OPERATIONS PLAN OF HRVATSKE AUTOCESTE d.o.o. FOR 2020 Zagreb, December 2019 Hrvatske autoceste d.o.o. Operations Plan for 2020 CONTENTS: I. INTRODUCTION ..................................................................................................................................... 3 II. RESTRUCTURING ................................................................................................................................... 7 III. REVENUE AND EXPENDITURE PLAN ................................................................................................... 10 1. PLAN FOR THE HAC d.o.o. PROFIT AND LOSS ACCOUNT AS WELL AS ....................................... 11 INCOME AND EXPENSES / REVENUE AND EXPENDITURE OF THE PUBLIC GOOD (changes to the public capital) ........................................................................................................................ 11 2. STRUCTURE OF PLANNED REVENUE AND EXPENDITURE OF HAC AND THE PUBLIC GOOD OF ................................................................................................................................................. 12 IV. PLANNED NUMBER OF EMPLOYEES, SALARY COSTS AND EMPLOYEES’ MATERIAL RIGHTS............ 17 V. FINANCING PLAN ................................................................................................................................ 19 1. Financing sources plan for the activities planned in 2020 ............................................................ 19 2. Planned loan debt status .............................................................................................................. 21 VI. CONSTRUCTION PLAN ......................................................................................................................... 22 VII. MAINTENANCE PLAN .......................................................................................................................... 24 1. EXTRAORDINARY MAINTENANCE ................................................................................................ 24 2. ROUTINE MAINTENANCE ............................................................................................................. 25 VIII. MANAGEMENT STRUCTURE ............................................................................................................... 29 2 Hrvatske autoceste d.o.o. Operations Plan for 2020 I. INTRODUCTION The Company Hrvatske autoceste d.o.o. was established pursuant to the Act on the Amendment of the Public Roads Act (Official Gazette No 27/01), and the Decision of the Government of the Republic of Croatia on the Allocation and Reconstitution of the Croatian Road Administration (HUC) into the companies Hrvatske autoceste d.o.o. (HAC) and Hrvatske ceste d.o.o. (HC). The Company was established with the aim of managing, building and maintaining the motorways in Croatia. It commenced its business operations on 11 April 2001. Hrvatske autoceste d.o.o. are entirely owned by the Republic of Croatia, which exercises its rights in the General Meeting of the Company through the Government of the Republic of Croatia. The Hrvatske autoceste d.o.o. Company manages, builds, reconstructs and maintains motorways apart from those managed by the concession holder pursuant to the Roads Act. Pursuant to the Roads Act, the planning of motorway construction and maintenance is set out in the following programming and planning documents: in the long term, in the Public Roads Development Strategy adopted by the Croatian Parliament, in the medium term, in the four-year public road construction and maintenance programmes adopted by the Government of the Republic of Croatia, annually, in motorway construction and maintenance plans adopted by Hrvatske autoceste d.o.o. with the approval of the Government of the Republic of Croatia. Baseline for the creation of the Operations Plan of Hrvatske autoceste d.o.o. for 2020: The business and financial restructuring of HAC within the scope of the project titled “Modernisation and Restructuring of the Road Infrastructure Sector”, launched by the Government of the Republic of Croatia in cooperation with the World Bank; its implementation falls within the purview of HAC and other companies in the road sector The continuation of the investment cycle that began in the previous years as well as new investments in the motorways in accordance with the programming and planning documents of the Government of the Republic of Croatia, namely: The Public Roads Construction and Maintenance Programme for the period 2017-2020, adopted by the Government of the Republic of Croatia on a proposal by the Ministry of Maritime Affairs, Transport and Infrastructure. 3 Hrvatske autoceste d.o.o. Operations Plan for 2020 The Motorway Construction and Maintenance Plan for 2020, adopted by HAC with consent of the Government of the Republic of Croatia for the implementation of the Programme. A total of HRK 603,783,000 is planned for investments in the motorways for 2020. Out of the total amount of the investments for 2020, a total of HRK 292,937,000 concerns construction, and HRK 310,846,000 extraordinary maintenance of the motorways. Routine maintenance and toll collection on the motorways managed by Hrvatske autoceste d.o.o. (HAC) and Autocesta Rijeka – Zagreb d.d. (ARZ): By 2020, a total of HRK 129,400,000 is planned for the material costs and routine maintenance services, out of which HRK 96,029,000 are reserved for the sections managed by HAC, and HRK 33,371,000 for the sections managed by ARZ. Ensuring liquidity – from the company’s own revenue from the use and maintenance of the motorways as well as by ensuring its own credit sources for the continuation of the construction of the projects that are underway: Financed through its own revenue generation (tolls, road property management, fee paid by ARZ for the routine maintenance and toll collection services as well as other own revenue), HAC covers the entire costs of the business operations of the Company (management and routine maintenance) as well as interest for the Public Goods loan and payment of the principal. The investments will be financed from the excise duty on energy products, grants from EU funds, development bank loans and own funds. The Guidelines for the Economic and Fiscal Policy for the 2020-2022 period, as adopted by the Government of the Republic of Croatia at its 173rd session on 1 August 2019 on a proposal by the Ministry of Finance The Republic of Croatia Convergence Programme for the 2019-2022 Period, as adopted by Decision of the Government of the Republic of Croatia on 16 April 2019, lays down that the Croatian Parliament shall approve the Financial Plan of Hrvatske autoceste d.o.o. as an extrabudgetary user from the transport sector during the adoption of the State Budget of the Republic of Croatia for 2020. The Guidelines for the Economic and Fiscal Policy define the target values of the balance that 4 Hrvatske autoceste d.o.o. Operations Plan for 2020 extrabudgetary users must achieve in the coming medium-term period during the creation of their financial plans. Those Guidelines created by the Ministry of Finance ensure an additional control of the financial sustainability of business operations. They are the framework within which Hrvatske autoceste d.o.o. must ensure a surplus as a difference between the cash flow of the business revenue and expenditure. The surplus increased by the cash deposit from the previous year plus loan drawdown are used for the repayment of the debt principal that will be due in the current year. Therefore, Hrvatske autoceste d.o.o. created the Financial Plan for 2020 as well as the projection for 2021 and 2022, accepted by the Decision of the Supervisory Board of 25 October 2019, which the Croatian Parliament approved on 14 November 2019 at its 14th session, along with the adoption of the State Budget of the Republic of Croatia for 2020 and the projection for 2021 and 2022. A. REVENUE AND EXPENDITURE ACCOUNT Plan projection for Plan projection for No Description Plan for 2020 2021 2022 1. OPERATING REVENUE 2,779,087,865 2,780,580,540 2,816,585,430 2. REVENUE FROM NON-FINANCIAL ASSETS 0 0 0 3. TOTAL REVENUE (1+2) 2,779,087,865 2,780,580,540 2,816,585,430 4. OPERATING EXPENDITURE 1,274,625,675 1,214,129,070 1,142,663,200 5. EXPENDITURE FOR NON-FINANCIAL ASSETS 648,671,350 533,450,000 610,921,000 6. TOTAL EXPENDITURE (4+5) 1,923,297,025 1,747,579,070 1,753,584,200 7. DIFFERENCE – SURPLUS/DEFICIT (3-6) 855,790,840 1,033,001,470 1063,001,230 SURPLUS / DEFICIT ACCORDING TO THE GUIDELINES OF THE ECON. POLICY 2020-2022 855,000,000 1,033,000,000 1,063,000,000 B. FINANCING ACCOUNT Plan projection for Plan projection for No Description Plan for 2020 2021 2022 8. PROCEEDS FROM FINANCIAL ASSETS AND DEBT 81,160,000 400,000,000 430,000,000 9. EXPENDITURE FOR FINANCIAL ASSETS AND LOAN REPAYMENT 928,906,720 1,322,830,790 1,605,825,000 10. DEPOSIT BOOK TRANSFER FROM THE PREVIOUS PERIOD 556,200,000 564,244,120 674,414,800 11. DEPOSIT BOOK TRANSFER TO THE NEXT PERIOD (-(7+8+9+10)) -564,244,120 -674,414,800 -561,591,030 12. NET FINANCING -855,790,840 -1,033,001,470 -1,063,001,230 The Financial Plan of Hrvatske autoceste d.o.o. for 2020 along with the projection for 2021 and 2022 was created according to the Guidelines by the Ministry of Finance for the Economic and Fiscal Policy in the 2020-2022 period for the purpose of ensuring the sustainability of business operations and financial stability of the Company. 5 Hrvatske autoceste d.o.o. Operations Plan for 2020 The