Annual Report on the Operation of the Strategic Companies And

2014. – ANNUAL REPORT ON THE OPERATIONS OF THE STRATEGIC COMPANIES AND COMPANIES OF SPECIAL INTEREST FOR THE REPUBLIC OF CROATIA

2014. - ANNUAL REPORT ON THE OPERATIONS 1 TABLE OF CONTENTS Page

FOREWORD OF THE HEAD OF THE STATE ADMINISTRATIVE OFFICE FOR STATE PROPERTY MANAGEMENT ...... 5 I. INTRODUCTION - DIVISION OF THE STATE PORTFOLIO - ACCORDING TO THE DECISION OF THE CROATIAN GOVERNMENT ON LAYING DOWN A LIST OF COMPANIES AND OTHER LEGAL ENTITIES OF STRATEGIC AND SPECIAL INTERESTS FOR THE REPUBLIC OF CROATIA ...... 7 II. PORTFOLIO OVERVIEW - 49 COMPANIES OF STRATEGIC AND SPECIAL INTEREST TO THE REPUBLIC OF CROATIA – ACCORDING TO ACTIVITIES ...... 8 III. REVIEW OF OPERATIONS - 49 STRATEGIC AND COMPANIES OF SPECIAL INTEREST TO THE REPUBLIC OF CROATIA FROM 2011 TO 2014 ...... 9 III.I. TOTAL REVENUES, EXPENDITURES AND OPERATING RESULTS - 49 STRATEGIC AND COMPANIES OF SPECIAL INTEREST TO THE REPUBLIC OF CROATIA FROM 2011 TO 2014 ...... 11 III.II. NUMBER OF EMPLOYEES - 49 COMPANIES OF STRATEGIC AND SPECIAL INTEREST TO THE REPUBLIC OF CROATIA ON DECEMBER 31, 2014 FROM 2011 TO 2014 ...... 14 IV. COMPANIES LISTED ON THE REGULATED CAPITAL MARKET ...... 16 V. PORTFOLIO OVERVIEW - 49 COMPANIES ...... 21 COMPANIES OF STRATEGIC IMPORTANCE FOR THE REPUBLIC OF CROATIA ...... 22 Agencija Alan d.o.o...... 23

AKD - Agencija za komercijalnu djelatnost d.o.o...... 24 Autocesta Rijeka - Zagreb d.d...... 25 Hrvatska elektroprivreda d.d...... 26 Hrvatska Lutrija d.o.o...... 28 Hrvatske autoceste d.o.o...... 29 Hrvatske ceste d.o.o...... 31 Hrvatska kontrola zračne plovidbe d.o.o...... 32 Hrvatske šume d.o.o...... 33 Hrvatski operator tržišta energije d.o.o...... 35 HŽ Infrastruktura d.o.o...... 36 HŽ Putnički prijevoz d.o.o...... 37 Jadranski Naftovod (JANAF) d.d...... 39 Odašiljači i veze d.o.o...... 40 Plinacro d.o.o...... 41 Plovput d.o.o...... 43 Podzemno skladište plina d.o.o...... 44 Pomorski centar za elektroniku d.o.o...... 45 Središnje klirinško depozitarno društvo d.d...... 46

COMPANIES OF SPECIAL INTEREST IN WHICH THE REPUBLIC OF CROATIA HAS A MAJORITY SHARE ...... 48 Adriatic Croatia International Club d.d...... 49

2 2014. - ANNUAL REPORT ON THE OPERATIONS Agencija za podršku komunikacijskim sustavima i informacijskim tehnologijama (APIS IT) d.o.o...... 50 Brijuni Rivijera d.o.o...... 51 Brodarski Institut d.o.o...... 52 Club Adriatic d.o.o...... 53 Croatia Airlines d.d...... 55 Croatia banka d.d...... 56 Croatia osiguranje d.d...... 57 HP - Hrvatska pošta d.d...... 58 Hrvatska brodogradnja - Jadranbrod d.d...... 59 Hrvatska poštanska banka d.d...... 61 HŽ Cargo d.o.o...... 62 Imunološki zavod d.d...... 63 Jadrolinija ...... 64 Luka Rijeka d.d...... 65 Luka Vukovar d.o.o...... 66 Narodne novine d.d...... 67 Zračna luka Dubrovnik d.o.o...... 68 Zračna luka Osijek d.o.o...... 69 Zračna luka Pula d.o.o...... 71 Zračna luka Rijeka d.o.o...... 72 Zračna luka Split d.o.o...... 73 Zračna luka Zadar d.o.o...... 74 Zrakoplovno-tehnički centar d.d...... 75

COMPANIES OF SPECIAL INTEREST IN WHICH THE REPUBLIC OF CROATIA HAS A LESS THAN 50% SHARE AND WHOSE SHARES ARE LISTED ON THE REGULATED CAPITAL MARKET ...... 76 Đuro Đaković Holding d.d...... 77 INA - Industrija nafte d.d...... 78 Končar - Elektroindustrija d.d...... 80

Petrokemija d.d...... 81 Podravka d.d...... 83 Sunčani Hvar d.d...... 85

VI. FINANCIAL PERFORMANCE RATIOS- EXPLANATIONS ...... 88 VII. SOURCES ...... 87

2014. - ANNUAL REPORT ON THE OPERATIONS 3 4 2014. - ANNUAL REPORT ON THE OPERATIONS FOREWORD OF THE HEAD OF THE STATE ADMINISTRATIVE OFFICE FOR STATE PROPERTY MANAGEMENT

3. The efforts made for the companies to incorporate more of their shares on the regulated capital market (stock exchange), on which thirteen companies of strategic importance and special interest to the Republic of Croatia were listed in 2014.

The objectives of management of the state portfolio in terms of companies certainly include a stronger market capitalization and transparent presentation of their performance and results, as well as the achievement of companies’ goals, which generates profit and revenues in the state budget.

In order to achieve these goals, the initiated practice of publishing annual reports on the operations of companies in the state portfolio is continued and improved, as the best approach to the presentation of transparent management To whom it may concern, of state assets to all interested parties.

The start of the management of state property in the Republic of Croatia By reading the report, all those interested will find information that includes dates back to the early 1990s and to this date has seen a number of changes to data on the management supervisory board, the ownership structure, associated the management policy as well as in its various organizational forms. Today’s or dependent companies, brief summaries of their operations and key financial management model has a firm stronghold, but is subject to changes that occur indicators are shown with the generated data. For a better insight into the operating results of the listed companies, comparative data is presented for the founder the influence of business conditions in the country, international, econo- ur-year period from 2011 to 2014, and also cumulative analytical data is presented mic and business environment, and thus the need for constant improvement of for the portfolio with reviews that show trends for the period from 2011 to 2014. the management of state property, particularly corporate governance on the way to achieving maximum efficiency. By examining the operating results of companies in 2014, it is evident that, business-wise, the companies have made positive progress compared to 2013, as In 2014, the State Administrative Office for State Property Management (he- a result of the implementation of restructuring, rationalization or reorganization reinafter: DUUDI) for the first time published an annual report on the operations of operations according to the plans approved by the Supervisory Boards. of strategic and trade companies of special interest for the Republic of Croatia, modeled on international practice giving an insight in one place into the business In 2014, total revenues decreased by 6.3 percent compared to 2013 and amo- of strategic companies and companies of special interest for the Republic of Cro- unted to 71 billion HRK, whereas total expenditures decreased by 8.4 percent. atia. Companies in which the state shareholders and state business share owners Revenues of companies of strategic and special interest with a majority share have a stake in share capital are an important part of the gross domestic product, have minor fluctuations in the reporting period, and the decline in revenue is employment and market capitalization, which means that for these companies attributed to companies of special interest from the minority portfolio, in which there is an interest of the general and expert public. DUUDI continues with the the Republic of Croatia does not have a significant influence on business decisi- release of publications and the results for 2014 to in order to execute its activities ons. and obligations in a transparent, accountable, professional and efficient manner. In 2014, 35 companies realized profit and there was a significant increase in On the principles of transparency, predictability, effectiveness and accoun- profit of 117.3 percent compared to the previous year. The profit of companies of tability, the work guidelines are based and defined in respect of the corporate strategic interest in 2014 amounted to 3.8 billion HRK, which is an increase of 256 management of companies in the portfolio of the Republic of Croatia. percent, or 3.5 times. At the same time, in 2014 there was a significant reduction in reported loss, so out of the 49 observed companies in 2014 12 companies repor- Continuing to enhance good practice in the field of corporate governance of ted loss, of which only 2 companies were of strategic interest. the state portfolio, DUUDI prepared an Annual Report on the operations of strategic companies and companies of special interest for the Republic of Croatia for It is evident that encouraging indicators show positive trends which should 2014, to provide an insight to the public and competent government bodies into ultimately aim for the type of business that does not generate losses, and any their operations with respect to: further business rationalization should lead to significant positive developments in the economy, given that the analyzed company have been recognized as a key 1. The efficiency of exercising ownership rights of the Republic of Croatia by factor and a generator of economy growth, such as HEP, JANAF, ACI or Zračna the Croatian Government and centralized ownership bodies answerable to the luka Split. Croatian Government. We also highlight that amendments were made to the Decision of the Cro- 2. The ownership policy for the management of the companies owned by the atian Government on establishing a list of companies and other legal entities of Republic of Croatia is executed transparently and responsibly, professionally and strategic and special interest for the Republic of Croatia, published in the Offi- efficiently in accordance with the Companies Act and the principles of corpora- cial Gazette 74/15, according to which the above list for 2015 was amended and, te governance - under the guidelines of OECD - the Organization for Economic consequently, measures were implemented accordingly under the jurisdiction of Cooperation and Development (OECD The guidelines on Corporate Governance DUUDI in 2015. at State - Owned Enterprises, 2005), as the most accepted practice in European countries. MLADEN PEJNOVIĆ

2014. - ANNUAL REPORT ON THE OPERATIONS 5 6 2014. - ANNUAL REPORT ON THE OPERATIONS I. INTRODUCTION - DIVISION OF THE STATE PORTFOLIO - ACCORDING TO THE DECISION OF THE CROATIAN GOVERNMENT ON ESTABLISHING AA LIST OF COMPANIES AND OTHER LEGAL PERSONS OF STRATEGIC AND SPECIAL INTERESTS FOR THE REPUBLIC OF CROATIA

In 2014, in the portfolio of the Republic of Croatia which is under the division Legal persons Temeljni kapital % RH of the jurisdiction of the State Administrative Office for State Property Management (DUUDI), there were 59 companies and legal persons divided into three categories, ac- Hrvatske vode Waters Law on (NN 153/09) 100 cording to the Decision of the Croatian Government on establishing a list of compa- Croatian Bank for Reconstruction and HBOR(NN138/06) 100 nies and other legal persons of strategic and special interest for the Republic Croatia Development (HBOR) (Official Gazette No. 120/2013), and those are the following: State agency for deposit insurance and DAB(NN Act 44/94) 100 bank rehabilitation (DAB) A) Companies (21) and other legal persons (6) of strategic interest for the Repu- blic of Croatia, for which there are long-term social need and which are not scheduled Croatian compulsory oil stocks agency HANDA Act(NN 19/14) 100 for privatization. (HANDA) Financial agency (FINA) Act FINA (NN 117/01) 100 B) Companies of special interest in which the Republic of Croatia has a majority share (26) and are scheduled for restructuring, privatization or sale and exit on the Restructuring And Sale Center (CERP) Act (NN CERP 94/13) 100 capital market. B) Companies of special interest in which the Republic of Croatia has a majority C) Companies of special interest in which the Republic of Croatia has a less than stake in the share capital 50% share and whose shares are listed on the regulated capital market (6) and which are designated for possible further sale, and also purchase from a third party. COMPANIES AND OTHER LEGAL CAPITAL STOCK % OWNERSHIP % OWNERSHIP In the following tables all companies and legal entities of strategic and special PERSONS OF SPECIAL IN HRK OF THE REPUBLIC OF OTHER interest for the Republic of Croatia in the state portfolio are listed, 59 of them, whi- INTEREST FOR THE REPUBLIC OF CROATIA AND STATE HOLDERS ch are as stated above, divided into three categories. The registered share capital is OF CROATIA STATE HOLDERS shown in HRK, the share of the state portfolio is divided as the ownership of the REPRESENTD BY Republic of Croatia represented by the State Administrative Office for State Property DUUDI Management (DUUDI), as well as the share of other state holders, along with important remarks. In this Annual business report, as outlined in the introduction, the data ACI d.d., Opatija 399.816.000 78,91 is shown as of December 31, 2014. Janaf, HP, Croatia Airlines d.d., Zagreb 277.879.530 97,79 Hrvatska lutrija A) Companies and other legal persons of strategic interest for which there is long- ukupno 0,29 term social need and for which the Strategy on Management and Disposition of the Jadrolinija, Rijeka 209.054.148 100 Property Owned by the Republic of Croatia for the period from 2013 until 2017 (Offi- cial Gazette No. 76/2013) does not foresee privatisation. HZZO - 8,11 Kapitalni fond Luka Rijeka d.d., Rijeka 598.047.500 74,77 - 1,17 Jadrolinija COMPANIES AND OTHER LEGAL CAPITAL STOCK % OWNERSHIP % - 0,62 PERSONS OF STRATEGIC INTEREST IN HRK OF THE OWNERSHIP Zračna luka Osijek d.o.o., Klisa 26.208.000 55 FOR THE REPUBLIC OF CROATIA REPUBLIC OF OTHER Zračna luka Pula d.o.o., Pula 81.400.000 55 OF CROATIA STATE Zračna luka Rijeka d.o.o., AND STATE HOLDERS 144.203.100 55 Omišalj HOLDERS REPRESENTED Zračna luka Zadar d.o.o., Zadar 103.820.000 55 BY DUUDI Zračna luka Split d.o.o., Kaštel 322.200.000 55 Štafilić Companies Zračna luka Dubrovnik d.o.o., Hrvatske ceste d.o.o., Zagreb 107.384.800 100 375.050.000 55 Hrvatske autoceste d.o.o., Zagreb 131.140.100 100 Čilipi Autocesta Zagreb – Macelj d.o.o., HŽ Cargo d.o.o., Zagreb 531.006.500 100 88.440.400 49 Zagreb Zračna luka Zagreb d.o.o., Autocesta Rijeka – Zagreb d.d., 804.429.600 55 2.152.000.000 100 Zagreb Zagreb HP – Hrvatska pošta d.d., HŽ Infrastruktura d.o.o., Zagreb 224.188.000 100 952.636.100 100 Plovput d.o.o., Split 111.546.200 100 Zagreb Odašiljači i veze d.o.o., Zagreb 138.568.200 100 Luka Vukovar d.o.o., Vukovar 38.072.400 100 Hrvatska kontrola zračne plovidbe Brodarski institut d.o.o., 412.759.600 100 74.265.200 100 d.o.o., Velika Gorica Zagreb HŽ Putnički prijevoz d.o.o., Zagreb 75.627.300 100 Bina Istra d.d., Zagreb 25.641.720 HAC 14,78 Croatia banka d.d., Zagreb 474.600.000 DAB 100 Agencija za komercijalnu djelatnost Hrvatska pošta 232.000.000 100 Hrvatska poštanska banka d.d., d.o.o., Zagreb 966.640.400 71,64 -27,49 Croatia Zagreb JANAF d.d., Zagreb 2.821.442.400 52,22 CERP 26,28 Airlines -0,18 Podzemno skladište plina d.o.o., Plinacro 535.020.100 Croatia osiguranje d.d., Zagreb 601.575.800 31,26 Zagreb d.o.o 100 Hrvatski operator tržišta energije APIS IT d.o.o. 238.800.000 51 9.300.000 100 Zrakoplovno-tehnički centar d.o.o., Zagreb 274.962.000 100 Hrvatska elektroprivreda d.d., d.d., Velika Gorica 19.792.159.200 100 Zagreb Narodne novine d.d., Zagreb 289.519.000 100 Plinacro d.o.o., Zagreb 912.022.000 100 Hrvatska brodogradnja – Hrvatske šume d.o.o., Zagreb 1.171.670.000 100 5,060.000 100 Hrvatska lutrija d.o.o., Zagreb 50.000.000 100 Jadranbrod d.d., Zagreb Središnje klirinško depozitarno Imunološki zavod d.d., Zagreb 85.607.920 28,88 HZZO – 44,53 86.925.000 40,85 Fina 45,28 društvo d.d., Zagreb Club Adriatic d.o.o., Zagreb 120.947.400 100 Pomorski centar za elektroniku 14.954.900 100 Brijuni Rivijera d.o.o., Pula 4.500.000 66,67 d.o.o., Split Agencija Alan d.o.o., Zagreb 1.305.000 100 Park Prevlaka d.o.o. u stečaju 5.900.000 51

2014. - ANNUAL REPORT ON THE OPERATIONS 7 C) Companies of special interest in which the Republic of Croatia has a minority stake in the share capital

COMPANIES OF SPECIAL INTEREST IN WHICH THE REPUBLIC Capital stock in HRK % ownership of the % ownership OF CROATIA HAS A LESS THAN 50% OWNERSHIP AND WHOSE Republic of Croatia and of other state SHARES ARE LISTED ON THE REGULATED CAPITAL MARKET state holders represented holders Kapitalni fond Petrokemija d.d., Kutina 133.093.410 43,83 2,86 INA – Industrija nafte d.d., Zagreb 9.000.000.000 44,84 Đuro Đaković Holding d.d., Slavonski Brod 151.933.680 60,28 CERP 0,19 Kapitalni fond Končar - Elektroindustrija d.d., Zagreb 1.208.895.930 25,07 28,17 Kapitalni fond Podravka d.d., Koprivnica 1.084.000.600 20,51 5,94 Kapitalni fond Sunčani Hvar d.d., Hvar 333.651.520 32,36 0,35

II. PORTFOLIO OVERVIEW OF 49 COMPANIES OF STRATEGIC AND SPECIAL INTEREST FOR THE REPUBLIC OF CROATIA - BY ACTIVITY

As stated above, the overview of the state portfolio and its operations is Jadranski naftovod (JANAF) d.d., Zagreb related to 49 companies that are in accordance with the Decision of the Croa- Podzemno skladište plina d.o.o., Zagreb tian Government on establishing a list of companies and other legal persons of Hrvatski operator tržišta energije d.o.o., Zagreb strategic and special interest for the Republic of Croatia (Official Gazette No. Energetics (6) 94/2013) on December 31, 2014, comprised the following activities: Hrvatska elektroprivreda d.d., Zagreb Plinacro d.o.o., Zagreb INA – Industrija nafte d.d., Zagreb COMPANIES Business activity Agencija za komercijalnu djelatnost d.o.o. Hrvatske ceste d.o.o., Zagreb Agencija Alan d.o.o., Zagreb Hrvatske autoceste d.o.o., Zagreb Imunološki zavod d.d., Zagreb Autocesta Rijeka – Zagreb d.d., Zagreb HP – Hrvatska pošta d.d., Zagreb HŽ Infrastruktura d.o.o., Zagreb Narodne novine d.d., Zagreb Production, Plovput d.o.o., Split Croatia osiguranje d.d., Zagreb services and Hrvatska kontrola zračne plovidbe d.o.o., Velika Gorica Hrvatska lutrija d.o.o., Zagreb trade (11) HŽ Putnički prijevoz d.o.o., Zagreb Podravka d.d., Koprivnica Croatia Airlines d.d., Buzin (Grad Zagreb) Petrokemija d.d., Kutina Jadrolinija, Rijeka Đuro Đaković Holding d.d., Slavonski Brod Luka Rijeka d.d., Rijeka Končar - Elektroindustrija d.d., Zagreb Zračna luka Osijek d.o.o., Klisa Transport and communica- Adriatic Croatia Club International (ACI) d.d., Opatija Zračna luka Pula d.o.o., Pula tions (22) Club Adriatic d.o.o., Zagreb Zračna luka Rijeka d.o.o., Omišalj Tourism (4) Brijuni Rivijera d.o.o., Pula Zračna luka Zadar d.o.o., Zadar Sunčani Hvar d.d., Hvar Zračna luka Split d.o.o., Kaštel Štafilić Croatia banka d.d., Zagreb Zračna luka Dubrovnik d.o.o., Čilipi Banks (2) Hrvatska poštanska banka d.d., Zagreb HŽ Cargo d.o.o., Zagreb Hrvatske šume d.o.o., Zagreb Zrakoplovno-tehnički centar d.d. Središnje klirinško depozitarno društvo d.d., Zagreb Odašiljači i veze d.o.o., Zagreb Other (4) Brodarski institut d.o.o., Zagreb Pomorski centar za elektroniku d.o.o., Split Hrvatska brodogradnja – Jadranbrod d.d., Zagreb Agencija za podršku informacijskim sustavima i informacijskim tehnologijama (APIS IT) d.o.o., Zagreb KEY: Luka Vukovar d.o.o., Vukovar COMPANIES OF STRATEGIC INTEEST FOR THE REPUBLIC OF CROATIA COMPANIES OF SPECIAL INTEREST IN WHICH THE REPUBLIC OF CROATIA HAS A MAJORITY SHARE It is evident that the largest number of companies is in the transport and communications sector, 22 companies altogether, The extremely important COMPANIES OF SPECIAL INTEREST IN WHICH THE REPUBLIK OF CROATIA HAS A LESS THAN 50% OWNERSHIP AND HOSE SHARES ARE LISTED ON THE REGULATED CAPITAL MARKET energy sector consists of six companies while in the sector of production and trade 11 companies were active. There are 4 companies from the tourism sector, and in their companies of special interest there are banks. Due to the diversi- strategic and special interest for the Republic of Croatia, which is managed by ty of activities 4 companies are classified as a separate category, and together the State Administrative Office for State Property Management (DUUDI) and with other listed companies represent the state portfolio of 49 companies of shown in this publication.

8 2014. - ANNUAL REPORT ON THE OPERATIONS III. LAYOUT OF OPERATIONS OF 49 STRATEGIC AND TRADE COMPANIES OF SPECIAL INTEREST TO THE REPUBLIC OF CROATIA FROM 2011 TO 2014

Table: Revenues, expenditures, gross operating result of companies in the period from 2011 to 2014 (consolidated data, individual unaudited for 2014)

FINANCIAL RATIOS HRK IN THOUSANDS

COMPANIES AND OTHER LEGAL PERSONS OF STRATEGIC INTEREST FOR THE REPUBLIC OF CROATIA

COMPANIES Total Total Total Total Total Total Total Total Operating Operating Operating Operating revenue in revenue in revenue in revenue in expenditures expenditures expenditures expenditures result in result result result in 2011 2012 2013 2014 in 2011 in 2012 in 2013 in 2014 2011 in 2012 in 2013 2014 (gross) (gross) (gross) (gross) Hrvatske ceste d.o.o., 182.049 175.896 212.022 165.678 182.049 175.896 212.022 165.678 0 0 0 0 Zagreb* Hrvatske autoceste d.o.o., 1.352.130 1.363.744 1.446.393 1.508.919 1.352.130 1.363.744 1.439.791 1.508.919 0 0 6.602 0 Zagreb Autocesta Rijeka – Zagreb 602.913 615.533 744.640 703.015 973.591 854.888 724.433 627.017 -370.679 -239.356 20.207 75.998 d.d. HŽ Infrastruktura d.o.o., 1.539.886 1.358.023 1.320.459 1.824.553 1.614.537 1.603.512 2.126.912 1.850.963 -75.000 -245.488 -806.453 -26.410 Zagreb Plovput d.o.o., Split 77.470 77.876 78.720 78.202 68.093 70.968 69.933 76.517 9.377 6.908 8.787 1.685 Odašiljači i veze d.o.o., 235.108 236.985 235.311 253.465 252.811 219.583 217.950 240.812 -17.402 17.402 17.361 12.653 Zagreb Hrvatska kontrola zračne 599.128 594.760 642.196 704.795 583.550 588.771 639.086 679.591 15.578 5.989 3.110 25.204 plovidbe d.o.o., Zagreb HŽ Putnički prijevoz 1.317.165 1.316.101 940.158 1.070.252 1.394.967 1.879.602 1.282.982 1.066.691 -77.802 -563.500 -342.824 3.561 d.o.o., Zagreb Agencija za komercijalnu 313.160 350.998 362.793 307.595 280.215 311.761 319.902 275.404 32.945 39.236 42.891 32.191 djelatnost d.o.o. Janaf d.d., Zagreb* 444.931 487.549 475.727 489.735 369.216 385.702 362.477 371.507 75.715 101.847 113.250 118.228 Podzemno skladište plina 154.884 160.010 160.822 175.117 107.961 111.409 108.375 100.221 46.923 48.601 52.447 74.896 d.o.o., Zagreb Hrvatski operator tržišta 13.814 14.840 14.213 34.440 9.178 11.655 19.248 34.167 4.636 3.185 -5.035 273 energije d.o.o., Zagreb Hrvatska elektroprivreda 13.145.717 14.087.507 14.757.458 14.032.845 13.049.622 14.023.213 13.194.595 10.955.302 96.095 64.294 1.562.863 3.077.543 d.d., Zagreb* Plinacro d.o.o., Zagreb 631.767 633.565 619.473 576.362 561.687 548.905 466.676 444.551 70.080 84.660 152.797 131.811 (Unconsolidated) Hrvatske šume d.o.o., 2.414.265 2.065.210 2.145.033 2.145.138 2.405.004 2.044.410 2.030.873 1.993.994 9.261 20.800 114.160 151.144 Zagreb Hrvatska lutrija d.o.o., 444.580 457.565 508.244 484.271 439.673 476.202 492.569 462.232 4.907 -18.637 15.675 22.039 Zagreb Središnje klirinško depozitarno društvo d.d., 36.355 36.192 33.348 33.010 28.320 28.489 25.573 24.251 8.035 7.703 7.775 8.759 Zagreb Pomorski centar za elek- 13.965 13.688 12.195 7.941 19.994 22.775 17.411 12.907 -6.029 -9.087 -5.216 -4.966 troniku d.o.o., Split Agencija Alan d.o.o., Zagreb 80.501 78.011 319.526 301.809 78.131 58.881 209.537 202.138 2.370 19.130 109.989 99.671 TOTAL 23.599.788 24.124.053 25.028.731 24.897.142 23.770.729 24.780.366 23.960.345 21.092.862 -170.990 -656.313 1.068.386 3.804.280

COMPANIES OF SPECIAL INTEREST IN WHICH THE REPUBLIC OF CROATIA HAS A MAJORITY SHARE

2014. - ANNUAL REPORT ON THE OPERATIONS 9 COMPANIES OF SPECIAL INTEREST IN WHICH THE REPUBLIC OF CROATIA HAS A MAJORITY SHARE

COMPANIES Total Total Total Total Total Total Total Total Operating Operating Operating Operating revenue in revenue in revenue in revenue in expenditures expenditures expenditures expenditures result in result result result in 2011 2012 2013 2014 in 2011 in 2012 in 2013 in 2014 2011 in 2012 in 2013 2014 (gross) (gross) (gross) (gross) Zračna luka Rijeka d.o.o., 17.172 13.520 16.292 15.231 16.327 16.364 17.406 14.079 845 -2.844 -1.114 1.152 Omišalj Zračna luka Zadar d.o.o., 33.830 43.485 54.485 52.783 29.992 36.112 46.314 49.158 3.838 7.373 8.171 3.625 Zadar Zračna luka Split d.o.o., 189.138 203.938 216.263 245.534 149.132 157.443 168.849 181.216 40.006 46.495 47.414 64.318 Kaštel Štafilić Zračna luka Dubrovnik 206.506 225.674 219.330 235.633 179.766 200.018 184.339 192.599 26.740 25.656 34.991 43.034 d.o.o., Čilipi HŽ Cargo d.o.o., Zagreb 1.512.134 1.485.807 1.339.252 1.298.685 1.508.037 1.752.798 1.607.802 1.409.590 3.129 -267.155 -268.550 -110.905 HP – Hrvatska pošta d.d., 1.654.330 1.595.997 1.763.988 1.586.673 1.633.136 1.619.044 1.731.069 1.501.908 21.194 -23.047 32.919 84.765 Zagreb (Unconsolidated) Luka Vukovar d.o.o., 14.664 16.025 13.521 11.684 14.369 14.909 13.256 13.162 295 1.116 265 -1.478 Vukovar Brodarski institut d.o.o., 61.127 48.498 38.938 40.017 61.069 60.977 38.817 39.831 58 0 121 186 Zagreb Croatia banka d.d., Zagreb 129.998 111.866 141.291 172.344 143.927 238.228 165.935 167.208 -13.929 -126.362 -24.644 5.136 Hrvatska poštanska banka 1.503.471 1.543.585 1.460.259 1.442.335 1.423.082 1.441.684 1.423.891 2.072.697 80.389 101.901 36.368 -630.362 d.d., Zagreb Croatia osiguranje d.d., 3.566.345 3.500.238 3.305.210 3.218.505 3.408.068 3.333.975 3.519.937 3.775.085 158.277 166.263 -214.727 -556.580 Zagreb APIS IT d.o.o., Zagreb 236.508 192.729 216.934 213.433 220.232 172.860 196.096 195.538 18.450 19.869 20.838 17.895 Zrakoplovno-tehnički 32.544 34.012 63.991 65.630 36.245 39.701 63.636 65.151 -3.701 -5.689 355 479 centar d.d., Velika Gorica Narodne novine d.d., 409.940 382.600 401.501 434.607 399.725 373.136 385.763 422.450 10.215 9.464 15.738 12.157 Zagreb Hrvatska brodogradnja – 6.951 10.058 10.819 6.275 6.696 5.400 5.893 6.020 255 4.658 4.926 255 Jadranbrod d.d., Zagreb Imunološki zavod d.d., 92.991 66.247 48.460 20.181 92.980 79.522 70.119 41.268 11 -13.275 -21.659 -21.087 Zagreb Club Adriatic d.o.o., Zagreb 42.179 37.950 45.920 38.564 41.720 49.610 45.828 62.706 459 -11.660 92 -24.142 Brijuni Rivijera d.o.o., Pula* 1.980 8.406 9.397 8.682 1.976 6.603 6.506 6.612 4 1.803 2.891 2.070 TOTAL 12.978.678 12.658.089 12.315.062 12.015.449 12.581.275 13.189.761 12.629.026 13.080.339 398.608 -519.357 -313.964 -1.064.890

COMPANIES OF SPECIAL INTEREST IN WHICH THE REPUBLIC OF CROATIA HAS LESS THAN 50% OWNERSHIP AND WHOSE SHARES ARE LISTED ON THE REGULATED CAPITAL MARKET

The Strategy on Management and Disposition of the Property Owned by reports for the previous year are adoption related to the generated business Disposition of the Property Owned by the Republic of Croatia, in companies of ted, shown below is the 2014 summary results is shown before tax. the Republic of Croatia for the period the state portfolio the objective is to ge- of the consolidated unaudited total from 2013 to 2017, defined the objectives nerate economic growth, development, revenues, total expenditures and ope- The data in the part of the indivi- of corporate governance and the cor- employment and financial benefits. rating results achieved in 2014 for 49 dual overview of companies related to porate management of companies of companies. board members and members of the strategic and special interest for the Re- The layout of operations of the supervisory boards, ownership structu- public of Croatia was governed by laws state portfolio of 49 strategic and trade For all of the Companies the con- re and associated, i.e. dependent compa- and subordinate legislation, especially companies of special interest for the Re- solidated data is presented, except for nies ar shown as of December 31, 2014. by the Companies Act (Official Gazette public of Croatia provides insight into Plinacro d.o.o. and Hrvatska posta d.d., No. 152/2011, 111/2012, 68/2013) and the the realization of this goal, especially ob- since their subsidiaries, Podzemno skla- Act on Management and Disposal of serving the trends during the four-year diste plina d.o.o. and Hrvatska poštan- Assets owned by the Republic of Croatia period from 2011 to 2014. ska banka d.d. are listed as strategic or (Official Gazette No. 94/2013). trade companies of special interest for Considering that August 31 is the the Republic of Croatia. In accordance with the aforemen- statutory deadline for the Companies’ tioned Strategy on Management and assembly meeting where all the Annual Also, please note that the informa-

10 2014. - ANNUAL REPORT ON THE OPERATIONS III.I TOTAL REVENUES, EXPENDITURES AND OPERATING RESULTS - 49 STRATEGIC AND COMPANIES OF SPECIAL INTEREST TO THE REPUBLIC OF CROATIA FROM 2011 TO 2014

The following is a display of total revenues, total expenditures and gross pro- Graph: Total revenue of 49 strategic and trade companies of special interest fit or loss (operating result) of the encompassed portfolio of the Republic of Croatia by category for the period from 2011 to 2014, according to the division into categories. Revenue od the encompassed portfolio of the Republic of Croatia Table: Total revenue of the portfolio of the Republic of Croatia of 49 strategic from 2011 to 2014 and trade companies of special interest by category 45.000.000 a) COMPANIES OF STRATEGIC INTEREST FOR THE REPUBLIC 40.000.000 OF CROATIA REVENUE OF THE 2011 2012 2013 2014 35.000.000 ENCOMPASSED PORTFOLIO 30.000.000 b) COMPANIES OF SPECIAL INTEREST 25.000.000 OF THE REPUBLIC OF CROATIA IN WHICH THE REPUBLIC OF CROATIA HAS A MAJORITY SHARE (HRK in thousands) 20.000.000

15.000.000 COMPANIES OF STRATEGIC c) COMPANIES OF SPECIAL INTEREST 10.000.000 IN WHICH THE REPUBLIC OF CROATIA INTEREST FOR THE REPUBLIC 23.599.788 24.124.053 25.028.731 24.897.142 HAS A LESS THAN 50% SHARE AND 5.000.000 WHOSE SHARES ARE LISTED ON THE OF CROATIA REGULATED CAPITAL MARKET 0 2011 2012 2013 2014 COMPANIES OF SPECIAL INTEREST IN WHICH THE Graph: Overview of total revenue movements of strategic and trade companies in the 12.978.678 12.658.089 12.315.062 12.015.449 REPUBLIC OF CROATIA HAS majority ownership of the Republic of Croatia and the total revenue of the encompassed portfolio A MAJORITY SHARE 90.000.000 Total revenue of strategic 80.000.000 and trade companies in 36.578.466 36.782.142 37.343.793 36.912.591 70.000.000 majority ownership of the 60.000.000 Republic of Croatia 50.000.000 COMPANIES OF SPECIAL 40.000.000 INTEREST IN WHICH THE 30.000.000 REPUBLIC OF CROATIA HAS 20.000.000 A LESS THAN 50% SHARE 41.421.867 41.526.883 38.459.310 34.110.306 10.000.000 AND WHOSE SHARES ARE 0 LISTED ON THE REGULATED 2011 2012 2013 2014 CAPITAL MARKET Total revenue from strategic and trade companies in majority ownership of the Republic of Croatia Total revenue from strategic and trade companies of special interest in majority and minority Total revenues of strategic ownership of the Republic of Croatia and trade companies of From the graphic display it is evident that the revenue of strategic and trade special interest in majority 78.000.333 78.309.025 75.803.103 71.022.897 and minority ownership of companies of special interest in which the Republic of Croatia has a majority share the Republic of Croatia retained the same level of total revenue while the minority portfolio had a decrease in revenue in the past two years.

The total revenue of the presented companies from the portfolio of the Table: Total expenditures of 49 strategic and trade companies of special interest by category Republic of Croatia (49) in 2011 amounted to 78 billion HRK. In 2012, there was a small increase of 280 million HRK, and in the following years there was a de- EXPENDITURES OF THE 2011 2012 2013 2014 crease in total revenue. In 2014, total revenue amounted to 71 billion, which is ENCOMPASSED PORTFOLIO a 9% decrease compared to 2011. However, total revenue of strategic and trade OF THE REPUBLIC OF companies of special interest in which the Republic of Croatia has a majority sha- CROATIA (HRK in thousands) re remained at the same level, which means that there was a significant decrease COMPANIES OF STRATEGIC in total revenue of companies of special interest from a minority portfolio, whi- INTEREST FOR THE 23.770.729 24.780.366 23.960.345 21.092.862 ch makes almost 50% of the total revenue of the encompassed portfolio, and in REPUBLIC OF CROATIA which the Republic of Croatia does not have a significant influence on business COMPANIES OF SPECIAL INTEREST IN WHICH THE decisions. 12.581.275 13.189.761 12.629.026 13.080.339 REPUBLIC OF CROATIA HAS In 2014, the structure of total revenue slightly changed, and the companies A MAJORITY SHARE of strategic and special interest for the Republic of Croatia constitute 35% of to- Total expenditures of tal revenue, companies of special interest in which Croatia has a majority stake strategic and trade constitute 16% of total revenues and the companies of special interest in which companies in majority 36.352.004 37.970.127 36.589.371 34.173.201 Croatia has less than 50% ownership and whose shares are listed on the regulated ownership of the Republic of Croatia capital market constitute 48% of total revenue of the state portfolio of the Repu- blic of Croatia. COMPANIES OF SPECIAL INTEREST IN WHICH THE REPUBLIC OF CROATIA HAS By observing individual companies by category for the period from 2011 38.666.418 40.483.668 40.653.270 36.601.136 A LESS THAN 50% SHARE to 2014, the highest total revenue of strategic companies is realized by Hrvatska AND WHOSE SHARES ARE elektroprivreda d.d., Hrvatske šume d.o.o, HŽ Infrastruktura d.o.o, Hrvatske au- LISTED ON THE REGULATED toceste d.o.o. In the category of companies of special interest in which the Repu- Total expenditures of blic of Croatia has a majority share in the same period, the highest total revenue strategic and trade is realized by Croatia osiguranje d.d., HP – Hrvatska pošta d.d, Croatia Airlines companies of special interest 75.018.422 78.453.795 77.242.641 70.774.337 d.d., Hrvatska poštanska banka d.d. For companies of special interest from a mi- in majority and minority nority portfolio, the highest total revenue was realized by INA – Industrija nafte ownership of the Republic d.d. which generates 73% of total revenue in this category and its revenue decline of Croatia of 13% significantly affects the total revenue.

2014. - ANNUAL REPORT ON THE OPERATIONS 11 Total expenditures of the presented companies from the portfolio of the Table: Annual performance for 49 strategic and trade companies of special Republic of Croatia (49) in 2011 amounts to 75 billion HRK. In 2012 there was an interest by category increase of 3 billion HRK in total expenditures a decrease in total expenditures in the following years. In 2014, total expenditures amounted to 70 billion which was a OPERATING RESULT OF 2011 2012 2013 2014 decrease of 6% compared to 2011. THE ENCOMPASSED PORTFOLIO OF THE In total expenditures structure for the portfolio of the Republic of Croatia for REPUBLIC OF CROATIA the period from 2011 to 2014, the highest expenditures were realized in the category (HRK in thousands) of companies of special interest in which the Republic of Croatia has less than 50% ownership and whose shares are listed on regulated capital markets, which also COMPANIES OF makes over 50% of the total expenditures of the portfolio of the Republic of Croatia. STRATEGIC INTEREST -171.291 -656.313 1.068.386 3.804.280 FOR THE REPUBLIC OF By examining individual companies by category for the period from 2011 to CROATIA 2014, the largest total expenditures of strategic companies are constituted by: Hr- vatska elektroprivreda d.d., which compared to 2013, in 2014 decreased its expendi- COMPANIES OF SPECIAL INTEREST IN WHICH THE tures by 17%, as for Hrvatske šume d.o.o, HŽ Infrastruktura d.o.o, HŽ Putnički pri- 398.608 -519.357 -313.964 -1.064.890 REPUBLIC OF CROATIA jevoz d.o.o., the trend of expenditures is almost identical to the trend of revenues. HAS A MAJORITY SHARE

In the category of companies of special interest where the Republic of Croatia Total operating results has a majority share for the same period, the largest total expenditure is realized of strategic and trade by Croatia Osiguranje d.d., which had to compensate for lost provisions, and had companies in majority 227.317 -1.175.670 754.422 2.739.390 achieved significant growth in expenditures, and HP – Hrvatska pošta d.d i Croatia ownership of the Airlines d.d. Republic of Croatia

As with the revenue in the minority portfolio, the largest total expenditures COMPANIES OF SPECIAL were realized by INA – Industrija nafte d.d., followed by Podravka d.d. and Končar INTEREST IN WHICH THE Elektroprivreda d.d. REPUBLIC OF CROATIA HAS A LESS THAN 50% 2.755.449 1.089.442 -2.193.959 -2.490.830 Graph: Total expenditures for 49 strategic and trade companies of special in- SHARE AND WHOSE SHARES ARE LISTED ON terest by category THE REGULATED

Expenditures of the encompassed portfolio of the Republic of Croatia Total operating result

for the period from 2011 to 2014 of strategic and trade 45.000.000 companies of special a) COMPANIES OF STRATEGIC 2.982.766 -86.228 -1.439.537 248.560 40.000.000 interest in majority and INTEREST FOR THE REPUBLIC 35.000.000 OF CROATIA minority ownership of the

30.000.000 Republic of Croatia b) COMPANIES OF SPECIAL 25.000.000 INTEREST IN WHICH THE REPUBLIC OF CROATIA HAS A MAJORITY SHARE 20.000.000

15.000.000 c) COMPANIES OF SPECIAL INTEREST Total gross profit of the portfolio of the Republic of Croatia in 2011 amounted 10.000.000 IN WHICH THE REPUBLIC OF CROATIA HAS A LESS THAN 50% SHARE AND to 3 billion HRK which indicated that the total profit of 249 million HRK in 2014 5.000.000 WHOSE SHARES ARE LISTED ON THE REGULATED CAPITAL MARKET meant a significant decline. If we analyze the structure of these results, it is evident 0 that 90% of profits in 2011 were formed by the category of companies of special 2011 2012 2013 2014 interest in which the Republic of Croatia has less than 50% ownership and whose shares are listed on the regulated capital markets and the movements within the- Graph: Total expenditures for 49 strategic and trade companies of spe- se companies strongly reflect on the big picture. Since 2012, due to the situation cial interest in Syria, there was a write-off of assets which had a significant influence on the a negative operating result of INA-industrije nafte d.d. Since the general share of Expenditures from 2011 to 2014 INA- industrije nafte d.d. in total revenue accounted for almost three-quarters of 90.000.000 the minority portfolio, it is noticeable how the total portfolio was sensitive to the 80.000.000 events in the region. 70.000.000 60.000.000 If the operating results of strategic and trade companies from the majority 50.000.000 portfolio of the Republic of Croatia are analyzed, it is evident that in 2012 a total loss 40.000.000 of 1.2 billion HRK was recorded, the companies that significantly contributed to the loss were Croatia Airlines d.d., HŽ Cargo d.o.o., Croatia banka d.d., Autocesta Rijeka 30.000.000 – Zagreb d.d., HŽ Infrastruktura d.o.o., and HZ Putnički prijevoz d.o.o. The largest 20.000.000 share in a positive result out of these categories was achieved by Croatia osiguranje 10.000.000 d.d., Luka Rijeka d.d., Hrvatska poštanska banka d.d. te Zračna luka Split d.o.o. 0 2011 2012 2013 2014 Total expenditures from strategic and trade companies in majority ownershio of the Republic of Croatia In 2013, gross loss of the covered portfolio is 1.4 billion HRK, but the realised Total expenditures from strategic and trade companies of special interest in majority and minority profits of companies of strategic and special interest in majority state ownership ownership of the Republic of Croatia was 0.8 billion HRK, to which contributed an excellent overall result of strategic companies in the amount of 1 billion HRK. Namely, companies of special interest The graph shows a slight increase in expenditures at the beginning of the coin majority state ownership were not able to achieve a positive result but merely to vered period followed by a significant decline in companies of strategic and special reduce loss. In 2013, the companies that have achieved the highest gross loss were interest in which the Republic of Croatia has a majority share and also in minority HZ Cargo d.o.o., Croatia osiguranje d.d., Croatia banka d.d. and Imunološki zavod portfolio companies. d.d,, and by far the largest profit was obtained by Hrvatska elektroprivreda d.d. Alre- ady in 2013, a more positive trend was evident in the results of companies that have reduced losses have become profit-makers such as HP Hrvatske pošte d.d.

In 2014 the total revenue of the covered portfolio is 249 million HRK, where an impact of minority portfolio companies is also visible, but unfortunately with a gross loss of 2.5 billion HRK. If we take into account the companies in which the state has a majority stake and which are of strategic and special importance for the Republic of Croatia, we come to a operating results, profit, amounting in the amount of 2.7 billion HRK.

12 2014. - ANNUAL REPORT ON THE OPERATIONS Companies of strategic and special interest in the majority ownership of the Repu- nies of strategic interest for the Republic of Croatia, which in 2014 amounted to a blic of Croatia who obtained the most significant losses in 2014 are most certainly record 3.8 billion HRK. the Hrvatska poštanska banka d.d. and Croatia osiguranje d.d. (with the sale of shares as of June 3, 2014, the Republic of Croatia does not have a majority share), pri- It is important to emphasize that some of the companies’ operations that in marily due to the cleansing of the balance sheet and HZ Cargo d.o.o., Club Adriatic 2011 and 2012 accounted for the largest losses, in 2014 obtained a positive business d.o.o., and Imunoloski zavod d.d. which have contributed the most that the category revenue, principally Autocesta Rijeka - Zagreb d.d., HŽ Putnički prijevoz d.o.o., Cro- of companies of special interest in majority ownership of the Republic of Croatia, atia Airlines d.d., and Croatia banka d.d. ended the year 2014 with a loss of 1 billion HRK. Note that the operating results of Hrvatske ceste d.o.o., Hrvatske autoceste In 2014, a reduction of losses in certain companies is evident, this primarily d.o.o. i HŽ Infrastruktura d.o.o. is calculated in accordance with the relevant laws in includes HZ Infrastruktura d.o.o., Hrvatski operater tržišta energije d.o.o., Zračna favour or at the expense of public capital. Yet the goal for the upcoming period is to luka Pula d.o.o., Zračna luka Rijeka d.o.o., HZ Cargo d.o.o., Zračna luka Zagreb d.o.o., increase the total revenue and rationality of overall operations and it is also impor- Croatia banka d.d., Sunčani Hvar d.d. and an increase in profit primarily for HEP tant that the companies designated for privatization or restructuring intensify their d.d., which compared to 2013 in 2014, obtained a 50% higher profit, and with the actions according to the specified plans. amount of 3 billion HRK accounted for the majority of the total profits of compa-

Graph: Operating result of 49 strategic and trade companies of special interest by category

Operating results od the encompassed portfolio from 2011 to 2014 (HRK in thousands)

4.000.000

a) COMPANIES OF STRATEGIC 3.000.000 INTEREST FOR THE REPUBLIC OF CROATIA 2.000.000 b) COMPANIES OF SPECIAL INTEREST IN WHICH THE 1.000.000 REPUBLIC OF CROATIA HAS A MAJORITY SHARE

0 c) COMPANIES OF SPECIAL 2011 2012 2013 2014 INTEREST IN WHICH THE -1.000.000 REPUBLIC OF CROATIA HAS A LESS THAN 50% SHARE AND WHOSE SHARES ARE -2.000.000 LISTED ON THE REGULATED CAPITAL MARKET

-3.000.000

By monitoring the individual categories of companies, there is an obvious vities of these companies. A negative trend was expressed in the operating perfor- progress in the operations of companies of strategic interest for the Republic of mance of companies of the minority portfolio, but as was previously mentioned, Croatia. In the category of companies of special interest in which the Republic of INA-industrija nafte d.d had the greatest influence on the result of that particular Croatia has a majority share gross loss was recorded for all periods except in 2011, category. The Republic of Croatia, as non-controlling interest holder in companies and the Republic of will have to devote even more attention to the operating acti- of the third category, is not in a position of making key business decisions.

Operating results from 2011 to 2014 ( HRK in thousands ) 3.500.000 3.000.000 2.500.000 2.000.000 1.500.000 1.000.000 500.000 0 -500.000 2011 2012 2013 2014 -1.000.000 -1.500.000 -2.000.000 Total operating results from strategic and trade companies in majority ownership of the Republic of Croatia Total operating resultrs from strategic and trade companies of special interest in majority and minority ownershio of the Republic of Croatia

From the graph it is evident that the companies in which the Republic of Cro- ady been present in Croatia for the sixth year in a row, companies of strategic and atia has a significant impact (strategic and of special interest in which the Republic special interest in which the Republic of Croatia has a majority share surpassed of Croatia holds a majority share), in 2012 began to generate positive results and the the planned total revenue for 2014. This is the result of the implementation of the positive trend of companies of the minority portfolio started one year later. restructuring process, but also an even more active presence of state control mechanisms and the application of transparency in conducting business operations of Regardless of the economic situation and that the recession in 2014 had alre- companies as a form of state property.

2014. - ANNUAL REPORT ON THE OPERATIONS 13 III.II NUMBER OF EMPLOYEES - 49 COMPANIES OF STRATEGIC INTEREST FOR THE REPUBLIC OF CROATIA AS OF DECEMBER 31 FORM 2011 TO 2014

In the framework of implementation of the business rationalization and re- It is important to point out that the state portfolio includes a large number of structuring process the effects have affected the number of employees. The number companies, particularly in the tourism and transport sector, which during the year of employees in covered companies has decreased by 11% as of December 31 2014 employs seasonal workers, and the number of employees hired on an hourly basis compared to the same date in 2011. The gradual reduction of employees increased the is higher than the number of employees expressed on December 31. at 31.12. It is also productivity per employee and decreased expenditures per employee which resulted important to mention that companies such as INA-industrija nafte d.d. and Podravka in positive operating results. The goal is to optimize the number of employees and d.d. have within their group companies with headquarters outside the Republic of obtain positive effects of companies in the portfolio of the Republic of Croatia. Croatia.

Graph: Number of employees in the companies of the covered portfolio of he Republic of Croatia on december 31 from 2011-2014

NUMBER OF EMPLOYEES IN THE COMPANIES OF THE COVERED COMPANIES 2011 2012 2013 2014 PORTFOLIO OF THE REPUBLIC OF CROATIA ON DECEMBER 31 Agencija Alan d.o.o., Zagreb 19 19 19 19 Agencija za komercijalnu djelatnost d.o.o., Zagreb 1.628 1.608 1.527 1.556 Autocesta Rijeka – Zagreb d.d. 733 762 39 44 Hrvatska elektroprivreda d.d., Zagreb 13.784 13.585 11.877 12.060 Hrvatska lutrija d.o.o., Zagreb 1.357 1.366 1.325 1.345 Hrvatske autoceste d.o.o., Zagreb 2.827 2.780 2.503 3.059 Hrvatske ceste d.o.o., Zagreb 427 417 412 428 Hrvatska kontrola zračne plovidbe d.o.o., Zagreb 749 743 705 704 Hrvatske šume d.o.o., Zagreb 8.862 8.500 7.667 7.101 COMPANIES OF STRATEGIC IMPORTANCE FOR THE Hrvatski operator tržišta energije d.o.o., Zagreb 21 24 28 27 REPUBLIC OF CROATIA HŽ Infrastruktura d.o.o., Zagreb 7.865 7.308 7.525 7.253 HŽ Putnički prijevoz d.o.o., Zagreb 3.439 3.375 3.080 2.888 Janaf d.d., Zagreb 386 387 389 390 Odašiljači i veze d.o.o., Zagreb 299 291 289 292 Plinacro d.o.o., Zagreb 274 285 282 281 Plovput d.o.o., Split 267 272 278 279 Podzemno skladište plina d.o.o., Zagreb 62 68 72 75 Pomorski centar za elektroniku d.o.o., Split 122 73 83 70 Središnje klirinško depozitarno društvo d.d., Zagreb 45 42 42 46 ACI d.d., Opatija 353 343 352 354 APIS IT d.o.o., Zagreb 381 390 378 416 Brijuni Rivijera d.o.o., Pula 15 15 16 15 Brodarski institut d.o.o., Zagreb 166 165 167 139 Club Adriatic d.o.o., Zagreb 116 190 191 113 Croatia Airlines d.d., Zagreb 1.121 1.107 1.063 931 Croatia banka d.d., Zagreb 286 277 268 228 Croatia osiguranje d.d., Zagreb 3.795 3.962 3.922 4.214 HP – Hrvatska pošta d.d., Zagreb 10.664 10.543 9.664 9.335 Hrvatska brodogradnja – Jadranbrod d.d., Zagreb 14 13 13 12 Hrvatska poštanska banka d.d., Zagreb 1.071 1.155 1.114 1.120 COMPANIES OF SPECIAL INTEREST IN WHICH THE HŽ Cargo d.o.o., Zagreb 3.439 3.991 3.575 3.039 REPUBLIC OF CROATIA HAS A MAJORITY SHARE Imunološki zavod d.d., Zagreb 317 217 185 174 Jadrolinija Rijeka (do 2017. g.) 1.692 1.716 1.705 1.708 Luka Rijeka d.d., Rijeka 768 724 704 686 Luka Vukovar d.o.o., Vukovar 76 76 76 77 Narodne novine d.d., Zagreb 628 519 517 514 Zračna luka Dubrovnik d.o.o., Čilipi 365 405 407 404 Zračna luka Osijek d.o.o., Klisa 44 48 45 43 Zračna luka Pula d.o.o., Pula 144 164 159 123 Zračna luka Rijeka d.o.o., Omišalj 75 76 72 54 Zračna luka Split d.o.o., Kaštel Štafilić 401 397 408 399 Zračna luka Zadar d.o.o., Zadar 82 88 98 103 Zrakoplovno-tehnički centar d.d., Velika Gorica 191 193 201 214

14 2014. - ANNUAL REPORT ON THE OPERATIONS NUMBER OF EMPLOYEES IN THE COMPANIES OF THE COVERED COMPANIES 2011 2012 2013 2014 PORTFOLIO OF THE REPUBLIC OF CROATIA ON DECEMBER 31 Đuro Đaković Holding d.d., Slavonski Brod 963 1.099 1.142 997 COMPANIES OF SPECIAL INTEREST IN WHICH THE INA – Industrija nafte d.d., Zagreb 14.217 13.854 13.460 13.400 REPUBLIC OF CROATIA HAS A LESS THAN 50% SHARE Končar -Elektroindustrija d.d., Zagreb 3.956 3.897 2.783 3.662 AND WHOSE SHARES ARE LISTED ON THE REGULATED Petrokemija d.d., Kutina 2.312 2.481 2.294 1.793 CAPITAL MARKET Podravka d.d., Koprivnica 6.377 6.115 5.717 5.341 Sunčani Hvar d.d., Hvar 375 260 218 209

Graph: Summary of the number of employees in companies of the covered portfolio from 2011 to 2014

NUMBER OF EMPLOYEES IN THE COMPANIES OF THE COVERED PORTFOLIO OF THE REPUBLIC OF CROATIA 2011 2012 2013 2014.

a) Companies of strategic importance for the Republic of Croatia 43.166 41.905 38.142 37.917

b) Companies of special interest in which the Republic of Croatia has a majority share 26.204 26.774 25.300 24.415

Total a) + b) 69.370 68.679 63.442 62.332

c) Companies of special interest in which the Republic of Croatia has a less than 50% share amd whose 28.200 27.706 25.614 25.402 shares are listed on the regulated capital market

Total a) + b) + c) 97.570 96.385 89.056 87.734

It is clear that most employees are in the category of companies of strategic are listed on the regulated capital market, and finally companies of special interest interest for the entire period from 2011 to 2014, followed by companies of special in- in which the Republic of Croatia has a majority share. terest in which the Republic of Croatia has a less than 50% share and whose shares

Graph: Number of employees in companies of the covered portfolio from 2011 to 2014

Number of employees in companies of the covered portfolio from 2011 to 2014 120000

From the graph the decreasing trend in the total number of 100000 97570 96385 COMPANIES OF STRATEGIC employees for the period from 2011 to 2014 is evident. In 2011 a 89056 INTEREST FOR THE REPUBLIC total of 97.70 employees were employed, while in 2014, 87,734 wor- 87734 OF CROATIA kers were employed representing indicating a decrease 11%. In the 80000 COMPANIES OF SPECIAL category of companies of strategic and special interest for the Re- INTEREST IN WHICH THE public of Croatia, the largest number of employees for the period REPUBLIC OF CROATIA HAS A MAJORITY SHARE from 2011 to 2014 are constituted by Hrvatska elektroprivreda d.d., Hrvatske šume d.o.o and HŽ Infrastruktura d.o.o., followed by HP 60000 COMPANIES OF SPECIAL – Hrvatska pošta d.d, Croatia osiguranje d.d. and HŽ Cargo d.o.o. in INTEREST IN WHICH THE the category of companies of special interest in which the Republic REPUBLIC OF CROATIA HAS A LESS THAN 50% SHARE of Croatia has a majority share for the same period. 40000 AND WHOSE SHARES ARE LISTED ON THE REGULATED CAPITAL MARKET The largest number of employees in the category of companies of special interest in which the Republic of Croatia has a less 20000 TOTAL 50% share and whose shares are listed on the regulated capital market are constituted by the following companies: INA – Industrija nafte d.d., Podravka d.d and Končar elektroindustrija d.d.

0 Number of Number of Number of Number of employees employees employees employees in 2011 in 2012 in 2013 in 2014

Table: Number of employees in companies of the covered portfolio of the Republic of Croatia on December 31, from 2011 to 2014, according to the activity

NUMBER OF EMPLOYEES ACCORDING TO ACTIVITY IN THE COVERED PORTFOLIO OF THE REPUBLIC OF CROATIA 2011 2012 2013 2014

Transport and communications 25.507 25.396 23.805 23.214 Energetics 28.744 28.203 26.108 26.233 Production, services and trade 32.016 31.826 29.095 28.950 Tourism 859 808 777 691 Banks 1.357 1.432 1.382 1.348 Other 9.087 8.720 7.889 7.298 TOTAL 97.570 96.385 89.056 87.734

In the reporting period the number of employees according to activity are mostly employed in the production, services and trade sector, followed by energetics and transport and communications.

2014. - ANNUAL REPORT ON THE OPERATIONS 15 Employees by industry 2% 1% Transport and 9% telecommunications Graph: Number of employees in companies of the covered portfolio of the Re- Energetics public of Croatia on December 31, from 2011 to 2014, according to the activity 26% Production, services In the structure of the total number of employees for the same period, produ- and trade ction, services and trade comprise 33% of employees, energetics 29%, and transport 33% Tourism and communications 26% of employees. Banks 29% Other

IV. JOINT-STOCK COMPANIES LISTED ON THE REGULATED CAPITAL MARKET

In the present portfolio of companies owned by the Republic of Croatia, sha- dustrija d.d., Petrokemija d.d., Podravka d.d., Đuro Đaković Holding d.d. and Sunča- res of trade companies are listed on the regulated capital market and traded: ni Hvar d.d.

Jadranski naftovod (JANAF) d.d., Adriatic Croatia International club (ACI) d.d., In the graphical display for the movement of share prices on the regulated ca- Croatia Airlines d.d.*, Luka Rijeka d.d., Imunološki zavod d.d., Croatia osiguranje pital market in 2013 and 2014, the last monthly prices have been taken into account: d.d., Hrvatska poštanska banka d.d., INA – Industrija nafte d.d., Končar – Elektroin-

ACI d.d. 6.000 5.500 5.000 4.500 4.000 3.500 3.000 4 4 4 4 4 4 4 4 4 3 3 3 3 3 3 3 3 3 14 14 14 13 13 13 .1.20 1 .2.20 1 .3.20 1 .4.20 1 .5.20 1 .6.20 1 .7.20 1 .8.20 1 .9.20 1 .1.20 1 .2.20 1 .3.20 1 .4.20 1 .5.20 1 .6.20 1 .7.20 1 .8.20 1 .9.20 1 .10.2 0 .11.2 0 .12.2 0 .10.2 0 .11.2 0 .12.2 0 3 1 2 6 2 6 2 4 2 3 0 3 1 2 9 2 6 3 1 2 8 2 9 2 9 2 8 2 8 3 1 2 8 3 0 3 1 2 7 3 1 3 1 2 8 2 7

ACI-R-A

The share price of ACI d.d. increased since the beginning of 2014 compared to 2013, with continuous higher pricing values throughout the year. In April 2014, the company ACI d.d. announced the planned investments in 2014, with significant investments.

CROATIA OSIGURANJE d.d. 7.600 7.400 7.200 7.000 6.800 6.600 6.400 6.200 6.000 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 13 13 13 14 14 14 .1.20 1 .2.20 1 .3.20 1 .4.20 1 .5.20 1 .6.20 1 .7.20 1 .8.20 1 .9.20 1 .1.20 1 .2.20 1 .3.20 1 .4.20 1 .5.20 1 .6.20 1 .7.20 1 .8.20 1 .9.20 1 .10.2 0 .11.2 0 .12.2 0 .10.2 0 .11.2 0 .12.2 0 3 1 2 8 2 6 2 9 3 1 2 8 2 9 3 0 3 0 3 1 2 7 3 1 3 0 3 0 1 2 3 0 2 9 3 0 3 0 2 9 3 0 3 0 2 8 3 0

CROS-R-A

The share price of the company Croatia Osiguranje d.d. by the end of 2013 also marked an increased rise in value, and after completing the takeover of the majority package of company shares by Adris grupa d.d., in mid 2014, there has been a stagnation at higher price levels.

16 2014. - ANNUAL REPORT ON THE OPERATIONS ĐURO ĐAKOVIĆ HOLDING d.d.

90 80 70 60 50 40 30 20 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 13 13 13 14 14 14 .1.20 1 .2.20 1 .3.20 1 .4.20 1 .5.20 1 .6.20 1 .7.20 1 .8.20 1 .9.20 1 .1.20 1 .2.20 1 .3.20 1 .4.20 1 .5.20 1 .6.20 1 .7.20 1 .8.20 1 .9.20 1 .10.2 0 .11.2 0 .12.2 0 .10.2 0 .11.2 0 .12.2 0 3 1 2 8 2 9 2 9 3 1 2 8 3 1 3 0 3 0 3 1 2 8 3 1 3 0 3 0 3 0 3 1 2 9 3 0 3 1 2 9 3 1 3 1 2 8 3 1

DDJH-R-A

Shares of the company Đuro Đaković Holding d.d. in the said period had a decrease of value with greater fluctuations in value. In view of the above, in late 2014, after the Supervisory board accepted the restructuring plan, the company created a document Strategy and restructuring, along with a financial plan 2015-2019. In the same period an increase in share capital was carried out by issuing new shares with a nominal value of 20.00 HRK.

HRVATSKA POŠTANSKA BANKA d.d. 2.200 2.000 1.800 1.600 1.400 1.200 1.000 800 600 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 13 13 14 2.20 1 .1.20 1 .2.20 1 .3.20 1 .4.20 1 .5.20 1 .6.20 1 .7.20 1 .9.20 1 .2.20 1 .3.20 1 .4.20 1 .5.20 1 .6.20 1 .7.20 1 .8.20 1 .9.20 1 .10.2 0 .11.2 0 .10.2 0 3 1 1 3 2 2 4 2 1 4 2 6 3 0 1 9 1 0 2 2 1 2 0 3 0 2 9 3 0 3. 1 2 8 2 8 3 0

HPB-R-A

In the reporting period, the company shares of Hrvatska poštanska banka d.d., following a exponential growth in mid 2013, a continuing decline in value, and at the end of 2014 came to the lowest price level. The company is in the process of restructuring.

INA - Industrija nafte d.d. 4.600 4.400 4.200 4.000 3.800 3.600 3.400 3.200 3.000 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 13 13 13 14 14 14 .1.20 1 .2.20 1 .3.20 1 .4.20 1 .5.20 1 .6.20 1 .7.20 1 .8.20 1 .9.20 1 .1.20 1 .2.20 1 .3.20 1 .4.20 1 .5.20 1 .6.20 1 .7.20 1 .8.20 1 .9.20 1 .10.2 0 .11.2 0 .12.2 0 .10.2 0 .11.2 0 .12.2 0 3 1 2 8 2 8 2 9 3 1 2 8 3 1 2 9 3 0 3 1 2 8 3 1 3 0 3 0 2 7 3 1 2 9 3 0 3 1 2 9 3 0 3 1 2 8 3 1

INA-R-A

Company shares of INA d.d had mild fluctuations in price during the reporting period, while maintaining similar values. The impact on smaller fluctuations in share prices was driven by some significant news in 2014, such as the company entry into two major projects, the decision on outplacement of redundant workers, and the decision on delisting Global Depositary Receipts (GDR) from the London Stock Exchange.

2014. - ANNUAL REPORT ON THE OPERATIONS 17 IMUNOLOŠKI ZAVOD d.d. 110,00 100,00 90,00 80,00 70,00 60,00 50,00 40,00 30,00 3 3 3 3 4 4 4 4 4 4 13 13 14 14 14 .2013 .2013 .2014 .1.20 1 .2.20 1 .7.20 1 .9.20 1 .1.20 1 .2.20 1 .4.20 1 .5.20 1 .6.20 1 .9.20 1 .11.2 0 .12.2 0 .10.2 0 .11.2 0 .12.2 0 9. 5 3. 6 8. 7 2 2 5 2 3 2 7 3 1 2 6 2 3 3 0 1 2 2 9 2 9 1 9 3 1 2 6 3 1

IMZV-R-A

The value of shares of Imunološki zavod d.d. had a decrease in value in 2013, and the upward movement in share value since the beginning of 2014, which remain at approximately similar values by the end of the year. During 2014, a public call was sent to for expressing interest for the purchase of shares and recapitalization of the company Imunološki zavod d.d.

JANAF d.d. 4.000

3.500

3.000

2.500

2.000 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 13 13 13 14 14 14 14. .1.20 1 .2.20 1 .3.20 1 .4.20 1 .5.20 1 .6.20 1 .7.20 1 .8.20 1 .9.20 1 .2.20 1 .3.20 1 .4.20 1 .5.20 1 .6.20 1 .7.20 1 .8.20 1 .9.20 1 .10.2 0 .11.2 0 .12.2 0 .10.2 0 .11.2 0 .12.2 0 .01.2 0 3 1 2 8 2 5 2 6 3 1 2 7 3 0 3 0 2 6 2 8 3 1 3 0 2 3 3 0 3 1 2 8 3 0 3 1 2 9 3 1 3 1 2 8 3 1 2 7

JNAF-R-A

After stagnation, the share of the company Janaf d.d., from the beginning of 2014. had a continuous increase, with small price fluctuation, and stronger growth in the last half of the year when it reached its highest value of 3.900 HRK. In September 2014, the company JANAF d.d., decided to increase the share capital by 30.3 million HRK, with an increase of the nominal value of shares from 2.770 to 2.800 HRK.

KONČAR - Elektroindustrija d.d. 800 750 700 650 600 550 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 13 13 13 14 14 14 .1.20 1 .2.20 1 .3.20 1 .4.20 1 .5.20 1 .6.20 1 .7.20 1 .8.20 1 .9.20 1 .1.20 1 .2.20 1 .3.20 1 .4.20 1 .5.20 1 .6.20 1 .7.20 1 .8.20 1 .9.20 1 .10.2 0 .11.2 0 .12.2 0 .10.2 0 .11.2 0 .12.2 0 3 1 2 8 2 9 2 9 3 1 2 7 3 1 2 9 3 0 3 1 2 8 3 1 3 0 3 0 3 0 3 1 2 9 2 9 3 1 2 8 3 1 3 1 2 8 3 0

KOEI-R-A

Shares of the company Končar elektroindustrija d.d. in the reporting period had extremely mild oscillations with almost insignificant changes in the share price. During 2014, there was a share capital increase of 180 million HRK, and an increase in the nominal value of shares from 400.00 HRK to 470.00 HRK.

18 2014. - ANNUAL REPORT ON THE OPERATIONS LUKA RIJEKA d.d.

145 135 125 115 105 95 85 75 65 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 13 13 13 14 14 14 .1.20 1 .2.20 1 .3.20 1 .4.20 1 .5.20 1 .6.20 1 .7.20 1 .8.20 1 .9.20 1 .1.20 1 .2.20 1 .3.20 1 .4.20 1 .5.20 1 .6.20 1 .7.20 1 .8.20 1 .9.20 1 .10.2 0 .11.2 0 .12.2 0 .10.2 0 .11.2 0 .12.2 0 3 1 2 8 2 9 2 9 3 1 2 8 3 1 3 0 2 7 3 0 2 8 3 1 3 0 3 0 3 0 3 1 2 9 2 9 3 1 2 9 3 1 3 1 2 8 3 0

LKRI-R-A

In the reporting period, especially from the beginning of 2014, shares of Luka Rijeka d.d. had a continuous decrease of share value. During 2014, the company Luka Rijeka d.d. had gone under restructuring, and a reduction of share capital was carried out, as well as a reduction in the nominal value of shares from 100 HRK to HRK 40.

PETROKEMIJA d.d.

270 220 170 120 70 20 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 13 13 13 14 14 14 .1.20 1 .2.20 1 .3.20 1 .4.20 1 .5.20 1 .6.20 1 .7.20 1 .8.20 1 .9.20 1 .1.20 1 .2.20 1 .3.20 1 .4.20 1 .5.20 1 .6.20 1 .7.20 1 .8.20 1 .9.20 1 .10.2 0 .11.2 0 .12.2 0 .10.2 0 .11.2 0 .12.2 0 3 1 2 8 2 8 2 9 3 1 2 8 3 1 3 0 3 0 3 1 2 8 3 1 3 0 3 0 3 0 3 1 2 9 3 0 3 1 2 8 3 1 3 1 2 8 3 1

PTMK-R-A

In the reporting period the company shares of Petrokemija d.d. recorded a significant decrease in value. The restructuring is still in process, as well as the search for potential partners.

PODRAVKA d.d. 360 340 320 300 280 260 240 220 200 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 13 13 13 14 14 14 .1.20 1 .2.20 1 .3.20 1 .4.20 1 .5.20 1 .6.20 1 .7.20 1 .8.20 1 .9.20 1 .1.20 1 .2.20 1 .3.20 1 .4.20 1 .5.20 1 .6.20 1 .7.20 1 .8.20 1 .9.20 1 .10.2 0 .11.2 0 .12.2 0 .10.2 0 .11.2 0 .12.2 0 3 1 2 8 2 9 2 9 3 1 2 8 3 1 3 0 3 0 3 1 2 8 3 1 3 0 3 0 3 0 3 1 2 9 3 0 3 1 2 9 3 1 3 1 2 8 3 0

PODR-R-A

Company shares of Podravka d.d. in the reporting period did not register excessive price fluctuations in the price, but with a constant increase in value. During 2014, the company went through restructuring, and in that the merged with 4 companies in which it had a 100% share in ownership and fabricated a program for the outplacement of redundant employees. The company concluded a contract with Zagrebačka banka which then became the Specialist of the company on the Zagreb Stock Exchange. After the EU accession of the Republic of Croatia, the company made the decision to suspend production in Poland.

2014. - ANNUAL REPORT ON THE OPERATIONS 19 SUNČANI HVAR d.d. 27 25 23 21 19 17 15 13 11 9 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 13 13 14 14 14 2.20 1 .1.20 1 .2.20 1 .3.20 1 .4.20 1 .5.20 1 .6.20 1 .7.20 1 .8.20 1 .9.20 1 .1.20 1 .2.20 1 .3.20 1 .4.20 1 .6.20 1 .7.20 1 .8.20 1 .9.20 1 .10.2 0 .11.2 0 .10.2 0 .11.2 0 .12.2 0 3 1 1 9 2 8 2 6 2 4 2 7 3 1 2 7 2 7 4. 1 3 1 2 1 2 6 3 0 2 6 3 1 2 3 0 2 9 2 7 3 1 2 6 3 1

SUNH-R-A

The trend of movement of shares of Sunčani Hvar d.d. in the reported period is declining, with slight oscillations in value. With the extension of the deadline for implementation of the pre-settlement agreement, at the end of 2014 a new Plan of financial restructuring was adopted.

* The graph of share price movement of Croatia Airlines d.d. in 2014 was not shown for the reason that it was extremely rarely traded, there were four transactions with 10 shares and the last recorded value as of December 30, 2014. was at 100.00 HRK. At the end of 2014, the Decision on the elimination of all preferred shares of Croatia Airlines d.d. was made.

Financial reports and other information, in accordance with the regulations, for those joint-stock companies are published on the website of the Croatian Financial Services Supervisory Agency, the Zagreb Stock Exchange and on the company websites.

20 2014. - ANNUAL REPORT ON THE OPERATIONS V. PORTFOLIO OVERVIEW – COMPANIES

Companies and other legal persons of strategic interest for the Republic of Croatia >>

2014. - ANNUAL REPORT ON THE OPERATIONS 21 22 2014. - ANNUAL REPORT ON THE OPERATIONS AGENCIJA ALAN d.o.o. www.aalan.hr Nike Grškovića 15, 10 000 Zagreb

Management Board: in the General Ownership structure Ivica Nekić, chairman Assembly: on December 31, 2014 Milan Knežević, member Ante Kotromanović, Defence Minister Supervisory Board: Ivan Vrdoljak, Ruža Vučić, head Minister of Economy Niko Raič, deputy Ranko Ostojić, DUUDI/HR Ante Modrić, member Minister of the Interior Ljudevit Herceg, member Vesna Pusić, Minister of Foreign and European Affairs Ivica Nekić Government Boris Lalovac, 100% representative Minister of Finance

GENERAL COMPANY INFORMATION INCOME STATEMENT (HRK in 2013 2014 thousands) Agencija Alan d.o.o. was founded in 1993 and its main activity is import and Operating revenues 307.689 286.351 export of weapons and military equipment. It operates with a stable profit gain. It has no subsidiary companies. Operating expenditures 201.917 195.150 Financial revenues 11.837 15.458 COMPANY OBJECTS Financial expenditures 7.620 6.988 TOTAL REVENUES 319.526 301.809 The company specializes in import and export of arms and military equi- TOTAL EXPENDITURES 209.537 202.138 pment, as well as the sale of obsolete weapons and military equipment. Agen- PROFIT/LOSS BEFORE TAX 109.989 99.671 cija Alan d.o.o. is authorized to conclude contracts on production of arms Corporate Tax 22.022 19.990 and military equipment, as well as consulting and mediation in the field of NET PROFIT 87.967 79.681 production and trade of arms and military equipment.

The main guidelines, vision, mission and goals of the company Agencija ALAN FINANCIAL RATIOS 2013 2014 d.o.o. are to promote, represent and protect the interests of the Republic of Croatia LIQUIDITY RATIOS by performing the core business, the export of arms and military equipment, as Current ratio 5,10 5,95 well as new products of the Croatian military industry and obsolete weapons and military equipment for the Ministry of Defence, and actively promote the products Financial stability ratio 0,05 0,04 of the Croatian military industry on the domestic and foreign markets. LEVERAGE RATIOS Debt ratio 0,19 0,16 KEY FINANCIAL RATIOS Equity ratio 0,81 0,84 Financial ratio 0,23 0,19 Graph: Summary of total revenue, expenditures and operating results in the period from ACTIVITY RATIOS 2011 to 2014 (HRK in thousands) Total asset turnover ratio 1,62 1,68 EFFICIENCY RATIOS 400.000 Overall operations efficiency 1,52 1,49 300.000 PROFITABILITY RATIOS 200.000 NET RETURN ON ASSETS (ROA) 44,65% 54,24% 100.000 0 2011 2012 2013 2014 Agencija Alan d.o.o. obtained a gross profit of 99.7 million HRK in 2014 which is 9.38 percent less than the profit in 2013. TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT/LOSS Total revenues were 5.54 percent lower than the in 2013, while expenditu- Table: Summary of the abbreviated balance sheet, profit and loss account for 2013 and 2014 res were reduced by 3.53 percent. (HRK in thousands) USD. Domestic and international market conditions directly influenced BALANCE SHEET (HRK in thousands) 2013 2014 the decrease in total revenue in 2014, such as the inability to secure planning of BALANCE SHEET, ASSETS continuing operations with large customers with whom they operated in pre- LONG-TERM ASSETS 7.403 6.490 vious years, strong competition in terms of quality, price etc. In 2014, Agencija SHORT-TERM ASSETS 189.599 173.613 Alan d.o.o. made 45.5 million USD in exporting Croatian arms and military equipment. PREPAID EXPENSES AND ACCRUED 7 401 REVENUES Funds generated from the export of arms and military equipment, through TOTAL ASSETS 197.009 180.504 the purchase value of sold goods, are deposited in the state budget and used for BALANCE SHEET, LIABILITIES investment in the domestic military production. CAPITAL AND RESERVES 159.399 151.113 PROVISIONS 424 198 LONG-TERM LIABILITIES 0 0 SHORT-TERM LIABILITIES 37.186 29.193 DEFERRED EXPENSES AND 0 0 ACCRUED INCOME TOTAL – LIABILITIES 197.009 180.504

2014. - ANNUAL REPORT ON THE OPERATIONS 23 AKD - Agencija za komercijalnu www.akd.hr djelatnost d.o.o. Savska cesta 31, 10 000 Zagreb

Management Board: Government Ownership structure Anita Perković Škalic, representative in the on December 31, 2014 chairman General Assembly : Ranko Ostojić, Nadzorni odbor: Deputy Prime Minister 25,97% Zlatko Koštić, head and Minister of the Vitomir Bijelić, deputy Interior DUUDI/RH Željko Renić, member Marija Hrebac, DAB Ines Grković, member Director of the State Anita Barbara Ilijaš Juranić, Agency for Deposit Perković 74,03% Škalic member Insurance and Bank Resolution

GENERAL COMPANY INFORMATION BALANCE SHEET (HRK in thousands) 2013 2014 BALANCE SHEET, LIABILITIES Commercial Services Agency Ltd. began its history in 1991, as a manufacturer CAPITAL AND RESERVES 368.092 367.229 of personal documents and highly secured printing materials, by creating the first PROVISIONS 5.410 8.574 identity cards and travel documents for citizens of the Republic of Croatia, and has LONG-TERM LIABILITIES 15.766 8.946 kept this activity to this day. SHORT-TERM LIABILITIES 53.842 61.381 DEFERRED EXPENSES AND ACCRUED 8.416 2.333 AFFILIATED COMPANIES INCOME TOTAL LIABILITIES 451.526 448.463 • AKD Zaštita d.o.o., Zagreb, 100 % ownership, • Hrvatski novčarski zavod d.o.o., Sveta Nedjelja, AKD d.o.o. 57,40% INCOME STATEMENT (HRK in thousands) 2013 2014 ownership, HNB 42,60% ownership Operating revenues 356.135 301.982 • Indicium dooel, Skopje, 100% ownership Operating expenditures 317.287 273.672 Financial revenues 6.658 5.613 COMPANY OBJECTS Financial expenditures 2.615 1.732 TOTAL REVENUES 362.793 307.595 Commercial Services Agency Ltd. is a well-equipped company, which using its TOTAL EXPENDITURES 319.902 275.404 meticulous organization and application of cutting-edge workflow manufactures a range of products, e-solutions and services gathered in three main brands: AKD PROFIT/LOSS BEFORE TAX 42.891 32.191 Documents, AKD Smart cards and electronic solutions and AKD sSecure printing, Corporate Tax 6.789 6.624 which includes the fabrication of personal documents, smart cards and e-solutions NET PROFIT 36.102 25.567 and printing material protected against forgery and abuse. The company also has the capacity for commercial printing, graphic design and graphic preparation. FINANCIAL RATIOS 2013 2014 LIQUIDITY RATIOS KEY FINANCIAL RATIOS Current ratio 5,54 5,08 Graph: Summary of total revenue, expenditures and operating results in the period Financial stability ratio 0,39 0,36 from 2011 to 2014 (HRK in thousands) LEVERAGE RATIOS Debt ratio 0,15 0,16 400.000 Equity ratio 0,82 0,82 300.000 Financial ratio 0,19 0,19 200.000 ACTIVITY RATIOS 100.000 Total asset turnover ratio 0,81 0,69 0 EFFICIENCY RATIOS 2011 2012 2013 2014 Overall operations efficiency 1,13 1,12 TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT PROFITABILITY RATIOS NET RETURN ON ASSETS (ROA) 8,02% 5,72% Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 and 2014 (HRK in thousands) In 2014, AKD group generated a total revenue of 307.6 million USD, which is 15.21 percent lower than in 2013. The reason is the change in market conditions and BALANCE SHEET (HRK in thousands) 2013 2014 a drop in demand for travel documents in AKD Ltd. parent company, and affiliates BALANCE SHEET, ASSETS LONG-TERM ASSETS 151.591 135.331 also recorded a drop in revenues in providing security services and coin sales. In I. INTANGIBLE ASSETS 10.131 8.868 2014, total expenditures of AKD Group in amounted to 275.4 million HRK, which is II. TANGIBLE ASSETS 139.528 124.160 a 13.90 percent decrease compared to 2013. III. LONG-TERM FINANCIAL ASSETS 1.762 1.790 IV. CLAIMS 0 AKD Group obtained a net profit of 25.6 million HRK which is 29.18 percent V. DEFERRED TAX ASSETS 170 513 lower than compared to 2013. In 2014 AKD Ltd. parent company posted a net profit SHORT-TERM ASSETS 298.442 311.838 of 25.9 million HNK, HNZ Ltd. achieved a net profit of 0.556 million HRK and AKD I. INVENTORY 51.250 62.639 protection Ltd. recorded a loss in the amount of 0.956 million HRK. II. CLAIMS 81.425 86.575 III. SHORT-TERM FINANCIAL ASSETS 146.429 148.146 During 2014, AKD Ltd. parent company hired their own development reso- IV. CASH AT BANK AND IN HAND 19.338 14.478 urces on three strategic projects in the field of identification solutions. Investment PREPAID EXPENSES AND ACCRUED activities in 2014 are related to the procurement of software, IT and computer equ- 1.493 1.294 REVENUES ipment, machinery and work equipment. Investments are funded from the com- TOTAL ASSETS 451.526 448.463 pany’s assets.

24 2014. - ANNUAL REPORT ON THE OPERATIONS AUTOCESTA RIJEKA – www.arz.hr ZAGREB d.d. Širolina 4, 10 000 Zagreb

Management Board: Government Ownership structure Josip Šala, chairman representative on December 31, 2014 Slavica Grđan, member in the General Assembly: Suprvisory Board: Siniša Hajdaš Dončic, Renata Blažević, head Minister of Maritime Krunoslav Šams, deputy Affairs, Transport and DUUDI/HR Mladen Efendić, member Infrastructure (until December 17, 2014)

Josip Šala 100%

GENERAL COMPANY INFORMATION Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 and 2014 (HRK in thousands) The company began its operations on March 15, in the framework of restructuring the road network in the Republic of Croatia. Its economic purpose is closing BALANCE SHEET, LIABILITIES of the financial construction, construction, and management and maintenance of CAPITAL AND RESERVES -4.009.044 -3.933.040 the Rijeka - Zagreb motorway and its roads and support facilities on the road land PROVISIONS 16.502 15.887 as a part of the realization of the concession to be granted to the Company pur- LONG-TERM LIABILITIES 5.837.381 6.748.169 suant to the decision of the Government. The share capital is divided into 21.520 SHORT-TERM LIABILITIES 1.534.891 518.924 shares, with a nominal amount of 100.000 HRK made out to the name. DEFERRED EXPENSES AND ACCRUED 900.254 846.436 INCOME AFFILIATED COMPANY TOTAL LIABILITIES 4.279.984 4.196.376 INCOME STATEMENT (HRK in thousands) 2013 2014 HAC – ONC – associated company with Croatian Motorways Ltd., 27% ownership Operating revenues 740.746 695.319 Operating expenditures 484.888 438.996 COMPANY OBJECTS Financial revenues 3.894 7.696 The company Rijeka - Zagreb Motorway Ltd. is extremely important in conne- Financial expenditures 239.255 186.541 cting seaports with the capital, but contributes greatly to the direct benefits and ac- TOTAL REVENUES 744.640 703.015 hieving new possibilities of the Croatian economy, so basis of its operations is a safe, TOTAL EXPENDITURES 724.433 627.017 well-maintained and free-flowing motorway. Rijeka-Zagreb Motorway Ltd. manages PROFIT/LOSS BEFORE TAX 20.207 75.998 the section of a closed toll-collection system from Zagreb to Rijeka in the length of Corporate Tax 0 0 146.5 km at 12 toll stations and an open collection system at Krk bridge and Rupa toll NET PROFIT 20.207 75.998 stations. The company is acting in accordance with professional and ethical values, cooperating with others and growing in accordance with the development needs of FINANCIAL RATIOS 2013 2014 the Republic of Croatia. It strives in being a synonym of careful and responsible atti- LIQUIDITY RATIOS tude towards customers, the community, its employees and the environment. Current ratio 0,18 0,80 Financial stability ratio 2,18 1,33 KEY FINANCIAL RATIOS LEVERAGE RATIOS Debt ratio 1,73 1,74 Equity ratio 1.500.000 -0,94 -0,94 Financial ratio -1,84 -1,85 1.000.000 ACTIVITY RATIOS 500.000 Total asset turnover ratio 0,17 0,17 EFFICIENCY RATIOS 0 Overall operations efficiency 1,03 1,12 2011 2012 2013 2014 -500.000 PROFITABILITY RATIOS NET RETURN ON ASSETS (ROA) 0,47% 1,82% TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT

Graph: Summary of total revenue, expenditures and operating results in the period In 2014, Rijeka-Zagreb Motorway Ltd. 2014 obtained a total revenue of from 2011 to 2014 (HRK in thousands) 703.014,977 HRK, which is 5% more than was planned for 2014. The largest share of the total revenue structure is composed of toll collection revenue, which was 3% higher BALANCE SHEET (HRK in thousands) 2013 2014 than in 2013. Lower revenues in 2014 compared to 2013 are in the item of generated BALANCE SHEET, ASSETS revenue from reimbursement of expenses according to the concession contract for LONG-TERM ASSETS 3.981.413 3.755.457 the maintenance of the bypass motorway of the city of Rijeka as a result of refunds I. INTANGIBLE ASSETS 3.921.460 3.698.306 from previous years. In 2014, the according to evaluation, the company generated an II. TANGIBLE ASSETS 24.330 23.211 estimated 627.017,266 HRK of total expenditure, which was in the planned budget for III. LONG-TERM FINANCIAL ASSETS 35.623 33.940 2014, or 14% less than total expenditures in 2013. The decrease in total expenditures is a result of the implementation of the restructuring process of the Company by alloca- IV. CLAIMS 0 0 ting toll collection and regular highway maintenance tasks. The routine maintenance V. DEFERRED TAX ASSETS 0 0 service of the highway and toll collection is provided by Croatian motorways mainte- SHORT-TERM ASSETS 282.018 416.110 nance and tolling Ltd. (HAC ONC Ltd.), from February 1, 2014, following the takeover I. INVENTORY 393 219 of the subsidiary ARZ ON Ltd. During September 2014, a contract was drafted and II. CLAIMS 64.465 29.324 signed on providing regular maintenance services and toll collection, by which the III. SHORT-TERM FINANCIAL ASSETS 194.274 372.827 rights and obligations of the company Croatian motorways maintenance and tolling IV. CASH AT BANK AND IN HAND 22.886 13.740 Ltd. (HAC ONC Ltd.) are regulated, with an agreed monthly fee for a fixed amount. PREPAID EXPENSES AND ACCRUED 16.553 24.809 REVENUES The realized company profit in the amount of 75.997,710 will be used to cover TOTAL ASSETS 4.279.984 4.196.376 losses brought forward from previous years.

2014. - ANNUAL REPORT ON THE OPERATIONS 25 HEP – HRVATSKA www.hep.hr ELEKTROPRIVREDA d.d. Ulica grada Vukovara 37, 10 000 Zagreb

Management Board: Juraj Bukša, member Ownership structure Perica Jukić, chairman Ivo Uglešić, member on December 31, 2014 Zvonko Ercegovac, member Mirko Žužić, member Željko Štromar, member Jadranko Berlengi, member Saša Dujmić, member Government represen- Supervisory Board: tative in the General DUUDI/HR Nikola Bruketa, head Assembly: Igor Džajić, member Ivan Vrdoljak, Minister of Žarko Primorac, member Economy Perica Jukić 100%

GENERAL COMPANY INFORMATION • HEP – Trade d.o.o., BiH, electrical energy trading, 100% ownership • HEP – Trade d.o.o., Srbija, electrical energy trading, 100% ownership Hrvatska elektroprivreda d.d. is a company 100 percent ownership by the • HEP - KS sh.p.k, Kosovo, electrical energy trading, 100% ownership Republic of Croatia, founded in 1990 as a public company Hrvatska elektropri- • HEP – Telekomunikacije d.o.o., telecommunication services, 100% vreda d.d. for production, transmission, distribution of electricity and electri- ownership cal power system control. Hrvatska elektroprivreda d.d. is the national energy • HEP – Opskrba plinom d.o.o., wholesale gas market supply, 100% company, which for more than a century has engaged in the production, tran- ownership smission and distribution of electricity, and for the last few decades also in • TE Plomin d.o.o., production of electrical energy, 50% ownership supplying customers with heat and gas distribution. • LNG Hrvatska d.o.o., liquefied natural gas transactions, 50% ownership Hrvatska elektroprivreda d.d. is the founder and sole owner of the 16 • NE – Krško, Slovenija, production of electrical energy, 50% companies that make up the HEP group, combines management of HEP Gro- ownership up subsidiaries and retains ownership of the assets which are contractually transferred to the management of dependant companies or subsidiaries. The holding company (parent company) of HEP Group is Hrvatska elektroprivre- COMPANY OBJECTS da d.d., which performs the function of corporate management of HEP Group and guarantees the conditions for a safe and reliable electricity supply to cu- Two main activities of Hrvatska elektroprivreda d.d. are electric generation stomers. Within the HEP Group (managerial, accounting and legal) companies and supply. are clearly separated, which perform regulated activities (transmission and distribution) from non-regulated activities (production and supply). Hrvatska HEP Group has 4.212 MW of installed capacity for electricity generation and elektroprivreda d.d. is the co-owner of the Krško Nuclear Power Plant in the 1.670 MW for heat generation. Within the HEP Proizvodnja Ltd., there are 26 hydro Republic of Slovenia. power plants and eight thermal power plants that are fueled by heating oil, natural gas and coal. Hrvatska elektroprivreda d.d. has been focusing more and more on the production of energy from renewable energy sources. AFFILIATED COMPANIES In 2014, HEP Group completely fulfilled its mission of a safe, high-quality and • HEP – Proizvodnja d.o.o., Zagreb, production of electricity and heat reliable supply of energy to customers and achieved solid operating results. The energy, 100% ownership Group net profit is 2.5 billion HRK, and investment in the construction of new fa- • Hrvatski operator tržišta prijenosnog sustava d.o.o., Zagreb, cilities, and the replacement and reconstruction of existing facilities have reached transmission of electricity, 100% ownership a significant amount of 2 billion HRK. In its own production facilities 14.3 TWh • HEP – Operator distribucijskog sustava d.o.o., Zagreb, distribution of electricity was produced. A good availability of power plants, transmission and of electricity, 100% ownership distribution networks was achieved without significant disruptions in the supply • HEP – Opskrba d.o.o., Zagreb, electricity supply, 100% ownership of electricity, heat and gas. • HEP –Toplinarstvo d.o.o., Zagreb, production and distribution of heat energy, 100% ownership During 2014, the Project of the operational and strategic transformation of • HEP – Trgovina d.o.o., Zagreb, electricity trading and power plant HEP was initiated, and series of restructuring activities of the business system optimization, 100% ownership were conducted all related to adoption of regulations that govern the energy sector • HEP – Plin d.o.o., Osijek, gas supply and distribution, 100% (continuation of the process of certification of the Croatian Transmission System ownership Operator and activities of further harmonization of the position of HEP Distribu- • APO d.o.o. , environmental services, 100% ownership tion System Operator Ltd. and HEP Group in accordance with the legal provisions • HEP – ESCO d.o.o. management and financing of energy efficiency on the independence and on decision-making rights). projects, 100% ownership • Plomin Holding d.o.o., development of infrastructure of the Plomin Given the role of the Croatian energy leaders, in February HEP d.d., by Decisi- surrounding area, 100% ownership on of the Government of the Republic of Croatia, was designated as the supplier on • CS Buško Blato d.o.o., BiH, equipment maintenance of hydroelectric the wholesale gas market for the period until March 31, 2017. Hrvatska elektropri- power plants, 100% ownership vreda d.d., as the supplier on the wholesale market, as of April 1, 2014 ,under regula- • HEP – Odmor i rekreacija d.o.o., tourism and hospitality services, ted conditions sells gas to suppliers in a public service obligation of gas supply for 100% ownership the customer needs in the housing category and ensures a reliable and secure gas • HEP – NOC, education, training and housing and schooling services, supply. 100% ownership • HEP – Obnovljivi izvori energije d.o.o., production of electrical With the objective of maintaining a dominant share on the Croatian electricity energy, 100% ownership market, during 2014 HEP has worked intensively on improving services and deve- • Program Sava d.o.o., preparation services of selection of all-purpose loping and offering new, innovative products adapted to customers’ requirements real estate projects, 100% ownership and continued to implement a number of other activities in accordance with the • HEP – Trgovina d.o.o., Slovenija, electrical energy trading, 100% standards of sustainable development and social responsibility. Also, activities for ownership exiting the surrounding markets were prepared, which were expected to compen- • HEP – Magyarorsag Energia KFT, Hungary, electrical energy trading, sate the loss of part of the revenues on the Croatian market. 100% ownership

26 2014. - ANNUAL REPORT ON THE OPERATIONS Through a long-term investment cycle HEP Group strives to meet the de- FINANCIAL RATIOS 2013 2014 mands of the development of the energy sector in the Republic of Croatia with res- LIQUIDITY RATIOS pect to new circumstances, such as the increasing presence of other participants on the open market, especially in the supply of electricity and the production of Current ratio 1,04 1,40 electricity from renewable energy sources. During 2014, the development of the Financial stability ratio 1,18 1,13 project for the construction of Plomin Thermal Power Plant C-500 was continued, LEVERAGE RATIOS which, in accordance with the Act on strategic investment projects of the Republic Debt ratio 0,28 0,25 of Croatia, by decision of the Government’s decision on May 15, 2014, was announ- Equity ratio 0,57 0,62 ced as a project of strategic importance for the Republic of Croatia. Financial ratio 0,49 0,40 The improvement of financial management and proactive liquidity manage- ACTIVITY RATIOS ment has been recognized by the rating agencies Standard & Poor’s and Moody’s, Total asset turnover ratio 0,43 0,39 repeatedly affirmed the improved chances of HEP in 2014, which were awarded EFFICIENCY RATIOS in late 2013, despite the decline in the forecast for the movement of the country’s Overall operations efficiency 1,12 1,28 rating. PROFITABILITY RATIOS KEY FINANCIAL RATIOS NET RETURN ON ASSETS (ROA) 3,76% 6,88%

Graph: Summary of total revenue, expenditures and operating results in In 2014 a net profit of 2.46 billion HRK was realized, which is 1.16 billion HRK the period from 2011 to 2014 (HRK in thousands) more than in 2013 when it a net profit of 1.30 billion HRK was realized.

The largest contribution to the consolidated results of the Group was by electri- 20.000.000 cal energy activities, followed by gas activities, while the heating activities recorded a loss. 15.000.000 10.000.000 In addition to the operating revenue of 13.599.2 million HRK and the operating 5.000.000 expenditure of 10.398,7 million HRK an operation profit of 3.2 billion. HRK was reali- 0 zed, which is 826.8 million HRK more than in the previous year. 2011 2012 2013 2014

TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT Operating revenue decreased by 1.095,7 million HRK (7.5%) compared to 2013. The decline in operating revenue was primarily a result of reduced income from the sale of electrical energy to domestic customers. Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 Operating expenses of the Group decreased in to 1.922.6 million HRK (15.6%) in 2014. and 2014 (HRK in thousands) Due to favorable hydrological conditions, the drop in consumption and the loss BALANCE SHEET (HRK in thousands) 2013 2014 of market share and the reduction in the average price of fuel and electricity, purchase BALANCE SHEET, ASSETS cost and electric generation amounted to 2.842,7 million HRK, which is 1.953.3 million LONG-TERM ASSETS 30.701.948 30.779.160 HRK or 40.7% less than in 2013. I. INTANGIBLE ASSETS 140.895 150.172 From April 1, 2014, under regulated conditions, HEP started the activity of su- II. TANGIBLE ASSETS 29.613.789 29.727.643 pplying wholesale gas to suppliers who have an obligation of supply as a public servi- III. LONG-TERM FINANCIAL ASSETS 141.463 210.450 ce. The revenue from wholesale gas activities in 2014 amount to 689.6 million HRK. IV. CLAIMS 49.154 36.988 The reduction of monetary expenditures for the purchase of electricity and energy V. DEFERRED TAX ASSETS 756.647 653.907 fuel, further strengthened the Group’s liquidity and all obligations to suppliers were SHORT-TERM ASSETS 3.847.385 5.053.642 settled in average due date, and the investments were funded by the Group’s own funds without the need of a new long-term debt. I. INVENTORY 1.154.404 1.613.297 II. CLAIMS 2.059.738 1.922.345 In accordance with the operating results, all financial ratios as well as indicators III. SHORT-TERM FINANCIAL ASSETS 372.399 438.100 as well as indicators for contracted loans were attained at a satisfactory level. IV. CASH AT BANK AND IN HAND 260.844 1.079.900 PREPAID EXPENSES AND ACCRUED 22.107 23.916 REVENUES TOTAL ASSETS 34.571.440 35.856.718 BALANCE SHEET, LIABILITIES CAPITAL AND RESERVES 19.845.562 22.077.573 PROVISIONS 808.383 902.779 LONG-TERM LIABILITIES 6.088.546 5.253.564 SHORT-TERM LIABILITIES 3.694.897 3.597.427 DEFERRED EXPENSES AND ACCRUED 4.134.052 4.025.375 INCOME TOTAL LIABILITIES 34.571.440 35.856.718

INCOME STATEMENT (HRK in thousands) 2013 2014 Operating revenues 14.694.917 13.599.174 Operating expenditures 12.321.307 10.398.725 Financial revenues 62.540 433.671 Financial expenditures 873.288 556.577 TOTAL REVENUES 14.757.457 14.032.845 TOTAL EXPENDITURES 13.194.595 10.955.302 PROFIT/LOSS BEFORE TAX 1.562.862 3.077.543 Corporate Tax 264.658 612.119 NET PROFIT 1.298.204 2.465.424

2014. - ANNUAL REPORT ON THE OPERATIONS 27 HRVATSKA LUTRIJA d.o.o. www.lutrija.hr Ulica grada Vukovara 72, 10 000 Zagreb

Management Board: : Government Ownership structure Danijel Ferić, chairman representative in the on December 31, 2014 Dražen Kovač, member General Assembly: Oleg Valjalo, member Boris Lalovac, Minister of Finance Nadzorni odbor: Vedran Mornar, Vjekoslav Mrakovčić, Minister of Science, DUUDI/HR head Education and Sports Hrvoje Mršić, deputy Andrea Zlatar Violić, Ivica Prlender, member Minister of Culture Viktor Peršić, member 100% Danijel Ferić Jasminka Lojen, member

GENERAL COMPANY INFORMATION BALANCE SHEET, LIABILITIES 2013 2014 CAPITAL AND RESERVES 61.208 63.728 Hrvatska lutrija is a limited liability company for the organization and pre- PROVISIONS 27.966 31.823 paration of the games of chance and amusement games, and the systems, types LONG-TERM LIABILITIES 2.533 1.438 and conditions of the preparation of the games of chance are regulated by the SHORT-TERM LIABILITIES 178.033 111.690 Act on organisation of games of chance. DEFERRED EXPENSES AND 6.585 4.878 ACCRUED INCOME The sole founder and owner of the Company is the Republic of Croatia, in TOTAL-LIABILITIES 276.325 213.557 accordance with the Regulation on the establishment of Hrvatska lutrija d.o.o. There are no affiliated companies. INCOME STATEMENT (HRK in thousands) 2013 2014 COMPANY OBJECTS Operating revenues 506.660 482.785 Operating expenditures 490.839 458.688 Hrvatska lutrija d.o.o., on the market in the Republic of Croatia has been present Financial revenues 1.584 1.485 with a rich assortment of games (a variety of lottery games, betting games, slot mac- Financial expenditures 1.730 3.544 hines and in casinos). The company seeks to be competitive on the market, with its wide TOTAL REVENUES 508.244 484.270 range of products, innovation, application of modern technology and quality service. TOTAL EXPENDITURES 492.569 462.232 The preparation of games of chance in a controlled and socially responsible manner PROFIT/LOSS BEFORE TAX 15.675 22.038 generates funds for socially useful activities and also for humanitarian activities. Corporate Tax 4.694 5.736 KEY FINANCIAL RATIOS NET PROFIT 10.981 16.302

Graph: Summary of total revenue, expenditures and operating results in the period FINANCIAL RATIOS 2013 2014 from 2011 to 2014 (HRK in thousands) LIQUIDITY RATIOS Current ratio 1,04 1,00 600.000 Financial stability ratio 0,99 1,06 400.000 LEVERAGE RATIOS Debt ratio 0,65 0,53 200.000 Equity ratio 0,22 0,30 0 Financial ratio 2,95 1,78 2011 2012 2013 2014 -200.000 ACTIVITY RATIOS TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT Total asset turnover ratio 1,84 2,27 EFFICIENCY RATIOS Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 Overall operations efficiency 1,03 1,05 and 2014 (HRK in thousands PROFITABILITY RATIOS BALANCE SHEET (HRK in thousands) 2013 2014 NET RETURN ON ASSETS (ROA) 3,97% 7,63% BALANCE SHEET, ASSETS 91.077 102.340 I. INTANGIBLE ASSETS 10.028 9.430 The revenues generated in 2014 are by 5.4 percent lower than in 2013, prima- II. TANGIBLE ASSETS 75.150 86.005 rily due to reduced sales revenue, or revenue from games, which almost entirely III. LONG-TERM FINANCIAL ASSETS 857 707 consists of sales revenue. Expenditures have also decreased by 5 percent compared IV. CLAIMS 913 820 to 2013, which was largely the result of reduced material costs. V. DEFERRED TAX ASSETS 4.129 5.378 Notwithstanding the general decrease of both revenues and expenditures, SHORT-TERM ASSETS 171.796 101.030 in 2014 Hrvatska lutrija d.o.o gained profit which was significantly higher than the I. INVENTORY 1.547 1.377 profit realized in 2013. The profitability ratio of total assets has doubled which is II. CLAIMS 2.609 2.468 certainly an excellent business indicator. III. SHORT-TERM FINANCIAL ASSETS 5.050 6.451 IV. CASH AT BANK AND IN HAND 162.590 90.734 Realized investments were greater than in 2013, and the Management gave PREPAID EXPENSES AND 13.452 10.187 priority to investments that would recover their funds in the shortest period. By ACCRUED REVENUES performing its activity, the Company obtained significant funds which were depo- TOTAL ASSETS 276.325 213.557 sited in the state budget.

28 2014. - ANNUAL REPORT ON THE OPERATIONS HRVATSKE AUTOCESTE d.o.o. www.hac.hr Širolina 4, 10 000 Zagreb

Management Board: Government rep- Ownership structure Davor Mihovilić, chairman resentative in the on December 31, 2014 Marijan Sente, member General Assembly: Siniša Hajdaš Nadzorni odbor: Dončić, Minister Darko Liović, deputy of Maritime Affairs, Ivan Dadić, member Transport and DUUDI/HR Natasa Munitić, member Infrastructure Karlo Rukavina, member

100% Davor Mihovilić

GENERAL COMPANY OBJECTS informing the public on motorway mobility, by implementing the organization’s toll system, deciding on the use of road land plot and preparations for the awarding of the Croatian Motorways Ltd. manage motorways, construct them, is in charge of concession. The Company also takes into account the protection of the environment, reconstruction and maintenance, except for those motorways managed by the conce- the unrestrained use of roads and the cost-effectiveness, through effective operations ssionaire, in accordance with the provisions of special laws. The Company Croatian and protection of the financial interests of the Company itself, but also of the commu- Highways Ltd. is registered and started its business activity on April, 11 2001. nity. The operations of Croatian Motorways Ltd. in 2014 was marked with a continuation of the implementation of the Program of Company restructuring which began The Company was established based on the Decision of the Croatian Gover- in 2013, as well as the implementation of the Plan of construction and maintenance nment on the distribution and transformation of Croatian Road Administration in of motorways in 2014. It should be highlighted that from the third quarter of 2014, the company Croatian Motorways Ltd. and Hrvatske Ceste Ltd. During its founding Croatian Motorways Ltd. (HAC), based on the sector classification according to the in 2001, the Company took over the management of the 355.8 km of motorways, and European system of national and regional accounts (ESA 2010), has been classified in currently manages a total of 901.4 km of motorways. the central government subsector.

AFFILIATED COMPANIES KEY FINANCIAL RATIOS

• HAC ONC – Croatian motorways maintenance and tolling Ltd., 73% Graph: Summary of total revenue, expenditures and operating results in ownership the period from 2011 to 2014 (HRK in thousands) • BINA - ISTRA d.d., 14,8% ownership • BINA - FINCOM d.d., 44% ownership 2.000.000 COMPANY OBJECTS 1.500.000 1.000.000 For the management, maintenance and construction of motorways, the Com- 500.000 pany prepares expert support a four-year program of motorway construction and 0 maintenance, and also specializes in constructing and reconstructing, toll collection 2011 2012 2013 2014 on state roads, settlement of property-legal relations required for construction, recon- TOTAL REVENUES TOTAL EXPENDITURES OPERATING RESULT struction and maintenance of motorways and toll road facilities, ordinary and extraordinary maintenance of motorways and road facilities, protection of motorways and

HAC Group Public ownership Total HAC Group Public ownership Total BALANCE SHEET (HRK in thousands) 2013. 2013. 2013. 2014. 2014. 2014. BALANCE SHEET, ASSETS LONG-TERM ASSETS 197.721 44.854.599 45.052.320 262.103 44.199.820 44.461.923 I. INTANGIBLE ASSETS 6.939 0 6.939 2.059 9.025 11.084 II. TANGIBLE ASSETS 100.634 44.746.239 44.846.873 59.211 44.067.696 44.126.907 III. LONG-TERM FINANCIAL ASSETS 90.013 108.360 198.373 200.724 123.099 323.823 IV. CLAIMS 135 0 135 109 0 109 V. DEFERRED TAX ASSETS 0 0 0 0 0 0 SHORT-TERM ASSETS 387.499 -178.894 208.605 349.774 167.490 517.264 I. INVENTORY 53.259 2.501 55.760 1.316 842 2.158 II. CLAIMS 44.038 55.480 99.518 47.586 48.516 96.102 III. SHORT-TERM FINANCIAL ASSETS 2.160 11.746 13.906 2.149 161.394 163.543 IV. CASH AT BANK AND IN HAND 288.042 -248.621 39.421 298.723 -43.262 255.461 PREPAID EXPENSES AND ACCRUED REVENUES 180 993 1.173 534 952 1.486 TOTAL ASSETS 585.400 44.676.698 45.262.098 612.411 44.368.262 44.980.673 BALANCE SHEET, LIABILITIES CAPITAL AND RESERVES 142.491 21.391.615 21.534.106 131.707 20.370.835 20.502.542 PROVISIONS 181.475 0 181.475 155.432 0 155.432 LONG-TERM LIABILITIES 46.799 17.283.007 17.329.806 29.673 20.489.951 20.519.624 SHORT-TERM LIABILITIES 120.987 5.817.084 5.938.071 134.784 3.382.507 3.517.291 DEFERRED EXPENSES AND ACCRUED INCOME 93.647 184.993 278.640 160.815 124.969 285.784 TOTAL LIABILITIES 585.399 44.676.699 45.262.098 612.411 44.368.262 44.980.673

2014. - ANNUAL REPORT ON THE OPERATIONS 29 INCOME STATEMENT (HRK in 2013 2014 On January 31, 2014 the merger of the company ARZON (subsidiary of ARZ thousands) d.d.) with the company HAC ONC was carried out with the transfer of the employ- OPERATING REVENUES 1.446.393 1.508.919 ment contract for 643 workers. The merger was preceded by the signing of a social contract between HAC and ARZ and based on the share in capital stock of HAC OPERATING EXPENDITURES 758.485 770.409 ONC (HAC share of 67.1 billion HRK or 73%, ARZ share 25.2 billion HRK or 27%) GROUP OPERATING RESULT (EXCLUDING MOTORWAY DEPRECIATION) management control was established between the two companies, which had HAC Financial revenues 1.433.333 1.501.295 losing its full management control. Consequently, HAC has no obligation of prepa- Financial expenditures 717.268 681.443 ring consolidated reports in the previous form. TOTAL REVENUES AND 687.908 738.510 EXPENDITURES RATIO The Act on roads, in Articles 94, 95 and 96, specifies the method of registration of business changes with the application of the capital approach, which involves Motorway depreciation under HAC 681.307 738.510 management two parallel records of business changes in the business records of HAC, for HAC as a company and for the Public ownership (motorways) which are assets the Repu- TOTAL EXPENDITURES including 1.439.792 1.508.919 blic of Croatia. motorway depreciation PROFIT/LOSS BEFORE TAX 6.601 0 Article 96 of the Act on roads stipulates that a legal person, which operates a Corporate Tax 6.601 0 public road, includes depreciation of public roads it manages in the operating ex- NET PROFIT 0 0 penditures. Part of the depreciation which is not covered by own funds is calculated at the expense of public capital in the records of the legal person that manages the FINANCIAL RATIOS 2013 2014 public road. LIQUIDITY RATIOS The amendments on the Act on roads had a significant impact on the Com- Current ratios 0,03 0,14 pany in 2014, reducing the charge per liter of the collected excise duty on energy Financial stability ratio 1,16 1,08 generating products (from 0.60 to 0.20 HRK). Reduced receipt from excise duty fees LEVERAGE RATIOS contributed to the increased debt-to-income in 2014 Debt ratio 0,52 0,54 Financial leverage 2,10 2,19 Revenue from toll collection and other HAC revenue entirely covers the operating expenses (management and routine maintenance of motorways). ACTIVITY RATIOS Total asset turnover ratio 0,03 0,03 Total current asset turnover ratio 6,74 2,80 FINANCIAL RATIO Selffinancing degree 0,48 0,46

30 2014. - ANNUAL REPORT ON THE OPERATIONS HRVATSKE CESTE d.o.o. www.hrvatske-ceste.hr Vončinina 3, 10 000 Zagreb

Management Board: Tihomir Barišić, member Ownership structure Edo Kos, chairman Zlatko Rugan, member on December 31, 2014 Jurica Krleža, member Nenad Maljković, member Government representative in the Supervisory Board: General Assembly : DUUDI/HR Irena Miličević, head Siniša Hajdaš Dončić, Ivica Martinić, member Minister of Maritime Affairs, Ingo Kamenar, member Transport and Infrastructure Edo Kos 100%

Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 GENERAL COMPANY INFORMATION and 2014 (HRK in thousands) BALANCE SHEET (HRK in thousands) 2013 2014 Hrvatske ceste Ltd. is a trade company of strategic interest for the Republic of Croatia, due to the activity of management, construction and maintenance of BALANCE SHEET, ASSETS state roads. The Company was established based on the Decision of the Croatian LONG-TERM ASSETS 69.974.854 70.342.417 Government on the distribution and transformation of Croatian Road Admini- I. INTANGIBLE ASSETS 13.941 11.181 stration on the companies Croatian Motorways Ltd. and Hrvatske Ceste Ltd. The II. TANGIBLE ASSETS 69.939.935 70.311.713 Company was formed in 2001 and today has 400 employees. The Company has III. LONG-TERM FINANCIAL ASSETS 16.603 15.606 no affiliated companies. IV. CLAIMS 4.375 3.917 V. DEFERRED TAX ASSETS COMPANY OBJECTS 0 0 SHORT-TERM ASSETS 295.534 599.208 The Company activity covers all operating tasks of technical and techno- I. INVENTORY 18.412 15.232 logical unity of the public roads system (except motorways), including spatial, II. CLAIMS 80.670 148.763 transport, technical and economic research and analysis. III. SHORT-TERM FINANCIAL ASSETS 0 0 IV. CASH AT BANK AND IN HAND 196.452 435.213 According to the Act on roads (Official Gazette No. 84/11), business acti- PREPAID EXPENSES AND ACCRUED 77 vity of Hrvatske Ceste Ltd. is to organize and conduct expert reports needed REVENUES for the four-year program of construction and maintenance of state roads, county roads and local roads, construction and reconstruction work, resolving TOTAL ASSETS 70.270.388 70.941.702 property-legal relations required for construction, reconstruction and mainte- BALANCE SHEET, LIABILITIES nance of state roads, financing of construction, reconstruction and the mainte- CAPITAL AND RESERVES 60.901.028 60.552.655 nance of state roads. PROVISIONS 136.451 142.695 LONG-TERM LIABILITIES 7.960.632 8.606.185 The Company also engages in protecting the environment from traffic -im pact on state roads, monitoring the traffic load and traffic flows on the national SHORT-TERM LIABILITIES 1.252.596 1.614.397 and public roads, and also has a unique database of public roads. The main acti- DEFERRED EXPENSES AND ACCRUED 19.681 25.770 vity of the Company is investment in the development of road infrastructure INCOME in order to successfully include the Croatian economy in an international envi- TOTAL LIABILITIES 70.270.388 70.941.702 ronment, to ensure a more dynamic economic development. INCOME STATEMENT (HRK in thousands) 2013 2014 The general objectives for the four-year period are based on the Govern- Operating revenues 210.339 162.044 ment’s Program of construction and maintenance of public roads for the period from 2013 to 2016 (Official Gazette No. 1/2014). Operating expenditures 208.397 160.501 Financial revenues 1.683 3.634 Due to the application of a capital approach neither profit nor loss is Financial expenditures 3.625 5.177 displayed but the Company’s efficiency is measured by the execution of the investment program and financial plan. TOTAL REVENUES 212.022 165.678 TOTAL EXPENDITURES 212.022 165.678 KEY FINANCIAL RATIOS PROFIT/LOSS BEFORE TAX 0 0

Graph: Summary of total revenue, expenditures and operating results in FINANCIAL RATIOS 2013 2014 the period from 2011 to 2014 (HRK in thousands) LIQUIDITY RATIOS Current ratio 0,24 0,37 Financial stability ratio 1,02 1,02 LEVERAGE RATIOS Debt ratio 0,13 0,14 300.000 Equity ratio 0,87 0,85 200.000 Financial ratio 0,15 0,17 ACTIVITY RATIOS 100.000 Total asset turnover ratio 0,00 0,00 0 EFFICIENCY RATIOS 2011 2012 2013 2014 Overall operations efficiency 1,00 1,00 TOTAL REVENUES TOTAL EXPENDITURES OPERATING RESULT PROFITABILITY RATIOS NET RETURN ON ASSETS (ROA) 0,00% 0,00%

2014. - ANNUAL REPORT ON THE OPERATIONS 31 The display of business changes and the business results of Hrvatske Ceste credit funds withdrawn at the end of the year, while at te same time there was a de- Ltd. is determined by the application Act on roads (Official Gazette No. 84/11). The crease of accounts receivable. Due to coverage, the financial plan of the approved de- law makes provisions for the regulation of financing of public roads and pursuant ficit increased long-term and short-term liabilities to banks. Due to the application to this provision sources of funds represent public capital, used by the Republic of of capital approach neither profit nor loss is displayed but the Company’s efficiency Croatia for financing construction and public roads maintenance, and from which is measured depending on the execution of the program and financial plan. the difference between revenues and expenditures recorded in the financial year is compensated. The implementation of the annual plan was carried out in a given framework and did the approved deficit was not exceeded. In 2014, 1.077,05 HRK was obtained In the Company’s balance sheet long-term assets are increased as a result of in investments, or a total of 90% of the planned amount. The structure of the in- continuous investments in road infrastructure and changes to the Decision on the vestment concerns the construction of state roads, investment in reconstruction classification of public roads. In the structure of current assets, there is a significant and overall improvement, investment maintenance of state roads, investment in increase in claims for value added tax and cash at bank and in hand, mainly due to regional and local roads and the acquisition of other tangible and intangible assets.

HRVATSKA KONTROLA www.crocontrol.hr ZRAČNE PLOVIDBE d.o.o. Rudolfa Fizira 2, 10 150 Velika Gorica

Ownership structure Management Board : Government on December 31, 2014 Dragan Bilać, chairman representative in the General Assembly : Nadzorni odbor: Siniša Hajdaš Dončić, Darko Prebežac, head Minister of Maritime Affairs, Dinko Staničić, deputy Transport and Infrastructure DUUDI/HR Hrvoje Filipović, member Boris Lalovac, Marijana Müller, member Minister of Finance Željko Gojko, member Ante Kotromanović, Defence Minister 100% Dragan Bilać

Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 GENERAL COMPANY INFORMATION and 2014 (HRK in thousands)

Croatia Control Ltd. is a company owned by the Republic of Croatia, which BALANCE SHEET (HRK in thousands) 2013 2014 is responsible for the provision of air navigation services to civil and military BALANCE SHEET, ASSETS airspace users of the Republic of Croatia and the airspace that was assigned for LONG-TERM ASSETS 639.065 588.840 control. Although the Company was formally registered in 1999 in the Com- I. INTANGIBLE ASSETS mercial Court, the tradition of activity through other state administrations and 260.339 255.747 institutions has continuously been active for several decades. There are no affi- II. TANGIBLE ASSETS 378.726 323.916 liated companies. III. LONG-TERM FINANCIAL ASSETS 0 46 IV. CLAIMS 0 0 COMPANY OBJECTS V. DEFERRED TAX ASSETS 0 9.131 SHORT-TERM ASSETS 298.924 417.041 Croatia Control Ltd., in accordance with national and international regula- I. INVENTORY 3.733 2.623 tions, is dedicated to the performance of its activities in a manner to provide its II. CLAIMS 106.443 112.093 users air navigation services at the highest level of quality and safety in accordance III. SHORT-TERM FINANCIAL ASSETS 37.894 191.665 with their expectations and needs. With its operations, the Company achieves Eu- IV. CASH AT BANK AND IN HAND 150.854 110.660 rope’s strategic goals in maintaining a high level of aviation safety, the provision PREPAID EXPENSES AND ACCRUED 8.718 6.750 of sufficient capacity, an increase in efficiency and a reduction of pollution of the REVENUES environment, at the same time realizing the national interests. In cooperation with partners in the European ATM network, the Company maintains the highest safety TOTAL ASSETS 946.707 1.012.631 standards of and superior quality of service with its expertise, reliability and work BALANCE SHEET, LIABILITIES efficiency, at the same time taking care of the environment. Croatia Control Ltd. is CAPITAL AND RESERVES 453.050 472.769 certified for the provision of operational services in air traffic (ATS), communicati- PROVISIONS 27.199 50.834 on, navigation and surveillance services (CNS), aeronautical Information Services LONG-TERM LIABILITIES 356.695 331.301 (AIS) and the provision of aviation meteorology services (MET). SHORT-TERM LIABILITIES 96.972 145.235 DEFERRED EXPENSES AND ACCRUED 12.791 12.492 KEY FINANCIAL RATIOS INCOME TOTAL LIABILITIES 946.707 1.012.631 Graph: Summary of total revenue, expenditures and operating results in the period from 2011 to 2014 (HRK in thousands) INCOME STATEMENT (HRK in thousands) 2013 2014 Operating revenues 638.481 700.971 800.000 Operating expenditures 627.671 670.613 600.000 Financial revenues 3.715 3.824 400.000 Financial expenditures 11.415 8.978 200.000 TOTAL REVENUES 642.196 704.795 0 TOTAL EXPENDITURES 639.086 679.591 2011 2012 2013 2014 PROFIT/LOSS BEFORE TAX 3.110 25.204 TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT Corporate Tax 1.301 5.485 NET PROFIT 1.809 19.719

32 2014. - ANNUAL REPORT ON THE OPERATIONS FINANCIAL RATIOS 2013 2014 ring the reporting year significant funds have been invested in the maintenance and modernization of equipment and systems, as well as ensuring conditions for LIQUIDITY RATIOS the expansion of capacity and the increase in air transport safety. Current ratio 3,08 2,87 Financial stability ratio 0,79 0,73 During 2014, there has been an increase in the company’s equity by 60 million LEVERAGE RATIOS HRK from the reserves. The profit for 2014 is entirely allocated to retained earnings Debt ratio 0,48 0,47 in order to ensure a sustainable liquidity position. Long-term liabilities are related Equity ratio 0,48 0,47 to long-term financial borrowings as a result of the dynamics and scope of finan- Financial ratio 1,00 1,01 cing of the investment cycle and the pace and scope of deleveraging Croatia Control ACTIVITY RATIOS Ltd. Total revenue for 2014 increased by 9.7% compared to the same period last year. Total expenses increased by 6.3% compared to the same period in the previous year. Total asset turnover ratio 0,68 0,70 This increase is the result of a rise in depreciation costs, particularly concerning the EFFICIENCY RATIOS activation of assets from the current investment cycle. Overall operations efficiency 1,00 1,04 PROFITABILITY RATIOS The current liquidity ratio indicates a high degree of ability to meet short- NET RETURN ON ASSETS (ROA) 0,19% 1,96% term liabilities in the maturity date. The reduction of the financial stability ratio implies improved financial stability because the growing part of the principal and The asset value of Croatia Control Ltd. has been continuously increasing over long-term liabilities is used to finance current assets. Total assets turnover ratio the years, which is one of the important indicators of a dynamic business based on indicates the efficient use of total assets of Croatia Control Ltd., taking into account successful financial results. that this ratio for entrepreneurs of the same size was considerably lower in 2012 and in 2013. The cost-effectiveness of total operations and net return on assets, In accordance with the objectives and tasks of the Business Plan for 2014, du- have improved in the context of improved profitability during 2014.

HRVATSKE ŠUME d.o.o. www.hrsume.hr Lj. F. Vukotinovića 2, 10 000 Zagreb

Ownership structure Management Board: Neven Voća, member on December 31, 2014 Ivan Pavelić, chairman Dalibor Georgievski, Marija Vekić, member member Ivan Ištok, member Željka Šikić, member

Supervisory Board : Government DUUDI/HR Doris Srnec, head representative in the Vicko Njavro, deputy General Assembly : Mijo Prgomet, deputy Tihomir Jakovina, Ivan Martinić, member Minister of Agriculture 100% Ivan Pavelić

GENERAL COMPANY INFORMATION COMPANY OBJECTS

Hrvatske šume, a limited liability company is the legal successor of “Hr- The Company seeks to ensure a sustainable integrated management of state vatske šume” a public company for forest and woodland management in the forests in an area of more than 2 million hectares throughout the territory of the Republic of Croatia, p.o. Zagreb, founded on the basis of the Amending Forestry Republic of Croatian, in an environmentally sensitive, economically efficient and Act (Official Gazette No. 41/90), with the beginning of function on January 1, socially responsible way towards society in general and to the employees of the 1991. company. Approximately 89% of total revenue of Hrvatske šume Ltd. derive from its core business - selling wood. Other activities related to forestry are becoming The Company also owns six subsidiaries. Hrvatske šume, the public more and more important, such as hunting, tourism, real estate, recreational acti- company for forest and woodland management in the Republic of Croatia, vities and other activities arising from a wide range of beneficial functions. p.o. Zagreb, was the legal successor of a few forestry estates. Today, Hrvatske šume Ltd. is a three-layered company owned by the state with headquarters in Zagreb, 16 regional forest administrations (subsidiaries) and 169 regional KEY FINANCIAL RATIOS forest offices. The company is being lead by the President of the Management Graph: Summary of total revenue, expenditures and operating results in Board, its work is being controlled by the Supervisory Board while the basic the period from 2011 to 2014 (HRK in thousands) decisions are being met by the Assembly. The Company owns has six subsidiaries. 3.000.000

AFFILIATED COMPANIES 2.000.000

• Ambalaža d.o.o., Lanišće, 100 % ownership 1.000.000 • Hrvatske šume Consult d.o.o., Zagreb, 100 % ownership • Šumska biomasa d.o.o., Zagreb, 100 % ownership 0 • Kamenolomi Krašić d.o.o., Zagreb, 100 % ownership 2011 2012 2013 2014 • Drvna galanterija Vrbovsko d.o.o., Zagreb, 100 % ownership TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT • Rasadnik Piket d.o.o, Zemunik Donji, 100 % ownership

2014. - ANNUAL REPORT ON THE OPERATIONS 33 Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 FINANCIAL RATIOS 2013 2014 and 2014 (HRK in thousands) LIQUIDITY RATIOS BILANCA U 000 KUNA 2013 2014 Current ratio 2,00 2,48 BALANCE SHEET, ASSETS Financial stability ratio 1,02 0,94 LONG-TERM ASSETS 1.388.222 1.417.467 LEVERAGE RATIOS I. INTANGIBLE ASSETS 52.330 67.764 Debt ratio 0,18 0,17 II. TANGIBLE ASSETS 1.302.331 1.255.876 Equity ratio 0,64 0,67 III. LONG-TERM FINANCIAL ASSETS 17.287 38.175 Financial ratio 0,28 0,25 IV. CLAIMS 16.274 55.652 ACTIVITY RATIOS V. DEFERRED TAX ASSETS 0 0 Total asset turnover ratio 1,05 1,01 SHORT-TERM ASSETS 652.884 707.423 EFFICIENCY RATIOS I. INVENTORY 140.145 147.027 Overall operations efficiency 1,06 1,08 II. CLAIMS 472.856 418.283 PROFITABILITY RATIOS III. SHORT-TERM FINANCIAL ASSETS 23.594 101.479 IV. CASH AT BANK AND IN HAND 16.289 40.634 NET RETURN ON ASSETS (ROA) 4,22% 5,86% PREPAID EXPENSES AND ACCRUED 1.245 1.524 REVENUES In this period, the Group recorded a profit before tax in the amount of 151 TOTAL ASSETS 2.042.351 2.126.414 million HRK. The said profit before tax consists of the profit of Hrvatske šume Ltd. BALANCE SHEET, LIABILITIES parent company in the amount of 151 million HRK, and of the total loss of the three CAPITAL AND RESERVES 1.310.239 1.429.275 affiliated companies in the amount of 1 million HRK. PROVISIONS 332.174 312.573 The profit of Hrvatske šume Ltd. has been adjusted for the costs of adjus- LONG-TERM LIABILITIES 45.374 72.434 tment of shares in subsidiaries and loans to subsidiaries, which are eliminated in SHORT-TERM LIABILITIES 326.092 285.419 the consolidation process, and the profit is therefore lower by 0.7. DEFERRED EXPENSES AND ACCRUED 28.472 26.713 INCOME The liquidity ratio has increased because the Company uses its own funds, TOTAL LIABILITIES 2.042.351 2.126.414 has no loan obligations to banks. The debt ration decreased because the Company has no loan obligations to banks. The activity ratio has slightly decreased because INCOME STATEMENT (HRK in thousands) 2013 2014 some subsidiaries have had losses. Profitability and efficiency ratios have risen due Operating revenues 2.115.424 2.121.169 to a positive increase in performance of the Parent company and of some subsidia- Operating expenditures 1.945.804 1.941.905 ries. Financial revenues 29.609 23.805 Financial expenditures 85.069 51.937 From the accompanying unaudited data it is clear that the subsidiaries did not significantly influence the profit of the Parent company Hrvatske šume Ltd. TOTAL REVENUES 2.145.033 2.145.138 TOTAL EXPENDITURES 2.030.873 1.993.994 PROFIT/LOSS BEFORE TAX 114.160 151.143 Corporate Tax 28.072 39.505 NET PROFIT 86.088 124.450

34 2014. - ANNUAL REPORT ON THE OPERATIONS HRVATSKI OPERATOR www.hrote.hr TRŽIŠTA ENERGIJE d.o.o. Ulica grada Vukovara 284, 10 000 Zagreb

Management Board: Government Ownership structure Ivor Županić, chairman representative in the on December 31, 2014 General Assembly: Supervisory Board: Sabina Škrtić, Žarko Stilin, head Assistant Minister of Valentin Dujmović, deputy Economy DUUDI/HR Zdenko Lucić, member Milan Devčić, member

Ivor Županić 100%

Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013

GENERAL COMPANY INFORMATION and 2014 (HRK in thousands) Croatian Energy Market Operator Ltd. was founded in 2005, 100 percent BALANCE SHEET (HRK in thousands) 2013 2014 owned by the Republic of Croatia as a legal person with public authorities, with BALANCE SHEET, LIABILITIES the purpose of contributing to achieving the strategic energy objectives and to CAPITAL AND RESERVES 18.791 19.092 the development of the energy sector in the Republic of Croatia. PROVISIONS 118 104 LONG-TERM LIABILITIES 0 0 AFFILIATED COMPANIES SHORT-TERM LIABILITIES 324.252 598.287 DEFERRED EXPENSES AND ACCRUED 207 241 Croatian Power Exchange Ltd., company founded in 2014 (founders HROTE INCOME i HOPS). TOTAL LIABILITIES 343.368 617.724

INCOME STATEMENT (HRK in thousands) 2013 2014 COMPANY OBJECTS Operating revenues 13.264 33.953 Operating expenditures 19.244 34.165 The company is registered for providing the public services of organization of Financial revenues the electricity market in accordance with the provisions of the energy legislation. 949 488 Within its competence the Company covers four areas, namely: organizing and mo- Financial expenditures 4 3 nitoring of the electricity market, gas market, the system for incentivizing electricity TOTAL REVENUES 14.213 34.441 production from renewable energy sources and cogeneration. It also participates in TOTAL EXPENDITURES 19.248 34.168 the development of the electricity and gas market, and manages the system for incen- PROFIT/LOSS BEFORE TAX -5.035 273 tivizing electricity production from renewable energy and cogeneration. The project Corporate Tax -993 -24 of establishing the power exchange was successfully implemented in the first half of NET LOSS/PROFIT -4.042 297 2014 and the project of establishing Guarantees of origin registry was not initiated until the end of 2014, it is already in the final phase and is expected to launch by the FINANCIAL RATIOS 2013 2014 beginning of February 2015. LIQUIDITY RATIOS Current ratio 1,05 1,02 KEY FINANCIAL RATIOS Financial stability ratio 0,20 0,38 LEVERAGE RATIOS Graph: Summary of total revenue, expenditures and operating results in the period from 2011 to 2014 (HRK in thousands) Debt ratio 0,94 0,97 Equity ratio 0,05 0,03 Financial ratio 17,26 31,34 40.000 ACTIVITY RATIOS 20.000 Total asset turnover ratio 0,04 0,06 EFFICIENCY RATIOS 0 2011 2012 2013 2014 Overall operations efficiency 0,74 1,01 -20.000 PROFITABILITY RATIOS

TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT/LOSS NET RETURN ON ASSETS (ROA) -1,18% 0,05%

During 2014, the Company had implemented restructuring measures by redu- BALANCE SHEET (HRK in thousands) 2013. 2014. cing costs. In comparison to 2013, in 2014, the Company balance increased because BALANCE SHEET, ASSETS accounts in the system for incentivizing electricity production from renewable ener- LONG-TERM ASSETS 3.716 7.256 gy sources were included in receivables and liabilities. Compared to 2013, in 2014 over I. INTANGIBLE ASSETS 2.396 2.564 37% more contracts were concluded concerning the purchase of electricity, which also II. TANGIBLE ASSETS 296 641 meant more incentives. The project of launching the power exchange was successfully III. LONG-TERM FINANCIAL ASSETS 0 3.000 implemented in the first half of the year, and the Croatian Energy Market Operator Ltd. IV. CLAIMS 0 0 (HROTE) invested 3 million HRK of the Company’s funds. V. DEFERRED TAX ASSETS 1.024 1.051 Regarding the total revenues and expenditures in 2014 compared to 2013, as part SHORT-TERM ASSETS 339.652 610.468 of the total revenues and total expenditures, operating revenue is included, recorded I. INVENTORY on the basis of intermediation services during energy balancing, calculating deviations II. CLAIMS 151.093 277.268 from the nominations, calculating the value of total deviation and calculating the re- III. SHORT-TERM FINANCIAL ASSETS 14.040 60.989 maining deviation of balance groups after trading, accompanied by the increase in ex- IV. CASH AT BANK AND IN HAND 174.519 272.211 penditures at the same level. Financial ratios are not objective because accounts in the PREPAID EXPENSES AND ACCRUED systems of incentives are not included in costs or Company revenue but in debts and REVENUES obligations. The Company collects more funds based on the incentive fees than incenti- TOTAL ASSETS 343.368 617.724 ves are paid, and the collected subject fees represents a future Company liability.

2014. - ANNUAL REPORT ON THE OPERATIONS 35 HŽ INFRASTRUKTURA d.o.o. www.hzinfra.hr Mihanoviceva 12, 10 000 Zagreb

Management Board: Government Ownership structure Renata Suša, chairman representative in the on December 31, 2014 Ivan Vuković, member General Assembly : Željko Kopčić, member Siniša Hajdaš Dončić, Minister of Maritime Supervisory Board : Affairs, Transport and Milan Stojanović, head Infrastructure DUUDI/HR Ratko Zelenika, member Ljudevit Krpan, member Ivan Žilić, member Marko Gašpar, member 100% Renata Suša

Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 GENERAL COMPANY INFORMATION and 2014 (HRK in thousands)

HŽ Infrastruktura Ltd. for the management, maintenance and constru- BALANCE SHEET (HRK in thousands) 2013 2014 ction of railway infrastructure engages in the organization and regulation of BALANCE SHEET, ASSETS rail transport, maintenance and modernization of railway infrastructure, its LONG-TERM ASSETS 11.225.867 12.110.264 protection and the construction of railway infrastructure. The Company has subsidiaries engaged in complementary activities. I. INTANGIBLE ASSETS 62.301 55.371 II. TANGIBLE ASSETS 11.114.340 12.014.421 AFFILIATED COMPANIES III. LONG-TERM FINANCIAL ASSETS 1.299 1.478 IV. CLAIMS 47.927 38.576 • Pružne gradevine d.o.o., Zagreb, 100 % ownership V. DEFERRED TAX ASSETS 418 • Croatia express d.o.o., Zagreb, 100 % ownership SHORT-TERM ASSETS 1.220.981 1.253.765 I. INVENTORY 569.757 587.840 COMPANY OBJECTS II. CLAIMS 438.950 374.010 III. SHORT-TERM FINANCIAL ASSETS 2.477 3.264 HŽ Infrastruktura Ltd., as manager of railway infrastructure, is service of IV. CASH AT BANK AND IN HAND 209.797 288.651 general, transport and economic interests of the Republic of Croatia. the Com- PREPAID EXPENSES AND ACCRUED 7.223 16.372 pany creates conditions to increase flow movements of passengers and goods REVENUES by rail, through commercially acceptable network quality and capacity and with TOTAL ASSETS 12.454.071 13.380.401 access charges for users of the railway infrastructure. There is a growing focus BALANCE SHEET, LIABILITIES on the market and on the customer needs for transport services, modernizati- CAPITAL AND RESERVES 7.758.263 8.600.956 on and development, as an inevitable prerequisite for competitiveness in relation to other European railway routes. PROVISIONS 129.790 108.591 LONG-TERM LIABILITIES 1.110.894 2.211.424 The overall goal is the inclusion of rail transport routes passing through SHORT-TERM LIABILITIES 1.257.008 1.221.514 the Republic of Croatia in the Pan-European transport network, as well as ba- DEFERRED EXPENSES AND ACCRUED 2.198.116 1.237.916 lancing the technical and technological conditions on the regional and local INCOME transport lines in order to increase the role of railways in passenger and cargo TOTAL LIABILITIES 12.454.071 13.380.401 transport. INCOME STATEMENT (HRK in thousands) 2013 2014 The Company objects primarily include the management of railway infra- Operating revenues 1.315.766 1.813.883 structure, organization and regulation of rail transport, maintenance and mo- Operating expenditures dernization of railway infrastructure, its construction and protection. 2.096.759 1.790.059 Financial revenues 4.694 10.670 The extensiveness and complexity of railway infrastructure maintenance Financial expenditures 30.154 60.904 hinders the achievement of profitability. The goal is business modernization, a TOTAL REVENUES 1.320.460 1.824.553 complete and functional informatization of the railway infrastructure system TOTAL EXPENDITURES 2.126.913 1.850.963 and the increase of efficiency, capacity and quality of service. PROFIT/LOSS BEFORE TAX -806.453 -26.410 Corporate Tax 7.505 22.136 KEY FINANCIAL RATIOS NET LOSS -813.958 -48.546 Graph: Summary of total revenue, expenditures and operating results in Pursuant to Article 21 of the Railway Act (Official Gazette No. 94/13 and 148/13), the the period from 2011 to 2014 (HRK in thousands) difference between revenues and expenditures of the Parent Company HZ Infrastruk- tura Ltd. in the financial year is compensated at the expense/benefit of public capital 3.000.000 after the adoption of the annual financial statements. According to the consolidated and unrevidate data in 2014 for the Group HZ Infrastruktura, a 37.8 percent higher total 2.000.000 revenue was realized than in 2013. The largest share in total revenues is constituted 1.000.000 from revenues of the state budget, approximately 65%. The funds from the state budget are used for railway infrastructure maintenance, organization, transport control and 0 management of the Company. In 2014, HZ Infrastruktura Group reduced the loss com- 2011 2012 2013 2014 -1.000.000 pared to the pre-tax loss in 2013, from 806 million HRK to 26 million HRK. In 2014, the Parent company, HŽ Infrastruktura Ltd., has been operating with a profit of 0.2 million TOTAL REVENUES TOTAL EXPENDITURES GROSS LOSS HRK, Pruzne gradevine Ltd. with a operating profit of 85.1 million HRK and Croatia

36 2014. - ANNUAL REPORT ON THE OPERATIONS FINANCIAL RATIOS 2013 2014 devine Ltd. in 2013, in the amount of 129.9 million HRK, and the aforementioned revenue of HŽ Infrastruktura Ltd. is eliminated on a consolidated level, which had a LIQUIDITY RATIOS serious effect on the consolidated result. Current ratio 0,97 1,03 Financial stability ratio 1,27 1,12 During 2014, a total of 998.5 million HRK was invested in the Program of recon- LEVERAGE RATIOS struction and modernization of railway lines for international (714.6 million HRK), Debt ratio 0,19 0,26 regional (51 million HRK) and local transport (18.2 million HRK), the Program of bu- Equity ratio 0,62 0,64 ilding a new and upgrading an existing railway infrastructure (21.9 million HRK), the Program of reconstruction and modernization of the Zagreb railway junction (18.5 Financial ratio 0,31 0,40 million HRK) and also investments was made in the Program of activities in infra- ACTIVITY RATIOS structure and transport on the rail network as a whole (174, 3 million HRK). In the Total asset turnover ratio 0,11 0,14 previous period, the following activities were carried out: the Company activity com- EFFICIENCY RATIOS plies with the EU directives, status changes of subsidiaries have been implemented, Overall operations efficiency 0,62 0,99 organizational changes to further rationalize operations and to adjust to the actual PROFITABILITY RATIOS number of employees with the classification number, in December 2014 with the Or- ganization Regulations, the outplacement of redundant employees and the rationali- NET RETURN ON ASSETS (ROA) -6,54% -0,36% zation of employee costs was conducted, and also investments were made in railway infrastructure. Express Ltd. with the loss of 0.4 million HRK. Due to the application of accounting rules, the revenue of HŽ Infrastruktura Ltd. is eliminated on a consolidated level for the With the scope of financing the restructuring process, the Company imple- profit of Pruzne gradevine Ltd., paid in 2014, which means that at a group level, accoun- mented consolidation measures of the value adjustment and the adjustment of the ting showed a loss of 48.6 million HRK was shown. Balance structure, in aiming to resolve the current adverse financial condition of the Company and to create long-term stable sources of financing for railway infrastru- In 2014, HŽ Infrastruktura Ltd. recorded the committed profit of Pružne gra- cture, in accordance with the Railway Act.

HŽ PUTNIČKI PRIJEVOZ d.o.o. www.hzpp.hr Antuna Mihanovića 12, 10 000 Zagreb

Management Board: Government Ownership structure Dražen Ratković, chairman representative in the on December 31, 2014 Robert Frdelja, member General Assembly: Siniša Balent, member Siniša Hajdaš Dončić, Minister of Maritime Supervisory Board: Affairs, Transport and Snježana Josipović, head Infrastructure DUUDI/HR Marijan Drempetić, deputy Dalibor Obradović, member Hrvoje Livaja, member Dalibor Petrović, member, 100% Dražen Ratković employee representative

GENERAL COMPANY INFORMATION needs in each segment.

HZ – Putnički prijevoz Ltd. is a 100 percent owned company of the Republic In 2014 the realization of the investment was 335 million HRK, which is of Croatia, primarily engaging in public passenger transport in domestic and in- 345.6% more than in 2013, and consists of four programs: the maintenance of ternational rail transport. This implies linking urban centers and local areas in transport capacity, the procurement program of new motor trains, the inves- Croatia by rail with metropolitan and other urban centers in Europe and a mass tment maintenance program and construction of facilities and the program of transport of passengers within major cities and suburban areas. Considering the company computerization. need to prepare national infrastructure and operators for business on a liberali- zed market, the Company operates in present form since 2007. KEY FINANCIAL RATIOS AFFILIATED COMPANIES Graph: Summary of total revenue, expenditures and operating results in the period from 2011 to 2014 (HRK in thousands) • Tersus eko d.o.o., Zagreb, 100 % ownership • Željeznička tiskara d.o.o., Zagreb, 100 % ownership • Tehnicki servisi zeljeznickih vozila d.o.o., Zagreb, 100 % ownership 3.000.000 2.000.000

COMPANY OBJECTS 1.000.000

The main activity of HŽ–Putnički prijevoz Ltd. is connecting county and 0 2011 2012 2013 2014 regional centers between each other , as well as with local communities thro- -1.000.000 ughout the HŽ train network of a high transport and commercial rank. In this TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT/LOSS manner a service is formed and tailored for business passengers, with emphasis on the time of travel and the provision of additional services for customers

2014. - ANNUAL REPORT ON THE OPERATIONS 37 Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 FINANCIAL RATIOS 2013 2014 and 2014 (HRK in thousands) LIQUIDITY RATIOS BALANCE SHEET (HRK in thousands) 2013 2014 Current ratio 0,84 0,95 BALANCE SHEET, ASSETS Financial stability ratio 3,40 2,20 LONG-TERM ASSETS 1.559.141 1.672.164 LEVERAGE RATIOS I. INTANGIBLE ASSETS 17.350 12.779 Debt ratio 0,55 0,47 II. TANGIBLE ASSETS 1.425.001 1.530.702 Equity ratio -0,13 0,04 III. LONG-TERM FINANCIAL ASSETS 116.790 128.683 Financial ratio -4,39 11,11 IV. CLAIMS ACTIVITY RATIOS V. DEFERRED TAX ASSETS Total asset turnover ratio 0,51 0,58 SHORT-TERM ASSETS 269.242 179.181 EFFICIENCY RATIOS I. INVENTORY 131.114 70.720 Overall operations efficiency 0,73 1,00 II. CLAIMS 103.544 81.397 PROFITABILITY RATIOS III. SHORT-TERM FINANCIAL ASSETS 24.144 132 IV. CASH AT BANK AND IN HAND 10.440 26.932 NET RETURN ON ASSETS (ROA) -18,75% 0,19% PREPAID EXPENSES AND ACCRUED 7.048 12.326 REVENUES In view of the above, the stabilization of the Group is evident. in 2014, the TOTAL ASSETS 1.835.431 1.863.671 Group had a positive performance compared to 2013 when it recorded a significant BALANCE SHEET, LIABILITIES operating loss. This is even more important due to the fact that the share of HŽ Putnički prijevoz in the Group’s total revenue is approximately 93.5%, and HZ Put- CAPITAL AND RESERVES -230.334 78.240 nicki prijevoz generated an operating loss in 2013. By observing the balance sheet, PROVISIONS 151.084 124.188 a significant decrease in inventories, stabilization of capital and reduction commi- LONG-TERM LIABILITIES 688.881 681.455 tments are noticeable. SHORT-TERM LIABILITIES 321.423 188.156 DEFERRED EXPENSES AND ACCRUED 904.377 791.632 In the last two years, the Company has focused its operations on a sustainable INCOME development system, joined in activities of the integration of public transport and TOTAL LIABILITIES 1.835.431 1.863.671 many other activities such as financial restructuring, structural reorganization and new investments. The recapitalization of HŽ Putnički prijevoz was also carried out, INCOME STATEMENT (HRK in thousands) 2013 2014 a new organization in order to increase productivity and prepare for market condi- Operating revenues 935.752 1.058.733 tions, the number of employees was reduced as well as salaries. The procurement process was completed for 44 new trains and a new Contract for the purchase of a Operating expenditures 1.241.498 1.034.776 new sales system was concluded allowing for HŽ Putnički prijevoz to rapidly adapt Financial revenues 4.406 11.519 to market conditions while at the same time reducing operating costs as a result of Financial expenditures 41.484 31.915 usage of new technologies and improvement of its business processes. Financial ra- TOTAL REVENUES 940.158 1.070.252 tios, also showed significantly better performance in 2014 as opposed to 2013. This TOTAL EXPENDITURES 1.282.982 1.066.691 includes an improvement in liquidity, a decrease of the financial stability ratio, debt PROFIT/LOSS BEFORE TAX -342.824 3.561 ratio reduction and significant improvement of business efficiency. Corporate Tax The Company should continue to implement measures from the Restructu- NET LOSS/PROFIT -342.824 3.561 ring and financial consolidation program.

38 2014. - ANNUAL REPORT ON THE OPERATIONS JANAF – JADRANSKI www.janaf.hr NAFTOVOD d.d. Miramarska cesta 24, 10 000 Zagreb

Management Board: Government Ownership structure Dragan Kovačević, chairman representative on December 31, 2014 Jakša Marasović, member in the General

Bruno Šarić, member Assembly : DUUDI/HZMO 4,34% 4,30% 5,36% Ivan Vrdoljak, 37,26% CERP

Supervisory Board: Minister of Economy 10,66% INA Marija Bilman, predsjednica DUUDI/RH Stjepan Čuraj, zamjenik HEP 11,80% Krešimir Komljenović, member Other private and Dragan Goran Vojković, member institut. shareholders Kovačević DUUDI/DAB Tihomir Ivčević, member 26,28%

GENERAL COMPANY INFORMATION Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 and 2014 (HRK in thousands) Jadranski naftovod Plc. manages the oil pipeline system which was designed and built from 1974 to 1979 as a modern, efficient and economical oil BALANCE SHEET (HRK in thousands) 2013 2014 transportation system for domestic and foreign customers. The Company was BALANCE SHEET, ASSETS established in 1992 in its present form. The system of Jadranski naftovod Plc., LONG-TERM ASSETS 2.974.312 2.915.235 which consists of 5 terminals and a pipeline of approximately 622 km in length, I. INTANGIBLE ASSETS 86.659 104.047 was built as an international crude oil transportation system from the Port and II. TANGIBLE ASSETS 2.873.601 2.801.450 Terminal Omisalj to domestic and foreign refineries in Central and Eastern III. LONG-TERM FINANCIAL ASSETS 54 37 Europe. JANAF Plc. currently disposes of a 1,540,000 m3 storage capacity for IV. CLAIMS 2.208 206 crude storage and 202 thousand m3 of storage space for storing oil products. V. DEFERRED TAX ASSETS 11.790 9.495 On the capital market the Jadranski naftovod Plc. has 1.007,658 ordinary shares. SHORT-TERM ASSETS 676.122 745.645

I. INVENTORY 11.251 14.657 AFFILIATED COMPANIES II. CLAIMS 99.478 91.730 III. SHORT-TERM FINANCIAL ASSETS 310.886 349.106 • JANAF – upravljanje projektima d.o.o., Zagreb IV. CASH AT BANK AND IN HAND 254.507 290.152 • JANAF – Terminal Brod, Brod, BiH PREPAID EXPENSES AND ACCRUED 196 637 REVENUES COMPANY OBJECTS TOTAL ASSETS 3.650.630 3.661.517 BALANCE SHEET, LIABILITIES The operating activity of the Company is the transport of oil and the storage CAPITAL AND RESERVES 3.369.826 3.414.764 of oil and oil products for domestic and foreign customers. The mission of Jadran- ski naftovod Plc. is to provide a safe and high-quality system for the transport of PROVISIONS 52.416 54.400 crude oil and the storage of crude oil and oil products using the highest internatio- LONG-TERM LIABILITIES 96.467 115.106 nal technological standards and with concern for the preservation and protection SHORT-TERM LIABILITIES 93.069 51.281 of the environment, health, safety and development of employees. The Company DEFERRED EXPENSES AND ACCRUED 38.852 25.966 manages a safe, environmentally friendly, efficient and economical system for the INCOME transportation of crude oil, storage of crude oil and oil products and is an important TOTAL LIABILITIES 3.650.630 3.661.517 factor and a desirable partner on the European energy map. The designed capacity of the pipeline is 34, and the installed capacity is 20 million tons of oil per year INCOME STATEMENT (HRK in thousands) 2013 2014 (MTG). With the transport of oil, important activities of Jadranski naftovod Plc. is Operating revenues 452.172 465.291 storage of crude oil and oil products and liquid cargo transshipment. The emphasis Operating expenditures 351.236 352.163 is put on the modernization and high-quality maintenance of crude oil transporta- Financial revenues 23.555 24.444 tion system and the increase of its functionality, environmental protection, diver- sification of operations, as well as the increase in transport. Financial expenditures 11.242 19.344 TOTAL REVENUES 475.727 489.735 During 2014, JANAF Plc. is strongly influenced by the uncertainty in the oil TOTAL EXPENDITURES 362.478 371.507 market, particularly by the fall in oil prices and product consumption as well as PROFIT/LOSS BEFORE TAX 113.249 118.228 by threats for oil transport through Ukraine. With this in mind, JANAF Plc. has Corporate Tax 17.159 17.878 adjusted its operations to the new circumstances of increased demand for sto- NET PROFIT 96.090 100.350 rage capacity, but also to the possibility that a sudden significant increase in oil transport to refineries of EU Member States and to Southeast Europe may occur. FINANCIAL RATIOS 2013 2014 LIQUIDITY RATIOS KEY FINANCIAL RATIOS Current ratio 7,26 14,54 Financial stability ratio 0,86 0,83 Graph: Summary of total revenue, expenditures and operating results in the period from 2011 to 2014 (HRK in thousands) LEVERAGE RATIOS Debt ratio 0,05 0,05 Equity ratio 0,92 0,93 600.000 Financial ratio 0,06 0,05 400.000 ACTIVITY RATIOS

200.000 Total asset turnover ratio 0,13 0,13 EFFICIENCY RATIOS 0 Overall operations efficiency 2011 2012 2013 2014 1,31 1,32 PROFITABILITY RATIOS TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT NET RETURN ON ASSETS (ROA) 2,63% 2,74%

2014. - ANNUAL REPORT ON THE OPERATIONS 39 In 2014, the operating activity compared to the previous year can be described The operating activities of JANAF Plc. is characterized by explicit liquidity ac- as very successful. The Company increased its operating revenue, primarily by incre- companied by minimal indebtedness. Investments in 2013 and 2014, in the amount asing the volume of activity. Total expenditures associated to current activities are of $ 396.1 million HRK, were financed exclusively from the Companies own funds, slightly higher compared to the previous year. and obligations are settled in accordance with maturity dates. Operating efficiency is satisfactory. The turnover ratio of total assets and net return on assets is lower than Total expenditures increased by less than the overall increase in total revenues the theoretically desirable due to a considerable amount of assets which is a feature of which resulted in an increase of gross profit by 4.4% compared to the previous year. the infrastructure-related activities of the Company.

ODAŠILJAČI I VEZE d.o.o. www.oiv.hr Ulica grada Vukovara 269 d, 10 000 Zagreb

Ownership structure Management Board: Government on December 31, 2014 Aleksandar Golub, chairman representative Vlatka Dokoza, member in the General Boris Klenović, member Assembly: Siniša Hajdaš Dončić, Supervisory Board : Minister of Maritime DUUDI/HR Marijan Crnjak, predsjednik Affairs, Transport and Mislav Peričić, zamjenik Infrastructure Lora Čurković, member Damir Vuk, member 100% Aleksandar Golub Pavao Vitaljić, member

Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 GENERAL COMPANY INFORMATION and 2014 (HRK in thousands)

Transmitters and Communications Ltd., with over 90 years of experience in BALANCE SHEET (HRK in thousands) 2013 2014 radio broadcasting and more than 60 years of experience in broadcasting television BALANCE SHEET, ASSETS programs, provide services of transmitting national television and radio programs, as LONG-TERM ASSETS 348.259 318.015 well as the majority of regional and local television and radio programs in the Repu- I. INTANGIBLE ASSETS 424 359 blic of Croatia. The Company was founded in 2002 and was created with the division II. TANGIBLE ASSETS of the Croatian Radiotelevision. The Company has no affiliated companies. 346.176 313.237 III. LONG-TERM FINANCIAL ASSETS 1.377 3.309 IV. CLAIMS 0 0 COMPANY OBJECTS V. DEFERRED TAX ASSETS 282 1.110 SHORT-TERM ASSETS Transmitters and Communications Ltd. provide services of terrestrial and sa- 130.095 96.498 tellite broadcasting of radio and television programs, multimedia services, and other I. INVENTORY 23.342 12.555 professional services in the field of electronic communications, leased electronic II. CLAIMS 38.289 63.752 communications networks, power lines and infrastructure, particularly taking into III. SHORT-TERM FINANCIAL ASSETS 62.635 11 account the quality of service and customer satisfaction, sustainable development, IV. CASH AT BANK AND IN HAND 5.829 20.180 energy efficiency and environmental protection and social responsibility. PREPAID EXPENSES AND ACCRUED 6.189 6.806 REVENUES The Company’s objectives are to strengthen the its position in the core busine- TOTAL ASSETS 484.543 421.319 sses and the development of new services and the maintenance and development of BALANCE SHEET, LIABILITIES electronic communications infrastructure and related equipment. During 2014, the CAPITAL AND RESERVES 239.722 239.322 Company undertook the Project of unifying the fiber optic infrastructure in compa- PROVISIONS 2.428 6.428 nies majority-owned by the Republic of Croatia, which will serve as the basis for the Company to further develop fiber optic infrastructure and broadband networks in LONG-TERM LIABILITIES 74.613 79.524 areas where there is insufficient commercial interest, with the aim of ensuring access SHORT-TERM LIABILITIES 165.650 81.946 to the Internet to all citizens and creating conditions for the introduction of e-ser- DEFERRED EXPENSES AND ACCRUED 2.130 14.099 vices of public administration and modern age information services. For the same INCOME purposes the Company plans to takeover and use the communications infrastructu- TOTAL LIABILITIES 484.543 421.319 re called “Neptune” from the Ministry of Defence The Company has also started with the extensive planning and preparations to build a single communication system for INCOME STATEMENT (HRK in thousands) 2013 2014 public services and for services of special interest. Operating revenues 232.361 249.671 Operating expenditures 202.178 225.502 KEY FINANCIAL RATIOS Financial revenues 2.949 3.794 Financial expenditures 15.771 15.311 Graph: Summary of total revenue, expenditures and operating results in TOTAL REVENUES 235.310 253.465 the period from 2011 to 2014 (HRK in thousands) TOTAL EXPENDITURES 217.949 240.813 PROFIT/LOSS BEFORE TAX 17.361 12.652 300.000 Corporate Tax 3.839 4.939 NET PROFIT 13.522 7.713 200.000

100.000 The realized total revenue in 2014 was 253.5 million HRK, compared to the same period last year there was an increase of 7.7%. The most important 0 business activities of the Company are in the field of basic radio and television 2011 2012 2013 2014 -100.000 program broadcasting, the project of unifying optical infrastructure of companies majority owned by the Republic of Croatia was implemented, and also the TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT expansion of the Company’s optical networks.

40 2014. - ANNUAL REPORT ON THE OPERATIONS In late March of 2014, the first phase of the introduction of digital terre- FINANCIAL RATIOS 2013 2014 strial television in Bosnia and Herzegovina was initiated, resulting in higher LIQUIDITY RATIOS total revenues and in an increased activity ratio of total assets. Total expenditures in 2014 amounted to 240.8 million HRK, and compared to the total expendi- Current ratio 0,79 1,18 tures for the same period in the previous year there was an increase of 10.5%. Financial stability ratio 1,11 1,00 LEVERAGE RATIOS The profit, ass well as the difference between total revenues and expen- Debt ratio 0,50 0,39 ditures amounted to 12.7 million HRK, 7.7 million HRK after taxation, while in Equity ratio 0,50 0,58 2013 they amounted to 13.5 million HRK. The decrease in net profit was influen- Financial ratio ced by the decrease in net return on assets. 1,00 0,67 ACTIVITY RATIOS In November 2007, the Company issued bonds in the amount of 100 mi- Total asset turnover ratio 0,49 0,61 llion HRK that were due and fully paid in November 2014, which affected the EFFICIENCY RATIOS movement of liquidity and leverage ratios. Overall operations efficiency 1,08 1,05 PROFITABILITY RATIOS NET RETURN ON ASSETS (ROA) 2,83% 1,86%

PLINACRO d.o.o www.plinacro.hr Savska cesta 88a, 10 000 Zagreb

Management Board: Government Ownership structure Marin Zovko, chairman representative in the on December 31, 2014 Radovan Cvek, member General Assembly: Ratimir Orešković, member Anka Mrak Taritaš, The Minister of Supervisory Board: Construction and Ivo Družić, head Phsyical Planning DUUDI/HR Josip Jambrač, deputy Tomislav Stojak, member Marija Duljković, member Berislav Lipovac, member 100% Marin Zovko

GENERAL COMPANY INFORMATION transmission. As the gas transmission system operator, Plinacro Ltd. is in charge of the transmission and transit of natural gas, management (supervision and Plinacro Ltd., a company for gas transmission and trade, was established control), maintenance, development and construction of the gas transmission and registered on 2001 as a member of INA group, and in 2002 it became a 100% system. The company provides non-discriminatory access to the transmis- state-owned company. With the establishment of Plinacro Ltd. Company, the sion system when it is financially, technically and technologically reasonable organizational structure was formed for introducing natural gas market libera- and justified. The company is balancing the quantity of gas in the transmissi- lization in accordance with the requirements of the EU directive, providing the on system. Plinacro Ltd. is also in charge of securing long-term transmission consumers with the possibility to choose from different suppliers and with a system capability of the transmission system to meet the gas transmission free access to the gas transmission. requirements in order to provide the usage of natural gas as the environmentally most acceptable energy source.

AFFILIATES In 2014, the largest part of the activities on the pipeline projects was related to the preliminary part of the pipeline construction, i.e. the adjustment of • Underground Gas Storage, Zagreb, a company of strategic interest for the spatial planning, the preparation of environmental impact studies and project Republic of Croatia, in 100% ownership of Plinacro Ltd. documentation in accordance with the applicable laws, regulations and stan- • LNG Croatia Ltd., Zagreb, 50 % ownership of Plinacro Ltd., 50% ownership dards. The most important part was the initiation and contracting of procu- of HEP d.d. rement for the service of the design elaboration for the main project of the pipeline Split - Zagvozd - Ploče and the service of the design elaboration for the COMPANY OBJECTS main project of the pipeline Donji Miholjac - Belišće. For the Rogatec – Zabok project the concept design elaboration service was contracted, as well as the The most important company objects of Plinacro Ltd. are pipeline tran- Investment request for the financing of the pipeline construction from the EU smission, pipeline construction, technical maintenance of the facilities and gas funds.

2014. - ANNUAL REPORT ON THE OPERATIONS 41 KEY FINANCIAL RATIOS FINANCIAL RATIOS 2013 2014 LIQUIDITY RATIOS Graph: Summary of total revenue, expenditures and operating results in Current ratio 1,94 2,74 the period from 2011 to 2014 (HRK in thousands) Financial stability ratio 0,93 0,92 LEVERAGE RATIOS 800.000 Debt ratio 0,47 0,44 600.000 Equity ratio 0,52 0,56 400.000 Financial ratio 0,91 0,79 200.000 ACTIVITY RATIOS 0 Total asset turnover ratio 0,14 0,13 2011 2012 2013 2014 EFFICIENCY RATIO TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT Overall operations efficiency 1,33 1,30 PROFITABILITY RATIOS NET RETURN ON ASSETS (ROA) 3,12% 2,60% Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 and 2014 (HRK in thousands) INCOME STATEMENT (HRK in 2013 2014 BALANCE SHEET (HRK in thousands) 2013 2014 thousands) BALANCE SHEET, ASSETS Operating revenues 562.174 519.938 LONG-TERM ASSETS 3.991.282 3.862.445 Operating expenditures 349.347 357.991 I. INTANGIBLE ASSETS 105.050 59.150 Financial revenues 57.299 56.424 II. TANGIBLE ASSETS 3.348.390 3.264.510 Financial expenditures 117.329 86.560 III. LONG-TERM FINANCIAL ASSETS 536.828 536.828 TOTAL REVENUES 619.473 576.362 IV. CLAIMS 2 640 TOTAL EXPENDITURES 466.676 444.551 V. DEFERRED TAX ASSETS 1.012 1.317 PROFIT/LOSS BEFORE TAX 152.797 131.812 SHORT-TERM ASSETS 595.709 515.657 Corporate Tax 9.743 18.002 I. INVENTORY 21.212 16.694 NET PROFIT 143.054 113.810 II. CLAIMS 54.126 70.081 III. SHORT-TERM FINANCIAL ASSETS 11.080 9.696 The total expenditures in 2014 include core business expenses in the amo- IV. CASH AT BANK AND IN HAND 509.291 419.186 unt of 357.99 million HRK (349.34 million HRK in the same period in 2013) and the financial expenses in the amount of 85.56 million HRK (117.33 million in the PREPAID EXPENSES AND ACCRUED 2.867 2.354 same period in 2013). REVENUES TOTAL ASSETS 4.589.858 4.380.456 The net profit for the mentioned period in 2014 amounts to 113.81 million BALANCE SHEET, LIABILITIES HRK and is 29.24 million HRK or 18.80% less than the net profit in the same pe- CAPITAL AND RESERVES 2.401.423 2.443.707 riod in 2013 (143.05 million HRK). The drop in the net profit is the consequence PROVISIONS 3.906 4.443 of the revenue reduction (core business revenues and financial revenues). LONG-TERM LIABILITIES 1.871.435 1.736.978 SHORT-TERM LIABILITIES 306.531 188.192 Compared to 2013 there was a reduction of long-term and short-term liabilities, due to a reduction in long-term loan liabilities. The loan that was DEFERRED EXPENSES AND ACCRUED 6.563 7.136 INCOME raised from the European Bank for Reconstruction and Development for the acquisition of the Underground gas storage Ltd. in 2009 was repaid in full. Ta- TOTAL LIABILITIES 4.589.858 4.380.456 king into consideration the financial ratios of liquidity, debt, efficiency, -pro The comparison of the revenue outcomes from the core business in 2014 fitability and activity it can be concluded that Plinacro Ltd. had positive and and 2013 shows a drop of approx. 12 %. When analyzing the revenue generated stable operating results and no difficulties with the settlement of liabilities. from the gas transmission in 2013 and 2014 it should be noted that in the obser- Also, in 2014 there is a debt ratio reduction as a consequence of the reduction ved periods different methodologies and gas market models were applied. of loan based liabilities.

42 2014. - ANNUAL REPORT ON THE OPERATIONS PLOVPUT d.o.o. www.plovput.hr Obala Lazareta 1, 21 000 Split

Management Board: Government Ownership structure Darko Meštrović, chairman representative in the on December 31, 2014 General Assembly: Supervisory Board: Zdenko Antešić, Rade Bobanac, head deputy Minister of Joško Dvornik, deputy Maritime Affairs, DUUDI/HR Ivica Grga, member Transport and Infrastructure

100% Darko Meštrović

Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 GENERAL COMPANY INFORMATION and 2014 (HRK in thousands)

With the aim of forming a navigation security service, the Government of BALANCE SHEET (HRK in thousands) 2013 2014 the Republic of Croatia established in 1992 Plovput LLC as a company for the BALANCE SHEET, ASSETS maintenance of maritime waterways and radio services. The company is 100 LONG-TERM ASSETS 102.193 119.001 % owned by the Republic of Croatia, its core business, in accordance with the I. INTANGIBLE ASSETS 856 770 Maritime Law and the Law about Plovput, is related to safety of navigation and II. TANGIBLE ASSETS 98.559 115.372 is of interest for the Republic of Croatia. III. LONG-TERM FINANCIAL ASSETS 2.695 2.738 IV. CLAIMS 0 61 AFFILIATED COMPANIES V. DEFERRED TAX ASSETS 83 60 SHORT-TERM ASSETS 60.626 55.024 • Obala d.o.o., Split I. INVENTORY 4.629 4.485 II. CLAIMS 9.674 16.198 COMPANY OBJECTS III. SHORT-TERM FINANCIAL ASSETS 37.917 27.747 IV. CASH AT BANK AND IN HAND 8.406 6.594 The Plovput LLC maintains and regulates the waterways in the internal PREPAID EXPENSES AND ACCRUED 63 1.004 sea waters and the territorial sea of the Republic of Croatia. The company bu- REVENUES siness activities include the implementation of aids to navigation on maritime TOTAL ASSETS 162.882 175.029 waterways (lighthouses and similar) and the guarantee of their correct functi- BALANCE SHEET, LIABILITIES oning. The company also performs the radio service activities on the maritime CAPITAL AND RESERVES 140.856 138.153 waterways of the Republic of Croatia and conducts the research and the design for carrying out operations from their business. PROVISIONS 986 1.209 LONG-TERM LIABILITIES 4.904 19.718 The total investment was financed from own funds and compared to 2013 SHORT-TERM LIABILITIES 4.869 5.619 it was increased by 184% while compared to the average of the past ten years it DEFERRED EXPENSES AND ACCRUED INCOME 11.267 10.330 was increased by 242%, which indicates the importance of investments in the TOTAL LIABILITIES 162.882 175.029 core business, i.e. the safety of the navigation in the internal waters and the territorial sea of the Republic of Croatia. INCOME STATEMENT (HRK in thousands) 2013 2014 Operating revenues 77.072 76.786 The most significant investments in 2014 are: the construction of a work Operating expenditures 69.653 76.335 boat, investing in the modernization of aids to navigation and maritime radio services and solving the office space. Financial revenues 1.648 1.416 Financial expenditures 280 182 KEY FINANCIAL RATIOS TOTAL REVENUES 78.720 78.202 TOTAL EXPENDITURES 69.933 76.517 Graph: Summary of total revenue, expenditures and operating results in PROFIT/LOSS BEFORE TAX 8.787 1.685 the period from 2011 to 2014 (HRK in thousands) Corporate Tax 1.850 404 NET PROFIT 6.937 1.281

100.000 the fees for the use of aids to navigation for foreign boats and yachts was reduced in order to equalize the prices for Croatian and foreign boats and yachts, in accordance with the provisions of the EU, and due to the incomplete imple- 50.000 mentation of the Agreement between the MPPI and the Company pursuant to which the MPPI, in the name and for the account of the Company, bills the fees 0 for the use of aids to navigation for foreign yachts, Croatian and foreign boats 2011 2012 2013 2014 and Croatian small boats.

TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT/LOSS Increased expenditures also had a major impact on business results in 2014. They ensued from the settlement of the debt from the previous period, a capital investment that was financed from the State Budget since the 2008. The The profit decline in 2014 compared to 2013 was influenced by the 2 % Company has settled these costs from its own resources as the budget of The decrease in the revenues from the fees for the use of the aids to navigation for Republic of Croatia did not provide the funding. A non-plan expenditure was foreign ships. The share of these revenues in the Company’s total revenues is also the payment of the invoicing service in the amount of 22.5 % of the total 73 %. From the 1st of January 2014, through a decree issued by the Chairman, invoiced amount, paid to the MPPI which, under the Agreement from 01 Au- with the consent of the Supervisory Board of the Company, the unit price of gust 2014, invoiced the fees for the use of aids to navigation for foreign yachts,

2014. - ANNUAL REPORT ON THE OPERATIONS 43 FINANCIAL RATIOS 2013 2014 Croatian and foreign boats and Croatian small boats. LIQUIDITY RATIOS Due to the decrease in net profit in 2014 the net return of the assets was Current ratio 12,45 9,79 significantly reduced. Financial stability ratio 0,70 0,75 LEVERAGE RATIOS In 2014 the long-term asset value increased as a consequence of an incre- Debt ratio 0,06 0,15 ase in advances for the construction of a work boat, which started in June 2014. Equity ratio 0,87 0,79 The bank loan in the amount of 15 million HRK that the Company got in 2014 for the construction of the work boat influenced the increase in the long-term Financial ratio 0,07 0,18 liabilities. ACTIVITY RATIOS Total asset turnover ratio 0,48 0,45 The Company’s borrowing from a bank reflected on the increase in the EFFICIENCY RATIOS debt ratio value, which still does not represent a risk for the Company’s opera- Overall operations efficiency 1,13 1,02 tion. The Company indebtedness did not significantly affect its liquidity. PROFITABILITY RATIOS NET RETURN ON ASSETS (ROA) 4,26% 0,74%

PODZEMNO SKLADIŠTE www.psp.hr PLINA d.o.o. Veslačka 2–4, 10 000 Zagreb

Ownership structure Management Board: : on December 31, 2014 Krešimir Malec, chairman

Government representative in the General Assembly: Marin Zovko, chairman of Plinacro d.o.o. Plinacro Ltd.

100% Krešimir Malec

Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 GENERAL COMPANY INFORMATION and 2014 (HRK in thousands)

The Company Underground gas storage Ltd. is an operator of a gas storage BALANCE SHEET (HRK in thousands) 2013 2014 system with a task of managing, maintaining and developing a secure, reliable BALANCE SHEET, ASSETS and efficient gas storage system. Podzemno skladište plina was built and for- LONG-TERM ASSETS 424.406 471.093 med in the 1988 within Industrija nafte d.d. It was founded as an independent I. INTANGIBLE ASSETS 336 1.484 company in the 2008 and is 100 % owned by the company Plinacro Ltd. The II. TANGIBLE ASSETS 424.070 469.537 company has no affiliates. III. LONG-TERM FINANCIAL ASSETS 0 0 IV. CLAIMS 0 0 COMPANY OBJECTS V. DEFERRED TAX ASSETS 0 72 SHORT-TERM ASSETS 191.198 185.302 The Company is responsible for ensuring the long-term capabilities of I. INVENTORY 7.083 16.406 the storage system and satisfying the requirements of customers and other II. CLAIMS 22.261 26.295 interested parties for the natural gas. The company objects are the balancing III. SHORT-TERM FINANCIAL ASSETS 0 4.255 of the supply and the consumption of the gas, specifically by participating in the optimal and homogeneous gas production, by favorable gas purchases and IV. CASH AT BANK AND IN HAND 161.854 138.346 continuous and homogeneous supply and ensuring the strategic gas reserves. PREPAID EXPENSES AND ACCRUED 727 1.272 The policies related to quality, environmental and health protection and safety, REVENUES as well as the analysis of risks and system improvements are continuously im- TOTAL ASSETS 616.331 657.667 plemented with the aim of maintaining a high level of gas storing services. BALANCE SHEET, LIABILITIES CAPITAL AND RESERVES 577.056 594.760 KEY FINANCIAL RATIOS PROVISIONS 352 722 LONG-TERM LIABILITIES 0 0 Graph: Summary of total revenue, expenditures and operating results in SHORT-TERM LIABILITIES 37.647 60.922 the period from 2011 to 2014 (HRK in thousands) DEFERRED EXPENSES AND ACCRUED 1.276 1.263 INCOME TOTAL LIABILITIES 616.331 657.667 200.000 150.000 In the course of the investment cycle in 2014, the realization of projects 100.000 amounted to 81 million HRK, which affected the increase in long-term assets in 50.000 the balance sheet. 0 2011 2012 2013 2014 These projects are significantly boosting the competitiveness and independence of the existing Okoli gas storage facility and creating the prerequi- TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT sites for the full functionality of the storage facility as a strategic seasonal gas storage facility.

44 2014. - ANNUAL REPORT ON THE OPERATIONS INCOME STATEMENT (HRK in thousands) 2013 2014 The inventory in 2014 was significantly increased compared to 2013 due to the gas market liberalization and the possibility of buying and storing the gas Operating revenues 153.461 170.823 for the drive consumption. Operating expenditures 108.147 99.949 Financial revenues 7.361 4.294 The cash position saw a decrease in 2014 due to a heavy investment cycle Financial expenditures 228 273 and the settlement of the accruals. The operating revenues in 2014 increased TOTAL REVENUES 160.822 175.117 by 11.3% compared to 2013. This increase is the result of the Methodology for TOTAL EXPENDITURES 108.375 100.221 determining the tariff items and allowed revenue cap which regulates the maximum allowed income. PROFIT/LOSS BEFORE TAX 52.447 74.896 Corporate Tax 10.412 15.156 The operating expenses in 2014 were reduced by 7.6% compared to 2013 as NET PROFIT 42.035 59.740 a result of the continuous rationalization of the operating costs while maintaining the same level of quality of services to the beneficiaries of storage capaci- FINANCIAL RATIOS 2013 2014 ties. This increase in revenues and reduction in expenditures in 2014 compared to 2013 has resulted in an increase in net profit by 42.3% in 2014 compared to LIQUIDITY RATIOS 2013. Current ratio 5,08 3,04 Financial stability ratio 0,74 0,79 LEVERAGE RATIOS Debt ratio 0,06 0,09 Equity ratio 0,94 0,91 Financial ratio 0,07 0,10 ACTIVITY RATIOS Total asset turnover ratio 0,26 0,27 EFFICIENCY RATIOS Overall operations efficiency 1,48 1,75 PROFITABILITY RATIOS NET RETURN ON ASSETS (ROA) 6,83% 9,10%

POMORSKI CENTAR ZA www.pce.hr ELEKTRONIKU d.o.o. Zrinsko-Frankopanska 209, 21 000 Split Ownership structure on December 31, 2014

Management Board: Government Ivan Brković, chairman representative in the General Assembly: DUUDI/HR Supervisory Board: Ante Kotromanović, Zdenko Simičić, head Defence Minister Nino Stapić, deputy Ivan Vrdoljak, Minister

Tihomir Mandac, member of the Economy 100%

Ivan Brković

GENERAL COMPANY INFORMATION nic Center and the Manufacturing Center (lohn-contract). The Development department of PCE Marine Electronic Center Ltd. has been successfully coope- PCE Marine Electronic Center Ltd. was established with the basic task of rating for several years with the Security and Intelligence Agency in the project technical maintenance and development of highly sophisticated electronic de- of the development and the production of crypto devices. vices and systems for the needs of the Republic of Croatia Armed Forces and civilian markets. KEY FINANCIAL RATIOS AFFILIATES Graph: Summary of total revenue, expenditures and operating results in the period from 2011 to 2014 (HRK in thousands) • PCE – Thales napredni sustavi d.o.o., Split, 75% ownership 30.000 COMPANY OBJECTS 20.000 10.000 PCE Marine Electronic Center Ltd. is a manufacturing company that 0 offers services of development, design, production and servicing of the electro- -10.000 2011 2012 2013 2014 nic equipment, especially naval, communications, information and navigation systems. In addition to establishing high-quality and long-term business re- -20.000 lations with its business partners, the Company creates an environment that TOTAL REVENUES TOTAL EXPENDITURES GROSS LOSS inspires excellence. The Company is made up of two profitable centers: Electro-

2014. - ANNUAL REPORT ON THE OPERATIONS 45 Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 FINANCIAL RATIOS 2013 2014 and 2014 (HRK in thousands) LIQUIDITY RATIOS BALANCE SHEET (HRK in thousands) 2013 2014 Current ratio 18,85 4,08 BALANCE SHEET, ASSETS Financial stability ratio 0,43 0,46 LONG-TERM ASSETS 17.518 16.617 I. INTANGIBLE ASSETS 556 801 LEVERAGE RATIOS II. TANGIBLE ASSETS 16.962 15.816 Debt ratio 0,03 0,15 III. LONG-TERM FINANCIAL ASSETS 0 0 Equity ratio 0,97 0,85 IV. CLAIMS 0 0 Financial ratio 0,03 0,18 V. DEFERRED TAX ASSETS 0 0 ACTIVITY RATIOS SHORT-TERM ASSETS 24.978 26.221 Total asset turnover ratio 0,29 0,19 I. INVENTORY 3.143 3.406 EFFICIENCY RATIOS II. CLAIMS 1.523 2.529 III. SHORT-TERM FINANCIAL ASSETS 14.321 10.947 Overall operations efficiency 0,70 0,62 IV. CASH AT BANK AND IN HAND 5.991 9.339 PROFITABILITY RATIOS PREPAID EXPENSES AND ACCRUED 59 NET RETURN ON ASSETS (ROA) -12,28% -11,59% REVENUES TOTAL ASSETS 42.496 42.897 BALANCE SHEET, LIABILITIES The performance ratios suggest that due to the recession and economic sta- CAPITAL AND RESERVES 41.170 36.474 gnation in the region, the Company failed to achieve a sufficient revenue growth PROVISIONS 0 0 and at the same time accelerate the decline in expenditures, thus in 2014 too it fa- LONG-TERM LIABILITIES 0 0 iled to achieve a positive result. The loss from the previous year was reduced, but SHORT-TERM LIABILITIES 1.325 6.422 given the fact that the Company’s revenues depend primarily on the orders of The DEFERRED EXPENSES AND ACCRUED 1 1 Ministry of Defence and the orders from abroad, the dynamics of orders did not INCOME ensure the achievement of positive results. TOTAL LIABILITIES 42.496 42.897 The operating result was reflected in the financial performance ratios. The -cu INCOME STATEMENT (HRK in thousands) 2013 2014 rrent ratio was reduced, but still remarkably high. The debt ratio increased slightly. Operating revenues 11.261 7.514 The profitability and rentability increased compared to 2013 but were still negative, Operating expenditures 17.308 12.818 as a result of loss made in both reporting periods. The overall operations efficiency Financial revenues 934 427 was increased. Financial expenditures 104 89 TOTAL REVENUES 12.195 7.941 During the 2014 investments were made in the Company’s facilities that ha- TOTAL EXPENDITURES 17.412 12.907 ven’t seen any investment for years, and part of the space of those unused facilities PROFIT/LOSS BEFORE TAX -5.217 -4.966 was leased. The value of the investment was approx. 50,000,00 HRK. Corporate Tax NET LOSS -5.217 -4.966

SREDIŠNJE KLIRINŠKO www.skdd.hr DEPOZITARNO DRUŠTVO d.d. Heinzelova 62, 10 000 Zagreb

Management Board: Zrinka Vrhovski, member Ownership structure Vesna Živković, chairman Ivan Sobin, member on December 31, 2014 Stjepko Čičak, member Government 9,00% Nadzorni odbor: representative in the 5,00% DUUDI/RH Tanjica Liktar, head General Assembly: Financijska agencija Ivo Balen, deputy Central Depository & Zagrebačka banka d.d.

Ivana Gažić, member Clearing Company Inc. has Other Saša Drezgić, member no General Assembly 45,00% 41,00% Anđelka Buneta, member Vesna Živković

GENERAL COMPANY INFORMATION tory of dematerialised securities, management of the central register of financial instruments, management of the clearing and settlement system for the Central Depository & Clearing Company Inc. was founded in 1997, pursu- transactions of the financial instruments and the services related to the corpo- ant to provisions of the Act on Issuing and Trading Securities. rate actions of the issuers of dematerialised securities.

It is a joint-stock company with a majority state share in the capital stock and it has the permit to carry out the activities of depositing dematerialised AFFILIATES securities and clearing and settling legal affairs performed with such securities. • SKDD-CCP Smart Clear d.d., Zagreb, ownership 100% The Company’s core business is the management of the central deposi-

46 2014. - ANNUAL REPORT ON THE OPERATIONS COMPANY OBJECTS BALANCE SHEET, LIABILITIES 2013 2014 CAPITAL AND RESERVES 72.777 109.700 Central Depository & Clearing Company Inc. seeks to maintain its posi- PROVISIONS tion as one of the most reliable, respected institutions of the highest quality on the capital market, and to enable further development and integrity of the LONG-TERM LIABILITIES 16 capital markets, by providing diverse and high quality services to the investors, SHORT-TERM LIABILITIES 1.734 1.718 members and all users of its services. DEFERRED EXPENSES AND ACCRUED 1.308 1.470 INCOME The strategy of the Central Depository & Clearing Company Inc. is focu- TOTAL LIABILITIES 75.819 112.904 sed on the development of products and services, but also on the boosting of its reputation, integrity and credibility and thus maintaining the confidence in INCOME STATEMENT (HRK in thousands) 2013 2014 the Company and its operations. Operating revenues 30.952 30.205 KEY FINANCIAL RATIOS Operating expenditures 25.564 24.244 Financial revenues 2.396 2.805 Graph: Summary of total revenue, expenditures and operating results in Financial expenditures 8 6 the period from 2011 to 2014 (HRK in thousands) TOTAL REVENUES 33.348 33.010 TOTAL EXPENDITURES 25.574 24.251 PROFIT/LOSS BEFORE TAX 7.774 8.759 40.000 30.000 Corporate Tax 1.581 1.824 20.000 NET PROFIT 6.193 6.935 10.000 FINANCIAL RATIOS 2013 2014 0 2011 2012 2013 2014 LIQUIDITY RATIOS Current ratio 28,16 47,00 TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT Financial stability ratio 0,37 0,29 LEVERAGE RATIOS Debt ratio 0,02 0,02 Tables: Summary of the abbreviated balance sheet, profit and loss account Equity ratio for 2013 and 2014 (HRK in thousands) 0,96 0,97 Financial ratio 0,02 0,02 BALANCE SHEET (HRK in thousands) 2013 2014 ACTIVITY RATIOS BALANCE SHEET, ASSETS Total asset turnover ratio 0,44 0,29 EFFICIENCY RATIOS LONG-TERM ASSETS 26.910 32.104 Overall operations efficiency 1,30 1,36 I. INTANGIBLE ASSETS 749 544 PROFITABILITY RATIOS II. TANGIBLE ASSETS 15.884 14.788 NET RETURN ON ASSETS (ROA) 8,18% 6,15% III. LONG-TERM FINANCIAL ASSETS 10.277 16.772 IV. CLAIMS company CDCC-CCP, to which CDCC will allocate the settlement operations, V. DEFERRED TAX ASSETS is expected in late 2015, after the end of the licensing process of the European SHORT-TERM ASSETS 48.822 80.750 regulator. In order to meet the capital requirements defined in EMIR, the Com- I. INVENTORY 5 11 pany CDCC-CCP was recapitalized in 2014 in the amount of 78 million HRK, partly with the CDCC resources in the amount of 48 million, and partly with II. CLAIMS 2.793 3.595 the funds that the CDCC obtained through a capital increase and the subscrip- III. SHORT-TERM FINANCIAL ASSETS 45.133 44.732 tion of the new shares by the shareholders. IV. CASH AT BANK AND IN HAND 891 32.412 PREPAID EXPENSES AND ACCRUED The total revenues of CDCC Group decreased by 1% compared to 2013, 87 50 REVENUES while the expenditures were reduced by 5%, primarily in the area of material costs and other expenses (banking and postal expenses, representation, value TOTAL ASSETS 75.819 112.904 adjustments, etc.).

The Companies CDCC Inc. and its subsidiary CDCC-CCP Smart Clear Within its depository services CDCC stores 1,065 financial instruments Inc. in 2014 made 13 percent higher profit compared to 2013. The 2014 was very with a market value of 384 billion HRK. As a paying agent CDCC has proces- challenging for CDCC due to the extreme emphasis on the development se- sed payments from corporate actions (dividends, interest) in the amount of 35 gment (adjustment with the EU EMIR regulation), but nevertheless the Com- billion HRK in 2014, while on the basis of clearing and settlement services an pany managed to achieve good business results. The operational start of the amount of over 38 billion HRK was settled through CDCC account.

2014. - ANNUAL REPORT ON THE OPERATIONS 47 The companies of special interest in majority ownership of the Republic of Croatia >>

48 2014. - ANNUAL REPORT ON THE OPERATIONS ADRIATIC CROATIA CLUB www.aci-marinas.com INTERNATIONAL Inc. Maršala Tita 151, 51 410 Opatija

Management Board: Government representative in the Doris Peručić, Member of General Assembly: Ownership structure the Board, authorized for Darko Lorencin, chairman, on December 31, 2014 representation Minister of Tourism Siniša Hajdaš Dončić, 0,61% 8,79% DUUDI/DAB deputy, Minister of Maritime Affairs, 1,14% Supervisory board: 4,12% Dogus Marine Dražen Ivanušec, predsjednik Transport and Infrastructure - one Croatia DUUDI/RH Tedi Chavalon, zamjenik of them presides over the General 10,87% Raiﬀeisenbank Tamara Martinčić, članica Assembly, the power of attorney is Austria d.d. Mladen Mijač, član issued by the State Administrative Bahovec Srečko

Doris Peručić Ivan Mladinić, član Office for State Property Management 74,47% Other

GENERAL COMPANY INFORMATION

Adriatic Croatia International Club is a joint-stock company founded in 1983. BALANCE SHEET (HRK in thousands) 2013 2014 After the transformation in 1994 it was registered at the Commercial Court in BALANCE SHEET, LIABILITIES Rijeka. The Company’s shares are listed on the capital market and the company’s CAPITAL AND RESERVES 423.521 447.962 operations remain stable and make profit. It has no subsidiary companies. PROVISIONS 19.244 9.877 LONG-TERM LIABILITIES 26.370 27.897 COMPANY OBJECTS SHORT-TERM LIABILITIES 16.608 21.849 DEFERRED EXPENSES AND ACCRUED 63.992 66.873 The company objects of Adriatic Croatia International Club Inc. is organizing INCOME and providing berth services for the vessels in the marinas along the Croatian coast, as well as the other activities related to the rental, construction and repair of ves- TOTAL LIABILITIES 549.735 574.458 sels and others. In order to enable the use of the maritime demesne, the Croatian Government has granted the Company the concessions, on the basis of which 21 INCOME STATEMENT (HRK in thousands) 2013 2014 marinas were built on this demesne. The Company’s vision is to remain a leader Operating revenues in providing the services to the sailors in the Adriatic and in the long term in the 194.113 204.488 Mediterranean also. The Company is not in the process of restructuring, but is con- Operating expenditures 191.673 174.312 tinuously implementing measures for the improvement of the operations. In the Financial revenues 11.063 8.694 future period it is expected that the further direction of the announced recapitali- Financial expenditures 8.535 5.414 sation of the Company will be decided, on the basis of the completed analysis and TOTAL REVENUES 205.176 213.182 studies. At the same time, intensive work is being done on resolving property-legal TOTAL EXPENDITURES 200.208 179.726 relations and the modernisation of infrastructure in the marinas. PROFIT/LOSS BEFORE TAX 4.968 33.456 Corporate Tax 1.472 7.161 KEY FINANCIAL RATIOS NET PROFIT 3.496 26.295

Graph: Summary of total revenue, expenditures and operating results in the period from 2011 to 2014 (HRK in thousands) FINANCIAL RATIOS 2013 2014 LIQUIDITY RATIOS 250.000 Current ratio 7,72 7,90 200.000 Financial stability ratio 0,94 0,84 150.000 LEVERAGE RATIOS 100.000 Debt ratio 0,08 0,09 50.000 0 Equity ratio 0,77 0,78 2011 2012 2013 2014 Financial ratio 0,10 0,11

TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT ACTIVITY RATIOS Total asset turnover ratio 0,37 0,37 Tables: Summary of the abbreviated balance sheet, profit and loss account EFFICIENCY RATIOS for 2013 and 2014 (HRK in thousands) Overall operations efficiency 1,02 1,19 BALANCE SHEET (HRK in thousands) 2013 2014 PROFITABILITY RATIOS BALANCE SHEET, ASSETS NET RETURN ON ASSETS (ROA) 0,64% 4,58% LONG-TERM ASSETS 420.894 401.450 I. INTANGIBLE ASSETS 26.208 28.705 The analysis of the balance sheet shows that in 2014 the company ACI Inc. II. TANGIBLE ASSETS 392.615 369.965 made a profit in the amount of 26 million HRK, after a corporate tax deduction III. LONG-TERM FINANCIAL ASSETS 141 99 in the amount of 7 million HRK, which is a 22.7 million HRK profit increase compared to the year before when the net profit amounted to 3.5 million HRK. IV. CLAIMS 0 0 V. DEFERRED TAX ASSETS 1.930 2.681 The financial ratios generally show an upward trend. The current ratio in- SHORT-TERM ASSETS 128.264 172.589 creased by 2 %, mostly due to an increase in the short-term financial assets, I. INVENTORY 1.010 1.060 the debt ratio increased by 11 %, the equity ratio by 1 %, the financial ratio by II. CLAIMS 9.286 8.111 9 %, the overall operations efficiency by 16 %, mostly due to a decline in the III. SHORT-TERM FINANCIAL ASSETS 116.151 153.297 expenditures, and the ROA showed a sixfold increase due to seven times better IV. CASH AT BANK AND IN HAND 1.817 10.121 operating results. The financial stability ratio shows a downward trend with a 10 % decline, mostly as a result of the capital value growth. The investments PREPAID EXPENSES AND ACCRUED 577 419 REVENUES worth 23 million HRK were made in 2014. TOTAL ASSETS 549.735 574.458

2014. - ANNUAL REPORT ON THE OPERATIONS 49 Agencija za podršku komunikacijskim www.apis-it.hr sustavima i informacijskim tehnologijama ( APIS IT ) d.o.o. Paljetkova 18, 10 000 Zagreb

Management Board: Government Ownership structure Hrvoje Somun, chairman representative in the on December 31, 2014 Denis Hrestak, member General Assembly :

Lovro Mateš, member Igor Rađenović, representative of the Supervisory Board : Republic of Croatia DUUDI/RH Slavica Pezer-Blečić, predsjednica Sandra Švaljek, 49% 51% Ivan Rašeta, member representative of the Grad Zagreb Jelena Pavičić-Vukičević, member City of Zagreb Ana Stavljenić-Rukavina, member Hrvoje Somun Dragica Bando, member

GENERAL COMPANY INFORMATION mation services and printing for government bodies. Projects such as the computerization of the largest state and city administration systems, the introduction of The Information systems and information technologies support agency Ltd. was a personal identification number, fiscalization, EU projects of the Tax and Customs established in late 2005 with an agreement between the Government of Croatia and Administration, Joint Information System (JIS) of Land Registry and Cadastre and the City of Zagreb, in order to perform the activities of development and support of consolidation of land register data, geoportal construction, development of municipal key information systems of the Republic of Croatia and the City of Zagreb and deve- information systems, document management systems, etc., and the pertaining infra- lop application services and keep the necessary information base as the basis for the structure, are a foundation and a good example of the transformation of the modern public administration. functioning of a modern and electronically supported administration. The Company has no affiliated companies. The Company provides strategic, professional and implementation services to owners and the public sector of the Republic of Croatia for planning, development, COMPANY OBJECTS support and maintenance of business information systems according to networked-oriented administration principles, and as such is a national reference center for Although Information systems and information technologies support agency the development and IT support of networked-oriented administration of the Repu- Ltd. has registered a wide scope of activities, the primary activity is providing infor- blic of Croatia and the first choice in the provision of IT services in the public sector.

BALANCE SHEET, LIABILITIES 2013 2014 KEY FINANCIAL RATIOS CAPITAL AND RESERVES PROVISIONS 328.205 330.967 Graph: Summary of total revenue, expenditures and operating results in LONG-TERM LIABILITIES 9.626 1.984 the period from 2011 to 2014 (HRK in thousands) SHORT-TERM LIABILITIES DEFERRED EXPENSES AND ACCRUED 29.677 28.098 INCOME 300.000 TOTAL LIABILITIES 4.627 3.943

200.000 UKUPNO – PASIVA 372.135 364.992

100.000 FINANCIAL RATIOS 2013 2014 0 LIQUIDITY RATIOS 2011 2012 2013 2014 Current ratio 9,41 9,21 TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT/LOSS Financial stability ratio 0,28 0,31 LEVERAGE RATIOS Debt ratio 0,08 0,08 Equity ratio Tables: Summary of the abbreviated balance sheet, profit and loss account 0,89 0,91 for 2013 and 2014 (HRK in thousands) Financial ratio 0,09 0,08 ACTIVITY RATIOS BALANCE SHEET (HRK in thousands) 2013 2014 Total asset turnover ratio 0,59 0,59 BALANCE SHEET, ASSETS EFFICIENCY RATIOS LONG-TERM ASSETS 90.339 103.169 Overall operations efficiency 1,11 1,09 I. INTANGIBLE ASSETS 53.388 57.150 PROFITABILITY RATIOS II. TANGIBLE ASSETS 34.616 43.490 NET RETURN ON ASSETS (ROA) 4,54% 3,55% III. LONG-TERM FINANCIAL ASSETS IV. CLAIMS 670 The balance sheet total decreased by 1.9% primarily due to profit distri- V. DEFERRED TAX ASSETS 2.335 1.859 bution to shareholders in the amount of approximately 10 million HRK. Mo- SHORT-TERM ASSETS 279.331 258.700 netary assets decreased by 21.5 million HRK due to investments in fixed assets. I. INVENTORY 22.014 9.052 Total receivables in the amount of 52.24 million HRK have increased by 39.0% compared to the same period in 2013 because payment of customers at the end II. CLAIMS 37.581 52.248 of 2013 was more intense than in 2014. III. SHORT-TERM FINANCIAL ASSETS 119.575 118.698 IV. CASH AT BANK AND IN HAND 100.161 78.702 There has been a significant change in long-term provisions (79%), which PREPAID EXPENSES AND ACCRUED 2.465 3.123 decreased due to the reduction of the principal for calculation of jubilee awards. REVENUES The total Company due liabilities in the amount of 28 million HRK were re- TOTAL ASSETS 372.135 364.992 duced by 5.3% compared to the same period last year. The Company has no

50 2014. - ANNUAL REPORT ON THE OPERATIONS liabilities to credit institutions. INCOME STATEMENT (HRK in thousands) 2013 2014

Apis IT Ltd. achieved a total revenue 213 million HRK which represents a Operating revenues 212.886 206.954 slight decrease compared to the same period in 2013. The decrease in revenue Operating expenditures 194.759 194.497 is a result of budget cuts in the volume of orders for state-owned enterprises, Financial revenues 4.049 6.479 and partly as a result of the completion of intensive adjustment of information Financial expenditures systems of the Tax and Customs Administration with EU regulations which 1.337 1.041 resulted in lower profitability. TOTAL REVENUES 216.935 213.433 TOTAL EXPENDITURES 196.096 195.538 Total expenses amounted to 195.5 million HRK and decreased by 0.3% PROFIT/LOSS BEFORE TAX compared to the same period last year. The liquidity of APIS IT Ltd. has been 20.839 17.895 very good for years and is expected to remain so in the forthcoming period. Corporate Tax 4.041 5.055 NET PROFIT 16.798 12.840

BRIJUNI RIVIJERA d.o.o. www.brijunirivijera.hr Riva 8, 52 100 Pula

Management Board: Ownership structure Sanja Švarc, chairman on December 31, 2014

Supervisory Board: Ivan Glušac, head , deputy 33% Giordano Škuflić DUUDI/RH Mirko Herceg, member Jadranka Čengija Šarić, member Istrian Region

Alen Damijanić, member 67%

Sanja Švarc Government representative in the General Assembly: Darko Lorencin, Minister of Tourism

GENERAL COMPANY INFORMATION Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 and 2014 (HRK in thousands) The Company was founded in 2004 with the aim of preparation, evaluation, BALANCE SHEET (HRK in thousands) 2013 2014 management and control of the Programme Management of certain state-owned real estate, more specifically the islands of Brijuni. It is owned by the Republic of BALANCE SHEET, ASSETS Croatia and the Region of Istria. The Company has no affiliated companies. LONG-TERM ASSETS 468 574 SHORT-TERM ASSETS 3.732 5.080 COMPANY OBJECTS PREPAID EXPENSES AND ACCRUED 25 15 REVENUES The main activity of the Company is the Brijuni Riviera project and its TOTAL ASSETS 4.225 5.669 management. BALANCE SHEET, LIABILITIES The business goal is the construction of high category tourist facilities on CAPITAL AND RESERVES 3.335 4.985 the principles of sustainable development, in order to create conditions for the PROVISIONS 0 0 implementation and management of Brijuni Riviera, in a manner to ensure the management of government-owned real estate of the Republic of Croatia in an LONG-TERM LIABILITIES 57 40 efficient and socially responsible way towards society as a whole. SHORT-TERM LIABILITIES 833 644 DEFERRED EXPENSES AND ACCRUED 0 0 KEY FINANCIAL RATIOS INCOME TOTAL – LIABILITIES 4.225 5.669 Graph: Summary of total revenue, expenditures and operating results in the period from 2011 to 2014 (HRK in thousands) INCOME STATEMENT (HRK in thousands) 2013 2014 Operating revenues 8.765 8.631

10.000 Operating expenditures 6.388 6.607 Financial revenues 63 31 5.000 Financial expenditures 118 5 TOTAL REVENUES 9.397 8.682 0 TOTAL EXPENDITURES 6.506 6.612 2011 2012 2013 2014 PROFIT/LOSS BEFORE TAX 2.891 2.070 TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT Corporate Tax 587 420 NET PROFIT 2.304 1.650

2014. - ANNUAL REPORT ON THE OPERATIONS 51 Total revenues in 2014 compared to the previous year decreased by 1.5% as FINANCIAL RATIOS 2013 2014 a result of the reduction of the biggest part of extraordinary - other revenues, LIQUIDITY RATIOS due to the absence of subsidy of Company founder, Region of Istria, which in 2013 amounted to 550,000 HRK. The agreement brought on the Decision that Current ratio 4,48 7,89 in 2014, the Company would finance its operations exclusively with its own re- Financial stability ratio 0,14 0,11 venue. LEVERAGE RATIOS Debt ratio 0,21 0,12 Total expenditure increased by 1.6% compared to 2013 as a result of an Equity ratio 0,79 0,88 increase of other costs (preparation of documentation- studies, project docu- Financial ratio mentation, geodetic services), while the purchase cost of raw materials, mate- 0,27 0,14 rials and personnel costs are substantially reduced compared to the previous ACTIVITY RATIOS year. In 2014, the financial expenditures item decreased by 96.5% as a result the Total asset turnover ratio 2,24 1,54 closure of the interest on loans. EFFICIENCY RATIOS Overall operations efficiency 1,44 1,31 The Company long-term liabilities for 2013 and 2014 are linked to the PROFITABILITY RATIOS long-term liability for financial leasing which, according to the repayment sc- hedule, is to be settled until January 2017. NET RETURN ON ASSETS (ROA) 54,86% 29,18%

BRODARSKI INSTITUT d.o.o. www.hrbi.hr Avenija V. Holjevca 20, 10 000 Zagreb

Management Board : Government Ownership structure Vladimir Koroman, chairman representative in the on December 31, 2014 General Assembly : Supervisory Board: Vedran Mornar, Roko Dejhalla, head Minister of Science, Tihomir Erceg, deputy Education and Sports Bojan Pečnik, member Ante Kotromanović, DUUDI/HR Ivo Radković, member Defence Minister Blaž Mešin, member Ivan Vrdoljak, Minister of Economy Vladimir Koroman 100%

GENERAL COMPANY INFORMATION all areas of renewable energy, particularly in the area of biogas and also an innovative approach to enhancing maritime technology. This way a greater utilization of natural Brodarski institut Ltd. was founded in 1948 as an institution of special im- and material resources is obtained, and maximum operational excellence is allowed. portance for the Republic Croatia in the field of maritime industry, science and technical systems. Today, Brodarski institut Ltd. is a technologically advanced com- The company objects of Brodarski institut Ltd. is to position itself as one of the pany that generates, transmits and applies knowledge to innovative products and three key factors in the implementation of technologies for the use of renewable energy high-value and quality services of and quality on the domestic and international sources, through an innovative approach to maritime technologies to improve existing market and seeks to maintain high-quality operations during the economic crisis technologies, maintain its share on the marine technology market, ensure continued and shipbuilding restructuring. The Company has no affiliated companies. growth in revenue and operating profit, achieve greater efficiency of internal material and human resources, to keep the existing quality staff and attract young professional personnel, thus ensuring stable operation and development of the Company. COMPANY OBJECTS

The main activity of the company is implementation of green technologies in Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 and 2014 (HRK in thousands)

BALANCE SHEET (HRK in thousands) 2013 2014 KEY FINANCIAL RATIOS BALANCE SHEET, ASSETS LONG-TERM ASSETS 98.395 95.330 Graph: Summary of total revenue, expenditures and operating results in I. INTANGIBLE ASSETS 2.533 1.974 the period from 2011 to 2014 (HRK in thousands) II. TANGIBLE ASSETS 95.809 93.261 III. LONG-TERM FINANCIAL ASSETS 53 95 IV. CLAIMS 0 0 80.000 V. DEFERRED TAX ASSETS 0 0 60.000 SHORT-TERM ASSETS 11.995 16.945 40.000 I. INVENTORY 28 23 20.000 II. CLAIMS 11.433 16.417 0 III. SHORT-TERM FINANCIAL ASSETS 469 155 2011 2012 2013 2014 IV. CASH AT BANK AND IN HAND 65 350 TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT PREPAID EXPENSES AND ACCRUED 6.527 6.889 REVENUES TOTAL ASSETS 116.917 119.164

52 2014. - ANNUAL REPORT ON THE OPERATIONS BALANCE SHEET (HRK in thousands) 2013 2014 INCOME STATEMENT (HRK in thousands) 2013 2014 BALANCE SHEET, LIABILITIES Operating revenues 38.868 31.484 CAPITAL AND RESERVES 74.386 74.571 Operating expenditures 37.815 38.832 PROVISIONS Financial revenues 70 75 LONG-TERM LIABILITIES 8.025 8.095 Financial expenditures 1.002 1.000 SHORT-TERM LIABILITIES 25.125 26.608 TOTAL REVENUES 38.938 40.017 DEFERRED EXPENSES AND ACCRUED 9.381 9.890 INCOME TOTAL EXPENDITURES 38.817 39.831 TOTAL LIABILITIES 116.917 119.164 PROFIT/LOSS BEFORE TAX 121 186 Corporate Tax FINANCIAL RATIOS 2013 2014 NET PROFIT 121 186 LIQUIDITY RATIOS Current ratio 0,48 0,64 In 2014, the Company realized a total revenue in the amount of 39.8 million Financial stability ratio 1,19 1,15 HRK, which resulted to be more than 1.8 percent compared to the previous year, LEVERAGE RATIOS when it amounted to 38.9 million HRK. The increase in revenue is negligible becau- Debt ratio 0,30 0,31 se with the employee retention, the Company achieves the same ratio of revenues and expenditures for both these years. Total expenses of the Company in 2014 amo- Equity ratio 0,67 0,66 unted to 39.8 million HRK, which proved to be slightly higher than compared to Financial ratio 0,45 0,47 2013. ACTIVITY RATIOS Total asset turnover ratio 0,35 0,36 The Company has entered into o the restructuring process in the field of se- EFFICIENCY RATIOS lling its own services, while other measures within the individual production acti- Overall operations efficiency 1,00 1,00 vities are in progress and the performance results of the implementation will be visible in the forthcoming period. PROFITABILITY RATIOS NET RETURN ON ASSETS (ROA) 0,11% 0,17%

CLUB ADRIATIC d.o.o. www.club-adriatic.hr Ivana Lucica 6, 10 000 Zagreb

Ownership structure on December 31, 2014

Management Board: Government Igor Uršić, chariman representative in the Darija Milina, member General Assembly : DUUDI/HR by power of attorney Supervisory Board: Darko Lorencin, Štefica Salaj, head Minister of Tourism

Petar Mastilica, deputy 100% Meri Vajncetler, member

GENERAL COMPANY INFORMATION and in held meetings, participates in the pre-settlement proceedings and in the Financial and operational restructuring plan. The goal of the pre-settlement Club Adriatic Ltd. is a 100 percent owned by the Republic of Croatia, and is procedure is to achieve and maintain liquidity and solvency of the Company’s operations and an ongoing business activity. registered for activities in the tourism industry with the ultimate goal of pre- paring state tourist facilities for privatization or joint venture. The Company manages tourist facilities owned by the Republic of Croatia. The Company has KEY FINANCIAL RATIOS no subsidiaries. Graph: Summary of total revenue, expenditures and operating results in the period from 2011 to 2014 (HRK in thousands) COMPANY OBJECTS

Given the purpose of facilities managed by Club Adriatic Ltd., the base of 100.000 operations is the provision of accommodation and catering services to guests of tourist facilities. The business operations are only seasonal, and because of 50.000 the inherited past and business framework, the Company has liquidity issues and is trying to solve them by improving the accommodation quality and by 0 2011 2012 2013 2014 expanding its capacities. -50.000 On October 10, 2014 a pre-settlement proceeding was opened. The compe- TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT/LOSS tent Ministry of Tourism, through its representative on the Supervisory Board

2014. - ANNUAL REPORT ON THE OPERATIONS 53 Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 FINANCIAL RATIOS 2013 2014 and 2014 (HRK in thousands) LIQUIDITY RATIOS BALANCE SHEET (HRK in thousands) 2013 2014 Current ratio 0,24 0,23 BALANCE SHEET, ASSETS Financial stability ratio 1,12 1,27 LONG-TERM ASSETS 287.450 279.746 LEVERAGE RATIOS SHORT-TERM ASSETS 9.510 17.970 PREPAID EXPENSES AND ACCRUED 112 38 Debt ratio 0,26 0,42 REVENUES Equity ratio 0,74 0,58 TOTAL ASSETS 297.072 297.754 Financial ratio 0,35 0,72 BALANCE SHEET, LIABILITIES ACTIVITY RATIOS CAPITAL AND RESERVES 220.031 173.514 Total asset turnover ratio 0,15 0,13 PROVISIONS 0 0 LONG-TERM LIABILITIES 37.403 46.606 EFFICIENCY RATIOS SHORT-TERM LIABILITIES 39.638 77.634 Overall operations efficiency 1,00 0,61 DEFERRED EXPENSES AND ACCRUED 0 0 PROFITABILITY RATIOS INCOME NET RETURN ON ASSETS (ROA) 0,02% -8,11% TOTAL – LIABILITIES 297.072 297.754 Total expenditures of the Company in 2014 have increased by 40% com- INCOME STATEMENT (HRK in thousands) 2013 2014 pared to last year, because in 2014 business events incurred in previous years Operating revenues 44.194 38.123 have been recorded, such as the provisions for employee claims in the period Operating expenditures 41.932 49.043 from 2011 to 2014, investments in non-owned assets and obligations under the Financial revenues 1.647 441 concluded entrepreneurial contract. Total expenses in 2014 compared to the Financial expenditures 3.896 13.663 previous year recorded an increase of nearly 11.2 million HRK, although in real TOTAL REVENUES 45.920 38.564 terms they were less than 5 million HRK. TOTAL EXPENDITURES 45.828 62.706 The Company’s insolvency on June 30, 2014 initiated the pre-settlement PROFIT/LOSS BEFORE TAX 92 -24.142 proceedings and its implementation should enable further business activity Corporate Tax 18 0 and supply accommodation capacity. The procedures include the takeover of NET PROFIT/LOSS 74 -24.142 the Company by a strategic partner and the sale of assets for the settlement of obligations to creditors. In 2014, the Company Club Adriatic Ltd., realized a 15.9 percent lower total revenue compared to 2013. This reduction is the result of a 13.7 percent drop in A positive outcome of the pre-settlement proceedings would resolve the revenues from sales. Total expenditures of the Company in 2014 have incre- Company’s issues, particularly insolvency and illiquidity issues, and would ased by 40 percent compared to last year mostly as a result of an increase of enable investment in other accommodation capacities, as well as raising the personnel costs and other operating costs. categorization of facilities.

54 2014. - ANNUAL REPORT ON THE OPERATIONS CROATIA AIRLINES d.d. www.croatiaairlines.com Bani 75b, 10 010 Buzin – Zagreb

Management Board: Government Ownership structure Krešimir Kučko, chairman representative on December 31, 2014 Zlatko Širac, member in the General 0,77% 0,41% Assembly: 0,08% Supervisory Board : Siniša Hajdaš 1,72% DUUDI/RH

Siniša Petrović, head Dončić, Minister of Zračna luka Zagreb Darko Prebežac, deputy Maritime Affairs, Berislav Matijević, member Transport and DUUDI/DAB Marko Lesić, member Infrastructure JANAF Krešimir Hrvoje Kujundžić, member Other Kučko 97,02%

GENERAL COMPANY ACTIVITIES In order to improve quality and operating efficiency, the Company has initiated a -re structuring process. Croatia Airlines Plc. is a national airline company founded in 1989 as a joint-stock company, and owns three subsidiaries. The share capital is divided into 27,787.953 shares. KEY FINANCIAL RATIOS

Graph: Summary of total revenue, expenditures and operating results in the period AFFILIATED COMPANIES from 2011 to 2014 (HRK in thousands)

• Obzor putovanja d.o.o., Zagreb, 100% ownership 3.000.000 • Amadeus Croatia d.d. Zagreb, 95% ownership • Pleso prijevoz d.o.o., Zagreb, 50% ownership 2.000.000 1.000.000

COMPANY OBJECTS 0 2011 2012 2013 2014 The main activity of the Company is providing transportation of passengers, mail and -1.000.000 cargo in domestic and international air traffic. Croatia Airlines is a mid-sized European airline, with a modern fleet and providing high-quality services, safe and reliable, and TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT/LOSS continuously contributes to the development of Croatian tourism and economy. FINANCIAL RATIOS 2013 2014 Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 and 2014 (HRK in thousands) LIQUIDITY RATIOS Current ratio 0,38 0,48 BALANCE SHEET (HRK in thousands) 2013 2014 Financial stability ratio 1,82 1,54 BALANCE SHEET, ASSETS LEVERAGE RATIOS LONG-TERM ASSETS 781.039 658.670 I. INTANGIBLE ASSETS 17.696 25.876 Debt ratio 0,62 0,52 II. TANGIBLE ASSETS 714.506 561.970 Equity ratio 0,35 0,43 III. LONG-TERM FINANCIAL ASSETS 48.337 70.649 Financial ratio 1,76 1,21 IV. CLAIMS 500 175 ACTIVITY RATIOS V. DEFERRED TAX ASSETS Total asset turnover ratio 1,68 1,91 SHORT-TERM ASSETS 204.966 179.474 EFFICIENCY RATIOS I. INVENTORY 47.626 49.804 Overall operations efficiency 1,00 1,01 II. CLAIMS 102.462 77.015 PROFITABILITY RATIOS III. SHORT-TERM FINANCIAL ASSETS 2.696 2.206 NET RETURN ON ASSETS (ROA) 0,15% 1,04% IV. CASH AT BANK AND IN HAND 52.182 50.449 PREPAID EXPENSES AND ACCRUED 25.104 22.419 Total assets at the end of 2014, decreased by 15% from than at the end of 2013, REVENUES largely due to the decrease in non-current assets. As part of the restructuring pro- TOTAL ASSETS 1.011.109 860.563 gram, to achieve its own contribution has sold Airbus A320 (CTJ) and three CFM56- BALANCE SHEET, LIABILITIES 5B engines that were taken under operating lease. Current assets decreased by 12% CAPITAL AND RESERVES 348.399 360.657 mainly due to the decrease in other current receivables. The positive result achieved PROVISIONS 22.215 23.315 was influenced by an increase in total capital at the end of 2014. With the repayment LONG-TERM LIABILITIES 80.011 67.472 of Company’s financial liabilities, long-term (16%) and current liabilities (31%) were reduced. SHORT-TERM LIABILITIES 534.824 370.586 DEFERRED EXPENSES AND ACCRUED 25.660 38.533 At the end of 2014 a profit of 8.7 million HRK was realized, which meant the INCOME Company achieved a positive net result for the second consecutive year. Despite TOTAL LIABILITIES 1.011.109 860.563 the increase of 2%, in the number of passengers, operating revenue decreased by 2% from the previous year as a result of a decrease of the average annual gross tariffs INCOME STATEMENT (HRK in thousands) 2013 2014 by 5%. Operating expenses also decreased by 2% and the most significant impact on Operating revenues 1.583.029 1.551.758 the reduction of costs came from fuel costs, depreciation and extraordinary aircraft leasing. The rationalization of personnel costs, reduction of representation costs and Operating expenditures 1.565.103 1.537.313 twice as lower value adjustments all contributed to the reduction of operating costs. Financial revenues 71.916 51.334 Performance indicators generally show a positive trend, although some were outside Financial expenditures 88.246 56.864 optimal range. Despite the positive trend, liquidity indicators indicate problems with TOTAL REVENUES 1.654.945 1.603.092 maintaining an appropriate level of liquid assets and a satisfactory working capital TOTAL EXPENDITURES 1.653.349 1.594.177 level. Because of the reduction of the Company’s financial liabilities and amortization of the debt, debt ratio showed positive developments. Turnover asset ratio increased, PROFIT/LOSS BEFORE TAX 1.596 8.915 which indicates a greater efficiency in the use of property in the business cycle, and is Corporate Tax 154 197 linked to an increase in the profitability of assets. Business efficiency remained at the NET PROFIT 1.442 8.718 same level as the previous year.

2014. - ANNUAL REPORT ON THE OPERATIONS 55 CROATIA BANKA d.d. www.croatiabanka.hr Roberta Frangeša Mihanovića 9, 10 000 Zagreb

Management Board: : Government Ownership structure Suzana Brenko, chairman representative in the on December 31, 2014 Stjepan Mandić, member General Assembly : Ivan Šverko, member State Agency For Deposit Insurance Supervisory Board: And Bank Resolution - Marija Hrebac, head Igor Rađenović - legal DAB Branka Grabovac, deputy representative Mladen Duliba, member Suzana Ivan Tomljenović, member Brenko 100%

GENERAL COMPANY INFORMATION BALANCE SHEET (HRK in thousands) 2013 2014 Croatia banka p.l.c. was founded in 1989 under the name Banka male pri- BALANCE SHEET, LIABILITIES vrede p.l.c. Zagreb. In 1995, the Company changed its name and since then it si Liabilities toward banks 154.412 126.365 called Croatia banka p.l.c. Zagreb. The Company is 100 percent owned by the Demand deposits 338.204 567.732 Republic of Croatia and has a business network of 18 subsidiaries and branch Time deposits 1.604.622 1.899.262 offices. The Company has no affiliates. Liabilities on received loans 301.647 203.414 COMPANY OBJECTS Other liabilities 21.734 31.234 Provisions 12.709 9.301 The Company engages in banking services, and handles all domestic nad TOTAL LIABILITIES 2.433.328 2.837.308 international banking transactions for small, medium and large enterprises, Capital stock 474.600 474.600 financial institutions, local administration and citizens. Reported loss -256.315 -280.959 KEY FINANCIAL RATIOS Reserves 1.584 2.609 Retained profit -24.644 3.919 Graph: Summary of total revenue, expenditures and operating results in TOTAL CAPITAL AND RESERVES 195.225 200.169 the period from 2011 to 2014 (HRK in thousands) TOTAL LIABILITIES, CAPITAL AND 2.628.553 3.037.477 RESERVES

400.000 INCOME STATEMENT (HRK in thousands) 2013 2014

200.000 Operating revenues 139.368 172.344 Operating expenditures 164.012 167.208 0 TOTAL REVENUES 139.368 172.344 -200.000 TOTAL EXPENDITURES 164.012 167.208 2011 2012 2013 2014 PROFIT/LOSS BEFORE TAX -24.644 5.136 TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT/LOSS Corporate Tax - 1.217 NET LOSS/PROFIT -24.644 3.919 Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 and 2014 (HRK in thousands) FINANCIAL RATIOS 2013 2014

BALANCE SHEET (HRK in thousands) 2013 2014 Cost/Income ratio (C/I ratio) 113,70% 79,70% BALANCE SHEET, ASSETS Return on assets (ROA) - 0,2% Monetary funds 266.877 87.431 Return on equity (ROE) - 2,0% Claims from the Croatian national Bank 192.094 208.448 Bank placements 57.497 38.168 Total expenditures in 2014 were 1.9 percent higher compared to 2013. This Financial assets for trading 5.081 0 increase is a result of growth in interest expenses on deposits (20.7 percent) due Financial assets for sale 333.495 593.630 to a very significant increase in deposits as the main source of the Bank’s funds. Financial assets until maturity date 2.149 61.176 The Bank’s balance sheet increased by 15.6 percent due to the increase in total Loans and advances to customers 1.629.818 1.906.494 deposits of 23.7 percent and an increase in loans to customers by 17 percent and Real estate investment 36.095 35.696 investments in securities of 92.2 percent. As for liabilities, the Bank recorded Property and equipment 20.921 19.446 a decrease in liabilities arising from borrowings by 32.6 percent compared to the same period last year. During 2014, the Bank successfully implemented the Non material assets 2.715 2.530 restructuring process which altered the organizational structure and systema- Approved assets 25.810 28.842 tization of jobs in order to reduce the number of employees and increase the Deferred tax assets 22.761 21.545 efficiency per employee. From 2012 to 2014, the Bank has implemented a signi- Other assets 33.240 34.071 ficant refining of the loan portfolio through the allocation of 132.7 million HRK TOTAL ASSETS 2.628.553 3.037.477 in provisions for bad placements. The Bank’s activities were significantly incre- According to the audited data for 2014 Croatia banka p.l.c. had a 4 million ased compared to the previous period. The Bank has introduced a number of HRK profit, which is a significant improvement in business operations com- new products and implemented redesign of existing products, and also main- pared to the same period last year when the Bank operated with a loss of 25 tained a significantly intensified and active approach to clients. Improvements million HRK. In 2014, the Bank generated 23.7 percent more revenue than in of application solutions were made which simplify the business transactions 2013. Total revenue growth is the result of an increase in interest income from and reduce the possibility of errors, and also improvements were introduced loans to customers (31.9 percent) which makes up 72.3 percent of total revenues. regarding the system of monitoring operations and reporting.

56 2014. - ANNUAL REPORT ON THE OPERATIONS CROATIA OSIGURANJE d.d. www.crosig.hr Miramarska 22, 10 000 Zagreb

Ownership structure Management Board: Roberto Škopac, member on December 31, 2014 Sanel Volarić, chairman Miroslav Hrščanec, Nikola Mišetić, member member Andrej Koštomaj, member 3,00% Government Adris grupa d.d. Supervisory Board : representative in the Ante Vlahović, head General Assembly : DUUDI/DAB Mladen Blažević, member By power of attorney 31,00% Other Plinio Cuccurin, member awarded by the State 66,00% shareholders Sanel Administrative Office for Volarić Branko Zec, member Josip Tica, member State Property Management

GENERAL COMPANY INFORMATION • Croatia osiguranje d.d., Ljubuški, BiH, 52,05% ownership • Croatia Sigurini sh.a, Priština, Kosovo, 100% ownership In 1990, Croatia osiguranje became a joint-stock company in majority state • PBZ Croatia osiguranje d.d., Zagreb, 50% ownership ownership, based on an it was based on business activity dating back to 1884, making • Croatia osiguranje dobrovoljno mirovinsko društvo d.o.o., Zagreb, 100% it the oldest, and therefore the largest insurance company in this part of Europe. ownership • Razne usluge d.o.o. u likvidaciji, Zagreb, 100% ownership The Company covers the major part of the insurance market and with the • Croatia zdravstveno osiguranje d.d. Zagreb, 66,19% ownership realization of the core activity it provides insurance coverage: insurance of persons, • Herz d.d., Požega, 100% ownership property, motor vehicles, transport and credit. • Croatia – tehnički pregledi d.o.o., Zagreb, 100% ownership • Slavonijatrans – tehnički pregledi d.o.o., Slavonski Brod, 76% ownership Block of shares owned by the Republic of Croatia on March 6, 2014, was sold Adris Group Plc. and currently the Republic of Croatia owns 31% of Croatia Osigu- ranje Plc. COMPANY OBJECTS The Company is involved in all types of life and non-life insurance, as well as AFFILIATED COMPANIES other closely related activities. The Company also performs the activities that are directly or indirectly related to the insurance business, mediation in sales, sales of • Croatia Lloyd d.d. Zagreb, ownership 100% the property belonging to the Company on the basis of their insurance operations, • Croatia osiguranje d.d. za osiguranje života, Skopje, Makedonija, 95% taking measures to prevent and eliminate the dangers that threaten the insured ownership property and persons, assessment of the degree of exposure to risk of the insured • Milenijum osiguranje d.d., Beograd, Srbija, 99,78% ownership object and loss assessment, the performance of other intellectual and technical ser- • Croatia osiguranje d.d. za osiguranje neživota, Skopje, Makedonija, 100% vices that are insurance related. ownership

Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 KEY FINANCIAL RATIOS and 2014 (HRK in thousands) BALANCE SHEET (HRK in thousands) 2013 2014 Graph: Summary of total revenue, expenditures and operating results in the period BALANCE SHEET, ASSETS from 2011 to 2014 (HRK in thousands) LONG-TERM ASSETS 8.098.976 8.527.384 I. INTANGIBLE ASSETS 64.072 44.967 II. TANGIBLE ASSETS 1.214.389 978.066 4.000.000 III. INVESTMENTS 6.609.251 7.153.142 IV. INVESTMENTS AT THE RISK OF THE LIFE 8.389 5.312 2.000.000 INSURANCE POLICYHOLDER V. REINSURANCE SHARE IN TECHNICAL 129.829 144.852 0 RESERVES VI. DEFERRED TAX ASSETS 73.046 201.045 2011 2012 2013 2014 -2.000.000 SHORT-TERM ASSETS 1.113.150 1.051.447 I. CLAIMS 957.663 892.984 TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT/LOSS II. OTHER ASSETS 155.487 158.463 PREPAID EXPENSES AND ACCRUED 69.523 84.680 REVENUES In 2014, the Company incurred a loss after taxation in the amount of 465.7 TOTAL ASSETS 9.281.649 9.663.511 million HRK. The realized loss is the result of reduction in premium income, BALANCE SHEET (HRK in thousands) 2013 2014 conducted impairment of financial assets and real estate, increase in reserves for unexpired risks and provisions for severance payments as a result of the BALANCE SHEET, LIABILITIES restructuring process. CAPITAL AND RESERVES 1.795.517 2.196.171 MINORITY INTEREST 47.463 35.073 In 2014, the gross written premium recorded a decrease of 8.4 percent. TECHNICAL RESERVES 6.332.243 6.485.137 SPECIAL LIFE INSURANCE RESERVE 8.389 5.312 Gross paid claims were reduced by 10.3 percent compared to the same ASSUMED BY THE POLICY HOLDER period last year. Administrative expenses in the reporting period increased by OTHER RESERVES 129.391 266.924 18.9 percent, compared to 2013, mostly as a result of an increase in provisions DEFERRED AND CURRENT TAX 73.345 88.206 for severance payments. OBLIGATION FINANCIAL LIABILITIES 390.713 31.527 During 2014, the company Croatia Osiguranje undertook measures and OTHER LIABILITIES 323.011 322.213 actions to reduce the negative impact of unfavorable economic developments DEFERRED EXPENSES AND ACCRUED 181.577 232.948 and market liberalization on business operations in order to compete with glo- INCOME bal companies and still maintain the position of the leading Croatian insurance TOTAL LIABILITIES 9.281.649 9.663.511

2014. - ANNUAL REPORT ON THE OPERATIONS 57 company. The Company implemented a restructuring process in order to chan- FINANCIAL RATIOS 2013 2014 ge the current ratio of employees on sales and support positions at the end of which 70 percent of employees would work in sales, which is the practice in LIQUIDITY RATIOS other modern insurance companies in Europe. Current ratio 1,24 1,79

INCOME STATEMENT (HRK in thousands) 2013 2014 Financial stability ratio 1,00 0,98 Operating revenues 2.967.308 2.845.562 LEVERAGE RATIOS Operating expenditures 3.104.052 3.406.303 Debt ratio 0,09 0,05 Financial revenues 337.902 372.942 Equity ratio 0,73 0,97 Financial expenditures 415.885 368.781 TOTAL REVENUES 3.305.210 3.218.505 Financial ratio 0,40 0,16 TOTAL EXPENDITURES 3.519.937 3.775.085 ACTIVITY RATIOS PROFIT/LOSS BEFORE TAX -214.727 -556.580 Total asset turnover ratio 2,97 3,06 Corporate Tax 14.543 -90.888 EFFICIENCY RATIOS NET LOSS -229.269 -465.692 ACCRUED TO THE PARENT COMPANY -227.555 -466.073 Overall operations efficiency 0,94 0,85 SHAREHOLDERS PROFITABILITY RATIOS ACCRUED TO THE NON-CONTROLLING -1.715 381 INTEREST NET RETURN ON ASSETS (ROA) -2,49% -4,86%

HP – Hrvatska pošta d.d. www.posta.hr Jurišićeva 13, 10 000 Zagreb

Management board: Željko Vidaković, member Ownership structure Alen Premužak, chairman Milan Jukić, member on December 31, 2014 Ranko Marinović, member Ivica Kranjčić, member Government representative in the Supervisory Board: General Assembly: Tihomir Hunjak, head Siniša Hajdaš Dončić, DUUDI/HR Drago Davidović, deputy Minister of Maritime Drago Šerič, member Affairs, Transport and Hrvoje Crnić, member Infrastructure 100% Alen Premužak Želimir Piberčnik, member

GENERAL COMPANY INFORMATION COMPANY OBJECTS

Croatian Post Plc. is a national postal operator. After the separation of Croatian Post Plc. engages in the provision of postal services, financial Croatian Post and Telecommunications into Croatian post Plc. and Croa- services and retailing through its network throughout the Republic of Croa- tian Telecom Plc., as from January 1, 1999, the Croatian Post operates as an tia. Due to increased competition, and ahead of market liberalization, Croatian independent joint-stock company, continuing the tradition and continuity Post Plc. begins to perform other activities as well as developing a system of of postal services in the Republic of Croatia. express delivery services within HP express services, introducing digital television service through EvoTV and eBox services as technological progress in AFFILIATED COMPANIES communication mediation.

• HP Produkcija d.o.o., affiliated company HP d.d. 100% ownership • Hrvatska postanska banka d.d., Zagreb, affiliated company HP d.d. 27,49% Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 ownership and 2014 (HRK in thousands) BALANCE SHEET (HRK in thousands) 2013 2014 KEY FINANCIAL RATIOS BALANCE SHEET, ASSETS LONG-TERM ASSETS 1.040.814 1.025.740 Graph: Summary of total revenue, expenditures and operating results in I. INTANGIBLE ASSETS 28.893 29.772 the period from 2011 to 2014 (HRK in thousands) II. TANGIBLE ASSETS 615.787 594.984 III. LONG-TERM FINANCIAL ASSETS 379.648 377.472 IV. CLAIMS 11.682 18.433 2.000.000 V. DEFERRED TAX ASSETS 4.804 5.079 1.500.000 SHORT-TERM ASSETS 371.412 493.700 1.000.000 I. INVENTORY 42.596 28.782 500.000 II. CLAIMS 258.045 176.859 0 III. SHORT-TERM FINANCIAL ASSETS 24.013 104.055 2011 2012 2013 2014 -500.000 IV. CASH AT BANK AND IN HAND 46.758 184.004 TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT PREPAID EXPENSES AND ACCRUED 46.991 53.859 REVENUES TOTAL ASSETS 1.459.217 1.573.299

58 2014. - ANNUAL REPORT ON THE OPERATIONS BALANCE SHEET (HRK in thousands) 2013 2014 FINANCIAL RATIOS 2013 2014 BALANCE SHEET, LIABILITIES LIQUIDITY RATIOS CAPITAL AND RESERVES 609.787 691.489 Current ratio 1,78 1,57 PROVISIONS 66.534 38.899 Financial stability ratio 0,92 0,88 LONG-TERM LIABILITIES 516.264 474.819 LEVERAGE RATIOS SHORT-TERM LIABILITIES 208.439 315.351 Debt ratio 0,51 0,52 DEFERRED EXPENSES AND ACCRUED 58.192 52.741 Equity ratio 0,43 0,46 INCOME Financial ratio 1,19 1,14 TOTAL LIABILITIES 1.459.216 1.573.299 ACTIVITY RATIOS Total asset turnover ratio 1,25 1,04 INCOME STATEMENT (HRK in thousands) 2013 2014 Operating revenues 1.755.061 1.577.177 EFFICIENCY RATIOS Operating expenditures 1.693.090 1.447.668 Overall operations efficiency 1,02 1,06 Financial revenues 8.927 9.496 PROFITABILITY RATIOS Financial expenditures 37.979 54.240 NET RETURN ON ASSETS (ROA) 0,03% 5,54% TOTAL REVENUES 1.763.988 1.586.673 As a result of a significant increase in net profit (84 million HRK), compared TOTAL EXPENDITURES 1.731.069 1.501.908 to 2013, return on assets (ROA) increased in 2014 and amounted to 5.54 percent PROFIT/LOSS BEFORE TAX 32.919 84.765 compared to 0,03 percent in 2013. Society has developed the Strategy of Croatian Corporate Tax 32.429 579 Post from 2013 until 2018. Some segments of the Strategy were held during 2014. NET PROFIT 490 84.186 The Company managed to stabilize its market share from 66 to 72 percent. In 2014, total revenues of Croatian Post Plc. decreased compared to 2013 by Although the majority of its revenues came from the provision of postal servi- 10.1%. Total expenditures decreased by 13.2% compared to 2013. ces, trends in this segment were negative. Therefor, the Company is optimized all controllable operating costs. Standardization and standardization of work Reducing the share of total expenditures in total revenues in 2014 compared processes were implemented, which is also meant a reduction of the number of to 2013 is the result of an increase in overall business efficiency. employees in accordance with the volume of work.

HRVATSKA BRODOGRADNJA – www.hb.hr JADRANBROD d.d. Avenija V. Holjevca 20, 10 000 Zagreb

Management Board: Government Ownership structure on December 31, 2014 Siniša Ostojić, chairman representative in the General Supervisory Board: Assembly: Sanjin Kuljanić, head Ivan Vrdoljak, Gordan Rubeša, deputy Minister of Economy DUUDI/HR Predrag Šarić, member Tomislav Bukša, member , member Ante Lucić 100% Siniša Ostojić

GENERAL COMPANY INFORMATION in line with agreements on the sale and transfer of shares of shipbuilding companies and their restructuring programs adopted by the European Commission. Croatian Shipbuilding Corporation Ltd. was founded in 1994, as a corporate The Company monitors the implementation of the restructuring program and body that coordinates the performance of the Croatian shipbuilding industry the contracts of sale and transfer of shares of shipbuilding companies. on the international market. In 1997, the Croatian Shipbuilding Corporation Ltd. and Jadranbrod Ltd. merged and formed a new company Croatian Shipbu- Croatian Shipbuilding - Jadranbrod Plc. aims to become a center of ex- ilding – Jadranbrod Plc. cellence and a place where highly skilled and professional individuals would formulate proposals to the government bodies responsible for deciding on the Croatian Shipbuilding - Jadranbrod Plc. primarily acts as a control and re- shipbuilding industry in the Republic Croatia. porting body to the Croatian Government and the European Commission, in the ongoing process of privatization and restructuring of large Croatian shi- The aim of Croatian Shipbuilding - Jadranbrod Plc. business operations is, pyards. The Company has no affiliates. using modern models of collection and analysis of comprehensive data from specific areas of the organization, production, finance and markets from shi- COMPANY OBJECTS pbuilding activities, to provide expert support to competent government bodies for decision-making related to the shipbuilding industry, in order to maintain Within the scope of its business operations, the Company is closely related to the industry, and that is remains an important and successful component of the operation and viability of shipyards which are in the process of restructuring, the economic structure of the Republic of Croatia.

2014. - ANNUAL REPORT ON THE OPERATIONS 59 KEY FINANCIAL RATIOS FINANCIAL RATIOS 2013 2014 LIQUIDITY RATIOS Graph: Summary of total revenue, expenditures and operating results in the period from 2011 to 2014 (HRK in thousands) Current ratio 17,85 33,66 Financial stability ratio 0,34 0,37 15.000 LEVERAGE RATIOS Debt ratio 0,04 0,02 10.000 Equity ratio 0,94 0,96 5.000 Financial ratio 0,04 0,02 ACTIVITY RATIOS 0 2011 2012 2013 2014 Total asset turnover ratio 0,43 0,28 EFFICIENCY RATIOS TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT Overall operations efficiency 1,84 1,04 PROFITABILITY RATIOS Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 and 2014 (HRK in thousands) NET RETURN ON ASSETS (ROA) 17,04% 1,05%

BALANCE SHEET (HRK in thousands) 2013 2014 INCOME STATEMENT (HRK in thousands) 2013 2014 BALANCE SHEET, ASSETS Operating revenues 5.742 5.999 LONG-TERM ASSETS 8.087 7.968 Operating expenditures 5.874 6.008 SHORT-TERM ASSETS 16.854 14.136 PREPAID EXPENSES AND ACCRUED 34 27 Financial revenues 5.077 277 REVENUES Financial expenditures 19 12 TOTAL ASSETS 24.975 22.131 TOTAL REVENUES 10.819 6.276 BALANCE SHEET, LIABILITIES TOTAL EXPENDITURES 5.893 6.020 CAPITAL AND RESERVES 23.491 21.242 PROFIT/LOSS BEFORE TAX 4.926 256 PROVISIONS 277 262 Corporate Tax 675 23 LONG-TERM LIABILITIES 18 14 NET PROFIT 4.251 233 SHORT-TERM LIABILITIES 944 420 DEFERRED EXPENSES AND ACCRUED 245 193 INCOME profit in 2014 compared to 2013 is a result of a single financial transaction of sales of shares from the Company’ portfolio in 2013, in the amount of 4.4 million HRK. TOTAL LIABILITIES 24.975 22.131 Total expenditures of the Company in 2014 were slightly higher (1.5 percent) compared to 2013. The increase in expenditures was mainly influenced by an increa- The Company Croatian Shipbuilding - Jadranbrod Plc. generated a profit se in personnel costs (severance of the former chairman) and depreciation. The of 0.2 million HRK, which was 18 times lower than compared to the realization Company carried out a process of rationalization and restructuring of operations in 2013, when it amounted to 4.9 million HRK. The Company generated a total beginning in 2008, with a significant reduction in cost and in the number of em- revenue of 42.1 percent lower compared to 2013. This reduction in revenue and ployees.

60 2014. - ANNUAL REPORT ON THE OPERATIONS HRVATSKA POŠTANSKA www.hpb.hr BANKA d.d. Jurišićeva 4, 10 000 Zagreb Ownership structure , member Management Board: Niko Raič on December 31, 2014 Tomislav Vuić, chairman Marin Palada, member Dubravka Kolarić, member 0,09% DUUDI/RH Domagoj Karadjole, member Government 0,18% 0,60% 20,18% Mladen Mrvelj, member representative in the HP d.d. General Assembly : DUUDI/HZMO Supervisory Board: By power of attorney 51,46% Croatia Airlines d.d. Dražen Kobas, head awarded by the State HPB d.d. 27,49% Nada Karaman Aksentijević, Administrative Office Other shareholders Tomislav Vuić deputy for State Property Management

BALANCE SHEET (HRK in thousand) 2013 2014

GENERAL COMPANY INFORMATION BALANCE SHEET, ASSETS Hrvatska poštanska banka Plc. was founded in October 1991 as a universal ban- Monetary funds 819.804 721.109 king organization to carry out all domestic and foreign banking transactions in. The Claims from the Croatian national Bank 1.799.784 2.133.130 Bank conducts business through eight subsidiaries, forty-two branches and ten field Bank placements 522.772 583.784 offices. Financial assets for trading 343.841 381.801 Financial assets for sale 1.715.416 2.002.974 AFFILIATED COMPANIES Financial assets until maturity date 821.305 597.943 Loans and advances to customers 11.753.691 10.473.750 • HPB Stambena štedionica d.d., 100% ownership Real estate investment 9.938 9.828 • HPB Invest d.o.o. 100% ownership Property and equipment 147.987 153.225 • HPB Nekretnine d.o.o., 100% ownership Non material assets 168.709 140.342 Approved assets 41.551 7.930 COMPANY OBJECTS Deferred tax assets 22.869 16.603 Other assets 430.120 347.492 The company engages banking transactions and Hrvatska poštanska banka Plc. TOTAL ASSETS 18.597.787 17.569.911 is the largest state-owned bank and one of the two banks owned by the state. Well-po- sitioned and with a competitive edge, Hrvatska postanska banka Plc. provides quality BALANCE SHEET, LIABILITIES 2013 2014 and comprehensive financial services to citizens, state administration and Croatian Liabilities toward banks 741.207 374.750 businessmen, especially to the segment of small and medium entrepreneurship. Demand deposits 5.497.699 5.533.600 Time deposits 8.863.666 8.551.125 Liabilities on received loans 1.074.013 1.507.327 KEY FINANCIAL RATIOS Other liabilities 932.960 730.622 Provisions 42.748 29.758 Graph: Summary of total revenue, expenditures and operating results in TOTAL LIABILITIES the period from 2011 to 2014 (HRK in thousands) 17.152.293 16.727.182 Capital stock 966.640 966.640 Reported loss 0 0 Reserves 282.851 311.594 3.000.000 Retained profit 160.266 193.885 Current year profit/loss 35.738 -629.390 2.000.000 TOTAL CAPITAL AND RESERVES 1.445.494 842.729 1.000.000 TOTAL LIABILITIES, CAPITAL AND 18.597.787 17.569.911 RESERVES 0 2011 2012 2013 2014 -1.000.000 FINANCIAL RATIOS 2013 2014 LEVERAGE RATIO TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT/LOSS Private equity ratio 0,07 0,07 ACTIVITY RATIO Total asset turnover ratio 0,08 0,08 In 2014, Hrvatska poštanska banka Plc. recorded its best operating profit in its corporate history, but it is faced with a net loss of 631 million HRK, due to the alloca- EFFICIENCY RATIO ted provisions for placements approved more than five years ago. Overall operations efficiency -1,03 -0,70 PROFITABILITY RATIO Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 Net return on assets (ROA) 0,19% -3,58% and 2014 (HRK in thousands) In 2014, Hrvatska poštanska banka Plc. recorded the highest operating profit in its corporate history, amounting to 299.5 million HRK, with interannual growth of 13 INCOME STATEMENT (HRK in thousands) 2013 2014 percent. Despite record operating results, because of implemented provisions for loans Operating revenues 1.474.336 1.442.335 and other assets (931.8 million HRK), the Bank recorded an after-tax loss in the amount Operating expenditures -1.437.968 -2.072.697 of 631 million HRK. The conducted provisions mainly relate to loans approved 6 years ago or more, and which had already been identified as reduced. Financial revenues Financial expenditures Because of provisions made in 2014, he Bank’s assets decreased by 5.5 percent and TOTAL REVENUES 1.474.336 1.442.335 at the end of 2014 amounted to 17.4 billion HRK, which enabled Hrvatska postanska TOTAL EXPENDITURES -1.437.968 -2.072.697 banka Plc. a market share of 4.4 percent in the banking sector of the Republic of Croatia. PROFIT/LOSS BEFORE TAX 36.368 -630.362 Provisions in 2014 and reduced the capital base of the Bank and the total capital decrea- Corporate Tax -630 972 sed to 845 million HRK. Although deposits remain a primary source of financing for the Bank, part of the deposits during 2014 were substituted by other sources, which is why NET PROFIT 35.738 -629.390 total deposits dropped by 4.2 percent.

2014. - ANNUAL REPORT ON THE OPERATIONS 61 HŽ CARGO d.o.o. www.hzcargo.hr Trg kralja Tomislava 11/I, 10 000 Zagreb

Ownership structure Management Board: Government on December 31, 2014 Danijel Krakić, chairman representative in the Alen Abrinac, member General Assembly: Siniša Hajdaš Dončić, Supervisory Board: Minister of Maritime Hrvoje Livaja, head Affairs, Transport and DUUDI/HR Borna Abramović, deputy Infrastructure Krešimir Rendeli, member Tomislav Ostojić, member 100% Danijel Krakić Marija Stefanov, member

Tables: Summary of the abbreviated balance sheet, profit and loss account GENERAL COMPANY INFORMATION for 2013 and 2014 (HRK in thousands) HŽ Cargo Ltd. operates since 2006 and was founded by the Republic of Cro- BALANCE SHEET (HRK in thousands) 2013 2014 atia. The mission of the Company is to continuously meet the needs of transport BALANCE SHEET, ASSETS using modern transport technology. LONG-TERM ASSETS 1.532.892 1.368.305 I. INTANGIBLE ASSETS 30.900 25.425 COMPANY OBJECTS II. TANGIBLE ASSETS 1.454.349 1.296.055 The Company objects are public rail transport and freight transport (conven- III. LONG-TERM FINANCIAL ASSETS 40.938 40.934 tional and intermodal transport), transport of shipments of dangerous materials, IV. CLAIMS 6.705 5.891 transport of exceptional consignments, wagon rental, storage space rental, wagon V. DEFERRED TAX ASSETS maintenance of and more. HŽ Cargo Ltd. seeks to ensure a development into a SHORT-TERM ASSETS 286.951 320.036 market-oriented company through restructuring, which carries out transport ser- I. INVENTORY 36.357 40.456 vices in a reliable, safe, cost-efficient and environmentally sustainable way. II. CLAIMS 250.103 223.682 AFFILIATED COMPANIES III. SHORT-TERM FINANCIAL ASSETS 4 IV. CASH AT BANK AND IN HAND 487 55.898 • Agencija za integralni transport d.o.o., Zagreb, 100% ownership PREPAID EXPENSES AND ACCRUED 6.796 8.161 • AGIT Bosna i Hercegovina d.o.o., Sarajevo, 100% ownership REVENUES • AGIT 200 Srbija d.o.o., Beograd, 100% ownership TOTAL ASSETS 1.826.639 1.696.502 • OV-Održavanje vagona d.o.o., Zagreb, 100% ownership • Radionica željezničkih vozila Čakovec d.o.o., Čakovec, 100% ownership BALANCE SHEET, LIABILITIES 2013 2014 • Remont i proizvodnja željezničkih vozila Slavonski Brod d.o.o., Slavonski Brod, 100% ownership CAPITAL AND RESERVES -64.265 -233.131 • Robno transportni centar Slavonski Brod d.o.o., Slavonski Brod, 51% owner- PROVISIONS 249.203 188.436 ship LONG-TERM LIABILITIES 595.822 432.120 • CROKOMBI d.o.o. Zagreb, 47% ownership CARGO Centar Zagreb, 25% SHORT-TERM LIABILITIES 677.934 1.117.853 ownership DEFERRED EXPENSES AND ACCRUED 367.945 191.224 INCOME KEY FINANCIAL RATIOS TOTAL LIABILITIES 1.826.639 1.696.502 Graph: Summary of total revenue, expenditures and operating results in the peri- INCOME STATEMENT (HRK in thousands) 2013 2014 od from 2011 to 2014 (HRK in thousands) Operating revenues 891.733 850.134 Operating expenditures 1.061.244 930.949 2.000.000 Financial revenues 5.834 1.077 Financial expenditures 79.975 90.717 1.000.000 TOTAL REVENUES 897.567 851.211 0 TOTAL EXPENDITURES 1.141.219 1.021.666 2011 2012 2013 2014 PROFIT/LOSS BEFORE TAX -243.652 -170.455 -1.000.000 Corporate Tax 0 0 TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT NET LOSS -243.652 -170.455

FINANCIAL RATIOS 2013 2014 Based on unconsolidated data, the Company HŽ Cargo has recorded a loss in LIQUIDITY RATIOS the amount of 170 million HRK, which is 30 percent lower than the loss in 2013. Current ratio 0,42 0,29 Total revenues were 5 percent lower than in 2013. Total expenditures decreased by 11 Financial stability ratio 2,88 6,88 percent compared to 2013. LEVERAGE RATIOS Debt ratio 0,70 0,92 In 2014, the Company generated a total revenue of 851.2 million HRK, which is Equity ratio -0,04 -0,14 lower 5 percent compared to 2013. The reason for the reduction is a 2.1 percent lower Financial ratio -19,82 -6,65 transportation revenue from the transport of goods due to changes in ways of taxa- ACTIVITY RATIOS tion with the ascension to the EU. Revenues from services with affiliates also decre- Total asset turnover ratio 0,49 0,50 ased by 65.1 percent, sales of goods and materials by 41.0 percent, as well as financial EFFICIENCY RATIOS revenue by 83.6 percent. A restructuring program is scheduled for the Company, whi- Overall operations efficiency 0,79 0,83 ch would mean a long-term credit indebtedness in the amount of 150 million HRK, PROFITABILITY RATIOS with further rationalization of business to contribute to reducing costs. Net return on assets (ROA) -13,39% -10,10%

62 2014. - ANNUAL REPORT ON THE OPERATIONS IMUNOLOŠKI ZAVOD d.d. www.imz.hr Rockefellerova ulica 2, 10 000 Zagreb

Management Board: Government Ownership structure on December 31, 2014 Mario Meštrović, chairman representative in the General Supervisory Board: Assembly: 26,59% HZZO Mladen Belicza, head Ivan Vrdoljak, Ljiljana Klarin, member Minister of 44,53% DUUDI/HZMO Milena Protega Vesović, Economy member DUUDI/RH 14,31% Željka Mihelić Grlević, Other shareholders Mario Meštrović member 14,57%

GENERAL COMPANY INFORMATION Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 and 2014 (HRK in thousands) The Institute of Immunology Plc. is a company specializing in the production of drugs, pharmaceuticals and scientific research in biomedicine and the oldest producer of immunobiological drugs in this part of Europe. As a joint-stock com- BALANCE SHEET (HRK in thousands) 2013 2014 pany, it has been operating since 1996. The Company has no affiliates. BALANCE SHEET, ASSETS LONG-TERM ASSETS 175.592 170.132 COMPANY OBJECTS SHORT-TERM ASSETS 41.964 32.586 PREPAID EXPENSES AND ACCRUED 0 0 The Company is a producer of biological drugs: viral vaccines, bacterial vaccines REVENUES and blood products from human or animal plasma and allergens and products from animal blood. TOTAL ASSETS 217.556 202.718

The goal Company’s activities is to become the leading manufacturer of highly BALANCE SHEET, LIABILITIES 2013 2014 effective immunobiologicals, to be an active participant in the global vaccination agen- CAPITAL AND RESERVES 98.177 77.090 da and to meet 2% of total world demand for vaccines, through a successful restructuring process and by finding a strategic partner. In terms of blood products, the goal PROVISIONS 0 0 is to continue to supply the market with safe and reliable blood products obtained by LONG-TERM LIABILITIES 53.910 46.730 processing plasma from blood collected in the Republic of Croatia. SHORT-TERM LIABILITIES 65.469 78.898 The mission of the Company’s operations is to produce high quality and reliable DEFERRED EXPENSES AND ACCRUED 0 0 immunobiological preparations for the prevention, control and treatment of diseases INCOME and thus contribute to the quality of health in the community. The Company has the TOTAL LIABILITIES 217.556 202.718 technology, products and skilled employees that can compete on the market of viral and bacterial vaccines on a global scale, and on the market of plasma fractionation on a regional level. INCOME STATEMENT (HRK in thousands) 2013 2014 Operating revenues 46.767 17.902 KEY FINANCIAL RATIOS Operating expenditures 60.491 34.865 Financial revenues 1.719 2.279 Graph: Summary of total revenue, expenditures and operating results in the period from 2011 to 2014 (HRK in thousands) Financial expenditures 9.655 6.403 TOTAL REVENUES 48.486 20.181 TOTAL EXPENDITURES 70.146 41.268 100.000 PROFIT/LOSS BEFORE TAX -21.659 -21.087 50.000 Corporate Tax 0 0

0 NET LOSS -21.659 -21.087 2011 2012 2013 2014 -50.000 FINANCIAL RATIOS 2013 2014 TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT/LOSS LIQUIDITY RATIOS Current ratio 0,64 0,41 Financial stability ratio 1,15 1,37 Due to many years of lack of investment in the modernization and standardization of equipment, manufacturing authorization was lost, and also the market in LEVERAGE RATIOS addition to the above. The Company has consumed the accumulated reserves from Debt ratio 0,55 0,62 previous years, and has recorded a loss for a third year in a row. Business activity in Equity ratio 0,45 0,38 2014 was halved compared to the previous year. Financial ratio 1,22 1,63 For the business activities to start heading in a positive direction in 2014, a ten- ACTIVITY RATIOS der was advertised so that the Institute of Immunology would find a strategic partner Total asset turnover ratio 0,22 0,10 in order to complete the required investment cycle. EFFICIENCY RATIOS Overall operations efficiency 0,69 0,49 PROFITABILITY RATIOS NET RETURN ON ASSETS (ROA) -9,96% -10,40%

2014. - ANNUAL REPORT ON THE OPERATIONS 63 JADROLINIJA www.jadrolinija.hr Riva 16, 51 000 Rijeka

Management Board: Government Ownership structure Alan Klanac, chairman representative in the on December 31, 2014 Miljenko Antić, deputy General Assembly : Marko Čičin-Šain, member Siniša Hajdaš Dončić, Minister of Maritime Supervisory Board: Affairs, Transport and Pavao Komadina, head Infrastructure DUUDI/HR Slavko Lončar, deputy Zoran Čumbelić, member Ante Mađerić, member 100% Alen Klanac Grgo Dujmović, member

GENERAL COMPANY INFORMATION

Jadrolinija is a company in a regime limited liability companies, registered in BALANCE SHEET, LIABILITIES 2013 2014 maritime transport of passengers and cargo. Connecting the islands with the ma- CAPITAL AND RESERVES 474.536 480.360 inland on the Croatian side of the Adriatic, Jadrolinija achieved its main task. The Company has no affiliates. PROVISIONS 2.117 4.972 LONG-TERM LIABILITIES 220.593 357.907 COMPANY OBJECTS SHORT-TERM LIABILITIES 244.227 206.502 DEFERRED EXPENSES AND ACCRUED 36.230 33.322 The main objective of the Company and business activity is a regular and safe INCOME holding office of transport connection of the Croatian islands and the coast and islands with each other, as well as continued participation in trans-Adriatic traffic, TOTAL LIABILITIES 977.703 1.083.063 primarily for the benefit of Croatian tourism. In three navigable areas – of Rijeka, Zadar and Sibenik and Split and Dubrovnik are, the islands are connected with the INCOME STATEMENT (HRK in thousands) 2013 2014 mainland by a total of 38 ferries, 9 catamarans, 3 classic boats and 1 hydrobus. Operating revenues 817.958 822.810 Operating expenditures 814.456 804.580 KEY FINANCIAL RATIOS Financial revenues 2.436 2.778 Graph: Summary of total revenue, expenditures and operating results in the period Financial expenditures 20.614 20.896 from 2011 to 2014 (HRK in thousands) TOTAL REVENUES 839.538 840.793 TOTAL EXPENDITURES 837.883 832.615 1.000.000 PROFIT/LOSS BEFORE TAX 1.655 8.178 Corporate Tax 758 1.741 500.000 NET PROFIT 897 6.437

0 FINANCIAL RATIOS 2013 2014 2011 2012 2013 2014 LIQUIDITY RATIOS TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT Current ratio 0,46 0,42 Financial stability ratio 1,21 1,18 Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 LEVERAGE RATIOS and 2014 (HRK in thousands) Debt ratio 0,49 0,53 Equity ratio 0,50 0,45 BALANCE SHEET (HRK in thousands) 2013 2014 Financial ratio 0,98 1,17 BALANCE SHEET, ASSETS ACTIVITY RATIOS LONG-TERM ASSETS 842.471 986.291 Total asset turnover ratio 0,88 0,78 I. INTANGIBLE ASSETS 2.060 413 EFFICIENCY RATIOS II. TANGIBLE ASSETS 831.445 977.800 Overall operations efficiency 1,00 1,01 III. LONG-TERM FINANCIAL ASSETS 8.966 8.078 PROFITABILITY RATIOS IV. CLAIMS 0 0 Net return on assets (ROA) 0,09% 0,60% V. DEFERRED TAX ASSETS 0 0 SHORT-TERM ASSETS 111.482 85.711 In 2014, Jadrolinija obtained a historic record figure and the number of passengers amounted to nearly 10 million, passenger traffic was up by 1.7 per- I. INVENTORY 18.577 18.411 cent and vehicle transport by 3.3 percent compared to the same period in the II. CLAIMS 73.656 44.288 previous year. The financial aspect of the business also showed strong results, III. SHORT-TERM FINANCIAL ASSETS 14.278 1.519 the Company realized a gross profit of 8.2 million HRK.170 IV. CASH AT BANK AND IN HAND 4.971 21.493 PREPAID EXPENSES AND ACCRUED 23.750 11.061 REVENUES TOTAL ASSETS 977.703 1.083.063

64 2014. - ANNUAL REPORT ON THE OPERATIONS LUKA RIJEKA d.d. www.lukarijeka.hr Riva 1, 51 000 Rijeka

Management Board: : Government Ownership structure on December 31, 2014 Vedran Devčić, chairman representative in the 0,62% Linda Sciucca, member General Assembly: 12,80% DUUDI/RH 1,17% HZZO Nenad Janjić, member By power of attorney 2,32% awarded by the State 3,58% DUUDI/HZMO Supervisory Board: Administrative Office SGE – Splitska banka Nikola Mendrila, head for State Property 8,11% HPB d.d./Capital fond Loris Rak, deputy Management Jadrolinija Katarina Drakulić, member 71,41% Small shareholders Darko Peričić, member Vedran Devčić Krešimir Trtanj, member

GENERAL COMPANY INFORMATION Tables: Summary of the abbreviated balance sheet, profit and loss account Port of Rijeka j.s.c. bases its operations is based on the importance of the Port for 2013 and 2014 (HRK in thousands) of Rijeka as a port of special international and economic importance for the Re- public of Croatia, with a status of an open port for international public traffic. The BALANCE SHEET (HRK in thousands) 2013 2014 main activities of the Company include services in maritime transport, port servi- BALANCE SHEET, ASSETS ces, warehousing and shipping goods. Shares of Port of Rijeka j.s.c. are listed on the LONG-TERM ASSETS 507.015 527.564 capital market. I. INTANGIBLE ASSETS 3.293 772 II. TANGIBLE ASSETS 415.639 419.394 COMPANY OBJECTS III. LONG-TERM FINANCIAL ASSETS 77.053 91.421 IV. CLAIMS 9.851 8.697 Port of Rijeka j.s.c. is the largest is the concessionaire for the transshipment of dry V. DEFERRED TAX ASSETS 1.179 7.280 cargo and a company that based on the concession agreement performs freight, ware- SHORT-TERM ASSETS 72.262 60.889 housing and shipping port services (concession contract duration until 2042). In addi- I. INVENTORY 1.365 1.084 tion, the Company carries out other economic activities relevant to business applicati- II. CLAIMS 33.752 37.972 ons, such as port machinery, maintenance and use of substructure and superstructure III. SHORT-TERM FINANCIAL ASSETS 34.733 19.212 infrastructure, fastening, wrapping and insurance of cargo, mooring and unmooring of ships, quality and quantity control of goods and other. IV. CASH AT BANK AND IN HAND 2.412 2.621 PREPAID EXPENSES AND ACCRUED 29.413 527 AFFILIATED COMPANIES REVENUES TOTAL ASSETS 608.690 588.980 • Luka Prijevoz d.o.o., Rijeka, 100% ownership • Stanovi d.o.o., Rijeka, 100% ownership BALANCE SHEET, LIABILITIES 2013 2014 • Adriatic Gate Container Terminal d.o.o. 49% ownership CAPITAL AND RESERVES 463.818 390.014 • Cargo centar Zagreb d.d. 20% ownership PROVISIONS 0 17.825 LONG-TERM LIABILITIES 67.499 79.494 KEY FINANCIAL RATIOS SHORT-TERM LIABILITIES 73.142 101.200 DEFERRED EXPENSES AND ACCRUED 4.231 447 Graph: Summary of total revenue, expenditures and operating results in the period INCOME from 2011 to 2014 (HRK in thousands) TOTAL LIABILITIES 608.690 588.980

400.000 INCOME STATEMENT (HRK in thousands) 2013 2014 300.000 Operating revenues 181.717 184.288 200.000 Operating expenditures 173.160 182.523 Financial revenues 5.369 2.042 100.000 Financial expenditures 10.715 8.593 0 Share in profit of associated entrepreneurs 1.913 -1.281 -100.000 TOTAL REVENUES 188.998 186.330 TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT/LOSS TOTAL EXPENDITURES 183.875 192.397 PROFIT/LOSS BEFORE TAX 5.123 -6.067 Note: Total revenues in 2011 were significantly higher due to single financial revenues related to the sale of of 51% of shares in the company Jadranska vrata Plc. - container terminal Brajdica. Corporate Tax 386 -278 NET PROFIT/LOSS 4.737 -5.789 Total operating revenues increased by 2 percent compared to 2013, while total revenue remained at the same level. Operating expenses increased by 6 percent. FINANCIAL RATIOS 2013 2014 Operating revenue from the core business-services in domestic and foreign mar- LIQUIDITY RATIOS kets, which increased by 15 percent, followed an increase of natural turnover and Current ratio 0,99 0,60 is above planned revenue. Operating expenditures have increased by 6 percent. In Financial stability ratio 0,95 1,12 2014, the Company conducted financial and tax in-depth analysis in order to pre- LEVERAGE RATIOS pare for the implementation of the process of recapitalization which had an effect Debt ratio 0,24 0,31 on the increase in operating expenditures in the current year and also affected the Equity ratio 0,80 0,66 increase of assigned losses, which is reduced the items of capital and reserves in Financial ratio 0,30 0,46 the balance sheet. The achieved operating profit, reduced by the negative net effect ACTIVITY RATIOS of financial revenues and expenses resulted in loss of the financial year before tax. Total asset turnover ratio 0,33 0,32 Consequently, the reduction of balance sheet item Current financial assets and an EFFICIENCY RATIOS increase in balance sheet item Current liabilities resulted in a decrease of the liqui- Overall operations efficiency 1,03 0,97 dity ratio. The measures of the Restructuring plan is based on the implementation PROFITABILITY RATIOS of a new organizational chart and a macro-organisation of the Company. NET RETURN ON ASSETS (ROA) 0,82% -0,98%

2014. - ANNUAL REPORT ON THE OPERATIONS 65 LUKA VUKOVAR d.o.o. www.luka-vukovar.hr Dunavski prilaz 8, 32 000 Vukovar

Ownership structure Management Board: Davor Bogojević, on December 31, 2014 Tomislav Mihaljević, member chairman Government Supervisory Board: representative in the Krešimir Dragić, head General Assembly: DUUDI/HR Zoran Turuk, deputy By power of attorney Davorka Knežević, member awarded by the State Katarina Mustafagić, Administrative Office 100% Tomislav Mihaljević member for State Property Management

GENERAL COMPANY INFORMATION

Port of Vukovar Ltd. engaged in the transshipment of general and bulk car- BALANCE SHEET, LIABILITIES 2013 2014 go, and the Company was founded in 2002. It is the largest inland port in Croatia CAPITAL AND RESERVES 44.843 36.596 and is therefore important in the transport strategy of the Republic of Croatia. The Company has no affiliates. PROVISIONS 0 0 LONG-TERM LIABILITIES 0 0 COMPANY OBJECTS SHORT-TERM LIABILITIES 765 673 DEFERRED EXPENSES AND ACCRUED INCOME 4.258 3.947 Port of Vukovar Ltd. primarily performs port activities, as well as mooring and un- TOTAL LIABILITIES 49.866 41.216 mooring of vessels and cargo maneuvering. With the transshipment and warehousing part, Port of Vukovar Ltd. develops the agency services program for merchant ships and passenger cruise ships, which are in last few years have much more pre- INCOME STATEMENT (HRK in thousands) 2013 2014 sent in this part of the Danube. Operating revenues 11.949 10.353 Operating expenditures 13.116 13.135 KEY FINANCIAL RATIOS Financial revenues 398 322

Graph: Summary of total revenue, expenditures and operating results in the period Financial expenditures 114 5 from 2011 to 2014 (HRK in thousands) TOTAL REVENUES 13.521 11.684 TOTAL EXPENDITURES 13.256 13.162 PROFIT/LOSS BEFORE TAX 265 -1.478 20.000 15.000 Corporate Tax 0 0 10.000 NET PROFIT/LOSS 265 -1.478 5.000 0 FINANCIAL RATIOS 2013 2014 -5.000 2011. 2012 2013. 2014 LIQUIDITY RATIOS TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT/LOSS Current ratio 31,82 25,35 Financial stability ratio 0,56 0,65 LEVERAGE RATIOS Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 Debt ratio 0,02 0,02 and 2014 (HRK in thousands) Equity ratio 0,91 0,89 BALANCE SHEET (HRK in thousands) 2013 2014 Financial ratio 0,02 0,02 BALANCE SHEET, ASSETS ACTIVITY RATIOS LONG-TERM ASSETS 25.165 23.861 Total asset turnover ratio 0,27 0,29 I. INTANGIBLE ASSETS 3.614 3.292 EFFICIENCY RATIOS Overall operations efficiency 1,02 0,89 II. TANGIBLE ASSETS 14.327 13.660 PROFITABILITY RATIOS III. LONG-TERM FINANCIAL ASSETS 7.224 6.909 NET RETURN ON ASSETS (ROA) 0,54% -3,61% IV. CLAIMS 0 0 V. DEFERRED TAX ASSETS 0 0 In 2014, operating revenue decreased because of a 27.19 percent reduction of SHORT-TERM ASSETS 24.339 17.058 natural transshipment ratios compared to 2013. The reason is a decrease in economic activity in the country and in the environment. Realized profit loss is caused I. INVENTORY 7.434 822 by business operations. In addition to such operating results Port of Vukovar Ltd. II. CLAIMS 2.053 915 thanks to the created reserves of liquid assets, managed to fulfill its obligations to III. SHORT-TERM FINANCIAL ASSETS 75 80 employees, the state and to the suppliers.

IV. CASH AT BANK AND IN HAND 14.777 15.241 The Company incurred a reduction of share capital in the amount of 6.7 million PREPAID EXPENSES AND ACCRUED 362 297 HRK because of a withdrawal of real estate owned by the Public Institution Port REVENUES Authority of Vukovar. Further actions will be implemented in accordance with the TOTAL ASSETS 49.866 41.216 prescribed procedure of implementation of privatization.

66 2014. - ANNUAL REPORT ON THE OPERATIONS NARODNE NOVINE d.d. www.nn.hr Savski gaj XIII. put 6, 10 020 Zagreb

Ownership structure Management Board: Stanko Borić, member on December 31, 2014 Davor Čović, chairman Dane Bićanić, member Nikola Sila, member Svebor Marion, member Government representative in the Supervisory Board: General Assembly: DUUDI/HR Tomislav Stojak, head Ivan Vrdoljak, Minister Alen Kajmović, member of Economy Vjeran Blažek, member 100% Davor Čović

GENERAL COMPANY INFORMATION COMPANY OBJECTS

Narodne novine Plc. is a joint-stock company for issuing and printing of The main activities of Narodne novine Plc. are publishing, printing and trade the Official Gazette of the Republic of Croatia, official and other blank forms activities. The main activity of the Company issuing and printing of the Official and trading in school and office supplies. Gazette - official publication of the Republic of Croatia, the official and other blank forms and trading in school and office supplies. The vision of the Company’s -bu The Company engages in publishing, trade and printing activities which siness is to be successful and innovative economic operator engaged in the publi- are interconnected. As a joint-stock company the company has been operating shing, printing and trade activities, with special responsibility for the publication since 2001. of the Official Gazette in printed and electronic form, as well as web pages for the purpose of public procurement and auctions, to provide professional training and Narodne novine Plc. is a company of particular interest to the Republic of consulting services, and to create and produce blank forms and professional and Croatia and intended for privatization. expert textbooks in the field of law. The Company strives to achieve new investment projects in order to increase total revenues, further rationalization of operations, commercialization of existing and new e-products (e-forms, e-auction, AFFILIATED COMPANIES e-accounts, e-procurement), advancing printing technology with the acquisition of new machinery, and all with the objective of maintaining stable operations of the • Papir Internacional d.o.o. Zagreb, 100% ownership Company in the years ahead.

Tables: Summary of the abbreviated balance sheet, profit and loss account KEY FINANCIAL RATIOS for 2013 and 2014 (HRK in thousands)

400.000 III. LONG-TERM FINANCIAL ASSETS 3.736 3.650 IV. CLAIMS 0 17 200.000 V. DEFERRED TAX ASSETS 126 132 0 2011 2012 2013 2014 SHORT-TERM ASSETS 221.964 208.088

TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT I. INVENTORY 49.848 56.311 II. CLAIMS 48.519 59.200 III. SHORT-TERM FINANCIAL ASSETS 86.651 57.190 IV. CASH AT BANK AND IN HAND 36.946 35.387 Total revenue of the Group increased by 8.2 percent compared to the pre- PREPAID EXPENSES AND ACCRUED 704 972 vious year. Total expenditures increased by 9.5 percent compared to 2013. Profit REVENUES before tax amounted to 12.1 million HRK, and decreased by 22.8 percent compared to 2013. TOTAL ASSETS 479.295 486.912

The balance sheet recorded a change in the structure of non-current and BALANCE SHEET, LIABILITIES 2013 2014 current assets due to major investment activities in 2014 in fixed assets and as CAPITAL AND RESERVES 407.730 412.191 a result of an increase in inventories and trade receivables in current assets. In the structure of short-term liabilities there was a significant increase in payables PROVISIONS 11.028 6.392 compared to 2013. LONG-TERM LIABILITIES 1.047 974

The Group’s financial ratios in 2014 are at the same level as in the previous SHORT-TERM LIABILITIES 56.633 64.815 year. Liquidity and debt ratios are a good, the activity ratio showed a slow turno- DEFERRED EXPENSES AND ACCRUED 2.857 2.540 ver of total assets since the Group possesses of a large number of assets. INCOME TOTAL LIABILITIES 479.295 486.912 The efficiency ratio from total operations derives from activity that is domi-

2014. - ANNUAL REPORT ON THE OPERATIONS 67 nant in the Group according to the total revenue criteria, and those are commer- FINANCIAL RATIOS 2013 2014 cial activities. The profitability ratio over ROA has slightly decreased compared to 2013. Investments in 2014 mainly relate to the purchase of the toilet paper ma- LIQUIDITY RATIOS king machine, construction works in a print shop and purchase of printing mac- Current ratio 3,92 3,21 hinery. All investment activities are financed from the Company’s own funds. Financial stability ratio 0,63 0,67 LEVERAGE RATIOS INCOME STATEMENT (HRK in thousands) 2013 2014 Debt ratio 0,12 0,14 Operating revenues 396.455 425.464 Equity ratio 0,85 0,85 Operating expenditures 385.352 421.750 Financial ratio 0,14 0,16 Financial revenues 5.046 9.143 ACTIVITY RATIOS Financial expenditures 411 700 Total asset turnover ratio 0,84 0,89 TOTAL REVENUES 401.501 434.607 EFFICIENCY RATIOS TOTAL EXPENDITURES 385.763 422.450 PROFIT/LOSS BEFORE TAX 15.738 12.157 Overall operations efficiency 1,04 1,03 Corporate Tax 3.497 695 PROFITABILITY RATIOS NET PROFIT 12.241 11.462 NET RETURN ON ASSETS (ROA) 2,56% 2,36%

ZRAČNA LUKA www.airport-dubrovnik.hr DUBROVNIK d.o.o. Dobrota 24, 20 213 Čilipi, Konavle

Management Government Ownership structure on December 31, 2014 Board: representative Roko Tolić, chairman in the General 10% Assembly : DUUDI/RH Supervisory Board: Siniša Hajdaš 15% Dubrovačko - Mateo Čagalj, head Dončić, Minister neretvanska Božidar Memed, deputy of Maritime Affairs, županija Ivica Martić, member Transport and 55% Općina Konavle Luka Klaić, member Infrastructure Grad Dubrovnik Romana Palčić, 20% member Mato Pušić, member Roko Tolić Vilma Kosović, member COMPANY OBJECTS

The core business of Zračna luka Dubrovnik Ltd. is the provision of a safe GENERAL COMPANY INFORMATION and regular air transport of passengers and goods, in accordance with international standards. The Company invests continuous efforts and carries out activities The main activity of the Zračna luka Dubrovnik Ltd. is regular and non-sc- for improving the quality of services by improving air transport safety, creating a heduled air transport, consignment operations and other activities carried out in recognizable image and a more efficient and rational use of the Company’s reso- airports. The Company has no affiliates. urces, with an increase in investment and a positive business trend.

Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 KEY FINANCIAL RATIOS and 2014 (HRK in thousands)

Graph: Summary of total revenue, expenditures and operating results in BALANCE SHEET (HRK in thousands) 2013 2014 the period from 2011 to 2014 (HRK in thousands) BALANCE SHEET, ASSETS LONG-TERM ASSETS 547.262 561.070 I. INTANGIBLE ASSETS 12.331 14.003 300.000 II. TANGIBLE ASSETS 534.029 546.165 III. LONG-TERM FINANCIAL ASSETS 902 902 200.000 IV. CLAIMS 0 0 100.000 V. DEFERRED TAX ASSETS 0 0 SHORT-TERM ASSETS 184.371 207.283 0 2011 2012 2013 2014 I. INVENTORY 6.931 8.868 II. CLAIMS 18.478 22.796 TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT III. SHORT-TERM FINANCIAL 90.703 104.080 ASSETS IV. CASH AT BANK AND IN HAND 68.259 71.539 PREPAID EXPENSES AND ACCRUED REVENUES 308 201 TOTAL ASSETS 731.941 768.554

68 2014. - ANNUAL REPORT ON THE OPERATIONS BALANCE SHEET, LIABILITIES 2013 2014 FINANCIAL RATIOS 2013 2014 CAPITAL AND RESERVES 604.566 645.991 LIQUIDITY RATIOS PROVISIONS 7.784 9.348 Current ratio 5,89 5,06 LONG-TERM LIABILITIES 87.748 72.018 Financial stability ratio 0,79 0,78 SHORT-TERM LIABILITIES 31.296 40.945 LEVERAGE RATIOS Debt ratio 0,16 0,15 DEFERRED EXPENSES AND ACCRUED INCOME 547 252 Equity ratio 0,83 0,84 TOTAL LIABILITIES 731.941 768.554 Financial ratio 0,20 0,17 ACTIVITY RATIOS INCOME STATEMENT (HRK in thousands) 2013 2014 Total asset turnover ratio 0,30 0,31 Operating revenues 211.842 229.227 EFFICIENCY RATIOS Operating expenditures 175.268 186.559 Overall operations efficiency 1,19 1,22 Financial revenues 7.488 6.405 PROFITABILITY RATIOS Financial expenditures 9.071 6.040 NET RETURN ON ASSETS (ROA) 4,63% 5,52% TOTAL REVENUES 219.330 235.633 Total revenues of the Company increased by 7.43 percent in the current year compa- TOTAL EXPENDITURES 184.339 192.599 red to the previous year. Total expenditures of the Company increased by 4.48% in the PROFIT/LOSS BEFORE TAX 34.991 43.033 current year compared to the previous year. Corporate Tax 1.138 583 NET PROFIT 33.853 42.450 In February 2014, the Company successfully completed the prenotification process for obtaining grants from the EU structural funds, and received a positive decision The business performance of Zračna luka Dubrovnik Ltd. in 2014 was marked from DG Competition on the compatibility of the project in accordance with the rules by another realization of a record number of passenger transport since its foundation, on state aid. Also, in April 2015, the Company received a decision of the Croatian Go- third year in a row. In accordance with the achieved turnover of 1.5 million passengers, vernment on the financing of the “Dubrovnik airport development’” project, as well passenger traffic increased by 4.06 percent compared to 2013. The increase in passenger as the green light from the European Investment Bank (EIB) on the approval of the traffic reflected on the financial results and the Company achieved profit after tax in the project and the financing of the Company. Future project plans and the investment amount of 42.5 million HRK which is a an increase of 25 percent compared to last year. cycle is closely related to the “Dubrovnik airport development” project.

ZRAČNA LUKA OSIJEK d.o.o. www.osijek-airport.hr Klisa, 31 000 Osijek

Management Board: Government Ownership structure on December 31, 2014 Domagoj Marinić, chairman representative in the General 25% Supervisory Board: Assembly: DUUDI/RH Dinko Staničić, head Siniša Hajdaš Zlatko Franjić, deputy Dončić, Minister of Osječko-baranjska županija Željko Bugarić, member Maritime Affairs, 55% Ivica Bilac, member Transport and Grad Osijek Infrastructure 20%

Domagoj Marinić

GENERAL COMPANY INFORMATION KEY FINANCIAL RATIOS

Zračna luka Osijek Ltd. is a company that provides air traffic services, Graph: Summary of total revenue, expenditures and operating results in acceptance and transport of airplanes, passengers and goods, with the aim of the period from 2011 to 2014 (HRK in thousands) establishing a regular and charter lines in domestic and international air transport. The Company has no affiliates.

15.000

COMPANY OBJECTS 10.000 The main goal of Zračna luka Osijek Ltd. is to ensure the importance of an in- 5.000 ternational regional airport that supports and promotes economic growth and deve- 0 lopment of the eastern Croatian region as a whole, ensuring a high quality and the 2011 2012 2013 2014 -5.000 highest standards in every business segment. The runway for take off and landing, TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT/LOSS 2500 meters in length and 45 meters wide, provides acceptance and transport services of passenger and cargo aircrafts, as well as smaller aircraft for business travel.

2014. - ANNUAL REPORT ON THE OPERATIONS 69 Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 INCOME STATEMENT (HRK in thousands) 2013 2014 and 2014 (HRK in thousands) Operating revenues 9.925 14.019 BALANCE SHEET (HRK in thousands) 2013 2014 Operating expenditures 9.456 13.500 BALANCE SHEET, ASSETS Financial revenues 14 8 LONG-TERM ASSETS 86.514 87.726 Financial expenditures 458 521 I. INTANGIBLE ASSETS 520 384 TOTAL REVENUES 9.939 14.027 II. TANGIBLE ASSETS 85.924 87.273 TOTAL EXPENDITURES 9.914 14.021 PROFIT/LOSS BEFORE TAX III. LONG-TERM FINANCIAL ASSETS 70 69 25 5 Corporate Tax 0 0 IV. CLAIMS 0 0 NET PROFIT 25 5 V. DEFERRED TAX ASSETS 0 0

SHORT-TERM ASSETS 1.896 455 FINANCIAL RATIOS 2013 2014 I. INVENTORY 98 77 LIQUIDITY RATIOS II. CLAIMS 362 351 Current ratio 0,37 0,07 III. SHORT-TERM FINANCIAL ASSETS 0 0 Financial stability ratio 3,64 3,82 IV. CASH AT BANK AND IN HAND 1.436 27 LEVERAGE RATIOS PREPAID EXPENSES AND ACCRUED REVENUES 114 204 Debt ratio 0,14 0,14 TOTAL ASSETS 88.524 88.385 Equity ratio 0,19 0,19 Financial ratio 0,71 0,73 BALANCE SHEET, LIABILITIES 2013 2014 ACTIVITY RATIOS CAPITAL AND RESERVES 16.863 16.868 Total asset turnover ratio 0,11 0,16 PROVISIONS 0 0 EFFICIENCY RATIOS LONG-TERM LIABILITIES 6.917 6.105 SHORT-TERM LIABILITIES 5.072 6.263 Overall operations efficiency 1,00 1,00 DEFERRED EXPENSES AND ACCRUED INCOME 59.672 59.149 PROFITABILITY RATIOS UKUPNO – PASIVA 88.524 88.385 NET RETURN ON ASSETS (ROA) 0,03% 0,01%

The Company’s business operations in 2014 in terms of passenger traffic on of secondary activities which in 2014 was realized. The operation expenses and aircraft operations was the best since after the war, and on the level of the of the Company have been reduced to a minimum, however, the introduction best pre-war years. In terms of passenger transport, the increase was almost of new routes as well as the expansion of secondary activities caused additional 800 percent compared to 2013 when there were 3487 passengers. initial costs, an increase in material costs, maintenance and personnel costs.

In 2014 the airline route from Osijek to London started operating. On this Long-term liabilities of the Company consists of long-term debt that route, significant results were recorded. Around 18,000 passengers were tran- was obtained in order to finance permanent working capital and current ratio. sported, which is 60 percent of the total number of passengers. Short-term liabilities relate to the loan along commitments for revolving credit, short-term loans, accounts payable, employee benefit liabilities The increase in the number of passengers indicated the need for expansi- and other current liabilities.

70 2014. - ANNUAL REPORT ON THE OPERATIONS ZRAČNA LUKA PULA d.o.o. www.aiport-pula.hr Valtursko polje 210, 52 100 Pula

Management Board: Government Ownership structure on December 31, 2014 Svemir Radmilo, chairman representative in the General DUUDI/RH 2% 1% 1% 3% Supervisory Board: Assembly: Istarska županija 8% Valerio Drandić, head Siniša Hajdaš Grad Poreč Renata Blažević, deputy Dončić, Minister of Grad Pula 15% Damir Prhat, member Maritime Affairs, Grad Labin 55% Robert Zenzerović, member Transport and Grad Rovinj Jordan Komatina, member Infrastructure Grad Pazin Svemir Davor Ravnić, member 15% Grad Buje Radmilo Elio Štifanić, member

GENERAL COMPANY INFORMATION BALANCE SHEET, LIABILITIES 2013 2014 The main activity of Zračna luke Pula Ltd. is service industry related to air CAPITAL AND RESERVES 143.662 143.606 transportation. The Company has no affiliates. PROVISIONS 0 0 LONG-TERM LIABILITIES 4.227 2.106 COMPANY OBJECTS SHORT-TERM LIABILITIES 5.636 5.734 The Company specializes in acceptance and transport of passengers, air- DEFERRED EXPENSES AND ACCRUED 16.144 18.200 crafts, cargo and goods in domestic and international air traffic, while providing INCOME services in a safe and quality manner. TOTAL LIABILITIES 169.669 169.646

The vision of the Company is to be a competitive international airport, with INCOME STATEMENT (HRK in thousands) 2013 2014 year-round scheduled and charter traffic. Operating revenues 48.670 49.476 FINANCIAL RATIOS Operating expenditures 51.031 50.512 Financial revenues 1.945 1.754 Summary of total revenue, expenditures, operating results from 2011 to 2014 (HRK in Financial expenditures 1.308 614 thousands) TOTAL REVENUES 50.615 51.230 TOTAL EXPENDITURES 52.339 51.126 80.000 PROFIT/LOSS BEFORE TAX -1.724 104 60.000 Corporate Tax 0 0 40.000 NET LOSS/PROFIT -1.724 104 20.000 0 -20.000 FINANCIAL RATIOS 2013 2014 2011 2012 2013 2014 LIQUIDITY RATIOS TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT/LOSS Current ratio 5,54 6,18 Financial stability ratio 0,94 0,92 Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 LEVERAGE RATIOS and 2014 ( HRK in thousands ) Debt ratio 0,06 0,05 Equity ratio 0,85 0,85 BALANCE SHEET (HRK in thousands) 2013 2014 Financial ratio 0,07 0,05 BALANCE SHEET, ASSETS ACTIVITY RATIOS LONG-TERM ASSETS 138.444 134.182 Total asset turnover ratio 0,30 0,30 I. INTANGIBLE ASSETS 244 268 EFFICIENCY RATIOS II. TANGIBLE ASSETS 137.679 133.601 Overall operations efficiency 0,97 1,00 PROFITABILITY RATIOS III. LONG-TERM FINANCIAL ASSETS 193 15 NET RETURN ON ASSETS (ROA) -1,02% 0,06% IV. CLAIMS 328 298 V. DEFERRED TAX ASSETS The Company ended 2014 with total revenue in the amount of 51.3 million HRK, total expenditures in the amount of 51.1 million HRK and net profit amounting to 104 SHORT-TERM ASSETS 31.211 35.411 thousand HRK. I. INVENTORY 173 265 Operating expenses in 2014 decreased by 1 percent compared to 2013. The largest II. CLAIMS 2.210 1.916 share in the of operating expenditures structure is the item of material costs and per- III. SHORT-TERM FINANCIAL ASSETS 26.802 30.585 sonnel costs. Compared to 2013 when the company ended the year with a loss, in 2014 it recorded a gain in the amount of 104 thousand HRK. IV. CASH AT BANK AND IN HAND 2.026 2.645 PREPAID EXPENSES AND ACCRUED REVENUES 14 53 Investments made in 2014 relate to investments in fixed assets - a system for par- king payment, control unit, adjustment of the building for the Schengen regime, waste TOTAL ASSETS 169.669 169.646 disposal unit.

2014. - ANNUAL REPORT ON THE OPERATIONS 71 ZRAČNA LUKA RIJEKA d.o.o. www.rijeka-airport.hr Hamec 1, 51 513 Omišalj

Management Board: Government Ownership structure Tomislav Palalić, chairman representative in the on December 31, 2014 General Assembly: Siniša Hajdaš Dončić, Supervisory Board: 4% 3% Minister of Maritime 4% DUUDI/RH Zdravko Čupković, head 4% , deputy Affairs, Transport and Primosko-goranska Nataša Zrilić županija Infrastructure 10% Branko Fibinger, member Grad Rijeka 55% Marinella Matić, member Grad Opatija

Marija Žarković Turak, member 20% Grad Crikvenica Tomislav Juraj Bukša, member Palalić Aldo Simper, member

GENERAL COMPANY INFORMATION Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 and 2014 (HRK in thousands) The main activity of Zračna luka Rijeka Ltd. are all activities related to the acceptance and transport of aircrafts, aircraft stay at the airport, and supplying BALANCE SHEET (HRK in thousands) 2013 2014 of passengers, baggage, goods, items and post. The Company is primarily oriented BALANCE SHEET, ASSETS on the transport of passengers, while cargo traffic takes place only sporadically. LONG-TERM ASSETS 151.363 155.301 There are no affiliated companies. I. INTANGIBLE ASSETS 697 556

II. TANGIBLE ASSETS 150.657 154.736 COMPANY OBJECTS III. LONG-TERM FINANCIAL ASSETS 9 9 IV. CLAIMS 0 0 The primary mission of Zračna luka Rijeka Ltd. is to fulfill an important so- V. DEFERRED TAX ASSETS 0 0 cial role in meeting the needs of the community for the availability of appropriate infrastructure that enables the safe and regular air transport of people and goods. SHORT-TERM ASSETS 1.172 2.732 I. INVENTORY 42 55 The vision of the Company is to a competitive international airport with re- II. CLAIMS 433 725 gular and charter traffic all-year round, that meets all modern requirements of air III. SHORT-TERM FINANCIAL ASSETS 0 0 transport. The main objectives of the Company’s operations are focused on the IV. CASH AT BANK AND IN HAND 697 1.952 complete integration of the domestic and international air transport system and PREPAID EXPENSES AND ACCRUED REVENUES 55 72 to ensure continuous traffic growth and sustainable development of the airport, TOTAL ASSETS 152.590 158.105 respecting its impact on the environment. BALANCE SHEET, LIABILITIES 2013 2014 KEY FINANCIAL RATIOS CAPITAL AND RESERVES 130.848 132.000 Graph: Summary of total revenue, expenditures and operating results in the period PROVISIONS 288 220 from 2011 to 2014 (HRK in thousands) LONG-TERM LIABILITIES 16 2.648 SHORT-TERM LIABILITIES 6.675 5.273 DEFERRED EXPENSES AND ACCRUED INCOME 14.763 17.964 20.000 TOTAL LIABILITIES 152.590 158.105

10.000 INCOME STATEMENT (HRK in thousands) 2013 2014 Operating revenues 15.826 14.888 0 Operating expenditures 16.768 13.715 2011 2012 2013 2014 Financial revenues -10.000 466 343 Financial expenditures 638 365 TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT/LOSS TOTAL REVENUES 16.292 15.231 TOTAL EXPENDITURES 17.406 14.079 PROFIT/LOSS BEFORE TAX -1.114 1.152 Although compared to 2013 in 2014, the Company generated revenues that Corporate Tax 0 0 were lower by 8%,, as a result of the drop in passenger numbers and aircraft ope- NET LOSS/PROFIT -1.114 1.152 rations, in contrast to 2013, when a loss of 1 mil HRK was recorded, in 2014 there was an operating profit of 1 million HRK. FINANCIAL RATIOS 2013 2014 LIQUIDITY RATIOS This is because the expenditures were reduced by 18%. There was an in- Current ratio 0,18 0,52 creased profitability and return on assets, and the liquidity of the Company also Financial stability ratio 1,16 1,15 increased. LEVERAGE RATIOS Debt ratio 0,04 0,05 Healthy conditions were generated for further development of Zračna luka Equity ratio 0,86 0,84 Rijeka Ltd. and rationalization measures and reduction of operating costs. Financial ratio 0,05 0,06 ACTIVITY RATIOS Realized investments in 2014 are related to the reconstruction of lighting, Total asset turnover ratio fire alarm systems, computer equipment and other. 0,11 0,10 EFFICIENCY RATIOS Overall operations efficiency 0,94 1,08 PROFITABILITY RATIOS Net return on assets (ROA) -0,73% 0,73%

72 2014. - ANNUAL REPORT ON THE OPERATIONS ZRAČNA LUKA SPLIT d.o.o. www.split-airport.hr Zračna luka Split d.o.o. Cesta dr. Franje Tuđmana, 21 217 Kaštel Štafilić

Management Board: Marko Parčina, Ownership structure on December 31, 2014 Lukša Novak, chairman member

5% Supervisory Board: Government 10% 55% DUUDI/RH Matko Kuzmanić, head representative Splitsko-dalmatinska Dalibor Obradović, in the General županija 15% member Assembly: Grad Kaštela Ferdo Kurtović, member Siniša Hajdaš Dončić, Grad Trogir Marin Šalov, member Minister of Maritime Grad Split 15% Lukša Novak Zoran Maršić, member Affairs, Transport and Mihovil Biočić, member Infrastructure

GENERAL COMPANY INFORMATION BALANCE SHEET, LIABILITIES 2013 2014 CAPITAL AND RESERVES 528.317 591.303 The core business of Zračna luka Split Ltd. are service activities related to air transportation or handling and transport of aircrafts and passengers as well PROVISIONS 2.266 4.668 as trade and catering services. The Company has no affiliates. LONG-TERM LIABILITIES 4.723 0 COMPANY OBJECTS SHORT-TERM LIABILITIES 31.353 18.463 DEFERRED EXPENSES AND ACCRUED INCOME 14.343 13.364 The aim is of the Company’s operations is to create conditions for safe TOTAL LIABILITIES 581.002 627.798 and regular air traffic, with a continuous increase in the quality of services and customer satisfaction, to ensure sustainable development and preserve the en- INCOME STATEMENT (HRK in thousands) 2013 2014 vironment, and at the same time retain the status of a secure airport, which is recording an increasing number of passengers and aircrafts. Operating revenues 208.599 239.147 Operating expenditures 166.941 179.894 KEY FINANCIAL RATIOS Financial revenues 7.663 6.387 Financial expenditures 1.907 1.322 Graph: Summary of total revenue, expenditures and operating results in the period TOTAL REVENUES 216.262 245.534 from 2011 to 2014 ( HRK in thousands ) TOTAL EXPENDITURES 168.848 181.216 PROFIT/LOSS BEFORE TAX 47.414 64.318 Corporate Tax 655 1.184 300.000 NET PROFIT 46.759 63.134 200.000

100.000 FINANCIAL RATIOS 2013 2014 LIQUIDITY RATIOS 0 Current ratio 5,95 12,89

TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT Financial stability ratio 0,74 0,66 LEVERAGE RATIOS Debt ratio 0,06 0,03 Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 and 2014 Equity ratio 0,91 0,94 Financial ratio 0,07 0,03 BALANCE SHEET (HRK in thousands) 2013 2014 ACTIVITY RATIOS BALANCE SHEET, ASSETS Total asset turnover ratio 0,37 0,39 EFFICIENCY RATIOS LONG-TERM ASSETS 394.388 389.697 Overall operations efficiency 1,28 1,35 I. INTANGIBLE ASSETS 631 271 PROFITABILITY RATIOS II. TANGIBLE ASSETS 393.094 388.818 NET RETURN ON ASSETS (ROA) 8,05% 10,06% III. LONG-TERM FINANCIAL ASSETS 663 608 In 2014, the Company’s total revenue increased by 14 percent while total expen- IV. CLAIMS 0 0 ditures increased by 7 percent which resulted in a profit of 64.3 million HRK, which V. DEFERRED TAX ASSETS 0 0 is 36 percent more than in the previous year. The balance sheet shows assets and the sources of assets, total assets increased by percent compared to the previous year. SHORT-TERM ASSETS 186.533 238.016 I. INVENTORY 5.215 6.433 The biggest growth was realized in short-term financial assets, which is important to highlight because the realization of the reconstruction investments and the II. CLAIMS 22.176 22.727 extension of the passenger terminal of Zračna luka Split Ltd. III. SHORT-TERM FINANCIAL ASSETS 81.189 131.582 The estimated value of these investments was 455 million HRK, fully financed IV. CASH AT BANK AND IN HAND 77.953 77.274 from the Company’s own funds. The investment activities in 2014 are to the purcha- PREPAID EXPENSES AND ACCRUED REVENUES 81 85 se of land, investments in the modernization and maintenance of equipment and the implementation of investments for reconstruction and extension of the passenger TOTAL ASSETS 581.002 627.798 terminal.

2014. - ANNUAL REPORT ON THE OPERATIONS 73 ZRAČNA LUKA ZADAR d.o.o. www.zadar-airport.hr Ulica I br. 2/A, Zemunik Donji, 23 000 Zadar

Management Board: Zastupnik RH Ownership structure on December 31, 2014 Irena Ćosić, chairman u Skupštini: Siniša Hajdaš 5% Supervisory Board: Dončić, Minister of DUUDI/RH Maritime Affairs, 20% Nediljko Pavlović, head Zadarska županija Nada Brekalo, deputy Transport and Infrastructure Grad Zadar Mario Pešut, member 55% Jure Buljat, member Općina Zemunik Jelena Tot Škrbić, member 20% Donji

Irena Ćosić

GENERAL COMPANY INFORMATION BALANCE SHEET, LIABILITIES 2013 2014 CAPITAL AND RESERVES 111.550 115.000 The core business of Zračna luke Zadar Ltd. is a service industry in relation to air transport, and the handling of aircrafts and passengers. The Company has PROVISIONS 1.600 2.191 no affiliates. LONG-TERM LIABILITIES 30.051 30.051 SHORT-TERM LIABILITIES 2.533 2.094 COMPANY OBJECTS DEFERRED EXPENSES AND ACCRUED INCOME 475 121 TOTAL LIABILITIES 146.209 149.457 With significant investments in infrastructure for air traffic, Zračna luka Zadar meets all modern requirements of air transportation, and has been recognized as such by customers. A feature of aircraft and passengers traffic is that INCOME STATEMENT (HRK in thousands) 2013 2014 it is seasonal, but every year there a significant increase in turnover. The aim is to further develop the business infrastructure and technology in order to enable Operating revenues 53.402 52.161 permanent growth of traffic to the maximum utilization of capacity. Operating expenditures 45.795 48.982 Financial revenues 1.083 622 KEY FINANCIAL RATIOS Financial expenditures 520 176 TOTAL REVENUES 54.485 52.783 Graph: Summary of total revenue, expenditures and operating results in the period from 2011 to 2014 (HRK in thousands) TOTAL EXPENDITURES 46.315 49.158 PROFIT/LOSS BEFORE TAX 8.170 3.625 Corporate Tax 395 174 60.000 NET PROFIT 7.775 3.451 40.000 FINANCIAL RATIOS 2013 2014 20.000 LIQUIDITY RATIOS 0 Current ratio 13,30 17,36 Financial stability ratio 0,79 0,78 TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT LEVERAGE RATIOS Debt ratio 0,22 0,22 Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 Equity ratio 0,76 0,77 and 2014 (HRK in thousands) Financial ratio 0,29 0,28 BALANCE SHEET (HRK in thousands) 2013 2014 ACTIVITY RATIOS BALANCE SHEET, ASSETS Total asset turnover ratio 0,37 0,35 EFFICIENCY RATIOS LONG-TERM ASSETS 112.415 113.055 Overall operations efficiency 1,18 1,07 I. INTANGIBLE ASSETS 2.186 2.069 PROFITABILITY RATIOS II. TANGIBLE ASSETS 110.229 110.961 NET RETURN ON ASSETS (ROA) 5,32% 2,31% III. LONG-TERM FINANCIAL ASSETS 0 25 In 2014, the Company has generated less profit than in 2013. Total revenues in IV. CLAIMS 2014 are lower than those realized in 2013 because in 2013 grants were received amoun- V. DEFERRED TAX ASSETS ting to 3.2 million HRK to cover the costs of investment maintenance, and repair cracks in the take off and landing runway and the rehabilitation of roadways (maneuvering SHORT-TERM ASSETS 33.696 36.353 surfaces) and for that reason the whole amount was classified as revenue. I. INVENTORY 409 612 The Company holds an excellent position regarding liquidity ratios. Efficiency ratio is greater than 1, which means that operations are efficient. The profitability ratio has de- II. CLAIMS 13.564 9.756 creased due to reduced profit in 2014. III. SHORT-TERM FINANCIAL ASSETS 17.949 22.746 Investments in 2014 are related to investments in the reconstruction of the ru- IV. CASH AT BANK AND IN HAND 1.774 3.239 nway and the main apron, upgrading lighting, turn signals, signaling and procurement of equipment for handling aircrafts and passengers. The development strategy of the PREPAID EXPENSES AND ACCRUED REVENUES 98 49 Company is heading towards improving service quality and constant investment in TOTAL ASSETS 146.209 149.457 infrastructure and equipment in order to fully meet the quality and safety regulations.

74 2014. - ANNUAL REPORT ON THE OPERATIONS ZRAKOPLOVNO-TEHNIČKI www.ztc-atc.hr CENTAR d.d. Sisačka 39E, 10 410 Velika Gorica

Management Board: Government representative Ownership structure Pavao Krpan, chairman in the General Assembly: on December 31, 2014 Tomislav Babić, head Ante Kotromanović, Defence Minister Marijo Dokupil, head Boris Lalovac, Minister of Finance Ivan Vrdoljak, Minister of Economy Supervisory Board: Siniša Hajdaš Dončić, Minister of Boško Pribičević, head Maritime Affairs, Transport and DUUDI/HR Ivan Beneta, deputy Infrastructure Niko Rimac, head Ranko Ostojić, Minister of the Interior Vildana Megla, head Drago Lovrić, Chief of General Staff of 100% Alan Rukavina, head the Armed Forces Pavao Krpan

GENERAL COMPANY INFORMATION Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 and 2014 (HRK in thousands) The Aeronautical Technical Centre j.s.c. was established based on the Decision of the Croatian Government in 2009. Activities according to the National classification of BALANCE SHEET (HRK in thousands) 2013 2014 activities (NKD) is the production of aircrafts and spacecrafts and related mechanisms. BALANCE SHEET, ASSETS The share capital of 274,962,000 HRK is divided into 274,962 shares, each carrying one LONG-TERM ASSETS 238.253 273.699 vote. The Company has no affiliates. I. INTANGIBLE ASSETS 19 91 II. TANGIBLE ASSETS 238.217 273.596 COMPANY OBJECTS III. LONG-TERM FINANCIAL ASSETS IV. CLAIMS 17 12 The core activity of the company is the overhaul of aircrafts for maintenance and V. DEFERRED TAX ASSETS achieving technical and functional safety of aircrafts and aircraft devices, examination SHORT-TERM ASSETS 55.256 297.522 of the certification of a new aircraft types, aircraft devices and spare parts for aircrafts, I. INVENTORY aircraft and helicopters repair and maintenance, as well as providing services of import 8.391 236.379 and export of goods for aircraft and technical equipment and gear. The Aeronautical II. CLAIMS 3.131 2.099 Technical Centre j.s.c. aims to become a regional center for the maintenance, restoration III. SHORT-TERM FINANCIAL ASSETS 37.158 12.463 and repair of military and civil aircrafts with international references and a high degree IV. CASH AT BANK AND IN HAND 6.576 46.581 of quality and with a continuous improvement of personnel permanently improve the PREPAID EXPENSES AND ACCRUED REVENUES 11.451 11.451 level of knowledge, organization and quality of service. The business objectives of the TOTAL ASSETS 304.960 582.672 Aeronautical Technical Centre j.s.c. are foremost the implementation of the annual maintenance contract for a strategic buyer, the Ministry of Defence of the Republic of Cro- BALANCE SHEET, LIABILITIES 2013 2014 atia. In addition, the goal is to expand its business activities in the provision of services CAPITAL AND RESERVES 263.073 263.552 to civil aviation, as well as the expansion of on foreign military and civilian markets. To PROVISIONS 826 1.456 achieve these goals it is necessary to permanently educate and license workers and faci- LONG-TERM LIABILITIES 1.769 1.622 lities according to international standards, increase the quality of service and improve the work technology. SHORT-TERM LIABILITIES 6.539 14.094 DEFERRED EXPENSES AND ACCRUED INCOME 32.753 301.948 KEY FINANCIAL RATIOS TOTAL LIABILITIES 304.960 582.672

Graph: Summary of total revenue, expenditures and operating results in the period from 2011 INCOME STATEMENT (HRK in thousands) 2013 2014 to 2014 (HRK in thousands) Operating revenues 63.451 47.471 Operating expenditures 62.442 64.670 80.000 Financial revenues 539 2.735 60.000 Financial expenditures 1.194 482 40.000 TOTAL REVENUES 63.991 65.630 TOTAL EXPENDITURES 63.636 65.151 20.000 PROFIT/LOSS BEFORE TAX 355 479 0 Corporate Tax 0 0 -20.000 NET PROFIT 355 479 TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT/LOSS FINANCIAL RATIOS 2013 2014 Fixed assets of the Company mostly consist of tangible assets, which makes LIQUIDITY RATIOS 99.9% of total assets. A significant increase in tangible assets and current assets com- Current ratio 8,45 21,11 pared to the 2013 refers to the inscribed supplies, equipment, tools, facilities and means Financial stability ratio 0,90 1,03 of transport assigned by the Agreement of the Croatian Government according to the LEVERAGE RATIOS condition on July 31, 2010, which based on Decision of the Company’s Management Debt ratio 0,03 0,03 from December 31,2014, was entered in the balance sheet. The business objectives of Equity ratio 0,90 0,46 the Aeronautical Technical Centre j.s.c. is the implementation of the annual mainte- Financial ratio 0,03 0,06 nance contract for a strategic buyer, the Ministry of Defence of the Republic of Croatia. ACTIVITY RATIOS Among important business goals is the expansion of activities in providing services to Total asset turnover ratio 0,22 0,11 civil aviation, and the expansion on the foreign military and civilian market. Considering EFFICIENCY RATIOS the turbulent economic crisis events, the Company still achieved positive results. Com- Overall operations efficiency 1,01 1,01 pared to 2013, core business revenue increased by 2.6 percent, total revenues included PROFITABILITY RATIOS other revenues in the amount of 15 million HRK. EBITDA (operating profit increased Net return on assets (ROA) 0,12% 0,08% by depreciation) decreased by 52.3 percent and net profit amounted to 479 thousand HRK. During 2014, the Company was exposed to a high risk business with the Ukraine 2014, the Company commenced the standardization of business and obtaining a ISO and the inability to complete the major overhaul of helicopters due to the delivery of 9001/2008 certificate, after which it will be possible to draw up a Restructuring plan of spare parts, and thus the inability to carry out the planned operating activities. During the Company for the purpose of more efficient operations.

2014. - ANNUAL REPORT ON THE OPERATIONS 75 Companies of special interest in which the Republic of Croatia has less than 50% ownership and whose shares are listed on regulated capital market >>

76 2014. - ANNUAL REPORT ON THE OPERATIONS ĐURO ĐAKOVIĆ www.duro-dakovic.com HOLDING d.d. Dr. Mile Budaka 1, 35 000 Slavonski Brod

Management Mladen Huber, member Ownership structure on December 31, 2014 Board : Igor Žonja, member Tomislav Mazal, Vjekoslav Galzina, member 3,80% 2,77% 1,38% chairman Blaženka Luketić, member DUUDI/RH 8,69% Marko Bogdanović, Mali dioničari

member Government Bakić Nenad 11,49% representative in the DUUDI/HZMO Supervisory Board: General Assembly : 50,21% Hypo AA Bank/PBZ co OMF Vjekoslav Leko, By power of attorney kategorija B deputy awarded by the State PBZ/PBZ SP Domagoj Bartek, Administrative Office for 21,66% DUUDI/RH Tomislav Mazal member State Property Management

GENERAL COMPANY INFORMATION Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 and 2014 ( HRK in thousands ) Đuro Đaković Holding Plc. manages the holding company for joint investments, purchases and sales, technical consulting and obtaining of licenses and patents. BALANCE SHEET, ASSETS 2013 2014 LONG-TERM ASSETS Đuro Đaković group with headquarters in Slavonski Brod consists of the I. INTANGIBLE ASSETS 204.429 245.908 Company Đuro Đaković Holding Plc., a parent company which has 7 other companies in which it has a dominant influence, and two companies in which the parent II. TANGIBLE ASSETS 24.578 25.546 company has a minority stake. The core activity of the Group is the production III. LONG-TERM FINANCIAL ASSETS 164.348 207.349 of freight cars, production and modernization of heavy and light armored vehicles IV. CLAIMS 3.844 2.589 for ground forces, design and construction of industrial and energy installations and facilities, production of equipment and components for industrial and power V. DEFERRED TAX ASSETS 11.659 10.424 installations and rail vehicles, and also capital management. SHORT-TERM ASSETS I. INVENTORY 401.682 262.563 Đuro Đaković group is one of the largest industrial groups in Croatia and in the region with a long tradition and reputation on the global market. Đuro Đaković II. CLAIMS 121.846 121.171 Holding Plc. was founded in 1991, by the Croatian Development Fund, Croatian ra- III. SHORT-TERM FINANCIAL ASSETS 135.730 87.864 ilway company and the then composite organization Đuro Đaković . IV. CASH AT BANK AND IN HAND 740 343 PREPAID EXPENSES AND ACCRUED REVENUES 143.366 53.185 AFFILIATED COMPANIES TOTAL ASSETS 716 7.450 Companies in majority ownership of Đuro Đaković Holding Plc. TOTAL ASSETS 606.827 515.921

• Đuro Đaković Specijalna vozila d.d., 99,69% BALANCE SHEET, LIABILITIES 2013 2014 • Đuro Đaković Elektromont d.d., 100% CAPITAL AND RESERVES 73.317 64.360 • Đuro Đaković Inzenjering d.d., 84,84% PROVISIONS 17.945 16.382 • Đuro Đaković Proizvodnja opreme d.o.o., 100% • Đuro Đaković Strojna obrada d.o.o.,100% LONG-TERM LIABILITIES 92.412 164.823 • Đuro Đaković Energetika i infrastruktura d.o.o., 97,55% SHORT-TERM LIABILITIES 405.309 255.512 • Slobodna zona Đuro Đaković Slavonski Brod d.o.o. 69,62% DEFERRED EXPENSES AND ACCRUED INCOME 17.844 14.844 TOTAL LIABILITIES 606.827 515.921 COMPANY OBJECTS INCOME STATEMENT (HRK in thousands) 2013 2014 The Group’s extensive list of references includes a wide range of completed projects of a broad scope and complexity, such as design and construction of a wide range Operating revenues 611.558 381.987 of pressure vessels for the oil and petrochemical industry, petroleum and gas tanks, Operating expenditures 730.077 465.621 production of tanks, armoured fighting vehicles, demining machines, railroad freight Financial revenues 5.270 1.217 cars of all types including tank cars for transportation of liquids and petroleum, manufacturing of steel bridge structures, turnkey factory construction, equipment for Financial expenditures 11.036 13.732 thermal and hydroelectric power plants, renewable energy sources and similar. TOTAL REVENUES 616.828 383.204 TOTAL EXPENDITURES 741.113 479.353 KEY FINANCIAL RATIOS PROFIT/LOSS BEFORE TAX -124.285 -96.149 Graph: Summary of total revenue, expenditures and operating results in the period from Corporate Tax 2011 to 2014 (HRK in thousands). NET LOSS -124.285 -96.149

1.500.000 In 2014, the Company marked the continuation of the negative trend on business operations. Compared to the previous year, the most important reason for drop 1.000.000 in revenues is the complete absence of income from the sale of armoured fighting ve- 500.000 hicles which has historically been a large segment of income and the most important 0 part of a positive operating performance. 2011 2012 2013 2014 -500.000 Compared to 2013, in 2014 the transport segment recorded certain tangible im- TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT provements, but in 2014 the occupancy rate of the manufacturing industry was not at a level that would bring a positive operating result.

2014. - ANNUAL REPORT ON THE OPERATIONS 77 In the segment of Industry and Energy in 2014 negative operating results conti- FINANCIAL RATIOS 2013 2014 nued with certain improvements in the Company Đuro Đaković Strojna obrada d.o.o., which managed to end 2014 with a profit. Other companies have big problems with LIQUIDITY RATIOS technological obsolescence and displayed negative results. Current ratio 0,99 1,03 Financial stability ratio 1,23 1,07 In September 2014, the Company’s Management adopted a Strategy, restructuring and financial program plan for 2015-2019, which is publicly issued on the Zagreb LEVERAGE RATIOS Stock Exchange on November 11, 2014. To improve the financial structure, a decision Debt ratio 0,82 0,83 was made on the recapitalization of a new issuing of shares, which was conducted in late Equity ratio 0,12 0,13 2014, when 4,359,616 new shares were registered with a total value of 87.2 million HRK. Financial ratio 6,79 6,53 This provided funding for the implementation of further steps as foreseen in ACTIVITY RATIOS the program. The necessary preparations have been conducted for the planned orga- Total asset turnover ratio 1,02 0,75 nizational restructuring through mergers of individual companies and the extracti- EFFICIENCY RATIOS on and sale or closing down of some steps that were provided in the program. After the recapitalization Duro Dakovic Holding Plc. as a parent company, other activities Overall operations efficiency 0,83 0,80 have been initiated to allow the Holding would recapitalize its affiliates with claims, PROFITABILITY RATIOS allowing for the affiliates to significantly improve their resources. NET RETURN ON ASSETS (ROA) -20,51% -18,91%

www.ina.hr INA – INDUSTRIJA NAFTE d.d. Avenija Većeslava Holjevca 10, 10 000 Zagreb

Management Board: Željko Perić, member Ownership structure Zoltán Sandor Áldott, Mladen Proštenik, member on December 31, 2014 chairman Oszkár Világi, member Horvath Gabor, member Ferenc Horváth, member Péter Ratatics, member Maja Rilović, member 6,08% Niko Dalić, member Davor Mayer, member Government MOL Ivan Krešić, member representative in the DUUDI/RH General Assembly : Nadzorni odbor: By power of attorney Other Siniša Petrović, head awarded by the State 44,84% György Mosonyi, deputy Administrative Office 49,08% Zoltán József Molnár, member for State Property Sandor Áldott Szabolcs I. Ferencz, member Management

GENERAL COMPANY INFORMATION • Polybit d.o.o., Hrvatska, 100% ownership • Croplin d.o.o., Hrvatska, 100% ownership INA – Industrija nafte was established on January 1, 1964 with the merger of • INA Maloprodajni servisi d.o.o., Hrvatska, 100% ownership Naftaplin (exploration and production of oil and gas) with the refineries in Rijeka • Corte Cros d.o.o., Hrvatska, 60% ownership and Sisak and in 1993 became a joint-stock company. • Crosco International Limited, Guernsey, 100% ownership • Crosco B.V, Nizozemska, 100% ownership Basic activities of the Company are exploration and production of oil and • Nordic Shipping Ltd, Maršalski otoci, 100% ownership gas, import of natural gas and sale of imported and domestic natural gas to indu- • Sea Horse Shipping Inc, Maršalski otoci, 100% ownership strial consumers and city gas suppliers, refining and production of oil products • Crosco International d.o.o., Slovenija, 100% ownership in refineries, distribution of fuel and associated products through a retail cha- • Rotary Zrt., Mađarska, 100% ownership in, trading in crude oil and petroleum products through a network of foreign • Crosco International d.o.o., Bosna i Hercegovina, 100% ownership subsidiaries and representative offices, providing services related to onshore and • INA Naftaplin International Exploration and Production Ltd, Guernsey, offshore oil drilling. 100% ownership • INA BH d.d, Bosna i Hercegovina, 100% ownership Industrija nafte d.d. is a medium-sized European oil company with a lea- • Holdina d.o.o., Bosna i Hercegovina, 100% ownership ding role in the oil and gas operations in Croatia, including exploration and pro- • INA d.o.o., Srbija, 100% ownership duction, oil refining and distribution of petroleum products and an important • INA Kosovo d.o.o., Kosovo, 100% ownership role in the regional market of motor fuel. The shares of Industrija nafte d.d. have • Adriagas S.r.l., Italija, 100% ownership been listed on the capital market. • INA Crna Gora d.o.o., Crna Gora, 100% ownership • INA BL d.o.o., Bosna i Hercegovina, 100% ownership • Interina d.o.o., Slovenija, 100% ownership AFFILIATED COMPANIES • Petrol d.d., Hrvatska, 99,9% ownership • Crosco S.A. DE C.V., Meksiko, 83% ownership • Crosco Naftni Servisi d.o.o., Hrvatska, 100% ownership • Mideast Integrated Drilling & Well Services Company LLC, Oman, 49% • Hostin d.o.o., Hrvatska, 100% ownership ownership • STS integralni tehnicki servisi d.o.o., Hrvatska, 100% ownership • ITR d.o.o., Hrvatska, 100% ownership • Top računovodstvo servisi d.o.o., Hrvatska, 100% ownership COMPANY OBJECTS • INA Maziva d.o.o., Hrvatska, 100% ownership • INA – Osijek Petrol d.d., Hrvatska, 100% ownership INA - Industrija nafte d.d realizes its operations in several segments.

78 2014. - ANNUAL REPORT ON THE OPERATIONS The segment Exploration and production of oil and gas engages in the BALANCE SHEET, LIABILITIES 2013 2014 exploration, development and production of oil and natural gas in Croatia and abroad. Since its foundation and until today, the INA Group, which comprises CAPITAL AND RESERVES 12.875.000 11.660.000 several companies fully or partially owned by INA – Industrija nafte d.d., has been LONG-TERM LIABILITIES 4.861.000 3.710.000 involved in exploration and production activities in 20 countries. SHORT-TERM LIABILITIES 8.173.000 6.845.000 The business segment of Refining and marketing carries procurement ope- TOTAL LIABILITIES 25.909.000 22.215.000 rations and petroleum refining and production, distribution and sale of petroleum products on the domestic and foreign markets. It manages two oil refineries INCOME STATEMENT (HRK in thousands) 2013 2014 in Croatia, located in Rijeka and Sisak. Operating revenues 28.293.000 24.495.000 The business segment Retail manages a regional network of 442 gas stati- Operating expenditures 29.798.000 26.207.000 ons, of which 391 are located in Croatia and 51 in the neighboring countries. Financial revenues 213.000 234.000 KEY FINANCIAL RATIOS Financial expenditures 524.000 856.000 TOTAL REVENUES 28.506.000 24.729.000 Graph: Summary of total revenue, expenditures, operating results from 2011 TOTAL EXPENDITURES 30.322.000 27.063.000 to 2014 ( HRK in thousands ) PROFIT/LOSS BEFORE TAX -1.816.000 -2.334.000 Corporate Tax 308.000 437.000 NET PROFIT/LOSS -1.508.000 -1.897.000 40.000.000 30.000.000 FINANCIAL RATIOS 2013 2014 20.000.000 10.000.000 LIQUIDITY RATIOS 0 Current ratio 0,90 0,75 2011 2012 2013 2014 -10.000.000 Financial stability ratio 1,05 1,11 TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT/LOSS LEVERAGE RATIOS Debt ratio 0,50 0,48 Equity ratio 0,50 0,52 Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 Financial ratio 1,01 0,91 and 2014 ACTIVITY RATIOS BALANCE SHEET (HRK in thousands) 2013 2014 Total asset turnover ratio 1,10 1,11 BALANCE SHEET, ASSETS EFFICIENCY RATIOS LONG-TERM ASSETS 18.567,000 17.097,000 Overall operations efficiency 0,94 0,91 I. INTANGIBLE ASSETS 524.000 457.000 PROFITABILITY RATIOS II. REAL ESTATE, FACILITIES AND 15.979.000 14.038.000 EQUIPMENT NET RETURN ON ASSETS (ROA) -5,82% -8,54% III. GOODWILL 183.000 183.000 IV. INVESTMENTS IN AFFILIATED 22.000 22.000 Although the gross loss of INA-Industrija nafte d.d. is considerable, net le- COMPANIES verage has been reduced as well as the debt and equity ratio. Investments in 2014 amounted to 1.691 million HRK and the production of crude oil has increased by V. OTHER INVESTMENTS 169.000 23.000 5 percent. The operating result of INA-Industrija nafte d.d. were mostly affected VI. LONG-TERM CLAIMS AND OTHER 233.000 170.000 by further impairment of assets in Syria in the amount of 1.6 billion HRK. ASSETS VII. DEFERRED TAX 1.127.000 1.742.000 Financial ratios of INA-Industrija nafte d.d. were influenced by the separati- VIII. ASSETS AND SHARES AVAILABLE FOR 330.000 462.000 on of the gas operations - supplying households that was overtaken by Hrvatska SALE elektroprivreda d.d. However, from the aforementioned we can say that in addi- SHORT-TERM ASSETS 7.342.000 5.118.000 tion to these profitable companies that have a profitable result, INA-Industrija I. INVENTORY 3.219.000 1.924.000 nafte d.d. is the multiplier of economic development. II. NET CLAIMS FROM CUSTOMERS 2.564.000 1.998.000 III. OTHER CLAIMS 426.000 181.000 IV. CLAIMS ON PREPAID WITHHOLDING TAX 421.000 112.000 V. OTHER SHORT - TERM ASSETS 144.000 282.000 VI. PAID FUTURE EXPENSES AND OUT- 166.000 154.000 STANDING REVENUE VII. MONEY AND MONETARY EQUIVALENTS 402.000 467.000 TOTAL ASSETS 25.909.000 22.215.000

2014. - ANNUAL REPORT ON THE OPERATIONS 79 KONČAR – ELEKTROINDUSTRIJA d.d. www.koncar.hr Fallerovo šetalište 22, 10 000 Zagreb

Management Board: Government representative in the General Assembly : Darinko Bago, chairman By power of attorney awarded by the State Administrative Office for Miroslav Poljak, member State Property Management Jozo Miloloža, member Marina Kralj Miliša, member Ownership structure on December 31, 2014 Davor Mladina, member Tomi Dužević, member 17,84% 28,17% HPB d.d./Kapitalni fond DUUDI/HZMO Nadzorni odbor: 1,06% DUUDI/RH Nenad Filipović, head 1,15% Hypo AAB/ PBZ CO Jasminka Belačić, deputy 1,55% 3,21% SG - Splitska banka d.d./ Boris Draženović, member Erste Plavi MF 4,14% SG - Splitska banka d.d./ AZ Dragan Marčinko, member OMF Ivan Rujnić, member Floričić Kristijan Vicko Ferić, member 7,86% Linteum savjetovanje 14,95% Hypo AAB/ Raiﬀeisen OMF Petar Vlaić, member PBZ d.d. 9,95% Darinko Bago Petar Mišura, member 10,12% Nikola Plavec, member

GENERAL COMPANY INFORMATION COMPANY OBJECTS

The Group Končar consists of KONČAR Electrical Industry Inc. - as the pa- The business activity of Končar - Electrical Industry Inc. is a production program rent company and 17 subsidiaries in which the Company has a controlling influence based on the Company’s own research and development of hydroelectric power plants, (more than 50% of the votes in the General Assembly). In the companies item, and transformer stations - air and gas insulated plants, wind power plants, electric power regular preferred shares were listed. In addition, the Parent company exercises mi- plants with application in thermal power plants, gas thermal power plants, industry, nority managerial influence (49% of votes in the General Assembly) in one company water management, production and transport of oil and gas. (affiliated company). Companies within the Group are legally independent companies and Parent company supervises them, strategically directing and supporting The production program consists of various rotating machines – hydro genera- them through supervisory boards and company assemblies, all in accordance with tors, turbo generators, wind generators, excitation systems and voltage regulators for the Companies Act, the KONČAR Electrical Industry Inc. Statute and the Articles synchronous machines, systems for monitoring rotating machinery, transformers, of Association. The Parent company also manages a part of the assets not invested switchgear, remote control systems and ICT. The transport program is also significant into companies, but has a direct and indirect function of financial support of sales, (commuter trains, trams, electric locomotives), as well as vehicle equipment. In the field product and equipment of affiliated companies as a credit - guarantee potential. of renewable energy sources Končar - Electrical Industries Inc. has solutions for wind mills, small hydroelectric power plants, autonomous power systems, which their pro- THE KONCAR GROUP CORE ACTIVITIES ARE DIVIDED INTO FOLLOWING duct line of household appliances are known to the general public. BUSINESS SEGMENTS: KEY FINANCIAL RATIOS • Energy and transport: designing and construction of plants and equipment for the generation, transmission and distribution of electric energy, electric Graph: Summary of total revenue, expenditures and operating results in the period from locomotives, electric trains, trams and electric equipment for stable electric 2011 to 2014 (HRK in thousands) traction plants. • Industry: electric motors, low voltage apparatus. • Trade: electric household appliances, serial products and low voltage apparatus. 4.000.000 • Special activities: research and development of products and infrastructure 3.000.000 services. 2.000.000 1.000.000 0 AFFILIATED COMPANIES 2011 2012 2013 2014

• KONČAR - Power Plant and Electric Traction Engineering Inc. TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT • KONČAR - Generators and Motors Inc. • KONČAR - High Voltage Switchgear Inc. Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 and • KONČAR - Medium Voltage Apparatus Inc. d.d. 2014 (HRK in thousands) • KONČAR - Switchgear Inc. • KONČAR - Distribution and Special Transformers Inc. BALANCE SHEET (HRK in thousands) 2013 2014 • KONČAR - Instrument Transformers Inc. BALANCE SHEET, ASSETS • KONČAR - Electronics and Informatics Inc. LONG-TERM ASSETS 1.485.477 1.500.641 • KONČAR - Steel Structures Inc. I. INTANGIBLE ASSETS 37.018 51.887 • KONČAR – Electric Vehicles Inc. II. TANGIBLE ASSETS 1.151.926 1.151.282 • KONČAR - Engineering for Plant Installation & Commissioning Inc. III. LONG-TERM FINANCIAL ASSETS 267.372 274.239 • KONČAR - Renewable Sources Ltd IV. CLAIMS 29.161 23.233 • KONČAR - MES Inc. V. DEFERRED TAX ASSETS 0 0 • KONČAR - Household Appliances Ltd. SHORT-TERM ASSETS 1.975.654 2.401.922 • KONČAR - Low Voltage Switches and Circuit Breakers Ltd. I. INVENTORY 482.694 538.249 • KONČAR - Electrical Engineering Institute Inc. II. CLAIMS • KONČAR - Infrastructure and Services Ltd. 741.369 1.032.281 III. SHORT-TERM FINANCIAL ASSETS 305.359 440.138 AFFILIATED COMPANY IV. CASH AT BANK AND IN HAND 446.232 391.254 PREPAID EXPENSES AND ACCRUED 5.999 15.919 • KONČAR - Power Transformers Ltd. REVENUES TOTAL ASSETS 3.467.130 3.918.482

80 2014. - ANNUAL REPORT ON THE OPERATIONS BALANCE SHEET, LIABILITIES 2013 2014 FINANCIAL RATIOS 2013 2014 CAPITAL AND RESERVES 2.175.508 2.285.004 LIQUIDITY RATIOS PROVISIONS 339.819 303.939 Current ratio 3,20 2,26 LONG-TERM LIABILITIES 206.519 161.036 Financial stability ratio 0,62 0,61 SHORT-TERM LIABILITIES 616.459 1.062.667 LEVERAGE RATIOS DEFERRED EXPENSES AND ACCRUED 128.825 105.836 INCOME Debt ratio 0,24 0,31 TOTAL LIABILITIES 3.467.130 3.918.482 Equity ratio 0,63 0,59 Financial ratio 0,38 0,54 INCOME STATEMENT (HRK in thousands) 2013 2014 ACTIVITY RATIOS Operating revenues 2.735.691 2.831.421 Total asset turnover ratio Operating expenditures 2.619.573 2.727.454 0,82 0,76 Financial revenues 115.288 116.067 EFFICIENCY RATIOS Financial expenditures 52.064 43.952 Overall operations efficiency 1,07 1,06 TOTAL REVENUES 2.850.979 2.947.488 PROFITABILITY RATIOS TOTAL EXPENDITURES 2.671.637 2.771.406 NET RETURN ON ASSETS (ROA) 4,73% 4,10% PROFIT/LOSS BEFORE TAX 179.342 176.082 Corporate Tax 15.647 15.986 The amount of total consolidated assets and resources on December 31, 2014 NET PROFIT 163.695 160.096 amounted to 3,918,5 million HRK, which compared to compared to December 31, 2013 meant an increase of 451.4 million HRK, or 13 percent. In the structure of fund For consolidated revenues in 2014, the Companies of Končar Group achieved resources, the share capital, reserves, retained earnings, yearly profit and capital 5.6 percent more from sales of products and services than for the same period in attributable to non-controlling interests amounts to 2,285 million HRK, which is 2013. The domestic market recorded a sales revenue amounting to 1,350,7 million 109.5 million HRK more than on December 31, 2013 and constitutes 58 percent of HRK (51 percent of total revenues from sales of products and services), or 6.7% total resources. The consolidated balance sheet indicates financial soundness of the more than in the previous year. In exports, the revenue from sales of products and Koncar Group. services was in the amount of 1,298 million HRK (49 percent of total revenues from sales of products and services), which is 4.4% more than in 2013. In 2014, new businesses were contracted in the amount of 4,072,9 million HRK. Of the total amount of contracted jobs 1,631,3 million HRK related to the Profit from operating activities in the amount of 104 million HRK, the share agreement KONČAR – Electric Vehicles with HŽ Passenger transportation for the of profit from associated entrepreneurs in the amount of 62.6 million HRK, and the delivery of trains. positive difference between the financial revenues and expenditures in the amount of 9.5 million HRK generates a consolidated profit before tax of 176.1 million HRK. In 2014 1,394,3 million new jobs were contracted for realization. The condition Corporate tax amounted to 16 million HRK, profit after tax amounted to 160.1 mi- of the contacted jobs at the end of December 2014 amounted to 3,717,6 million HRK llion HRK, of which 30.8 million HRK belongs to the non-controlling interest (mi- which is 62 percent more than the contracted jobs contracts at the beginning of the nority interest) and 129.2 million HRK belongs to the share owners of the Group’S year. Parent company.

PETROKEMIJA d.d. www.petrokemija.hr Aleja Vukovar 4, 44 320 Kutina

Manangement Board: Goran Kralj, member Ownership structure on December 31, 2014 Nenad Zečević, head Krešimir Huljev, member Tamara Pernar, member Davor Rakić, member 28,54% DUUDI/RH Vladimir Fresl, member 43,83%

Antonija Perošević Galović, Government SG Splitska banka/AZ OMF member representative in the Hypo AAB/PBZ CO OMF General Assembly : SG Splitska banka/Erste Nadzorni odbor: By power of attorney plavi OMF Tomislav Pokaz, head awarded by the State 2,86% HPB d.d. Branimir Fleković, deputy Administrative Office 7,50% Other 8,26% Nenad Željko Klaus, member 9,01% Zečević for State Property Sonja Ivoš, member Management

GENERAL COMPANY INFORMATION wide range of services that do not hold a significant share in the total business.

The core activity of Petrokemija Plc. is the production of chemical fertili- Fertilizer production in Kutina is one of the largest in Southeast Europe. zers and nitrogen compounds. The Company was founded in 1965, with produ- Based on natural raw materials (natural gas, atmospheric nitrogen, phosphorus, ction dating from 1926. In 1998, Petrokemija was included in the coupon privati- potassium chloride), and with its own ammonia, the Company produces several zation, and since 2003 the Company has been listed on the capital market. kinds of nitrogenous and complex NPK fertilizers.

COMPANY OBJECTS AFFILIATED COMPANIES

Petrokemija Plc. is one of two producers of mineral fertilizers in Croatia. In ad- • Restoran Petrokemija d.o.o Kutina – 100% dition to the core business, which makes up over 95% of the total business operations, • Petrokemija d.o.o. Novi Sad – 100% Petrokemija Plc. produces clay products, liquid fertilizers and chemicals, offering a • Luka Šibenik d.o.o. 79,72%

2014. - ANNUAL REPORT ON THE OPERATIONS 81 KEY FINANCIAL RATIOS INCOME STATEMENT (HRK in thousands) 2013 2014 Operating revenues 2.566.333 2.239.503 Graph: Summary of total revenue, expenditures and operating results in the period from 2011 to 2014 (HRK in thousands) Operating expenditures 2.865.566 2.547.997 Financial revenues 18.371 9.414 Financial expenditures 49.291 64.283 4.000.000 TOTAL REVENUES 2.584.704 2.248.917 3.000.000 TOTAL EXPENDITURES 2.914.857 2.612.280 2.000.000 PROFIT/LOSS BEFORE TAX -330.153 -363.363 1.000.000 Corporate Tax 284 370 0 NET LOSS -330.437 -363.733 -1.000.000 2011 2012 2013 2014 TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT/LOSS FINANCIAL RATIOS 2013 2014 LIQUIDITY RATIOS Current ratio 0,82 0,76 Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 and 2014 (HRK in thousands) Financial stability ratio 1,43 1,94 LEVERAGE RATIOS BALANCE SHEET (HRK in thousands) 2013 2014 Debt ratio 0,71 0,77 BALANCE SHEET, ASSETS Equity ratio 0,27 0,21 LONG-TERM ASSETS 719.303 666.470 Financial ratio 2,60 3,70 I. INTANGIBLE ASSETS 8.212 8.060 ACTIVITY RATIOS II. TANGIBLE ASSETS 710.518 658.048 Total asset turnover ratio 1,62 1,43 III. LONG-TERM FINANCIAL ASSETS 8 8 EFFICIENCY RATIOS IV. CLAIMS 250 41 Overall operations efficiency 0,89 0,86 V. DEFERRED TAX ASSETS 315 313 PROFITABILITY RATIOS SHORT-TERM ASSETS 877.888 907.602 I. INVENTORY 448.552 523.417 NET RETURN ON ASSETS (ROA) -20,69% -23,11% II. CLAIMS 382.995 294.596 a total revenue in the amount of 2,248,9 million HRK, total expenditures were 2,612,3 III. SHORT-TERM FINANCIAL ASSETS 24.512 78.109 million HRK and the reported loss before tax was 363.4 million HRK or 16.2 percent IV. CASH AT BANK AND IN HAND 21.829 11.480 of total revenues. That includes 100.4 million HRK of costs incentive severance pay to workers within the Company’s restructuring process. PREPAID EXPENSES AND ACCRUED REVENUES 12.551 544 TOTAL ASSETS 1.609.742 1.574.616 In 2014 12.7 percent lower operating revenue was realized than in 2013, largely due to falling prices of fertilizers on the domestic, global and regional market. Total BALANCE SHEET, LIABILITIES 2013 2014 fertilizer sales were 5.0 percent lower, and on the domestic market, sales of fertilizers decreased by 13.1 percent and exports by 1.8 percent, compared to the previous year. CAPITAL AND RESERVES 438.063 326.636 The realization of operating expenses decreased by 11.1 percent compared to the pre- PROVISIONS 14.232 10.226 vious year, a reflection of the change in line-up and lower average input prices of raw LONG-TERM LIABILITIES 63.460 17.016 materials. SHORT-TERM LIABILITIES 1.074.608 1.190.347 At the end of 2014 there was a tightening of liquidity issues because of the par- DEFERRED EXPENSES AND ACCRUED 19.379 30.391 tial implementation of the restructuring program and financial consolidation, and INCOME the newly appointed Company management adopted the revised program for the TOTAL LIABILITIES 1.609.742 1.574.616 period 2015-2019, in which there was a partial shift in the key settings for future operations. The Company’s performance in 2014 compared to that from the previous year indicates a 5 percent lower volume of sales, 0.7 percent higher production, 22.7 percent On February 18, 2015, the registration of an increase of share capital (recapita- fewer employees, 9.5 percent lower selling prices, 13.0 percent smaller revenue and lization) was completed, after which 79.85% of shares controlled by the State Office 16.0 percent smaller operating loss than in 2013, if severance payments are excluded for the revised program of restructuring and financial consolidation are based on the for 492 workers who left Petrokemija Plc. through a restructuring program. modernization of the majority of facilities, focusing on the production of fertilizers, efficient management and high-quality processing of the sales market, and focusing In the period from January to December 2014, the Group Petrokemija realized on the increase in sales in the region.

82 2014. - ANNUAL REPORT ON THE OPERATIONS PODRAVKA d.d. www.podravka.hr Ante Starčevića 32, 48 000 Koprivnica

Management Board: Dinko Novoselec, member Ownership structure on December 31, 2014 Zvonimir Mršić, chairman Petar Vlaić, member Miroslav Klepač, member Petar Miladin, member 10,62% Hrvoje Kolarić, member Martinka Marđetko- DUUDI/HZMO 28,89% DUUDI/RH Olivija Jakupec, member Vuković, member 9,89% OMF SG Splitska banka/AZ OMF Hypo AAB/PBZ CO OMF Supervisory Board: Government 9,50% Zagrebačka banka d.d. Dubravko Štimac, head representative in the HPB d.d./Kapitalni fond d.d. Hypo AAB/Raiﬀeisen OMF 2,25% Mato Crkvenac, zamjenik Podravka d.d. General Assembly: 3,28% Ivo Družić, member 9,01% Zagrebačka banka d.d. By power of attorney 3,65% Other shareholders

Milan Stojanović, awarded by the State 5,94% 8,88% Zvonimir 8,09% Mršić member Administrative Office for Ivana Matovina, member State Property Management

has dedicated itself to improving the quality of everyday life of our consumers, cu- GENERAL COMPANY INFORMATION stomers and employees through innovation and internationalization. The company Podravka Inc. emerged from the former jam and fruit processing factory - Wolf in 1947, and later became known domestically and abroad for KEY FINANCIAL RATIOS the production of a universal food supplement - Vegeta, which for half a century has Graph: Summary of total revenue, expenditures and operating results in the period been exported to more than 40 countries on all five continents. from 2011 to 2014 (HRK in thousands) Almost half of its revenues Podravka realizes on the domestic market, thus contributing to the successful financial results and the Croatian economy. Also, there has been a continuous growth in revenue and profitability in the economies 4.000.000 of the five continents in which it operates. 3.000.000 2.000.000 AFFILIATED COMPANIES 1.000.000 0 PODRAVKA D.D., 100% OWNERSHIP 2011 2012 2013 2014 TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT COMPANIES IN THE REPUBLIC OF CROATIA • Danica d.o.o., Koprivnica, • Studenac d.o.o., Koprivnica, Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 and • Belupo d.d., Koprivnica, 2014 (HRK in thousands) • Ljekarne Deltis Pharm, Koprivnica BALANCE SHEET (HRK in thousands) 2013 2014 FOREIGN COMPANIES BALANCE SHEET, ASSETS • Belupo doel, Makedonija, • Belupo s.r.o., Slovačka, LONG-TERM ASSETS 1.517.762 1.530.840 • Belupo Ljubljana, Slovenija, I. INTANGIBLE ASSETS 244.319 270.480 • Farmavita d.o.o., BiH, • Lagris a.s., Češka, II. TANGIBLE ASSETS 1.218.264 1.202.589 • Podravka –Polska Sp.z.o.o., Poljska, III. LONG-TERM FINANCIAL ASSETS 5.606 7.602 • Podravka-International Kft, Mađarska, • Podravka d.o.o., Slovenija, IV. CLAIMS 0 0 • Podravka d.o.o., Srbija, V. DEFERRED TAX ASSETS 49.573 50.169 • Podravka-Int. Deutschland – „Konar“ GmbH, Njemačka, SHORT-TERM ASSETS 1.940.394 1.977.730 • Podravka – International s.r.o., Slovačka, • Podravka d.o.o., Crna Gora, I. INVENTORY 727.970 813.596 • Podravka-International s.r.l., Rumunjska, II. CLAIMS 1.009.435 926.934 • Podravka d.o.o., Makedonija, • Podravka d.o.o., Bosna i Hercegovina, III. SHORT-TERM FINANCIAL ASSETS 6.754 3.145 • Podravka-International Inc. SAD, IV. CASH AT BANK AND IN HAND 179.461 220.478 • Podravka-International Pty Ltd, Australija, • Podravka d.o.o., Rusija PREPAID EXPENSES AND ACCRUED 16.774 13.577 • Podravka Gulf fze, UAE REVENUES TOTAL ASSETS 3.458.156 3.508.570 COMPANY OBJECTS BALANCE SHEET, LIABILITIES 2013 2014 Today, Podravka Inc. with its production and sale of food and beverages ranks among the leading companies in the food industry, in which it operates throughout CAPITAL AND RESERVES 1.691.388 1.785.263 Southeast, Central and Eastern Europe. The Company’s core activity is the produ- PROVISIONS 49.280 39.793 ction of a wide range of food products and soft drinks. LONG-TERM LIABILITIES 578.448 754.557 With a series of recognizable brands and food brands, Podravka Inc. has posi- SHORT-TERM LIABILITIES 1.041.986 842.173 tioned itself on the market, and through socially responsible and marketing activities it has become more recognizable. DEFERRED EXPENSES AND ACCRUED 97.054 86.784 INCOME Using an innovative culinary experience and healthy viable solutions, the Company TOTAL LIABILITIES 3.458.156 3.508.570

2014. - ANNUAL REPORT ON THE OPERATIONS 83 INCOME STATEMENT (HRK in thousands) 2013 2014 Based on long-term assets, on December 31, 2014 intangible assets increased by 11 percent compared to the end of 2013 mainly due to the takeover of the canned meat Operating revenues 3.693.550 3.571.332 program and brands PIK Vrbovec Plc for further production and sales for all markets, Operating expenditures 3.558.262 3.382.342 with the takeover of certain intangible assets such as trademarks, recipes and other. Financial revenues 44.187 45.039 On December 31, 2014, inventories increased by 12 percent compared to the end Financial expenditures 109.652 129.707 of 2013, primarily due to the need to provide raw material until the next season, and TOTAL REVENUES 3.737.737 3.616.371 to reduce the risk of purchasing at higher prices. The growth in inventories has significantly influenced the purchase of real estate intended for sale. In order to improve TOTAL EXPENDITURES 3.667.914 3.512.049 the payment of receivables, during the first half of 2014, Podravka concluded into an PROFIT/LOSS BEFORE TAX 69.823 104.322 insurance claims contract on the Croatian market. Corporate Tax 1.446 9.376 In 2014 the refinancing of existing credit obligations was carried out through NET PROFIT 68.377 94.946 a syndicated loan, where existing loans were replaced by new ones, with much more Minority interest 1.776 2.486 favorable conditions. Consequently, long-term obligations were increased and short- NET PROFIT after minority interest 66.601 92.460 term obligations. In addition, accounts payable were 7 compared to the end of 2013 as a result of continued coordination with the prescribed time limits of payments to suppliers. FINANCIAL RATIOS 2013 2014 LIQUIDITY RATIOS Operating revenue decreased by 3 percent compared to 2013 as a result of the Current ratio 1,86 2,35 negative impact of the restructuring program, the prescribed reduction in the price of prescription drugs by the Croatian Institute for Health Insurance, poor macroeco- Financial stability ratio 0,67 0,60 nomic situation and the pressure on business from foreign competition and private LEVERAGE RATIOS trademarks. Debt ratio 0,47 0,46 Operating expenses decreased by 5 percent due to favorable price movements Equity ratio 0,49 0,51 of key raw materials and lower depreciation costs, staff costs and value adjustments. Financial ratio 0,96 0,89 ACTIVITY RATIOS Financial expenditures increased by 18 percent compared to 2013 as a result of negative movements od foreign exchange rates, particularly expressed by exc- Total asset turnover ratio 1,08 1,03 hange rate differences of the Russian ruble compared to the kuna. Financial ratios EFFICIENCY RATIOS were at approximately the same levels as in 2013, except for the current liquidity ra- Overall operations efficiency 1,02 1,03 tio which increased due to the reduction of short-term obligations, mainly because of to the implemented refinancing loan liabilities and an increase in current assets PROFITABILITY RATIOS and in net return on assets (ROA), which is increasing due to favorable business NET RETURN ON ASSETS (ROA) 1,93% 2,64% results in 2014.

84 2014. - ANNUAL REPORT ON THE OPERATIONS SUNČANI HVAR d.d. www.suncanihvar.com Dolac b.b., 21 450 Hvar

Management Board: Government Ownership structure on December 31, 2014 Gordana Tomičić, chairman representative Jan Kratina, member in the General Petr Holzhammer, member Assembly : 16,23% By power of 26,47% Orco Property Supervisory Board : attorney awarded Group S.A. Tomaš Salajka, head by the State Prime ourist Jiri Dedera, deputy resort S.A. Administrative Martin Matula, member 20,28% DUUDI/RH Office for Pavel Menšek, member Small Martin Nemecek, member State Property shareholders Gordana Tomislav Dujmović, member Management 24,94% Tomičić Sanja Ćurin, member

GENERAL COMPANY INFORMATION Tables: Summary of the abbreviated balance sheet, profit and loss account for 2013 and 2014 (HRK in thousands) Sunčani Hvar is a hotel and a tourism company that manages the hotels Adriana, Amfora, Riva, Palace, Villa Dalmacia, Pharos, Sirena and the Vira camp. BALANCE SHEET (HRK in thousands) 2013 2014 The share of the Republic of Croatia in the ownership structure of Suncani Hvar BALANCE SHEET, ASSETS d.d. is 32%, and the majority share holder is Orco Property Group, Luxembourg. LONG-TERM ASSETS 664.583 647.402 I. INTANGIBLE ASSETS 6.886 6.695 AFFILIATED COMPANIES II. TANGIBLE ASSETS 657.697 640.707 III. LONG-TERM FINANCIAL ASSETS 0 0 • Obonjan Rivijera d.d. 100% ownership • Sirena hotel d.o.o. 100% ownership IV. CLAIMS 0 0 • Blue Yahts d.o.o. 70% ownership V. DEFERRED TAX ASSETS 0 0 SHORT-TERM ASSETS 33.853 65.853 COMPANY OBJECTS I. INVENTORY 1.365 983 II. CLAIMS 6.245 2.534 Through long-term systematic investment in the quality of services and the III. SHORT-TERM FINANCIAL ASSETS 24.566 51.365 development of modern and competitive facilities and services satisfy the most IV. CASH AT BANK AND IN HAND 1.677 10.971 demanding guests, Sunčani Hvar d.d. in its hotel industry activities has become a PREPAID EXPENSES AND ACCRUED REVENUES 3.510 4.934 recognizable tourism company in the Adriatic and aims to position itself among TOTAL ASSETS 701.946 718.189 the best tourist companies in the tourism sector.

By investing in highly professional staff, and integrating its tourism offer in BALANCE SHEET, LIABILITIES 2013 2014 the destination content of the island of Hvar, the Company is one of the leading CAPITAL AND RESERVES 76.187 98.258 brands in the hotel industry in the region and a key holder of tourism develop- PROVISIONS 4.046 6.007 ment of the island. LONG-TERM LIABILITIES 8.107 8.107 SHORT-TERM LIABILITIES 588.109 595.242 DEFERRED EXPENSES AND ACCRUED 25.497 10.575 KEY FINANCIAL RATIOS INCOME TOTAL LIABILITIES 701.946 718.189 Graph: Summary of total revenue, expenditures and operating results in the period from 2011 to 2014 (HRK in thousands) INCOME STATEMENT (HRK in thousands) 2013 2014 Operating revenues 142.857 174.676 Operating expenditures 272.665 124.707 Financial revenues 12.160 10.443 Financial expenditures 55.086 38.341 400.000 TOTAL REVENUES 155.062 185.324 TOTAL EXPENDITURES 327.751 163.048 200.000 PROFIT/LOSS BEFORE TAX -172.688 22.276 0 Corporate Tax 0 0 2011 2012 2013 2014 NET LOSS/PROFIT -172.688 22.276 -200.000 TOTAL REVENUES TOTAL EXPENDITURES GROSS PROFIT/LOSS FINANCIAL RATIOS 2013 2014 LIQUIDITY RATIOS Current ratio 0,06 0,11 Financial stability ratio 7,88 6,09 LEVERAGE RATIOS Due to the excessive indebtedness, the Company was unable to settle due Debt ratio 0,85 0,85 liabilities and in 2014, with the implementation of financial restructuring mea- Equity ratio 0,11 0,14 sures through the pre-settlement proceedings, in accordance with the proposed Financial ratio 7,83 6,14 write-offs, recapitalization and reduction of the Company’s share capital, Suncani ACTIVITY RATIOS Hvar d.d. reduced total debt to 271.6 million HRK, i.e. the existing 574 million HRK Total asset turnover ratio 0,22 0,26 to 302.4 million HRK. This level of debt can be properly settled by the Company EFFICIENCY RATIOS from regular operations. Return on assets and profit increased, given that much Overall operations efficiency 0,47 1,14 of the expenditures were reduced, those that were of a financial nature and reve- PROFITABILITY RATIOS nues increased. NET RETURN ON ASSETS (ROA) -24,72% 3,12%

2014. - ANNUAL REPORT ON THE OPERATIONS 85 VI. FINANCIAL PERFORMANCE RATIOS – EXPLANATION

LIQUIDITY RATIO: ACTIVITY RATIO:

CURRENT LIQUIDITY RATIO: TOTAL ASSETS TURNOVER RATIO = Short-term assets/long-term assets Total revenue/Total assets (long-term+ short-term assets)

Current liquidity ratio shows the relationship of current assets to current lia- The total assets turnover ratio shows the number of times company’s total bilities, and assesses liquidity and solvency. assets turns in one year, that is how the company successfully uses assets to create revenue. Liquidity is the ability of companies to meet short-term obligations and current activities. Solvency is the ability of companies to pay due liabilities in the amo- A swift turnover indicates greater efficiency and lower costs. unt and in the maturity date. EFFICIENCY RATIO: The liquidity ratio should be greater than 2, which means that current assets should be at least twice as higher than short-term liabilities. TOTAL OPERATING EFFICIENCY = Total revenue/Total expenditures FINANCIAL STABILITY RATIO = Long-term assets / (equity + long-term liabilities) The efficiency ratio indicates the total revenues and expenditures ratio, i.e. shows how the revenue generated per expenditure unit, and is calculated based on The financial stability ratio connects long-term assets with capital and long- income statement data . term obligations. The ratio should be higher than 1, because that means that the company had The financial stability ratio should be less than 1, because from long-term so- earned more than it had spent. If the expenditures were greater than the revenue, urces primarily short-term, not just long-term assets should be financed. it would cause a loss which would be a sure sign of a business crisis.

DEBT RATIOS: PROFITABILITY RATIO:

TOTAL LIABILITIES = NETO RETURN ON ASSETS (ROA) = Total assets (long-term + short-term assets) Net profit (loss) / Total assets (long-term+ short-term assets)

The debt ratio is the ratio between total liabilities and total assets. It shows the Net return on assets (ROA) indicates the ratio of net profit / loss and total as- extent to which businesses are using indebtedness as a form of financing, i.e. the sets and is an indicator of the efficiency of utilization of assets in generating profit. percentage of the property acquired by indebtedness. Usually it should be 50% or The value of the rate of return on assets varies depending on the company’s busi- less. ness activity.

SELF-FINANCING RATIO = Principal / total assets (long-term+ short-term assets)

FINANCING RATIO = Total liabilities (long-term + short term) / principal

These ratios are formed based on the balance sheet, and they reflect the static indebtedness. These indicators reflect the structure of liabilities and indicate the amount of assets financed from private equity (principal) and the amount of assets financed from debt capital (liabilities).

Using these indicators, it is possible to determine the relationship between debt capital (liabilities) and private equity (principal)

* Financial ratios for 2013 and 2014 individually for the Company are based on consolidated ratios for the entire company group and its affiliates except for the companies Croatian Post Plc. and Plinacro Ltd. since the operations of their affiliates is expressed in this report and by HZ Cargo Ltd.

* The balance sheet shows the state of assets and liabilities of companies as of December 31, 2014.

86 2014. - ANNUAL REPORT ON THE OPERATIONS VII. SOURCES

1. Company financial statements for 2014 for public notice 2. Court register 3. Zagreb Stock Exchange 4. Official gazette – law regulations 5. Poslovna Croatia 6. Company websites

2014. - ANNUAL REPORT ON THE OPERATIONS 87 Republic of Croatia

STATE PROPERTY MANAGEMENT ADMINISTRATION Corporate management of strategic companies and companies of special interest for the Republic of Croatia Dežmanova 10, 10 000 Zagreb

2015

88 2014. - ANNUAL REPORT ON THE OPERATIONS