit losses. At each reporting date, the Company measures expected credit losses and recognizes them in the financial statements. Expected credit losses from financial instruments are measured in a way that reflects: - Impartial and weighted probability amount determined by estimating the range of possible outcomes, - Time value of money, - Reasonable and acceptable data on past events, current conditions and forecasts of future economic conditions. For the purpose of calculating the expected credit loss, the financial asset portfolio is divided into three stages: Tier 1, Tier 2 and Tier 3. If no impairment is determined on the date of first recognition, the financial asset is included in Tier 1, and subsequent reclassification to Tier 2 and 3 depends on an increase in credit risk per financial instrument after initial recognition, i.e. on the credit quality of the financial instrument. The Company applies a simplified approach of IFRS 9 to measure expected credit losses using expected provisions for trade receivables. To measure expected credit losses, trade receivables are grouped based on similar credit risk and age structure. Expected credit loss rates are based on historical credit losses that occurred during the three years prior to the end of the reporting period. Historical loss rates are then adjusted for current and future information about macroeconomic factors affecting the Company's customers. The Company identified gross domestic product (GDP), unemployment rate and inflation rate as key factors for the country where the Company operates. Derecognition of financial assets The Company derecognises a financial asset when; - The contractual rights to cash flows from financial assets expire, - Transfers financial assets and the transfer qualifies for derecognition The Company transfers financial assets if and only; it either transfers contractual rights to receive cash flows from financial assets or retains contractual rights to receive cash flows from financial assets but assumes a contractual obligation to pay cash flows to one or more recipients in the arrangement. When the Company transfers financial assets, it is required to assess the extent to which it retains the risks and rewards of ownership of the financial assets. In this case, when all risks and rewards of ownership are transferred, the Company ceases to recognize financial assets and recognizes separately as assets or liabilities all rights and obligations that have arisen or are retained in the transfer.
25 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
2.8. Recognition of assets - continued b) Financial assets - continued Derecognition of financial assets - continued If almost all risks and rewards of ownership of financial assets are retained, the Company continues to recognize financial assets. If the Company neither transfers nor retains substantially all the risks and rewards of ownership of financial assets, the Company determines whether control of the financial assets has been retained. If control over financial assets is not retained, the Company ceases to recognize financial assets and recognizes separately as assets or liabilities all rights and obligations that have arisen or have been retained in the transfer. If control is retained, the Company continues to recognize financial assets to the extent that it continues to participate in those financial assets. c) Property, plant and equipment Property, plant and equipment are: • Land • Buildings • Plant and equipment Under the concept of property, plant and equipment, it is considered buildings of all purposes, plant and equipment (machines, helicopters) and tools, plant and office inventory, furniture and transport equipment (assets), as defined in the Accounting Act. Equipment and inventory are recorded as property, plant and equipment, respectively fixed tangible assets, according to legal regulations, if their lifetime is longer than one year, and their individual value greater than HRK 3,500 on the day of purchase. Purchase of property, plant and equipment during the year is recorded at purchase cost. Purchase cost represents invoiced value of acquired assets plus any costs incurred by putting the assets into use (import duties, delivery and transmission costs, installation, fees, costs of borrowing) and by the time of use of property. Subsequent expenditure relating to the already recognized assets is added to the carrying amount of that asset when it is probable that future economic benefits will inflow into the Company in a higher amount than originally agreed. Any other subsequent expenditure is recognized as an expense in the period in which it was incurred. Increase in property value is causing an extended lifetime of assets, increased use capacity and increased quality of products. Assets for which replacement of individual parts is expected and which have different useful lives are separated for financial reporting purposes to the appropriate depreciation units for which it is determined useful life in accordance with the characteristics of these assets. Fixed assets are measured at cost less accumulated depreciation and accumulated impairment losses. Book value of an item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising from derecognition of property, plant and equipment included in the Statement of comprehensive income for the period in which they are derecognized and are classified as a gain or loss equal to the difference between the net amount receivable from the disposal and the carrying value of assets and are recognized separately from operating income.
26 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
2.8. Recognition of assets - continued c) Property, plant and equipment - continued Internally generated fixed tangible assets are stated at cost (actual value), if the cost doesn't exceed market value. Roads, as public property that may not become an object of ownership, and which was given to the Company for managing, are recorded within the Company's fixed tangible assets and they are stated as public capital. Costs of designing, expropriation, construction, supervision and other costs related to construction of new roads, as well as investment and improvement maintenance costs, which relate to renovation and replacement of part of the road of limited duration of use, are all included in the value of the public property (roads). The construction and restoration of the public property (roads) is financed by fee on oils, surplus from own income, funds of depreciation of public property (roads), loans and dedicated donations. d) Intangible assets Intangible assets meet recognition conditions if acquired separately and if they arise from contractual or other legal rights. Intangible assets consist of rights, the use of which will produce economic benefits to the Company in a period longer than one year, and for which the individual cost value can be reliably measured. Amortisation of intangible assets is calculated according to the estimated useful life or the contractual term rights to use certain assets. In the case of intangible assets with indefinite useful life, special attention is paid that the impairment test is conducted for any asset preparation of the annual financial statements. Intangible assets are measured at cost less accumulated amortisation and accumulated impairment losses. Carrying value of intangible assets is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising from derecognition of intangible assets included in the statement of comprehensive income for the period in which they are derecognized, and are classified as revenue in the amount of the difference between the net amount receivable from the disposal and the carrying value of assets.
2.9. Liabilities Initial Recognition and Measurement All financial liabilities are initially recognized at fair value plus the associated transaction costs. The Company's financial liabilities include liabilities to suppliers and other liabilities, overdrafts and loans and borrowings. Financial liabilities are subsequently measured at amortized cost using the effective interest rate method. Gains and losses are recognized in the statement of comprehensive income when liabilities are derecognised as well as through the effective interest rate method in the amortization process. Amortized cost is calculated taking into account any discounts or premiums on the acquisition and the fees or expenses that are an integral part of the effective interest rate. Depreciation according to the effective interest rate method is included in the financing costs in the statement of comprehensive income.
27 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
2.9. Liabilities - continued Cessation of recognition A financial liability is derecognised when the liability is met, cancelled or expired. When the existing financial liability is replaced by another by the same creditor under substantially different terms or the terms of the existing liabilities have been substantially altered, such change or modification is treated as a cessation of the original liability and recognition of the new liability and the difference in the corresponding carrying amounts is recognized in the comprehensive income.
2.10. Capital a) Stock capital Stock capital represents part of the Company's total capital. Stock capital is registered with the competent commercial court. b) Public capital Public capital represents the value of assets - motorways, semi-motorways, bridges, tunnels and other facilities on the motorways, which are given to the Company under management and reported in the ledgers of the Company but are not registered in the stock capital. Fees for financing construction and maintenance of public roads from the state budget must be paid in accordance with the provisions of the Roads Act to the accounts of the Company and represents the capital (hereinafter: public capital) of the Republic of Croatia, which finance the construction and maintenance of public roads, the loan repayment for financing construction of motorways and state roads, and are used fpr recapitalization of the Company in accordance with the program from the article of the Roads Act. The difference between own revenues and expenses realized in fiscal year shall be compensated at the expense of public capital based on the approved plan of the Company. Public capital also includes income based on exchange rate differences, interests and other revenue from the cash management that make the public capital, while public capital is reduced by the interests and other fees associated with financing the construction and maintenance of public roads, and for exchange rate losses. Profit realized by the Company, while the Republic of Croatia is the sole Company’s member, increases public capital. Public capital is reduced by impairment (depreciation) of public goods (roads) by the difference of the amount of depreciation uncovered by own revenues of the Company. c) Other reserves The classified part of the capital - company's principal, which refers to the formation of reserves under the law or regulations due to provision of additional hedging measures from the effects of losses, is reported as other reserves. Other reserves might include a dedicated portion of retained earnings provided for hedge of capital.
2.11. Investments in associated companies and joint ventures Investments in companies in which the Company has significant influence but has no control, are measured in separate financial statements at acquisition cost adjusted for impairment losses. The existence of possible impairment of investments is verified annually when the event or changed circumstances indicate that the carrying amount may not be recoverable.
28 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
2.12. Corporate income tax Taxable income is the profit for the period specified in accordance with tax regulations, and according to which there is a duty of paying taxes on profits. The tax loss is loss for the period determined in accordance with tax regulations, according to which there is no obligation to pay corporate income tax. Corporate income tax expense is the cumulative amount of current and deferred tax included in the determination of net profit or loss for the period. Deferred tax liabilities are the amounts of corporate income tax payable in future periods relating to taxable temporary differences. Deferred tax assets are amounts of corporate income tax recovery in future periods, and relate to: a) Temporary deductible differences b) Unused tax losses carried forward and c) Unused tax reliefs carried forward. The tax liability is measured at the current tax rate, according to reported income tax. Deferred tax assets and liabilities are measured at the corporate income tax rates that are expected to apply in period of cancellation of the differences.
2.13. Government Grants and Disclosure of Government Assistance Due to the specific role of the Company, and the specific methods of evaluation, billing and financing of the core activities of the company Hrvatske autoceste d.o.o., established under the Roads Act with the aim of construction and maintaining public roads, some of the inflows needed to finance the activities, is provided from the proceeds of fees from oil products from which it primarily finances construction of public roads, and repays borrowed funds. Road as a public good over which one cannot acquire ownership rights, which are given to the management of the Company, are recorded in the non-current assets of the Company and recorded as public capital. Construction and renovation of public goods (roads) are funded by fees from oil products, the surplus of own income, assets depreciation of public goods (roads), loans and dedicated grants. Public capital is increased by the proceeds of fees from oil derivatives. According to the Roads Act, receipts are fees from oil products paid by producers and importers of oil products, and the competent government authority for commodity stocks per litre delivered and imported refined oil products at the expense of the Company. Proceeds from the fees for oil derivatives are used to cover part or the total depreciation of public goods (roads), if the Company's own resources are not available for their coverage; and to finance road construction in a broader sense. Public capital is increased by other income and receipts that are directly attributable to public capital, such as donations and dedicated grants for the construction of public goods, foreign exchange gains related to public goods and interest on dedicated deposits formed by public capital funds. Public capital is reduced by the impairment (depreciation) of public goods (roads) for difference of the amount of depreciation uncovered by the Company's own revenues. Public capital is reduced by amounts that are directly attributable to public capital, such as financial expenses (cost of loan processing, credit fees and guarantees, foreign exchange differences, interest expenses in the period of repayment, the interest expense
29 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
2.13. Government Grants and Disclosure of Government Assistance - continued up to the beginning of the repayment period, default interest, etc.), which is not included in the purchase value of the public good.
2.14. Fixed assets held for sale and discontinued operations Fixed assets can be classified as held for sale if their carrying value can be compensated primarily through sale rather than through continuing use. Fixed assets held for sale are measured at carrying and fair value less costs of sale, depending which is lower.
2.15. Provisions A provision is recognized only when the Company has a present obligation as a result of a past event and it is probable, that the obligation will require an outflow of resources with economic benefits and a reliable estimate can determine the amount of the obligation. Provisions are reviewed at each Balance sheet date and adjusted to reflect current best estimates. Provisions are established for litigation costs, severance payment costs, reimbursements to employees for benefits and retirement (regular jubilee awards and severance payments) and cost of stimulating severance payments based on the Company's personnel restructuring plan. Provisions for expenses related to employee benefits are based on expected earnings in accordance with the applicable collective agreement and the Rulebook and are measured at the projected unit credit method. Provisions for reimbursements to employees for benefits and retirement (regular jubilee awards and severance payments) are determined as the current value of future cash outflow using the discount rate which corresponds to the interest rate on state bonds.
2.16. Contingent liabilities and assets Contingent liabilities are not recognized in the financial statements but are disclosed only in the notes to the financial statements. Contingent assets are not recognized in the financial statements but are recognized when an inflow of economic benefits becomes probable.
2.17. Subsequent events Subsequent events that provide additional information about the Company's position on the balance sheet date (events that have the effect of adjustments) are recognized in the financial statements prior to the adoption of the financial statements by the Assembly (Adoption of the report for publication). Those events that are not adjusting events are disclosed in the notes to the financial statements when of material importance as an explanation of the circumstances occurred at the expiration of the fiscal year.
2.18. Operating segments The Company is not organized according to the production segments, but the Company uses capital approach, which implies the existence of two parallel records of public goods and own revenues and expenditures, as well as assets, liabilities and equity arising from these changes.
30 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
2.19. Accounting policies effective from 1 January 2019 Leases Leases are classified as finance leases whenever all the risk and rewards of ownership are transferred to the lessee. Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Finance leases are recognized at the beginning of the lease period as the assets and liabilities by an amount equal to the fair value of the leased property, plant or equipment, or the present value of minimum payments, determined at the beginning of the lease, whichever value is lower. All initial direct costs of lessee are added to the amount that is recognized as an asset. The assets under finance leases are depreciated in the same manner as defined for intangible assets, i.e. property, plant and equipment. However, if there is uncertainty whether the lessee acquires ownership at the end of the lease, the assets are fully depreciated in a period shorter than the lease period. Operating leases are recognized as expense on straight-line basis during the lease period. NOTES TO THE STATEMENT OF COMPREHENSIVE INCOME Below given is the overview of the Statement of Comprehensive income for the Company. Income Statement of the public good is stated within the capital.
3. OPERATING INCOME
2019 2018 DESCRIPTION HRK '000 HRK '000 Income from fees for use of land /i/ 53,545 57,722 Tolls income 1,993,303 1,891,858 Income from services to ARZ 155,498 162,083 Rent income 3,573 4,858 Income from sales of goods 3,485 4,560 Other sales income 13,736 15,024 Total sales income 2,223,140 2,136,105 Income from surpluses 196 195 Income from sale of assets 557 626 Income from liabilities’ write-offs 27,023 171,869 Income from claims, penalties and similar 16,737 48,523 Collected written-off receivables 4,180 1,168 Income from previous years 8 1,354 Other operating income 12,792 58,422 Total other operating income 61,493 282,157 Total 2,284,633 2,418,262 /i/ Income from fees for use of land and fee for performance of supporting activities originated from entrusting use of road land and supporting service facilities on land in accordance with Article 73 of the Roads Act (O.G. 84/11, 22/13, 54/13, 148/13, 92/14 and 110/19).
31 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
Conditions and way of use of the road land, conditions and procedures of delegating use of road land to legal and physical persons and rights and obligations of performing accompanying activities on the road land are prescribed by the Ordinance on Measures for Calculation of Fees for Usage of Road Land and Fees for Performing Accompanying Activities (0G 78/14), as well as measures for calculating amount of fee for their usage. Pursuant to Article 25 of the Road Act, which entered into force on 28 July 2011, the foundation of the easement and the right to build on the public road for construction of utility, energy and water management structures and buildings of electronic communication subject to the execution of the agreement with the public road manager are prescribed. For this type of installations that were performed before entry into force of the Roads Act, the contracts were signed on the use of road land. The Roads Act, Article 86, paragraphs 2 and 3, provide the exemption from payment of fees for right of way/construction of installations that are exclusively or predominantly owned by the Republic of Croatia or local and regional government or owned by the authorized easement/right of construction, which are predominantly owned by the Republic of Croatia or local and regional governments. For other authorized persons of construction easement stipulates the obligation to pay compensation for the right of use of construction according to the Decision on the establishment of fees for the right of way and rights to build on the public road (OG 87/14). /ii/ Toll income represents Company’s own income collected from the users of public roads, increased by the value added tax, and it serves to cover the costs of maintenance in broader sense, i.e. to cover operating, financial and extraordinary expenses of the Company, and depreciation of public roads up to the amount of total income of the Company. Tolls are charged pursuant to the Decision on the toll amount and system of toll collection for using motorways and Tunnel St. Ilija from 14 October and pursuant to the Decision on stimulation models of toll collection and prepaid toll collection dated 27 January 2015 which was approved by the Minister of Traffic in Article 87, Paragraph 2 of the Roads Act.
4. MATERIAL EXPENSES
2019. 2018 DESCRIPTION HRK '000 HRK '000 Raw material and material costs/i/ 106,863 132,001 Cost of goods sold 2,726 1,463 Other external costs /n / 134,173 126,939 Total 243,762 260,403
/i/ Raw material and material costs are shown as follows:
2019 2018 DESCRPTION HRK '000 HRK '000 Used raw material and material 39,862 63,388 Used energy 55,937 55,537 Used spare parts for maintaining tangible assets 6,206 7,342 Small inventory and car-tires write-offs 4,741 5,621 Other material expenses 117 113 Total 106,863 132,001
32 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
/ii/ Other external costs are shown as follows: 2019 2018 DESCRIPTION HRK '000 HRK '000 Transport services 702 1,706 PTT services 5,947 6,591 Maintenance services 65,927 63,034 Rental services 2,542 1,645 Advertising and propaganda 1,018 629 Research and development services 2,780 1,482 Utility services 7,203 7,184 Intellectual and agency services 19,723 17,354 Medical services 121 65 Bank services and payment transaction services 1,932 1,131 Assets insurance premiums 3,700 4,309 Staff insurance premiums 523 543 Reimbursement for usage of intellectual ownership rights 834 486 Utility fees 8,150 7,944 Data processing and software maintenance 8,838 9,322 Road fees and technical inspection of vehicles 1,770 1,809 Other services 2,463 1,705 Total 134,173 126,939
5. STAFF COSTS
2019 2018 DESCRIPTION HRK '000 HRK '000 Net salaries 280,205 285,241 Taxes and contributions from salaries 112,772 113,168 Contributions on salaries 67,062 70,698 Total 460,039 469,107
6. DEPRECIATION
2019 2018 DESCRIPTION HRK '000 HRK '000 Depreciation of intangible assets 3,909 4,763 Depreciation of tangible assets 14,153 12,646 Depreciation of public good 887,694 936,646 Total 905,756 954,055
33 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
III DEPRECIATION AND IMPAIRMENT OF PUBLIC GOOD The Company prepares reports and reports profit in accordance with the International Financial Reporting Standards, with the exception determined by applying the Roads Act (Official Gazette 84/11, 22/13, 54/13, 148/13, 92/14 and 110/19). The application of this Act conditions deviations when stating profit. The stated Act stipulates that a negative operating result of the period is transferred to the public capital, and impairment (depreciation of public roads) in the part that is not covered by the Company's own revenue, is transferred to the public capital. The impairment of public roads in the concession is recognized directly to the public capital on the basis of impairment calculation carried out in accordance with the rates prescribed for the depreciation of motorway. In 2019, the depreciation costs of the public good are covered by the Company's total income as a result of reduced depreciation due to the expiry of useful life, toll revenue growth and business rationalization.
7. OTHER COSTS
2019 2018 DESCRIPTION HRK '000 HRK '000 Other material rights of employees 65,102 60,798 Professional education 675 596 Entertainment 283 422 Memberships 371 480 Woods’ usage contribution 654 597 Legal costs 1,566 1,000 Professional literature and newspapers 109 109 Fees for temporary work contracts 465 377 Taxes independent of the business result and other fees 1,581 385 TOTAL 70,806 64,764
8. IMPAIRMENT
2019 2018 DESCRIPTION HRK '000 HRK '000 Assets impairment (except financial assets) 14,018 17,854 TOTAL 14,018 17,854
34 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019_____
9. PROVISIONS
2019 2018 DESCRIPTION HRK '000 HRK '000 Provisions for severance, Jubilee awards, etc 7,269 1,247 Provision for due receivables 0 11,213 Provisions for legal proceedings 28,632 15,835 TOTAL 35,901 28,295
10. OTHER OPERATING EXPENSES
2019 2018 DESCRIPTION HRK ’000 HRK '000 Non-wntten-off value of written-off and disposed assets 55,481 3,140 Donations, gifts in kind 12,166 11,555 Shortages 801 947 Fines, penalties and damages 1,408 133 Subsequently identified expenses from previous years 3,421 4,375 Other operating expenses 166 297 Total 73,443 20,447 The amount of donations of HRK 11,774 thousand includes the toll-free passage for the public utility vehicles with the right of passing (police, emergency, firefighters, military) who are allowed to use the highway without charge. The proposed changes to the Roads Act provide for compensation for the value added tax that the Company now calculates and pays. Other donations and donations in the amount of HRK 392 thousand were approved by the Company's Management Board in accordance with the Donation and Sponsorship Procedure.
11. FINANCIAL INCOME
2019 2018 DESCRIPTION HRK '000 HRK '000 Dividends and share portion 1 0 Other financial income 0 0 Interests, exchange rate differences, dividends and other income from related companies 1 0 Interest income 1,645 723 Exchange rate gains 9,828 3,065 Interests, exchange rate differences, dividends and other income from unrelated companies 11,473 3,788 Total 11,474 3,788
35 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
12. FINANCIAL EXPENSES
2019 2018 O P I s HRK '000 HRK ’000 Interest expenses 4,485 5,069 Interests, exchange rate differences and other expenses with unrelated companies and other entities 4,485 5,069 Total 4,485 5,069 Interest expense is related to the legal interest rate by court rulings and default interest from the business relationship. Interest on received loans is recorded at the expense of public property.
13. CORPORATE INCOME TAX /i/ In accordance with the legislation, income tax is calculated at the rate of 18% (2018: 18%) on the base which comprises the difference of income over expenses realized in the accounting period for which the tax base is determined. In 2019, the tax liability amounts HRK 89,353 thousand (in 2018 in the amount of HRK 109,470). /ii/ The Company prepares reports and reports profit in accordance with International Financial Reporting Standards with variations determined by applying the Roads Act (OG 84/11, 22/13, 54/13, 148/13, 92/14 and 110/19). The application of this Act conditions deviations when stating profit and capitalizing interests for financing investments in building and maintaining motorways. Application of Article 95 and 96 of the Roads Act on the Company provides a consistent application of the law without any change in the reporting manner and data comparability with data at the Company level. The reconciliation of accounting profit to taxable profit of the Company was conducted as follows:
2019 2018 DESCRIPTION HRK '000 HRK '000 Income 2,296,259 2,422,050 Expenses (1,808,362) (1,819,994) Profit/(loss) for the year 487,897 602,056 Tax non-deductible expenses 11,870 6,916 Tax benefits (3,359) (804) Profit/(loss) after increase and decrease 496,408 608,168 Tax loss carried forward 0 0 Tax base 496,408 608,168 Tax liability 89,353 109,470 Tax loss available for transfer 0 0 /iii/ The Company prepares reports and states profit in accordance with the International Financial Reporting Standards with variations determined by applying the Roads Act (OG 84/11, 22/13, 54/13, 148/13, 92/14 and 110/19). The application of this Act conditions deviations when stating profit and capitalizing interests for financing investments in building and maintaining motorways.
36 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
14. STATEMENT OF OTHER COMPREHENSIVE INCOME - PUBLIC GOOD Statement of other comprehensive income - Public Good, is shown in Appendix - Financial Statement of Hrvatske autoceste d.o.o. and public good
15. INTANGIBLE ASSETS
Concessions, patents, licenses, Intangible Total trademarks and Development assets under intangible service marks, construction assets software and DESCRIPTION other rights HRK '000 HRK '000 HRK '000 HRK '000 PURCHASE VALUE Balance as at 31 December 2017 192 101,837 0 102,029 Direct additions 0 0 6,340 6,340 Transfer to use 0 6,340 (6,340) 0 Balance as at 31 December 2018 192 108,177 0 108,369 Direct additions 0 0 1,320 1,320 Transfer to use 0 1,320 (1,320) 0 Balance as at 31 December 2019 192 109,497 0 109,689
ACCUMULATED DEPRECIATION Balance as at 31 December 2017 192 93,832 0 94,024 Depreciation during the year 0 4,763 0 4,763 Balance as at 31 December 2018 192 98,595 0 98,787 Depreciation during the year 0 3,909 0 3,909 Balance as at 31 December 2019 192 102,504 0 102,696
NET BOOK VALUE Balance as at 31 December 2017 0 8,005 0 8,005 Balance as at 31 December 2018 0 9,582 0 9,582 Balance as at 31 December 2019 0 6,993 0 6,993
37 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
16. PROPERTY, PLANT AND EQUIPMENT Tools, furniture and Prepayments Tangible Other Natural Plant and transport for tangible assets under tangible Description Land resources Buildings equipment vehicles assets construction assets TOTAL HRK '000 HRK '000 HRK '000 HRK '000 HRK '000 HRK '000 HRK '000 HRK '000 HRK ’000 PURCHASE VALUE Balance as at 31 January 2017 1,705,790 15,728,802 32,639,094 9,119,959 106,159 24,048 1,849,632 182 61,173,666 Direct acquisition 0 0 0 0 0 (20,315) 470,758 0 450,443 Transfer to use 6,623 14,872 104,648 47,300 7,689 0 (181,132) 0 0 Return to use 0 0 0 5 0 0 0 0 5 Asset transfer m use HC d.o.o. (15,394) (380,323) (995,337) (265,534) 0 0 0 0 (1,656,588) Disposals, write-off and shortages 0 0 (20,018) (3,765) (1,525) 0 0 0 (25,308) Balance as at 31 December 2018 1,697,019 15,363,351 31,728,387 8,897,965 112,323 3,733 2,139,258 182 59,942,218 Direct acquisition 0 0 0 0 0 9,817 337,051 0 346,868 Transfer to use 2,729 15,899 264,032 47,146 9,091 0 (338,897) 0 0 Return to use 0 0 0 30 0 0 0 0 30 Asset transfer to HC d.o.o. (13) 0 0 0 0 0 (359,989) 0 (360,002) Transfer to other assets’ positions 0 (865) (107,904) (1,635) 0 0 (1,741) 0 (112,145) Disposals, write-off and shortages 0 0 (11,597) (7,527) (3,416) 0 (302) (90) (22,932) Balance as at 31 December 2019 1,699,735 15,378,385 31,872,918 8,935,979 117,998 13,550 1,775,380 92 59,794,037
38 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
Tools, furniture and Prepayments Tangible Other Natural Plant and transport for tangible assets under tangible Description Land resources Buildings equipment vehicles assets construction assets TOTAL HRK '000 HRK '000 HRK '000 HRK '000 HRK '000 HRK '000 HRK '000 HRK '000 HRK '000 ACCUMULATED DEPRECIATION Balance as at 31 December 2017 0 0 11,881,010 8,427,874 96,400 0 0 0 20,405,284 Depreciation during the year 0 0 893,166 153,639 4,545 0 0 0 1,051,350 Depreciation correction 0 0 25 5 0 0 0 0 30 Asset transfer to HC d.o.o. (185,692) (158,098) 0 0 0 0 (343,790) Disposals, write-off and shortages 0 0 (16,955) (3,767) (1,508) 0 0 0 (22,230) Balance as at 31 December 2018 0 0 12,571,554 8,419,653 99,437 0 0 0 21,090,644 Depreciation during the year 0 0 883,375 112,678 6,095 0 0 0 1,002,148 Disposals, write-off and shortages 0 0 (65,562) (8,627) (3,270) 0 0 0 (77,459) Balance as at 31 December 2019 0 0 13,389,367 8,523,704 102,262 0 0 0 22,015,333
NET BOOK VALUE Balance as at 31 December 2017 1,705,790 15,728,802 20,758,084 692,086 9,759 24,049 1,849,632 182 40,768,384 Balance as at 31 December 2018 1,697,019 15,363,352 19,156,833 478,311 12,885 3,734 2,139,258 182 38,851,574 Balance as at 31 December 2019 1,699,736 15,378,387 18,483,551 412,274 15,735 13,550 1,775,380 92 37,778,704
The Company prepares reports and states profit in accordance with the International Financial Reporting Standards with deviations determined by applying the Roads Act (OG 84/11, 22/13, 54/13, 148/13, 92/14 and 110/19). Deviations required under this Act refer to the capitalization of interest (the value increase of investments in building and maintaining motorways for the amount of interest).
39 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019 ______
Review of investments in progress is shown as follows:
31 Dec 2018 Increase Decrease 31 Dec 2019 DESCRIPTION HRK '000 HRK '000 HRK '000 HRK '000 Investments in progress for lands - dispossession 79,855 6,530 (21,437) 64,948 Investments in progress for lands - conclusions 8,208 388 (2,124) 6,472 Investments in progress for lands - works 46,926 399 (6,720) 40,605 Investments - incomplete dispossession 1,394 95 (141) 1,348 a) Total investment in land 136,383 7,412 (30,422) 113,373 Construction objects - Motorways under construction - changes of installation 23,207 2,658 (2,092) 23,773 Construction objects - Motorways under construction - clearing of mines 14,373 0 0 14,373 Construction objects - Motorways under construction - projects 173,543 10,046 (74,380) 109,209 Construction objects - Motorways under construction - construction 1,532,605 147,549 (306,233) 1,373,921 Construction objects - Motorways under construction - supervision 43,366 3,161 (13,339) 33,188 b) Total investments in construction objects 1,787,094 163,414 (396,044) 1,554,464 c) Construction objects - Motorways under construction - toll payment system and equipment 49 12,548 (12,365) 232 d) Investments and improvement maintenance 215,732 141,652 (250,074) 107,310 Total (a + b + c + d) 2,139,258 325,026 (688,905) 1,775,380 Investments in land are shown as follows:
31 Dec 2018 Increase Decrease 31 Dec 2019 Description HRK '000 HRK '000 HRK '000 HRK '000 Istarski Ipsilon 37,467 234 (19) 37,682 Motorway Zagreb - Goncan 5 653 (250) 408 Motorway Zagreb - Macelj 488 28 (25) 491 Bosiljevo - Junction Sveti Rok 0 67 (67) 0 Junction Sveti Rok - Tunnel Sveti Rok - Split 4 597 (598) 3 Split - Metkovic - Ploce 0 460 (460) 0 Ploce - Dubrovnik 715 0 0 715 Motorway Zagreb - Lipovac 3 2,881 0 2,884 Motorway Rupe - Rijeka - Zuta Lokva 0 263 (263) 0 Motorway Bell Manastir - Osijek - B.and H.- Ploce 52,399 282 (59) 52,622 Krk bridge 204 0 0 204 Junction Vrbovec - Kopnvmca - Border crossing 1,390 575 0 1,965 Junction Vrbovec - Bjelovar - Border crossing 27,357 39 (27,358) 38 Motorway Zagreb - Sisak 16,351 1,334 (1,324) 16,361 Total 136,383 7,413 (30,423) 113,373
40 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
Investments in land are shown as follows:
31 Dec 2018 Increase Decrease 31 Dec 2019 Description HRK '000 HRK '000 HRK '000 HRK '000 Istarski Ipsilon 8,207 0 0 8,207 Motorway Zagreb - Goncan 1,029 13,611 (693) 13,947 Motorway Zagreb - Macelj 0 19 0 19 Bosiljevo - Junction Sveti Rok 447 189 (477) 159 Junction Sveti Rok - Tunnel Sveti Rok - Split 3,830 7,796 (2,898) 8,728 Split - Metkovic - Ploce 14,461 34,546 (45,972) 3,035 Entry into the Port of Ploce, EU Project 0 0 0 0 Ploce - Dubrovnik 1,331 0 0 1,331 Junction Metkovic - Border crossing with Bosnia and Herzegovina 4 119 (123) 0 Motorway Zagreb - Lipovac 18,523 24,502 (17,941) 25,084 Motorway Rupe - Rijeka - Zuta Lokva 830 2,188 0 3,018 Motorway Bell Manastir - Osijek - Svilaj 1,378,442 61,553 0 1,439,995 Zagreb detour 1,370 14 (1,375) 9 Junction Vrbovec - Koprivmca - Border crossing 25,439 90 0 25,529 Junction Vrbovec - Bjelovar - Border crossing 317,131 4,783 (318,733) 3,181 Motorway Zagreb - Sisak 16,050 14,005 (7,832) 22,223 Total 1,787,094 163,415 (396,044) 1,554,465
17. FIXED FINANCIAL ASSETS
31 Dec 2019 31 Dec 2018 DESCRIPTION HRK '000 HRK '000 Share in principal of BINA FINCOM d.d 45,502 45,502 Impairment of investments in financial assets (33,459) (33,459) Share in principal of BINA ISTRA d.d 3,790 3,790 a) Shares (stakes) in related companies 15,833 15,833 Receivables for loans given to related companies 20,231 23,121 Impairment of receivables for loans given to related companies (12,541) (12,541) b) Loans to related companies 7,690 10,580 Total (a + b) 23,523 26,413 /i/ Share in the principal of BINA-FINCOM d.d. Zagreb relates to 758,361 shares in the nominal value of HRK 70, i.e. 44.00%. /ii/ Share in the principal of BINA-ISTRA d.d. Zagreb relates to 378,985 shares in the nominal value of 10 HRK, i.e. 14.78%. Shares of the company BINA-ISTRA d.d. were given as fiduciary to Deutsche Trustee Company Limited from London.
41 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
/iii/ Based on the agreement on subordinated debt signed on 14 December 2010, the shareholders reduced the share capital of the Concessionaire (BINA-ISTRA d.d.) from the amount of HRK 256,417 thousand by the amount of HRK 230,775 thousand to the amount of HRK 25,642 thousand, which represents a decrease of the share capital of the Concessionaire by 90%, by the conversion of the amount of HRK 230,775 thousand to interest-free subordinated debt. The concessionaire will pay to the Company subordinated debt in the amount of HRK 31,901 thousand in equal annual instalments in the period from 2012 to 2027. /iv/ Pursuant to the Subordinated Debt Agreement of 19 April 2018, shareholders reduced the share capital of the company BINA-FINCOM d.d. from HRK 120,648 thousand in the amount of HRK 17,235 thousand to HRK 103,413 thousand, representing a decrease in the share capital of the company BINA-FINKOM d.d. for a 14.29% conversion of the amount of 17,235 into the non-interest bearing Subordinated Debt. BINA-FINKOM d.d. will repay to the Company repaid Subordinated debt in the amount of HRK 7,584 thousand in equal annual instalments from 2018 to 2027.
18. INVENTORIES
31 Dec 2019 31 Dec 2018 DESCRIPTION HRK '000 HRK '000 Raw matenal and material 31,171 30,688 Impairment of inventory (628) (628) Spare parts 9,528 9,621 Impairment of spare parts (824) (592) Small inventory 1,426 1,697 Car-tires 163 169 Small inventory in use 17,488 15,910 Impairment of small inventory in use (17,488) (15,910) Car-tires in use 3,216 2,939 Impairment of car-tires in use (3,216) (2,939) a) Raw material and material 40,836 40,955 b) Finished products 372 256 Total (a+b) 41,208 41,211
19. TRADE RECEIVABLES
31 Dec 2019 31 Dec 2018 DESCRIPTION HRK '000 HRK '000 Domestic trade receivables 109,113 124,191 Doubtful and disputable trade receivables 46,122 39,081 Impairment of doubtful and disputable receivables (46,122) (39,081) Total 109,113 124,191
42 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
20. RECEIVABLES FROM THE STATE AND OTHER INSTITUTIONS
31 Dec 2019 31 Dec 2018 DESCRIPTION HRK '000 HRK '000 Receivables for gas reimbursement 133,198 81,338 Receivables for sick leaves 1,498 911 Other receivables from the State and other institutions 498 580 Total 135,194 82,829 Receivables for gas fee relates to receivables for accrued fee from oil derivatives for October, November and December current year. According to the Law on Excise Tax (OG 83/09) and the Regulation on Excise Duties (OG 1/10), there was a change in reporting in the calculation of excise taxes on petroleum products. The Company records mentioned receivables based on monthly reports of the Ministry of Finance, respectively Customs Administration, which receives up to 20th day of the month for the previous month.
21. OTHER RECEIVABLES
31 Dec 2019 31 Dec 2018 DESCRIPTION HRK '000 HRK '000 Prepayment receivables 5 7 Receivables of insurance companies 62 130 Other receivables 4,700 4,626 Impairment of other receivables (3,169) (3,172) Total 1,598 1,591
22. CURRENT FINANCIAL ASSETS
31 Dec 2019 31 Dec 2018 DESCRIPTION HRK '000 HRK '000 Current portion of loans granted to associated companies 16,720 14,624 Impairment of loans to associated companies (12,169) (9,337) Receivables for domestic deposits 226,089 2,794 Total 230,640 8,081
23. CASH AND CASH EQUIVALENTS
31 Dec 2019 31 Dec 2018 DESCRIPTION HRK '000 HRK '000 Giro account 20,726 12,034 Treasury 5,631 6,894 Foreign currency account 156,395 145,371 Foreign currency treasury 3,202 4,477 Overnight term assets - HRK 255,484 353,336 Total 441,438 522,112
43 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
24. PREPAID EXPENSES AND ACCURED INCOME
31 Dec 2019 31 Dec 2018 DESCRIPTION HRK '000 HRK '000 Prepaid expenses 174 18 Accrued undue interests 49 22 Financing expenses of public good construction 86,741 96,162 Total 86,964 96,202
25. CAPITAL /i/ Subscribed capital stated in the Balance sheet as at 31 December 2019 in the amount of HRK 131,140 thousand (31 December 2018 in the same amount) represents own permanent sources for the Company’s operations and include stock principal registered at the Commercial court in Zagreb. /ii/ Public capital under management is shown as follows:
31 Dec 2019 31 Dec 2018 DESCRIPTION HRK '000 HRK '000 Public capital under management - transfer under demerger balance sheet 19,582,712 19,582,712 Public capital from gas fee - total revenue 19,847,379 19,313,019 Public capital from other financing sources - net expenditure (22,209,352) (21,645,450) Total 17,220,739 17,250,281 /iii/ Public capital from other financing sources is shown as follows:
2019 2018 DESCRIPTION HRK ’000 HRK '000 Balance as at 1 January (21,645,450) (19,998,377) Profit distribution 492,586 139,667 Public capital - deposit interests 22 32 Public capital - collection from the guarantees 114 153 Public capital - yield from portion in investment funds 0 558 Public capital - EU co-financing - entry to port Ploce 19 45,406 Public capital - exchange rate gams 215,640 516,740 Public capital - exchange rate losses (284,645) (237,819) Public capital - financing expenses (517,943) (696,954) Public capital - other expenses due to public good management (8,027) 0 Public capital - impairment of public good out of use (1,365) 0 Public capital - impairment of public good under concession (100,301) (102,058) Public capital - transfer to HC d.o.o. (360,002) (1,312,798) Balance as at 31 December (22,209,352) (21,645,450)
44 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
/iii-a/ Receipts or increase of public capital Receipts such as net foreign exchange differences from loans for construction of public roads, prepayments for construction of public roads and other liabilities related to the construction of public roads and interest on term deposits from public capital are stated within public capital. Increases in public capital are shown as follows:
2019 2018 DESCRIPTION HRK '000 HRK '000 Profit distribution 492,586 139,667 Public capital - financing the construction of motorways 19 45,406 Public capital - deposit interests 22 32 Public capital - warranty payment 114 153 Public capital - income from portions in investment funds 0 558 Public capital - foreign exchange gams 215,640 516,740 Total 708,381 702,556 /iii-b/ Expenditures or decrease of public capital Expenditures such as interest for non-current loans, bank fees for granting loans, fees for issued state guarantees, costs of co-financing other public property and impairment (depreciation) of public roads (in part that is not covered by own income of the Company), which decrease public capital are stated within public capital from other financing sources. Decrease in public capital is shown as follows:
2019 2018 DESCRIPTION HRK '000 HRK '000 Public capital - foreign exchange losses (284,645) (237,819) Public capital - financing costs (517,943) (696,954) Public capital - impairment of public good under concession (100,301) (102,058) Public capital - transfer to HC d.o.o. (360,002) (1,312,798) Public capital - other expenses due to public good management (8,027) 0 Public capital - impairment of public good out of use (1,365) 0 Total (1,272,283) (2,349,629) /iv/ Legal reserves stated in as at 31 December 2019 in the amount of HRK 568 thousand (31 December 2018: in the same amount) occurred due to the distribution of a part of generated income for 2001 in the amount of 5% of income after taxation, pursuant to Article 222 of the Company Act.
26. PROVISIONS
31 Dec 2019 31 Dec 2018 DESCRIPTION HRK '000 HRK '000 Provisions for pensions, severance payments and similar liabilities 42,104 34,835 Provisions for costs in guarantee period 49 49 Provisions for costs of initiated legal disputes 29,431 15,835 Total 71,584 50,719
45 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
Movements of provisions are shown as follows: New Used 31 Dec 2018 provisions provisions 31 Dec 2019 DESCRIPTION HRK '000 HRK '000 HRK '000 HRK '000 Provisions for pensions, severance payments and similar liabilities 34,835 7,269 0 42,104 Provisions for costs in guarantee period 49 0 0 49 Provisions for costs of initiated legal disputes 15,835 28,631 (15,035) 29,431 Total 50,719 35,900 (15,035) 71,584
27. LONG-TERM LIABILITIES
31 Dec 2019 31 Dec 2018 DESCRIPTION HRK '000 HRK '000 Liabilities to the Ministry of Finance for bond funds 5,006,556 4,989,736 Current portion of liabilities to the Ministry of Finance 0 0 I. Liabilities for loans, deposits etc. 5,006,556 4,989,736 Liabilities to domestic banks and other financial institutions 11,322,636 8,408,707 Liabilities to foreign banks and other financial institutions 4,028,995 7,603,164 Current portion (Note 29) (938,107) (3,784,220) II. Liabilities to banks and other financial institutions 14,413,524 12,227,651 I.+ II. 19,420,080 17,217,387 Liabilities for the sale of social housing to tenant rights’ holders 38 47 Trade payables for expropriation (Note 30) 65,133 0 Other long-term liabilities 65,171 47 Total 19,485,251 17,217,434 /i/ Movements in liabilities to banks and other financial institutions are shown as follows:
2019 DESCRIPTION HRK '000 1 January 2019 21,001,607 Loan repayments (3,774,282) New loans 3,079,959 Foreign exchange differences 50,903 31 December 2019 20,358,187 Current portion of principal (938,107) 31 December 2019 19,420,080
46 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
Maturity of long-term liabilities to banks and other financial institutions:
Amount Maturity HRK '000 2020 (current portion) 938,107 2021 1,331,448 2022 1,614,960 2023 1,676,636 2024 1,548,835 After 2025 13,248,201 Total 20,358,187
/ii/ Liabilities to domestic banks:
Amount in currency Interest 31 Dec 2018 Current portion Non-current portion Domestic banks Maturity Currency ’000 Repayment rate HRK '000 HRK '000 HRK '000 Zaba JUMBO 2030 EUR 1,137,715 Semi-annually <2% 8,345,604 182,899 8,162,705 Zaba JUMBO 2030 EUR 400,000 Semi-annually <2% 2,977,032 21,435 2,955,597 Eurobonds MF 2030 EUR 672,690 One-time <3% 5,006,556 0 5,006,556 Total liabilities to domestic banks 2,210,405 16,329,192 204,334 16,124,858
47 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
/iii/ Liabilities to banks abroad:
Amount m currency Interest 31 Dec 2018 Current portion Non-current portion Foreign banks Maturity Currency ‘000 Repayment rate HRK '000 HRK '000 HRK '000 KFW/11 2026 EUR 130,000 Semi-annually 2-4% 550,394 84,676 465,718 Ebrd/16 2030. EUR 211,900 Semi-annually <2% 1,346,259 122,387 1,223,872 EIB/03 2021. EUR 50,000 Semi-annually 2-4% 41,272 26,049 15,223 EIB/04 2031. EUR 45,000 Semi-annually 4-6% 186,720 16,569 170,151 E1B/11 2044. EUR 41,500 Semi-annually 2-4% 291,733 11,876 279,857 Depfa/07 2022. EUR 150,000 Semi-annually <2% 242,256 97,125 145,131 Depfa/07 2023. EUR 125,000 Semi-annually <2% 323,590 80,898 242,692 DB/15 2022. EUR 100,000 Semi-annually 4-6% 405,959 135,319 270,640 Ebrd/03 2021. EUR 45,000 Semi-annually <2% 44,726 22,363 22,363 Ebrd/11 2026. EUR 58,913 Semi-annually <2% 256,315 39,433 216,882 Dexia/13 2023 EUR 150,000 Semi-annually <2% 339,770 97,077 242,693 Total liabilities to foreign banks 1,107,313 4,028,994 733,772 3,295,222
48 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
During 2017, the Company started a process of financial restructuring involving optimization of HAC, ARZ and HC debts and was implemented on the basis of a state-level strategy agreed with representatives of international financial institutions. The aim of this strategy 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 the financial restructuring was concluded in December 2017. The Republic of Croatia entrusted the issuance of Eurobonds in the amount of EUR 1,275 000,000, while Hrvatske autoceste d.o.o. received EUR 672,690,950 at interest rate of 2.75%. The received funds were used for refinancing the debt at average interest rate of 4.28%. The second phase of the financial restructuring was completed in April 2018 when the Agreement was concluded for refinancing of 17 existing loans at average interest rate of 3.72%, in the amount of EUR 1,137,715,157 and at interest rate of 1.95% + 6M Euribor. This financing was carried out on the domestic financial market with a consortium of eight Croatian banks. The third phase of the financial restructuring was completed in September 2019 when the Loan Agreement in amount of EUR 400,000,000 at an interest rate of 1.6% +6M Euribor, was concluded at domestic financial market with consortium of 11 domestic banks with a purpose of refinancing the Company's existing debt to Deutsche Bank AG London dated from 2014 and with an agreed interest rate of 4.25%. The insurance facility on all loans is a 100% state guarantee issued by the Republic of Croatia.
28. LIABILITIES FOR LOANS AND DEPOSITS
31 Dec 2019 31 Dec 2018 DESCRIPTION HRK HRK Liabilities for received deposits 14,816 14,932 Total 14,816 14,932
29. LIABILITIES TO BANKS AND OTHER FINANCIAL INSTITUTIONS
31 Dec 2019 31 Dec 2018 DESCRIPTION HRK ’000 HRK '000 Current portion of non-current loans (Note 27) 938,107 3,784,220 Total 938,107 3,784,220
49 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
30. TRADE PAYABLES
31 Dec 2019 31 Dec 2018 DESCRIPTION HRK '000 HRK '000 Domestic trade payables 58,505 62,191 Trade payables for investments 58,925 93,308 Trade payables for fixed tangible assets 1,358 345 Trade payables for expropriation 30,909 30,872 Cessions 964 397 Trade payables - subcontractors 7,524 6,763 Trade payables - physical persons 42,757 41,932 Foreign trade payables 91 131 Liabilities for non-invoiced works and services 562 556 Other trade payables 23 7 Transfer from trade payables for expropriations for short-term liabilities (Note 27) (24,174) 0 Transfer from trade payables - not final, for short-term liabilities (Note 27) (40,958) 0 Total 136,486 236,502
31. LIABILITIES TO EMPLOYEES
31 Dec 2019 31 Dec 2018 DESCRIPTION HRK '000 HRK '000 Net salaries and wages 23,478 22,657 Severance payment liabilities 2,623 470 Other liabilities to employees 3,264 2,403 Total 29,365 25,530
32. LIABILITIES FOR TAXES AND CONTRIBUTIONS
31 Dec 2019 31 Dec 2018 DESCRIPTION HRK '000 HRK '000 Contributions on salaries 5,640 5,611 Contributions from salaries 6,612 6,318 Taxes and surtaxes from salaries 2,968 2,614 Corporate income tax 8,656 88,491 Honorariums and temporary working contracts 16 14 VAT 30,961 31,666 Other liabilities 8 88 Total 54,861 134,802
50 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
33. ACCRUED EXPENSES AND DEFERRED INCOME
31 Dec 2019 31 Dec 2018 DESCRIPTION HRK '000 HRK '000 Accrued interests by granted loans 76,960 108,732 Accrued legal default interests and unpaid fees 1,997 1,997 Accrued agreed interests 9,920 9,920 Accrued borrowing fee 126,726 148,427 Accrued unused vacation costs 19,692 20,924 a) Accrued expenses 235,295 290,000 Unrealized sales receipts to the balance sheet date 84,041 89,702 Deferred income - EU Project 37,120 27,393 Deferred income - fee for using motorway land 3,926 4,344 Other deferred income 617 624 b) Income for the future period 125,704 122,063 Total (a + b) 360,999 412,063
34. PAYMENTS TO THE MANAGEMENT BOARD
31 Dec 2019 31 Dec 2018 DESCRIPTION HRK ’000 HRK '000 Gross salary 1,301 1,072 TOTAL 1,301 1,072
35. TRANSACTIONS WITH RELATED PARTIES
31 Dec 2019 31 Dec 2018 0 P 1 s HRK '000 HRK '000 Fixed assets (Note 17) Share in principle BINA FINCOM d.d. 45,502 45,502 Share in principle BINA ISTRA d.d 3,790 3,790 Impairment of shares (33,459) (33,459) a) Shares with related parties 15,833 15,833 Receivables for loans given to BINA ISTRA d.d 17,054 19,186 Receivables for loans given to BINA FINCOM d.d. 6,067 6,067 Impairment of subordinated debt - BINA ISTRA d.d. (12,541) (12,541) Due portion (transfer to receivables) (2,890) (2,132) b) Loans given to related companies 7,690 10,580 Total (a + b) 23,523 26,413
51 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019 a) The most significant transactions with other companies owned by the government:
2019 2018 Description HRK '000 HRK '000 Current receivables Hrvatske ceste d.o o 1,414 1,645 Motorway Rijeka - Zagreb d.o.o 44,173 44,596 Odasiljaci i veze d.o.o. 324 254 Ministry of Finance of the Republic of Croatia 25 35 Hrvatska posta d.d., Zagreb 566 669 Total 46,502 47,199 Income Hrvatske ceste d.o.o. 7,736 8,118 Motorway Rijeka - Zagreb d o o. 428,745 429,009 Odasiljaci i veze d o.o. 1,385 2,651 Ministry of the Sea, Transport and Infrastructure 6,272 6,088 Ministry of Finance of the Republic of Croatia 331 308 Hrvatska posta d.d., Zagreb 10,589 11,912 Ministry of Internal Affairs 1,733 1,557 Total 456,791 459,643 Current liabilities Motorway Rijeka -Zagreb d.o.o. 18,890 18,993 Total 18,890 18,993 Expenses Motorway Rijeka - Zagreb d.o.o. 266,136 259,490 Hrvatska Postanska Banka d.d. 5 10 HEP ODS d.o.o. 17,378 20,592 Hrvatske ceste d.o.o 2 16 Narodne novine d.d. 459 708 Hrvatska Posta d.o.o. 1,048 1,061 Total 285,028 281,877
36. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT Capital risk management The Company manages its capital to ensure business continuity, maximizing the return to shareholders through the optimization of the balances of debt and equity. The Company's capital structure consists of cash and cash equivalents and equity, which includes the subscribed capital, reserves and retained earnings and public capital.
52 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
Financing ratio The Company's management reviews the capital structure. As part of the review, the Board considered the costs and risks associated with each class of capital. The actual ratio of financing the Company is 1.12 annually for the year ending 31 December 2019 (1.14 for the year ended 31 December 2018).
31 Dec 2019 31 Dec 2018 DESCRIPTION HRK ’000 HRK '000 Loan liabilities 20,423,358 21,001,654 Financial liabilities 20,423,358 21,001,654 Less: cash and cash equivalents (441,438) (522,112) Net debt 19,981,920 20,479,542 Principal* 17,766,353 17,889,937 Debt to equity ratio 1,12 1,14 *The principal includes overall Company's capital Financial instrument categories
31 Dec 2019 31 Dec 2018 DESCRIPTION HRK '000 HRK '000 Fixed financial assets 23,523 26,413 Non-current receivables 2,230 2,486 Current receivables 246,508 208,868 Current financial assets 230,640 8,081 Cash and cash equivalents 441,438 522,112 Financial assets 944,339 767,960 Liabilities for loans and deposits 14,816 14,932 Liabilities for borrowings 20,423,358 21,001,654 Current liabilities 221,098 397,225 Financial liabilities 20,659,272 21,413,811 On the reporting date, the Company has the most significant concentration of the loan risk in trade receivables, receivables from the State (the owner) and warranty deposits placements with a foreign business bank (Notes 19, 20 and 22 to the financial statements). The carrying amount of stated financial assets represents maximum exposure of the Company to the loan risk. The objectives of the financial risk management Management of the Company controls and manages the financial risk which could have an influence on the Company’s operations through internal reporting in which exposure to risks are analysed on the base of stage and significance. Financial risk includes market risk (including also foreign exchange risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The Company seeks to minimize the impact of these risks. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.
53 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
Foreign currency risk The official currency of the Company is Croatian Kuna (HRK), However, certain transactions in foreign currencies are translated into Croatian Kuna by applying the exchange rates valid on the balance sheet date, and, consequently, the Company is potentially exposed to risks of changes in exchange rates, As the Company has a significant number of loans in foreign currency (usually related to the EUR), the Company has significant exposure to this risk, The carrying amounts of monetary assets and monetary liabilities of the Company denominated in foreign currencies at the reporting date are summarized as follows:
Assets Liabilities Balance as at 31 December 2019 2018 2019 2018 HRK ’000 HRK '000 HRK '000 HRK '000 EUR 223,277 0 20,358,187 21,001,607 Analysis of sensitivity to foreign currency risk The Company is primarily exposed to the countries where the currency is EUR. The following table analyses the foreign currency risk of the Company in the event of a 1% increase in the value of Kuna against Euro. The 1% sensitivity rate is used in internal foreign currency risk reports to key managers and represents the Management's assessment of predictable changes in the exchange rates. The sensitivity analysis includes only open monetary items in foreign currency, and their translation at the end of the period is adjusted based on the 1-percent change in exchange rates. The influence of changes in the exchange rate is given in the following table:
EUR influence Decrease by 1 p.p. Decrease by 1 p.p. DESCRIPTION 2019 2018 2019 2018 HRK'000 HRK'000 HRK'000 HRK'000 Influence on the profit/loss for the period (201,349) (210,016) 201,349 210,016 Price risk management The Croatian market is the largest market on which the Company provides its services. The Management Board determines the prices of its services with the approval of the Government of the Republic of Croatia. Interest rate risk Interest rate risk is the risk that the value of financial instruments will change due to changes in market interest rates in relation to interest rates applicable to financial instruments. Interest rate cash flow risk is the risk that interest costs on financial instruments will fluctuate over time. The Company is exposed to interest rate risk as the Company uses loans with variable interest rates. Sensitivity analysis of interest rates Sensitivity analysis was performed only for the financial instruments with variable interest rates based on the exposure of the Company to interest rates at the end of the reporting period assuming that the outstanding amount at the end of the reporting period was unsettled during whole year.
54 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
Interest rate risk - continued Sensitivity analysis of interest rates - continued If interest rates were 50 basis points higher, the balance of loan indebtedness as at 31 December 2019 would be influenced by the increase of the interest rate expense in the amount of HRK 110,000 thousand HRK on exposure to the interest rate risk. This is mainly attributable to the Company's exposure to interest rates on loans with variable interest rates. Credit risk management Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. Financial assets that potentially expose the Company to credit risk consist mainly of cash, cash equivalents and trade receivables, Trade receivables have been adjusted to allow for bad and doubtful accounts. Liquidity Risk Management Liquidity risk is the risk that the Company will not be able to settle its financial obligations to the other contracting party. The ultimate responsibility for managing the credit risk lies with the management, who set up a quality framework for managing liquidity risk by the short, medium and long positions of the Company and define the requirements related to liquidity management. The Company has, during the reporting period, settled its obligations to creditors, suppliers, employees and the country within the statutory deadlines. Although the Company receives substantial funds from gas derivatives and toll, in subsequent periods the Company's Management Board is planning additional debts in order to continue the smooth operations of the Company. The Company manages its liquidity through continued monitoring of anticipated and actual cash flows and by adjusting maturity of financial assets and liabilities. Analysis of liquidity risk The following table details the remaining period to contractual maturity of financial liabilities of the Company. The table is prepared on the basis of undiscounted cash flows of financial liabilities at the earliest date on which the Company may be requested to make the payment. The remaining period to the contractual maturity of financial liabilities of the Company is shown as follows: Up to 1 3 months-1 LIABILITIES 1-3 months Over 1 year Total month year HRK '000 HRK '000 HRK '000 HRK '000 HRK '000 31 Dec 2019 Non-interest bearing 0 0 0 0 0 Interest bearing 13,187 139,357 785,563 19,420,080 20,358,187 31 Dec 2018 Non-interest bearing 0 0 0 0 0 Interest bearing 2,464 108,502 3,678,031 17,212,609 21,001,607
55 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
Liquidity Risk Management - continued The following table details the remaining period to contractual maturity of financial assets of the Company. The table is prepared on the basis of undiscounted cash flows of financial assets at the earliest date on which the Company may be requested to make the payment. The remaining period to the contractual maturity of financial assets of the Company is shown as follows: Up to 1 3 months-1 ASSETS 1-3 months Over 1 year Total month year HRK '000 HRK '000 HRK '000 HRK '000 HRK '000 31 Dec 2019 Non-interest bearing 0 0 0 23,523 23,523 Interest bearing 0 0 225,991 4,649 230,640 31 Dec 2018 Non-interest bearing 0 0 0 26,413 26,413 Interest bearing 0 0 2,673 5,408 8,081
37. LEGAL DISPUTES AND CONTINGENT LIABILITIES The Company keeps systematic records of legal disputes in which the Company acts both and the plaintiff and the defendant. The operating of the Sector for Legal, Personnel and General Affairs is assisted by external lawyers but the records that the lawyers keep on the disputes are kept in the Company's premises. As at 31 December 2019 the following disputes were initiated against the Company:
______31 Dec 2019______Litigation value 0 P I S HRK '000 Economy and other disputes with contractors 242,127,069 Disputes resulting from construction works 22,954,780 Disputes resulting from expropriation 100,023,142 Disputes for reimbursement of damages resulting from traffic 16,980,776 Harmful impact of the motorway 11,373,348 Labour disputes 1,416,144 Other disputes (enforcements, offence proceedings, ...) 87,370,240 TOTAL 482,245,499 Legal disputes and other potential benefits and liabilities are not stated in the statement of financial position (Balance Sheet) since the outcomes, as well as the inflow and outflow of assets on this base are uncertain. In the moment when the outcome of potential benefits and liabilities becomes certain, they are included as extraordinary income, i.e. as expense provisions in case of damages. As described in Note 27 to the financial statement, as at 31 December 2019 in line with the professional legal advice, the Company cancelled the formed pertaining provisions in the amount of HRK 15,835 thousand and formed new provisions in the amount of HRK 29,431 thousand.
56 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
38. EVENTS AFTER THE REPORTING DATE The existence of the new coronavirus (Covid-19) was confirmed in early 2020 and quickly spread to mainland China, Europe and the United States, causing disruptions in business and economic activity. Since the beginning of the pandemic, the Group has been applying special measures to prevent the spread of coronavirus disease, in accordance with the decisions of the National Civil Protection Headquarters, and with the aim of ensuring the smooth functioning of all business processes of the Group while protecting the health of workers and business partners. Further to this, on 30 March 2020, the Company formed an economic headquarters to adapt business operations to the special conditions, which elaborates in detail the scenarios for reduced operating costs by abandoning the employment of seasonal workers, by revising procurement plans to include only the needed and necessary criteria for the retention of procurement for traffic safety, and the smooth operations of regular maintenance and toll collection. On 30 March 2020, discussions with the social partner were initiated to delay the payment of material rights related to Easter what resulted with non-consent and the immediate mobilisation of members to give consent for the law suit against the Company for unpaid substantive rights. After the Government of the Republic of Croatia adopted decisions and conclusions on economic measures, the Company on 3 April 2020 initiated again the negotiations with the social partner to delay the payment of material rights till the recovery of toll revenue because of unexpected circumstances arising after adoption of the Collective Agreement, which the counterparty still does not want to accept. As a result, a rebalancing of the Hrvatske autoceste Financial Plan for 2020 has been prepared according to the Guidelines for the rationalization of the operations of state- owned legal entities due to the epidemic of COVID-19 and the instructions of the Ministry of Finance and the Ministry of the Sea, Transport and Infrastructure. Total planned revenues decreased from HRK 2,779,087,865 to HRK 2,008,956,790 which represents a decrease of 27.7% or HRK 770,131,075. The most significant decrease relates to toll revenue, which was reduced by 35.5% or HRK 708 mil and it is estimated at HRK 1.290 billion. The estimate is based on revenue generated in March this year compared to last year when there was a decrease of 34% or HRK 40 million and continued in April with a decrease of 70% or HRK 100 million while the estimates for May based on internal traffic increase because of relaxation of measures increase are projected to be 60% or HRK 87 million, while the favourable epidemiological situation and preparations of the tourist season imply an estimation for decrease in revenues of 45% or HRK 370 million for the period June-August compared to the same period of the previous year. The Company has liquidity reserves that can cover an additional decrease in toll revenue by approximately HRK 190 million to amount of HRK 11 billion or decrease of 45% compared to 2019. Besides the above mentioned, Capital assistance from the budget out from Fees from energy products excise were reduced by HRK 27 mil and now are HRK 447,500,000 while receipts from EU Funds were reduced by HRK 21.5 million according to the expected reducing in realisation of Crocodile 2 and 3 projects, and decrease in revenues from non- financial assets resulting from the management of road land decreased by HRK 12.5 million due to the adjustment of compensation to reduced vehicle traffic.
57 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
Total planned expenditures decreased from HRK 1,923,297,025 to HRK 1,603,734,055 which represents a decrease of 16.6% or HRK 319,562,970. This decrease consists of a decrease in operating expenses of HRK 121,491,620 and a decrease in expenditures for non- financial assets by HRK 198,071,350. The reduction in operating expenditure includes HRK 36 mil reduction in expenditure due to the reduction of the monthly corporate pre-tax liability approved by the Tax Administration of the Ministry of Finance at the request of the Company. Giving up the employment of seasonal workers of HRK 10 million also contributes to the reduction of expenditure as well as reduction of other variable expenditure related to the reduction of vehicle traffic. The Company also uses the measures of the Government of the Republic of Croatia referred to in Article 71m of Regulations on the implementation of the General Tax Law which reduces expenditure on taxes and contributions from and on wages in accordance with the decrease in revenues compared to the same period last year. Expenditures of nonfinancial assets decreased by 30% from HRK 648,671,350 to HRK 450,600,000 or by HRK 198,072,350. This decrease is due to the abandonment of planned procurement of means of transport, equipment and computer programmes and procurement from the areas of investment maintenance, construction and transport safety. The most significant investment in non-financial assets relates to the continued construction of the Vc corridor Beli Manastir - Halasica 17.5 km long section financed by EBRD and HBOR loans with planned receipt from debt in 2020 in the amount of HRK 80 million.
39. PREPARATION AND APPROVAL OF THE FINANCIAL STATEMENTS
The financial statements, set out on the previous pages, were prepared by the Management Board of the Company, and authorized for issue on 19 May 2020.
Hrvatske autoceste d.o.o. Sirolina ulica 4 10 000 Zagreb Republic of Croatia
58 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
APPENDIX - FINANCIAL STATEMENTS OF THE COMPANY AND THE PUBLIC GOOD Since capital approach implies existence of two parallel records of public goods and own income and expenses, as well as assets, liabilities and capital emerging from these changes, we present below financial statements of the Company and financial statements of Public goods. Certain positions of the financial statements were reclassified compared to the financial statements on pages 8 to 12. STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2019
The Company Public good Total Company The Company Public good Total Company DESCRIPTION 2019 2019 2019 2018 2018 2018 HRK HRK HRK HRK HRK HRK OPERATING INCOME Sales income 2,223,139,523 0 2,223,139,523 2,136,105,527 0 2,136,105,527 Other income 61,492,673 534,378,922 595,871,595 282,156,754 562,341,536 844,498,290 Total operating income 2,284,632,196 534,378,922 2,819,011,118 2,418,262,281 562,341,536 2,980,603,817
OPERATING EXPENSES Material expenses (243,762,023) 0 (243,762,023) (260,402,508) 0 (260,402,508) Staff costs (460,038,507) 0 (460,038,507) (469,107,152) 0 (469,107,152) Depreciation (16,536,516) 0 (16,536,516) (15,012,727) 0 (15,012,727) Other expenses (70,806,275) 0 (70,806,275) (64,764,298) 0 (64,764,298) Value adjustment (14,018,406) 0 (14,018,406) (17,854,404) 0 (17,854,404) Provisions (35,900,543) 0 (35,900,543) (28,294,786) 0 (28,294,786) Other operating expenses (73,442,158) (367,652,971) (441,095,129) (20,447,286) (1,312,798,130) (1,333,245,416) Total operating expenses (914,504,428) (367,652,971) (1,282,157,399) (875,883,161) (1,312,798,130) (2,188,681,291)
PROFIT / (LOSS) FROM OPERATING ACTIVITES 1,370,127,768 166,725,951 1,536,853,719 1,542,379,120 (750,456,594) 791,922,526
FINANCIAL INCOME 11,473,856 215,775,558 227,249,414 3,787,938 517,483,194 521,271,132 FINANCIAL EXPENSES (4,484,556) (802,963,900) (807,448,456) (5,068,619) (934,772,027) (939,840,646) PROFIT / (LOSS) FROM FINANCIAL ACTIVITES 6,989,300 (587,188,342) (580,199,042) (1,280,681) (417,288,833) (418,569,514)
TOTAL INCOME 2,296,106,052 750,154,480 3,046,260,532 2,422,050,219 1,079,824,730 3,501,874,949 TOTAL EXPENSES (918,988,984) (1,170,616,871) (2,089,605,855) (880,951,780) (2,247,570,157) (3,128,521,937) DIFFERENCE OF TOTAL INCOME AND TOTAL EXPENSES 1,377,117,068 (420,462,391) 956,654,677 1,541,098,439 (1,167,745,427) 373,353,012
DEPRECIATION AND IMPAIRMENT OF PUBLIC GOOD (889,219,850) (101,665,653) (990,885,503) (939,042,420) (102,058,578) (1,041,100,998)
PROFIT / LOSS BEFORE TAXATION 487,897,218 (522,128,044) (34,230,826) 602,056,019 (1,269,804,005) (667,747,986) Profit tax (89,353,426) 0 (89,353,426) (109,470,240) 0 (109,470,240) PROFIT / LOSS FOR THE YEAR 398,543,792 (522,128,044) (123,584,252) 492,585,779 (1,269,804,005) (777,218,226) Other comprehensive income / loss before taxation 0 0 0 0 0 0 COMPREHENSIVE INCOME / LOSS FOR THE YEAR 398,543,792 (522,128,044) (123,584,252) 492,585,779 (1,269,804,005) (777,218,226)
59 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
STATEMENT OF FINANACIAL POSITION AS AT 31 DECEMBER 2019 The Company Public good Total Company The Company Public good Total Company DESCRIPTION 31 Dec 2019 31 Dec 2019 31 Dec 2019 31 Dec 2018 31 Dec 2018 31 Dec 2018 HRK HRK HRK HRK HRK HRK ASSETS Fixed assets Intangible assets 6,109,542 883,599 6,993,141 7,172,899 2,409,364 9,582,263 Property, plant and equipment 87,458,417 37,691,245,021 37,778,703,438 90,195,572 38,761,378,303 38,851,573,875 Non-current financial assets 23,523,070 0 23,523,070 26,413,220 26,413,220 Receivables 2,229,837 0 2,229,837 2,486,901 2,486,901 Total fixed assets 119,320,866 37,692,128,620 37,811,449,486 126,268,592 38,763,787,667 38,890,056,259
Current assets Inventories 40,366,118 842,344 41,208,462 40,368,641 842,344 41,210,985 Receivables from related companies within the Group 0 0 0 0 0 0 Trade payables 109,113,244 0 109,113,244 124,189,006 1,696 124,190,702 Receivables from employees and member entrepreneurs 603,572 0 603,572 256,804 0 256,804 Receivables from the State and other institutions 1,996,003 133,197,587 135,193,590 1,490,700 81,337,981 82,828,681 Other receivables 1,597,539 0 1,597,539 1,591,345 0 1,591,345 Current financial assets 230,639,937 0 230,639,937 8,081,407 0 8,081,407 Cash and cash equivalents 399,222,210 42,216,066 441,438,276 757,117,149 (235,005,549) 522,111,600 Total current assets 783,538,623 176,255,997 959,794,620 933,095,052 (152,823,528) 780,271,524
Prepaid expenses and accrued income 223,561 86,740,815 86,964,376 39,792 96,162,204 96,201,996
TOTAL ASSETS 903,083,050 37,955,125,432 38,858,208,482 1,059,403,436 38,707,126,343 39,766,529,779
60 Hrvatske autoceste d.o.o., Zagreb NOTES TO THE ANNUAL FINANCIAL STATEMENTS - continued For the year ended 31 December 2019
The Company Public good Total Company The Company Public good Total Company DESCRIPTION 31 Dec 2019 31 Dec 2019 31 Dec 2019 31 Dec 2018 31 Dec 2018 31 Dec 2018 HRK HRK HRK HRK HRK HRK CAPITAL AND RESERVES Capital Subscribed capital 131,140,105 0 131,140,105 131,140,105 0 131,140,105 Public capital 0 17,742,867,782 17,742,867,782 0 18,520,085,869 18,520,085,869 - Public capital on management 0 19,582,712,403 19,582,712,403 0 19,582,712,403 19,582,712,403 - Public capital from fuel fee 0 19,847,379,069 19,847,379,069 0 19,313,019,461 19,313,019,461 - Public capital from other sources 0 (21,687,223,690) (21,687,223,690) 0 (20,375,645,995) (20,375,645,995) Capital reserves 567,506 0 567,506 567,506 0 567,506 Retained profit 0 15,361,607 15,361,607 0 15,361,607 15,361,607 Profit for the current year 398,543,792 (522,128,044) (123,584,252) 492,585,779 (1,269,804,005) (777,218,226) Total capital 530,251,403 17,236,101,345 17,766,352,748 624,293,390 17,265,643,471 17,889,936,861
Provisions 71,584,221 0 71,584,221 50,718,678 0 50,718,678
Long-term liabilities 38,209 19,485,212,479 19,485,250,688 46,989 17,217,386,636 17,217,433,625
Short-term liabilities Liabilities for loans and deposits 7,494,969 7,320,735 14,815,704 3,707,912 11,223,666 14,931,578 Liabilities to banks and other financial institutions 0 938,106,517 938,106,517 0 3,784,219,551 3,784,219,551 Liabilities for received prepayments 212,591 0 212,591 212,499 0 212,499 Trade payables 59,917,985 76,568,413 136,486,398 62,538,257 173,963,777 236,502,034 Liabilities due to employees 29,364,571 0 29,364,571 25,530,482 0 25,530,482 Liabilities for taxes, contributions and similar fees 54,861,816 0 54,861,816 134,802,180 0 134,802,180 Other current liabilities 174,140 0 174,140 179,270 0 179,270 Total short-term liabilities 152,026,072 1,021,995,665 1,174,021,737 226,970,600 3,969,406,994 4,196,377,594
Accrued expenses and deferred income 149,183,145 211,815,943 360,999,088 157,373,779 254,689,242 412,063,021
TOTAL CAPITAL AND LIABILITIES 903,083,050 37,955,125,432 38,858,208,482 1,059,403,436 38,707,126,343 39,766,529,779
61 Hrvatske autoceste d.o.o., Zagreb Standards annual financial statements as at and for the year ended 31 December 2019
BALANCE SHEET as at 31.12.2019.
HRVATSKE AUTOCESTE, OIB: 57500462912 in HRK ADP Previous year Current year Item code (net) (net) ASSETS A) RECEIVABLES FOR SUBSCRIBED CAPITAL UNPAID 001 B) FIXED ASSETS (ADP 003+010+020+031+036) 002 38,890,056,259 37,811,449,486 1 INTANGIBLE ASSETS (ADP 004 to 009) 003 9,582,263 6,993,141 1 Research and development 004 2 Concessions, patents, licences, trademarks, software and other rights 005 9,582,263 6,993,141 3 Goodwill 006 4 Advance payments for purchase of intangible assets 007 S Intangible assets in preparation 008 6 Other intangible assets 009 11 TANGIBLE ASSETS (ADP Oil to 019) 010 38,851,573,875 37,778,703,438 1 Land Oil 1,697,019,377 1,699,735,738 2 Buildings 012 34,520,184,034 33,861,936,309 3 Plant and equipment 013 478,200,518 412,273,682 4 Tools, working inventory and transportation assets 014 12,886,036 15,735,860 5 Biological assets 015 6 Advance payments for purchase of tangible assets 016 3,843,992 13,550,164 7 Tangible assets in preparation 017 2,139,258,381 1,775,379,728 8 Other tangible assets 018 181,537 91,957 9 Investment property 019 III FIXED FINANCIAL ASSETS (ADP 021 to 030) 020 26,413,220 23,523,070 1 Investments in holdings (shares) of undertakings within the group 021 2 Investments in other securities of undertakings within the group 022 3 Loans, deposits, etc. to undertakings within the group 023 4 Investments in holdings (shares) of companies linked by virtue of 024 15,832,579 15,832,579 participating interest 5 Investment in other securities of companies linked by virtue of 025 participating interest 6 Loans, deposits etc. given to companies linked by virtue of 026 10,580,127 7,689,977 participating interest 7 Investments in securities 027 514 514 8 Loans, deposits, etc. given 028 9 Other investments accounted for using the equity method 029 10 Other fixed financial assets 030 IV RECEIVABLES (ADP 032 to 035) 031 2,486,901 2,229,837 1 Receivables from undertakings within the group 032 2 Receivables from companies linked by virtue of participating interests 033 3 Customer receivables 034 2,429,701 2,185,173 4 Other receivables 035 57,200 44,664 V. Deferred tax assets 036
62 Hrvatske autoceste d.o.o., Zagreb Standards annual financial statements as at and for the year ended 31 December 2019 - continued
C) CURRENT ASSETS (ADP 038+046+053+063) 037 780,271,524 959,794,482 I INVENTORIES (ADP 039 to 045) 038 41,210,985 41,208,462 1 Raw materials 039 40,955,417 40,836,100 2 Work in progress 040 3 Finished goods 041 4 Merchandise 042 255,568 372,362 5 Advance payments for inventories 043 6 Fixed assets held for sale 044 7 Biological assets 045 II RECEIVABLES (ADP 047 to 052) 046 208,867,532 246,507,945 1 Receivables from undertakings within the group 047 2 Receivables from companies linked by virtue of participating interest 048 3 Customer receivables 049 124,190,702 109,113,244 4 Receivables from employees and members of the undertaking 050 256,804 603,572 5 Receivables from government and other institutions 051 82,828,681 135,193,589 6 Other receivables 052 1,591,345 1,597,540 III SHORT-TERM FINANCIAL ASSETS (ADP 054 to 062) 053 8,081,407 230,639,937 1 Investments in holdings (shares) of undertakings within the group 054 2 Investments in other securities of undertakings within the group 055 3 Loans, deposits, etc. to undertakings within the group 056 4 Investments in holdings (shares) of companies linked by virtue of 057 participating interest 5 Investment in other securities of companies linked by virtue of 058 participating interest 6 Loans, deposits etc. given to companies linked by virtue of 059 5,286,914 4,528,553 participating interest 7 Investments in securities 060 8 Loans, deposits, etc. given 061 2,794,493 226,111,384 9 Other financial assets 062 IV CASH AT BANK AND IN HAND 063 522,111,600 441,438,138 D) PREPAID EXPENSES AND ACCRUED INCOME 064 96,201,996 86,964,376 E) TOTAL ASSETS (ADP 001+002+037+064) 065 39,766,529,779 38,858,208,344 F) OFF-BALANCE SHEET ITEMS 066
63 Hrvatske autoceste d.o.o., Zagreb Standards annual financial statements as at and for the year ended 31 December 2019 - continued
CAPITAL AND LIABILITIES A) CAPITAL AND RESERVES (ADP 068 to 070+076+077+081+084+087) 067 17,889,936,861 17,766,352,610 1. INITIAL (SUBSCRIBED) CAPITAL 068 131,140,105 131,140,105 II CAPITAL RESERVES 069 17,250,281,864 17,220,739,600 III RESERVES FROM PROFIT (ADP 071+072-073+074+075) 070 567,506 567,506 1 Legal reserves 071 567,506 567,506 2 Reserves for treasury shares 072 3 Treasury shares and holdings (deductible item) 073 4 Statutory reserves 074 5 Other reserves 075 IV REVALUATION RESERVES 076 V FAIR VALUE RESERVES (ADP 078 to 080) 077 0 0 1 Fair value of financial assets available for sale 078 2 Cash flow hedge - effective portion 079 3 Hedge of a net investment in a foreign operation - effective portion 080 VI RETAINED PROFIT OR LOSS BROUGHT FORWARD (ADP 082-083) 081 15,361,607 15,361,607 1 Retained profit 082 15,361,607 15,361,607 2 Loss brought forward 083 VII PROFIT OR LOSS FOR THE BUSINESS YEAR (ADP 085-086) 084 492,585,779 398,543,792 1 Profit for the business year 085 492,585,779 398,543,792 2 Loss for the business year 086 VIII MINORITY (NON-CONTROLLING) INTEREST 087 B) PROVISIONS (ADP 089 to 094) 088 50,718,678 71,584,221 1 Provisions for pensions, termination benefits and similar obligations 089 34,835,028 42,104,442 2 Provisions for tax liabilities 090 3 Provisions for ongoing legal cases 091 15,835,000 29,431,129 4 Provisions for renewal of natural resources 092 5 Provisions for warranty obligations 093 48,650 48,650 6 Other provisions 094
64 Hrvatske autoceste d.o.o., Zagreb Standards annual financial statements as at and for the year ended 31 December 2019 - continued
C) LONG-TERM LIABILITIES (ADP 096 to 106) 095 17,217,433,625 19,485,250,688 1 Liabilities towards undertakings within the group 096 2 Liabilities for loans, deposits, etc. to companies within the group 097 3 Liabilities towards companies linked by virtue of participating interest 098 4 Liabilities for loans, deposits etc. of companies linked by virtue of 099 participating interest 5 Liabilities for loans, deposits etc. 100 6 Liabilities towards banks and other financial institutions 101 17,217,433,625 19,420,118,438 7 Liabilities for advance payments 102 8 Liabilities towards suppliers 103 65,132,250 9 Liabilities for securities 104 10 Other long-term liabilities 105 11 Deferred tax liability 106 D) SHORT-TERM LIABILITIES (ADP 108 to 121) 107 4,196,377,594 1,174,021,737 1 Liabilities towards undertakings within the group 108 2 Liabilities for loans, deposits, etc. to companies within the group 109 3 Liabilities towards companies linked by virtue of participating interest 110 4 Liabilities for loans, deposits etc. of companies linked by virtue of 111 participating interest 5 Liabilities for loans, deposits etc. 112 14,931,578 14,815,704 6 Liabilities towards banks and other financial institutions 113 3,784,219,551 938,106,517 7 Liabilities for advance payments 114 212,499 212,591 8 Liabilities towards suppliers 115 236,502,034 136,486,398 9 Liabilities for securities 116 10 Liabilities towards employees 117 25,530,482 29,364,571 11 Taxes, contributions and similar liabilities 118 134,802,180 54,861,816 12 Liabilities arising from the share in the result 119 13 Liabilities arising from fixed assets held for sale 120 14 Other short-term liabilities 121 179,270 174,140 E) ACCRUALS AND DEFERRED INCOME 122 412,063,021 360,999,088 F) TOTAL - LIABILITIES (ADP 067+088+095+107+122) 123 39,766,529,779 38,858,208,344 G) OFF-BALANCE SHEET ITEMS 124
65 Hrvatske autoceste d.o.o., Zagreb Standards annual financial statements as at and for the year ended 31 December 2019 - continued
STATEMENT OF PROFIT OR LOSS for the period 1.1.2019. to 31.12.2019.
HRVATSKE AUTOCESTE, OIB: 57500462912 in HRK
Previous, year Current year . ’ . i§; i mmm 1 OPERATING INCOME (ADP 126 to 130) 125 2,418,262,281 2,284,632,196 1 Income from sales with undertakings within the group 126 2 Income from sales (outside group) 127 2,136,105,527 2,223,139,523 3 Income from the use of own products, goods and services 128 10,417,470 10,965,383 4 Other operating income with undertakings within the group 129 5 Other operating income (outside the group) 130 271,739,284 50,527,290 II OPERATING EXPENSES (ADP 132+133+137+141+142+143+146+153) 131 1,814,925,581 1,803,724,278 1 Changes in inventories of work in progress and finished goods 132 2 Material costs (ADP 134 to 136) 133 260,402,508 243,762,023 a) Costs of raw material 134 132,000,983 106,862,711 b) Costs of goods sold 135 1,462,790 2,726,399 c) Other external costs 136 126,938,735 134,172,913 3 Staff costs (ADP 138 to 140) 137 469,107,152 460,038,507 a) Net salaries and wages 138 285,241,296 280,204,766 b) Tax and contributions from salaries expenses 139 113,168,092 112,772,449 c) Contributions on salaries 140 70,697,764 67,061,292 4 Depreciation 141 954,055,147 905,756,366 5 Other expenses 142 64,764,298 70,806,275 6 Value adjustments (ADP 144+145) 143 17,854,404 14,018,406 a) fixed assets other than financial assets 144 b) current assets other than financial assets 145 17,854,404 14,018,406 1 Provisions (ADP 147 to 152) 146 28,294,786 35,900,543 a) Provisions for pensions, termination benefits and similar obligations 147 1,246,602 7,269,414 b) Provisions for tax liabilities 148 c) Provisions for ongoing legal cases 149 15,835,000 28,631,129 d) Provisions for renewal of natural resources 150 e) Provisions for warranty obligations 151 f) Other provisions 152 11,213,184 8 Other operating expenses 153 20,447,286 73,442,158 III FINANCIAL INCOME (ADP 155 to 164) 154 3,787,938 11,473,856 1 Income from investments in holdings (shares) of undertakings within 155 the group 2 Income from investments in holdings (shares) of companies linked by 156 virtue of participating interest 3 Income from other long-term financial investment and loans granted 157 to undertakings within the group 4 Other interest income from operations with undertakings within the 158 group______, ______,___ 5 Exchange rate differences and other financial income from operations 159 with undertakings within the group 6 Income from other long-term financial investments and loans 160 7 Other interest income 161 721,800 1,645,362 8 Exchange rate differences and other financial income 162 3,065,440 9,827,333 9 Unrealised gains (income) from financial assets 163 10 Other financial income 164 698 1,161
66 Hrvatske autoceste d.o.o., Zagreb Standards annual financial statements as at and for the year ended 31 December 2019 - continued
IV FINANCIAL EXPENDITURE (ADP 166 to 172) 165 5,068,619 4,484,556 1 Interest expenses and similar expenses with undertakings within the 166 group 2 Exchange rate differences and other expenses from operations with 167 undertakings within the group 3 Interest expenses and similar expenses 168 5,068,619 4,484,556 4 Exchange rate differences and other expenses 169 5 Unrealised losses (expenses) from financial assets 170 6 Value adjustments of financial assets (net) 171 7 Other financial expenses 172 V SHARE IN PROFIT FROM COMPANIES LINKED BY VIRTUE OF 173 PARTICIPATING INTEREST VI SHARE IN PROFIT FROM JOINT VENTURES 174 VII SHARE IN LOSS OF COMPANIES LINKED BY VIRTUE OF PARTICIPATING 175 INTEREST VIII SHARE IN LOSS OF JOINT VENTURES 176 IX TOTAL INCOME (ADP 125+154+173 + 174) 177 2,422,050,219 2,296,106,052 X TOTAL EXPENDITURE (ADP 131+165+175 + 176) 178 1,819,994,200 1,808,208,834 XI PRE-TAX PROFIT OR LOSS (ADP 177-178) 179 602,056,019 487,897,218 1 Pre-tax profit (ADP 177-178) 180 602,056,019 487,897,218 2 Pre-tax loss (ADP 178-177) 181 0 0 XII INCOME TAX 182 109,470,240 89,353,426 XIII PROFIT OR LOSS FOR THE PERIOD (ADP 179-182) 183 492,585,779 398,543,792 1 Profit for the period (ADP 179-182) 184 492,585,779 398,543,792 2 Loss for the period (ADP 182-179) 185 0 0 STATEMENT OF OTHER COMPREHENSIVE INVOME 1 PROFIT OR LOSS FOR THE PERIOD 202 492,585,779 398,543,792 II OTHER COMPREHENSIVE PROFIT/LOSS BEFORE TAX 203 0 0 (ADP 204 to 211) 1 Exchange rate differences from translation of foreign operations 204 2 Changes in revaluation reserves of fixed tangible and intangible assets 205 3 Profit or loss arising from re-evaluation of financial assets available for 206 sale 4 Profit or loss arising from effective cash flow hedging 207 5 Profit or loss arising from effective hedge of a net investment in a 208 foreign operation 6 Share in other comprehensive income/loss of companies linked by 209 virtue of participating interest 7 Actuarial gains/losses on defined remuneration plans 210 8 Other changes in equity unrelated to owners 211 III TAX ON OTHER COMPREHENSIVE INCOME FOR THE PERIOD 212 IV NET OTHER COMPREHENSIVE INCOME OR LOSS (ADP 203-212) 213 0 0 V COMPREHENSIVE INCOME OR LOSS FOR THE PERIOD (ADP 202+213) 214 492,585,779 398,543,792
67 Hrvatske autoceste d.o.o., Zagreb Standards annual financial statements as at and for the year ended 31 December 2019 - continued
STATEMENT OF CHANGES IN EQUITY for the period 01.01.2019. to 31.12.2019.
HRVATSKE AUTOCESTE, OIB: 57500462912
MMBnnBi Attributable to owners of thf.pwnt
Hedgecfanft | Fefryelueof Minority (noniij | j,] Jfitcn
1 Balance on the first day of the previous business 01 15.361.607 139.666.964 18.667.155.086 18.667.155.086
2 Changes In accounting policies 02 0 0
3 Correction of errors 03 0 0
4 Balance on the first day of the previous business 04 0 0 0 0 15.361.607 139 666 964 18.667.155 086 0 18.667.155.086 year (restated) (ADP 01 to 03) 5 Profit/loss of the period 05 '/ssW/////, 492.58S.779 492.585.779 492.585.779 6 Exchange rate differences from translation of 06 0 ° foreign operations 7 Changes in revaluation reserves of fixed tangible 07 0 0 and intangible assets lift 8 Profit or loss arising from re-evaluation of financial 08 0 0 assets available for sale ww,.
9 Gains or losses on efficient cash flow hedging 09 0 0
10 Gains or losses arising from effective hedge of a 10 0 0 net investment in a foreign operation III 11 Share in other comprehensive income/loss of 11 0 0 companies linked by virtue of participating interest
12 Actuarial gains/losses on defined benefit plans 12 0 0
13 Other changes in equity unrelated to owners 13 -139.666.964 -1.269.804.004 -1.269.804.004
14 Tax on transactions recognised directly in equity 14 0 0
15 Increase/decrease in initial (subscribed) capital (other than from reinvesting profit and other than 15 0 arising from the pre-bankruptcy settlement • procedure)
16 Increase of initial (subscribed) capital by 16 0 0 reinvesting profit 17 Increase of initial (subscribed) capital arising from 17 0 0 the pre-bankruptcy settlement procedure 18 Redemption of treasury shares/holdings 18 0 ° 19 Payment of share in profit/dividend 19 « 0 20 Other distribution to owners 20 0 0 21 Transfer to reserves by annual schedule 21 0 0 22 Increase in reserves arising from the pre 22 0 0 bankruptcy settlement procedure 23 Balance on the last day of the previous business 23 0 0 0 0 0 15.361.607 492.585.779 17.889.936.861 0 17.889 936 861 year reporting period (A0P 04 to 22)
APPEN0IX TO THE STATEMENT OF CHANGES IN EQUITY (to be filled I, by undertakings that draw up financial statements In accordance with the IFRS)
-1.130.137.040 0 0 0 0 0 0 -139.666.964 -1.269.804.004 0 -1.269.804.004
-1.130.137.040 0 0 0 0 0 0 352.918.815 -777.218.225 • -777.218.225
0 0 0 0 0 0 0 0 0 0
68 Hrvatske autoceste d.o.o., Zagreb Standards annual financial statements as at and for the year ended 31 December 2019 - continued
17.889.936.861
2 Changes in accounting policies
3 Correction of errors
4 Balance on the first day of the current 17.889.936.861 business year (restated) (ADP 27 to 29)
5 Profit/loss of the period 398.543.792
6 Exchange rate differences from translation of foreign operations 7 Changes in revaluation reserves of fixed tangible and intangible assets
9 Gains or losses on efficient cash flow hedging
10 Gains or losses arising from effective hedge of a net investment in a foreign operation 11 Share in other comprehensive income/loss of companies linked by virtue of participating interest
13 Other changes in equity unrelated to owners
14 Tax on transactions recognised directly in equity 15 Increase/decrease in initial (subscribed) capital (other than from reinvesting profit and other than arising from the pre-bankruptcy settlement procedure)...... 16 Increase of initial (subscribed) capital by reinvesting profit 17 Increase of initial (subscribed) capital arising from the pre-bankruptcy settlement procedure
18 Redemption of treasury shares/holdings
19 Payment of share in profit/dividend
20 Other distribution to owners * I II III
21 Transfer to reserves by annual schedule
22 Increase In reserves arising from the pre bankruptcy settlement procedure 23 Balance on the last day of the current 17.766.352.610 business year reporting period (ADP 30 to 48) APPENDIX TO THE STATEMENT OF CHANGES IN EQUITY (to be filled In by undertakings that draw up financial statements in accordance with the IFRS)
I OTHER COMPREHENSIVE INCOME FOR THE CURRENT PERIOD. NET OF TAX __ (ADP 32 to 40)...... II COMPREHENSIVE INCOME OR LOSS FOR -123.584.251 THE CURRENT PERIOD (ADP 31+50) III TRANSACTIONS WITH OWNERS IN THE CURRENT PERIOD RECOGNISED DIRECTLY INEQUITY (ADP 41 to 48)
69 Hrvatske autoceste d.o.o., Zagreb Standards annual financial statements as at and for the year ended 31 December 2019 - continued
STATEMENT OF CASH FLOWS - indirect method for the period 1.1.2019. to 31.12.2019.
HRVATSKE AUTOCESTE, OIB: 57500462912 in HRK
t - ' . : n ,, ‘‘ ' ' ^ ’'’r. ■ ' . I '• ,• ’ .'.Jh v .i’.:; . ; j ] _ - 1 ' V ’ • . '• ... T • ' -- ' . : i.. i ' [•.. >£• .!; --..2-.:' J.*[ 0 («f:.*'1 .- (
Cash flow from operating activities 1. Profit before tax 001 602,056,019 487,897,218 2. Adjustments (ADP 003 to 010): 002 954,055,147 905,756,366 a) Depreciation 003 954,055,147 905,756,366 b) Gains and losses on disposals and value adjustments of 004 property, plant and equipment and intangible assets c) Gains and losses on disposals and unrealized gains and losses 005 and value adjustments of financial assets d) Interest and dividend income 006 e) Interest expenses 007 f) Provisions 008 g) Exchange rate differences (unrealized) 009 h) Other adjustments for non-monetary transactions and 010 unrealized gains and losses
1. Increase or decrease in cash flows before changes in working capital 011 1,556,111,166 1,393,653,584 (ADP 001 + 002) 3. Changes in working capital (ADP 013 to 016) 012 -444,644,818 -453,560,736 a) Increase or decrease in short-term liabilities 013 32,552,490 -439,895,634 b) Increase or decrease in current receivables 014 -210,536,241 -57,456,199 c) Increase or decrease in inventories 015 1,804,300 2,523 d) Other increases or decreases in working capital 016 -268,465,367 43,788,574
II. Cash from operations (ADP 011 + 012) 017 1,111,466,348 940,092,848 4. Cash interest expenses 018 5. Paid income tax 019 A) NET CASH FLOWS FROM OPERATING ACTIVITIES (ADP 017 to 019) 020 1,111,466,348 940,092,848 Cash flow from investment activities 1 Cash receipts from sales of fixed tangible and intangible assets 021 2,696,610 257,064 2 Cash receipts from sales of financial instruments 022 127,149,111 2,890,150 3 Interest received 023 4 Dividends received 024 5 Cash receipts from repayment of loans and deposits 025 6 Other cash receipts from investment activities 026 III Total cash receipts from investment activities (ADP 024 to 026) 027 129,845,721 3,147,214 1 Cash payments for the purchase of fixed tangible and intangible assets 028 -348,734,332 -215,953,711 2 Cash payments for the acquisition of financial instruments 029 3 Cash payments for loans and deposits 030
70 Hrvatske autoceste d.o.o., Zagreb Standards annual financial statements as at and for the year ended 31 December 2019 - continued
4 Acquisition of a subsidiary, net of cash acquired 031 5 Other cash payments from investment activities 032 -2,742,168 -222,558,530 IV Total cash payments from investment activities (ADP 028 to 032) 033 -351,476,500 -438,512,241 B) NET CASH FLOW FROM INVESTMENT ACTIVITIES (ADP 027 + 033) 034 -221,630,779 -435,365,027 Cash flow from financing activities 1 Cash receipts from the increase of initial (subscribed) capital 035 2 Cash receipts the from issue of equity financial instruments and debt 036 financial instruments 3 Cash receipts from credit principals, loans and other borrowings 037 8,527,298,528 4 Other cash receipts from financing activities 038
V Total cash receipts from financing activities (ADP 035 to 038) 039 8,527,298,528 0 1 Cash payments for the repayment of credit principals, loans and other 040 borrowings and debt financial instruments -9,344,233,365 -585,401,145 2 Cash payments for dividends 041 3 Cash payments for finance lease 042 4 Cash payments for the redemption of treasury shares and decrease of 043 initial (subscribed) capital 5 Other cash payments from financing activities 044 VI Total cash payments from financing activities (ADP 040 to 044) 045 -9,344,233,365 -585,401,145 C) NET CASH FLOW FROM INVESTMENT ACTIVITIES (ADP 039 +045) 046 -816,934,837 -585,401,145 1 Unrealised exchange rate differences in cash and cash equivalents 047 D) NET INCREASE OR DECREASE OF CASH FLOWS (ADP020+034+046+047) 048 72,900,732 -80,673,324 E) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD 049 449,210,868 522,111,600 F) CASH AND CASH EQUIVALENTS AT THE END OF PERIOD (ADP 048+049) 050 522,111,600 441,438,276
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