AUDITOR'S REPORT ON FINANCIAL STATEMENTS FOR NON-PROFIT ORGANISATION FOR 2018 THE PORT OF RIJEKA AUTHORITY (LUČKA UPRAVA RIJEKA) RIJEKA Rijeka, April 2019 FINANCIAL STATEMENTS FOR NON-PROFIT ORGANISATION FOR 2018 THE PORT OF RIJEKA AUTHORITY RIJEKA Rijeka, February 2019 THE PORT OF RIJEKA AUTHORITY - RIJEKA Table of Contents INDEPENDENT AUDITOR'S REPORT TO THE MANAGEMENT BOARD AND THE FOUNDERS……….................. 1 FINANCIAL STATEMENTS FOR THE PORT OF RIJEKA AUTHORITY (LUČKA UPRAVA RIJEKA) 2018 ....................... 1 STATEMENT OF RESPONSIBILITY FOR THE FINANCIAL STATEMENTS ................................................................. 1 BALANCE SHEET FOR NON-PROFIT ORGANISATION AS AT DEC 31ST 2018.......................................................... 2 STATEMENT OF INCOME AND EXPENDITURES FOR NON-PROFIT ORGANISATION 2018.................................... 9 NOTES TO THE FINANCIAL STATEMENTS FOR 2018.......................................................................................... 15 1. GENERAL INFORMATION ON NON-PROFIT ORGANISATION ................................................................... 16 1.1. DATA ENTERED IN REGISTERS OF COMPANIES................................................................................. 16 1.1.1. Data entered in the Register of Companies ................................................................................ 16 1.1.2. Data entered in the Register of Non-profit Organisations (RNO) ................................................ 16 1.2. LEGAL STATUS AND DEFINITION...................................................................................................... 16 1.2.1. Legal status................................................................................................................................ 16 1.2.2. Definition ................................................................................................................................... 16 1.3. FOUNDING AND HEADQUARTES ..................................................................................................... 17 1.4. OPERATING ACTIVITIES ................................................................................................................... 17 1.4.1. Operating activities based on the basic Law – non-profit activities............................................. 17 1.5. MANAGING BODIES ........................................................................................................................ 17 1.6. TAX STATUS .................................................................................................................................... 18 1.6.1. Value Added Tax (VAT)............................................................................................................... 18 1.6.2. Profit Tax (PT) ............................................................................................................................ 18 1.7. EMPLOYEES .................................................................................................................................... 18 2. LEGAL FRAMEWORK OF FINANCIAL REPORTING .................................................................................... 19 2.1. FINANCIAL REPORTING FRAMEWORK ............................................................................................. 19 3. REPORTING CURRENCY, CURRENCY USED AND RATES OF EXCHANGE.................................................. 19 4. ACCOUNTING PRINCIPLES ....................................................................................................................... 19 5. ACCOUNTING RULES DEFINED BY THE LAW ............................................................................................ 21 5.1. ASSETS REPORTING RULES .............................................................................................................. 21 5.1.1 General provisions ..................................................................................................................... 21 5.1.2 Non-produced fixed assets ......................................................................................................... 21 5.1.3 Fixed (produced and non-produced) non-financial tangible assets ............................................. 21 5.1.4 Books, art pieces and other show-piece valuables ...................................................................... 23 5.1.5 Small inventory .......................................................................................................................... 23 5.1.6 Non-financial assets in progress................................................................................................. 23 5.1.7 Short-term non-financial assets.................................................................................................. 23 5.1.8 Cash........................................................................................................................................... 24 5.1.9 Deposits, escrow money and receivables from employees, prepaid taxes, etc. ........................... 24 5.1.10 Loans ......................................................................................................................................... 24 5.1.11 Receivables for operating income............................................................................................... 24 5.1.12 Prepayments and accrued income.............................................................................................. 24 5.2. LIABILITY REPORTING RULES ........................................................................................................... 24 5.2.1. General provisions ..................................................................................................................... 24 5.2.2. Liabilities for expenses ............................................................................................................... 24 5.3. INCOME REPORTING RULES ........................................................................................................... 25 5.3.1. General provisions ..................................................................................................................... 25 5.3.2. Income from traded goods and services (reciprocal).................................................................. 25 THE PORT OF RIJEKA AUTHORITY - RIJEKA 5.3.3. Incomes under special legal provisions (non-reciprocal) ............................................................. 25 5.3.4. Income from assets (reciprocal) ................................................................................................. 26 5.3.5. Income from donations (non-reciprocal) .................................................................................... 26 5.3.6. Other incomes............................................................................................................................ 26 5.4. EXPENDITURE REPORTING RULES ................................................................................................... 26 5.4.1. General provisions ..................................................................................................................... 26 5.4.2. Expenses for employees ............................................................................................................. 26 5.4.3. Material expenses...................................................................................................................... 27 5.4.4. Depreciation expenses ............................................................................................................... 27 5.4.5. Financial expenses and exchange rate differences...................................................................... 27 5.4.6. Other expenses .......................................................................................................................... 27 5.5. OWN-SOURCES PRESENTATION RULES ........................................................................................... 28 5.5.1. General provisions ..................................................................................................................... 28 5.5.2. Own funds.................................................................................................................................. 28 5.5.3. Revaluation................................................................................................................................ 28 5.5.4. Income surplus/deficit................................................................................................................ 28 5.6. BUSINESS RESULT REPORTING RULES.............................................................................................. 28 5.7. OFF-BALANCE SHEET ITEMS REPORTING RULES............................................................................... 28 6. OTHER RULES APPLIED IN THE COMPILATION OF THE FINANCIAL STATEMENTS .................................... 29 GENERAL PROVISIONS - PRINCIPLES.............................................................................................................. 29 Income and expenditure accounting principle .......................................................................................... 29 6.1. ADJUSTMENTS RELATING TO PREVIOUS PERIODS ........................................................................... 29 6.2. FOREIGN EXCHANGE RATE DIFFERENCES ........................................................................................ 29 6.3. VALUE ADJUSTMENT OF NON-FINANCIAL ASSETS ACTIVATED BY DECEMBER 31ST 2007 ................... 29 6.4. CAPITALIZATION OF LOAN INTEREST AND EXPENSES....................................................................... 29 6.5. CAPITALIZATION OF PROJECT COSTS ............................................................................................... 30 6.6. INVESTMENT IN STUDIES ................................................................................................................ 30 6.7. VALUE ADJUSTMENT OF RECEIVABLES FROM CUSTOMERS ............................................................. 30 6.8. PREPAYMENTS................................................................................................................................ 31 7. CONTRACTUAL AND SIMILAR RELATIONS LIKELY TO BECOME EITHER LIABILITIES OR ASSETS, PROVIDED SATISFACTION OF CERTAIN REQUIREMENTS (LETTERS OF CREDIT, MORTGAGES, COURT ACTIONS IN PROGRESS) ....................................................................................................................................................... 31 8. POSITION AND MATURITY DATES FOR LONG-TERM AND SHORT-TERM LOANS AND FINANCIAL LEASING 32 8.1. LOAN AGREEMENT NO. HRV-1, SIGNED ON JANUARY 16TH 2001 ...................................................... 32 8.2. LOAN AGREEMENT NO. 4715 HR, SIGNED ON JULY 12TH 2003........................................................... 32 8.3. LOAN AGREEMENT NO. 4715-1 HR, SIGNED ON JUNE 11TH 2007 ...................................................... 33 8.4. LOAN AGREEMENT NO.7638 HR, SIGNED ON APRIL 17TH 2009.......................................................... 33 9. ABBREVIATED BALANCE SHEET AND STATEMENT OF INCOME AND EXPENDITURE................................ 33 10. NOTES TO THE 'BIL-NPF' FORM ITEMS .................................................................................................... 37 10.1. NON-PRODUCED FIXED ASSETS (AOP 004+008-017) (AOP 003) ....................................................... 37 10.1.1. Basic table ................................................................................................................................. 37 10.1.2. Basic table with turnover ........................................................................................................... 37 10.2. PRODUCED FIXED ASSETS (AOP 019+023+031+034+039+042-046) (AOP 018) ................................. 38 10.2.1. Basic table ................................................................................................................................. 38 10.2.2. Basic table with turnover ........................................................................................................... 38 10.3. PRECIOUS METALS AND OTHER VALUES IN CUSTODY (AOP 048) (AOP 047) ..................................... 39 10.3.1. Basic table ................................................................................................................................. 39 10.4. SMALL INVENTORY (AOP 052+053-054) (051) ................................................................................. 39 THE PORT OF RIJEKA AUTHORITY - RIJEKA 10.4.1. Basic table ................................................................................................................................. 39 10.5. NON-FINANCIAL ASSETS IN PROGRESS (AOP 056 DO 059+062+063) (055) ....................................... 39 10.5.1. Basic table ................................................................................................................................. 39 10.5.2. Basic table with turnover ........................................................................................................... 40 10.6. CASH IN BANKS AND IN HAND (AOP 076+080+081+082) (AOP 075) ................................................. 41 10.6.1. Basic table ................................................................................................................................. 41 10.7. DEPOSITS, ESCROW ACCOUNTS AND RECEIVABLES FROM EMPLOYEES, PREPAID TAXES AND THE LIKE (AOP 084+087+088+089+095) (AOP 083)...................................................................................................... 41 10.7.1. Basic table ................................................................................................................................. 41 10.8. LOANS (AOP 101+102+103-104 (AOP 100) ...................................................................................... 42 10.8.1. Basic table ................................................................................................................................. 42 10.9. RECEIVABLES FOR INCOMES (AOP 134 DO 137+140-141) (AOP 133)................................................ 42 10.9.1. Basic table ................................................................................................................................. 42 10.10. PREPAYMENTS AND ACCRUED INCOME (AOP 143+144) (AOP 142) ............................................. 43 10.10.1. Basic table ................................................................................................................................. 43 10.10.2. Basic table with turnover ........................................................................................................... 43 10.11. LIABILITIES FOR EXPENSES (AOP 148+156+164+168+169+170) (AOP 147) .................................. 44 10.11.1. Basic table ................................................................................................................................. 44 10.12. LIABILITIES FOR CREDITS AND LOANS (AOP 183+186-189) (AOP 182) .......................................... 45 10.12.1. Basic table ................................................................................................................................. 45 10.12.2. Basic table with turnover ........................................................................................................... 45 10.13. ACCRUED EXPENSES AND DEFERRED INCOME (AOP 191+192) (AOP 190).................................... 45 10.13.1. Basic table ................................................................................................................................. 45 10.13.2. Basic table with turnover ........................................................................................................... 46 10.14. RESERVES (AOP 197+199) (AOP 196) .......................................................................................... 46 10.14.1. Basic table ................................................................................................................................. 46 10.14.2. Basic table with turnover ........................................................................................................... 46 11. NOTES TO ITEMS OF THE (I-E-NP) ‘PR-RAS-NPF’ FORM 2017 .................................................................. 47 11.1. INCOME FROM TRADED GOODS AND PROVIDED SERVICES (AOP 002) ............................................ 47 11.1.1. Basic table ................................................................................................................................. 47 11.2. INCOME UNDER SPECIAL LEGAL PROVISIONS (AOP 009+010) (AOP 008).......................................... 48 11.2.1. Basic table ................................................................................................................................. 48 11.3. INCOME FROM ASSETS (AOP 012+021) (AOP 011)........................................................................... 48 11.3.1. Basic table ................................................................................................................................. 48 11.4. INCOME FROM DONATIONS (AOP 025+030+033+036+037) (AOP 024)............................................ 49 11.4.1. Basic table ................................................................................................................................. 49 11.5. OTHER INCOME (AOP 041+044+045) (AOP 040) .............................................................................. 49 11.5.1. Basic table ................................................................................................................................. 49 11.6. EXPENSES FOR EMPLOYEES (AOP 056+061+062) (AOP 055)............................................................. 50 11.6.1. Basic table ................................................................................................................................. 50 11.7. MATERIAL EXPENSES (AOP 068+072+077+082+087+097+102) (AOP 067) ....................................... 50 11.7.1. Basic table ................................................................................................................................. 50 11.8. DEPRECIATION EXPENSES (AOP 108)............................................................................................... 52 11.8.1. Basic table ................................................................................................................................. 52 11.8.2. FINANCIAL EXPENSES (AOP 110+111+115) (AOP 109) ................................................................ 52 11.8.3. Basic table ................................................................................................................................. 52 11.9. OTHER EXPENSES (AOP 129+134) (AOP 128) ................................................................................... 53 11.9.1. Basic table ................................................................................................................................. 53 11.10. RESULT FOR THE PERIOD – INCOME SURPLUS (AOP 001-133) (AOP 134) ..................................... 53 11.10.1. Basic table ................................................................................................................................. 53 12. RISK MANAGEMENT................................................................................................................................ 54 THE PORT OF RIJEKA AUTHORITY - RIJEKA 12.1. CURRENCY RISK .............................................................................................................................. 54 12.2. INTEREST RISK................................................................................................................................. 54 12.3. CREDIT RISK .................................................................................................................................... 54 12.4. LIQUIDITY RISK................................................................................................................................ 54 INDEPENDENT AUDITOR'S REPORT TO THE MANAGEMENT BOARD AND THE FOUNDERS Opinion We have audited the attached financial statements of Port of Rijeka Authority - Rijeka, that include the Balance Sheet as at December 31st 2018 (BIL-NPF), the Statement of Income and Expenditure for the year that ended (PR-RAS-NPF), and Notes to the Balance Sheet and the Statement of Income and Expenditure. Our Reports are presented on pages 1 – 55. In our opinion, the financial statements of non-profit organisation Port of Rijeka Authority - Rijeka (Entity) for the year ended on December 31st 2018 are presented in all material respects in compliance with the Republic of Croatia Law on Financial Operations and Accounting for Non-profit Organisations (Official Gazette no. 121/14). Basis for Opinion We conducted our audit in accordance with the Republic of Croatia Law on Financial Activity and Accounting for Non-profit Organisations, Audit Law and International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial statements section of our report. We are independent of the Entity in accordance with the IESBA Code of Ethics for Professional Accountants and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matters 1. Under Note 6., Other financial statement compilation rules applied, the indicated rules were applied by the Entity in compiling the financial statements because neither the Financial Reporting Framework presented within the Law and in the accompanying by-laws nor the accounting rules thereby defined do not deal with any possible recognition and measuring ways applicable to particular balance sheet items and/or particular transactions. For correct interpretation of certain financial statement items, users are referred to those rules, which are not provided for by the Law neither explicitly nor implicitly. Considering the implementation of those rules, we do not express our opinion with any reserve but wish to point out the manner in which the client prepaired their financial statements, which may affect the comparability with other Entities. 2. Attention is drawn to point 1.4.1. mentioning that based on the Decision on founding of the Port of Rijeka Authority, the Port of Rijeka Authority is liable up to the value of all of its assets and the Republic of Croatia bears joint and several responsibility for the entire amount of liabilities of the Entity. It is also mentioned under the same point that the Entity's registered activities are carried out on the maritime demesne, which has a special legal status, since legal exploitation of maritime demesne and its facilities 1 may be carried out exclusively by virtue of concession. It is further mentioned that in pursuance of point XI of the Decision, the Entity shall be granted the right to use the facilities listed in the list of infrastructure and superstructure and such facilities shall not be the assets of the Port Authority. Other Matters The Law on Financial Activities and Accounting for Non-profit Organisations (Official Gazette 121/14), applied in the compilation of financial statements of the non-profit organisation Port of Rijeka Authority – Rijeka for the year ended on December 31st 2018, that our auditing deals with, represents the compliance framework. Users are referred to point 5 where reference is made to all the accounting rules used in the preparation of financial statements for non-profit organisations. Responsibilities of the Legal Representative and Those Charged with Governance for the Annual Financial Statements The legal representative of a non-profit organisation is responsible for financial statements prepared in compliance with the Law on financial activity and accounting of non-profit organisations (Official Gazette no. 121/14), as well as for those internal controls which he in his own discretion considers indispensable for compilation of financial statements which are free of any material misstatements caused by fraud or error. ln preparing the financial statements, management is responsible for assessing the Entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Entity’s financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management. • Conclude on the appropriateness of management's use of the going concern as a basis for accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity’s ability to continue as a going concern. lf we conclude that a material uncertainty exists, we are required to draw attention in our 2 auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Entity to cease to continue as a going concern. . Evaluate the complete presentation, structure and contents ofannual financial statements, including disclosures, as well as whether the annual financial statements reflect the transactions and events on which they are based in a way that is in accordance with the Law We communicate with those charged with govemance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in intemal controls that we identifr during our audit. HLB Inienjerski biro d.o.o. Rijeka, April 26rb 2019 'l Strossmayerova I 51 000 Rijeka Croatia oo \n"r or nr-n InZenjenki biro d.o.o. \ \ \--=.- Kristina Krividi6 Ugrin President ofthe Board Member of the Board Certified auditor 6rNzeNJensxt etno \J d.o.o. Strotsmayero/a 11, Rijela THE PORT OF RUEKA AUTHORITY - RUEKA FINANCIAL STATEMENTS FOR THE PORT OF RITEKA A(rrfloRrry &aeKA UPRAVA RTJEKA) 2018 Statement of responsibility for the financial statements In pursuance ofthe Law on Financial Activities and Accounting for Non-profit Organisations (Official Gazette l2l/14) (hereinafter: the Law), Rule Book on Non-profit Accounting and Chart of Accounts (Official Gazette no. l/15) (Rule Book l), and Rule Book on Non-profit Accounting Reports and Non-profit Organisations Register (Official Gazette 3lll5,67117, I l5/18) (Rule Book 2) (collectively: Rule Books), legal representative of non-profit organisation is responsible for organisation, lawful business operation and accounting and for assuring for financial statements for each fiscal year to be prepared in compliance with provisions ofthe Law and the above mentioned Rule Books and based on the principles ofaccuracy, faithfulness, reliability and individual presentation of items. Pursuant to the Law and Rule Books, Financial Statements consist of: o Balance sheet for non-profit organisation as at Dec 31"' 2018, . Statement of Incomes and Expenditure for non-profit organisation Jan 1" 201E - Dec 3l"r 2018, . Notes to the Financial Statements. These financial statements consisting of pages I - 55 have been approved by the legal representative on February 28s 2019 and signed by: The Port of Rijeka Authority Riva 1 Rijeka Financial statements THE PORT OF RIJEKA AUTHORITY - RIJEKA Balance Sheet for Non-profit Organisation as at Dec 31st 2018 _______________________________________________________________ Financial statements 2 THE PORT OF RIJEKA AUTHORITY - RIJEKA Activity Form type: 708 BIL-NPF BALANCE SHEET as at 31.12.2018 Name of THE RIJEKA PORT AUTHORITY Organisation: Zip Code: 51000 Place: RIJEKA Headquarters address: RIVA 1 IBAN: HR4024020061100379918 RNO: 0112054 Services related to Activity Code: 5222 carriage by sea MB Number: 01212109 City Code: 373 City: RIJEKA Id.No. OIB: 60521475400 Period Code: 2018-12 Municipality Code: 8 Excel Database Version: 6.0.0. Key to Position as at Position as at Index Chart of DESCRIPTION AOP 1st Jan. 31st Dec. (5/4) Accounts 1 2 3 4 5 6 ASSETS ASSETS (AOP 002+074) 001 1.856.432.791 2.015.187.459 108,6 Non-financial assets 0 002 1.552.623.538 1.675.188.532 107,9 (AOP 003+018+047+051+055+064) Non-produced fixed assets (AOP 01 003 214.936.998 212.720.769 99,0 004+008-017) Tangibles – natural resources 011 004 209.861.063 209.861.063 100,0 (AOP 005 to 007) 0111 Land 005 209.861.063 209.861.063 100,0 0112 Mineral resources 006 - 0113 Other tangible natural resources 007 - 012 Intangible assets (AOP 009 to 016) 008 57.942.141 58.035.946 100,2 0121 Patents 009 - 0122 Concessions 010 - 0123 Licences 011 599.596 620.277 103,4 0124 Other rights 012 1.131.220 1.131.220 100,0 0125 Goodwill 013 - 0126 Incorporation expenses 014 - 0127 Development expenses 015 49.419.540 49.492.665 100,1 0128 Other intangibles 016 6.791.785 6.791.784 100,0 Value adjustment for non-produced 019 017 52.866.206 55.176.240 104,4 fixed assets Produced fixed assets (AOP 02 018 681.687.448 665.087.005 97,6 019+023+031+034+039+042-046) 021 Construction facilities (AOP 020 to 022) 019 2.596.999.044 2.602.410.250 100,2 0211 Residential buildings 020 - 0212 Business premises 021 378.177.980 378.239.605 100,0 Financial statements 3 THE PORT OF RIJEKA AUTHORITY - RIJEKA 0213 Other civil engineering structures 022 2.218.821.064 2.224.170.645 100,2 022 Plant & Equipment (AOP 024 to 030) 023 519.813.046 515.692.561 99,2 0221 Office equipment & furniture 024 17.764.513 13.384.656 75,3 0222 Communication equipment 025 2.434.107 2.423.259 99,6 0223 Maintenance & Protection equipment 026 2.437.999 2.510.091 103,0 0224 Medical & lab equipment 027 - 0225 Instruments, Devices & machinery 028 1.307 1.307 100,0 0226 Sporting and musical equipment 029 - Devices, machinery & equipment for 0227 030 497.175.120 497.373.248 100,0 other purposes 023 Means of transport (AOP 032+033) 031 3.791.311 2.521.175 66,5 0231 Road means of transport 032 2.067.247 797.111 38,6 0232 Other means of transport 033 1.724.064 1.724.064 100,0 Books, art pieces and other show 024 034 0 0 - pieces (AOP 035 to 038) 0241 Books in libraries 035 - 0242 Art pieces (in galleries, museums etc.) 036 - Museum showpieces and rare natural 0243 037 - objects 0244 Other showpieces 038 - Perennial plants and basic herd 025 039 0 0 - (AOP 040+041) 0251 Perennial plants 040 - 0252 Basic herd 041 - Intangible produced assets 026 042 2.989.589 3.326.751 111,3 (AOP 043 do 045) 0261 Investments in computer programs 043 2.989.589 3.326.751 111,3 Pieces of art, literature and scientific 0262 044 - papers 0263 Other intangible produced assets 045 - 029 Provisions for produced fixed assets 046 2.441.905.542 2.458.863.732 100,7 Precious metals and other values in 03 047 2.575.691 2.575.691 100,0 custody (AOP 048) Precious metals and other values in 031 048 2.575.691 2.575.691 100,0 custody (AOP 049+050) 0311 Precious metals and gems 049 - Books, art pieces & similar values in 0312 050 2.575.691 2.575.691 100,0 custody 04 Small inventory (AOP 052+053-054) 051 0 0 - 041 Small inventory stores 052 - 042 Small inventory in use 053 389.543 365.301 93,8 049 Value adjustment for small inventory 054 389.543 365.301 93,8 Non-financial assets in progress 05 055 653.423.401 794.805.067 121,6 (AOP 056 do 059+062+063) 051 Buildings/construction facil. in progress 056 633.957.815 766.037.719 120,8 052 Plant & equipment in preparation 057 265.119 789.620 297,8 053 Means of transport in progress 058 - Perennial plants and basic herd in 054 059 0 0 - progress (AOP 060+061) 0541 Perennial plants in preparation 060 - 0542 Basic herd in preparation 061 - Financial statements 4 THE PORT OF RIJEKA AUTHORITY - RIJEKA Other intangible produced assets in 055 062 - preparation 056 Other non-financial assets in prepar. 063 19.200.467 27.977.728 145,7 Produced short-term assets (AOP 06 064 0 0 - 065+070+073) Inventories for operational purposes 061 065 0 0 - (AOP 066 do 069) 0611 Inventories to be re-allocated to others 066 - Inventories of raw materials for regular 0612 067 - purposes 0613 Spare parts inventories 068 - Inventories of raw materials for special 0614 069 - purposes 062 Production & products (AOP 071+072) 070 0 0 - 0621 Production in progress 071 - 0622 Finished products 072 - 063 Trade goods 073 - Financial assets (AOP 1 074 303.809.253 339.998.927 111,9 075+083+100+105+125+133+142) Cash in bank and in hand (AOP 11 075 90.070.847 130.763.494 145,2 076+080+081+082) 111 Cash at bank (AOP 077 to 079) 076 90.026.642 130.738.021 145,2 1111 Cash at national commercial banks 077 90.026.642 130.738.021 145,2 1112 Cash at foreign commercial banks 078 - 1113 Clearing account 079 - 112 Allocated funds 080 - 113 Cash in hand 081 44.205 25.473 57624,7 114 Securities in hand 082 - Deposits, escrow accounts and receivables from employees, overpaid 12 083 56.555.704 77.768.583 137,5 taxes etc. (AOP 084+087+088+089+095) Deposits in banks and other financial 121 084 29.001 29.064 100,2 institutions (AOP 085+086) Deposits at national banks and other 1211 085 29.001 29.064 100,2 financial institutions Deposits at national banks and other 1212 086 - financial institutions 122 Warranties with escrow accounts 087 - 123 Receivables from employees 088 1.190 - Receivables for prepaid taxes and 124 089 0 92 - contributions (AOP 090 to 094) 1241 Receivables for prepaid taxes 090 92 - 1242 Receivables for self-owned VAT 091 - Receivables for prepaid customs duties 1243 092 - and dues 1244 Receivables for other prepaid taxes 093 - 1245 Receivables for prepaid contributions 094 - 129 Other receivables (AOP 096 to 099) 095 56.526.703 77.738.237 137,5 Receivables for refundable damages 1291 096 13.482 26.652 197,7 prepaid 1292 Receivables for damage indemnities 097 - 1293 Receivables for advances paid 098 56.513.221 76.579.782 135,5 Financial statements 5 THE PORT OF RIJEKA AUTHORITY - RIJEKA 1294 Other non-specified receivables 099 1.131.803 - 13 Loans (AOP 101+102+103-104) 100 16.071.172 9.843.745 61,3 131 Loans to physical entities & households 101 - 132 Loans to legal entities - contractors 102 16.071.172 9.843.745 61,3 133 Loans to other entities 103 - 139 Provisions for loans granted 104 - Securities (AOP 14 105 0 0 - 106+109+112+115+118+121-124) 141 Cheques (AOP 107+108) 106 0 0 - 1411 Cheques - national 107 - 1412 Cheques - foreign 108 - Commercial and treasury bills 142 109 0 0 - (AOP 110+111) 1421 Commercial and treasury bills - national 110 - Commercial and treasury bills 1422 111 - – foreign 143 Bills of exchange (AOP 113+114) 112 0 0 - 1431 Bills of exchange – national 113 - 1432 Bills of exchange – foreign 114 - 144 Promissory notes (AOP 116+117) 115 0 0 - 1441 Promissory notes – national 116 - 1442 Promissory notes – foreign 117 - Options and other financial derivatives 145 118 0 0 - (AOP 119+120) Options and other financial derivatives 1451 119 - – national Options and other financial derivatives 1452 120 - – foreign 146 Other securities (AOP 122+123) 121 0 0 - 1461 Other securities – national 122 - 1462 Other securities – foreign 123 - 149 Provisions for securities 124 - 15 Shares and equity (AOP 126+129-132) 125 0 0 - Shares and equity in banks and other 151 126 0 0 - financial institutions (AOP 127+128) Shares and equity in national banks 1511 127 - and other financial institutions Shares and equity in foreign banks and 1512 128 - other financial institutions Shares and equity in companies 152 129 0 0 - (AOP 130+131) Shares and equity in national 1521 130 - companies 1522 Shares and equity in foreign companies 131 - 159 Provisions for shares and equity 132 - Receivables for incomes 16 133 9.916.314 9.056.210 91,3 (AOP 134 to 137+140-141) 161 Receivables from clients 134 12.986.383 11.859.695 91,3 Receivables for membership fees and 162 135 - contributions Receivables for incomes under special 163 136 283.986 299.872 105,6 legal provisions Financial statements 6 THE PORT OF RIJEKA AUTHORITY - RIJEKA Receivables for incomes from assets 164 137 7.605 1.871 24,6 (AOP 138+139) Receivables for incomes from financial 1641 138 7.605 1.871 24,6 assets Receivables for incomes from non- 1642 139 - financial assets 165 Other receivables 140 - 169 Provisions for receivables 141 3.361.660 3.105.228 92,4 Prepayments and accrued income 19 142 131.195.216 112.566.895 85,8 (AOP 143+144) 191 Prepayments 143 131.195.216 112.566.895 85,8 Accrued income 192 144 - LIABILITIES AND OWN SOURCES LIABILITIES AND OWN SOURCES 145 1.856.432.792 2.015.187.459 108,6 (AOP 146+195) 2 Liabilities (AOP 147+174+182+190) 146 1.297.290.706 1.450.686.842 111,8 Liabilities for expenditures 24 147 138.298.171 222.835.914 161,1 (AOP 148+156+164+168+169+170) Liabilities for employees 241 148 493.805 799.447 161,9 (AOP 149 to 155) 2411 Liabilities for salaries – net 149 315.716 468.481 148,4 2412 Liabilities for fringe benefits – net 150 4.977 - 2413 Liabilities for salaries in kind – net 151 - Liabilities for income tax and surtax 2414 152 24.027 77.996 324,6 from salaries 2415 Liabilities for contributions from salaries 153 84.936 136.596 160,8 2416 Liabilities for contributions on salaries 154 69.126 111.397 161,2 2417 Other liabilities for employees 155 - Liabilities for material expenses (AOP 242 156 49.959.286 73.458.227 147,0 157 to 163 ) Reimbursement of expenses to 2421 157 20.023 16.945 84,6 employees Fees to representative and executive 2422 158 26.092 26.092 100,0 body members, committees, etc. 2423 Fees to volunteers 159 - Remuneration to other persons outside 2424 160 - employment contracts 2425 Liabilities toward suppliers at home 161 4.457.873 12.439.631 279,0 2426 Liabilities toward suppliers abroad 162 45.455.298 60.975.559 134,1 2429 Other liabilities for business expenses 163 - Liabilities for financial expenses 244 164 1.612.007 1.380.369 85,6 (AOP 165 to 167) Liabilities for interest on securities 2441 165 - issued Liabilities for interest on loans and 2442 166 1.612.007 1.380.369 85,6 credits received 2443 Liabilities for other financial expenses 167 - 245 Liabilities for grants received 168 - 246 Liabilities for penalties and damages 169 - 249 Other liabilities (AOP 171 to 173) 170 86.233.073 147.197.871 170,7 2491 Liabilities for taxes 171 - 2492 Liabilities for VAT 172 1.442.078 4.465.549 309,7 2493 Liabilities for advances, deposits, 173 84.790.995 142.732.322 168,3 Financial statements 7 THE PORT OF RIJEKA AUTHORITY - RIJEKA received escrow accounts and other liabilities Liabilities for securities 25 174 0 0 - (AOP 175+178-181) 251 Liabilities for cheques (AOP 176+177) 175 0 0 - 2511 Liabilities for cheques – national 176 - 2512 Liabilities for cheques – foreign 177 - Liabilities for bills of exchange 252 178 0 0 - (AOP 179+180) Liabilities for bills of exchange – 2521 179 - national 2522 Liabilities for bills of exchange – foreign 180 - 259 Provisions for liabilities for securities 181 - Liabilities for loans and credits 26 182 683.948.915 744.729.068 108,9 (AOP 183+186-189) Liabilities for bank and other creditors' 261 183 683.674.869 744.729.068 108,9 loans (AOP 184+185) 2611 Liabilities for loans at home 184 - 2612 Liabilities for loans from abroad 185 683.674.869 744.729.068 108,9 Liabilities for commodity loans and 262 186 274.046 0 0,0 other loans (AOP 187+188) 2621 Liabilities for loans at home 187 274.046 0,0 2622 Liabilities for loans from abroad 188 - Provisions for liabilities for loans and 269 189 - credits Accrued expenses and deferred income 29 190 475.043.620 483.121.860 101,7 (AOP 191+192) 291 Accrued expenses 191 - 292 Deferred incomes (AOP 193+194) 192 475.043.620 483.121.860 101,7 2921 Prepaid income 193 - 2922 Deferred income 194 475.043.620 483.121.860 101,7 5 Reserves (AOP 196+199-200) 195 559.142.086 564.500.617 101,0 51 Reserves (AOP 197+198) 196 447.085.143 436.949.916 97,7 511 Reserves 197 447.085.143 436.949.916 97,7 512 Revaluation reserves 198 - 5221 Income surplus 199 112.056.943 127.550.701 113,8 5222 Income deficit 200 - OFF-BALANCE SHEET ITEMS 61 Off-balance sheet items – assets 201 - 62 Off-balance sheet items – liabilities 202 0 0 - Legal Representative: Legal Representative: DENIS VUKOREPA Date: 28.02.2019. Contact Person: IVANA BULJAN COTA Telephone: 051351172 Telefax: 051351193 e-mail address: ivana.buljancota@portauthority. hr Financial statements 8 THE PORT OF RIJEKA AUTHORITY - RIJEKA Statement of Income and Expenditures for Non-profit organisation 2018 _______________________________________________________________ Financial statements 9 THE PORT OF RIJEKA AUTHORITY - RIJEKA Type of Form Activity708 PR-RAS-NPF STATEMENT OF INCOME AND EXPENDITURES for the period 01.01.2018 - 31.12.2018 Name of the THE RIJEKA PORT AUTHORITY Entity: Zip Code: 51000 Place: RIJEKA Legal Seat: RIVA 1 IBAN: HR4024020061100379918 RNO No.: 0112054 Activity Code: 5222 Services related with carriage by sea Reg. No.: 01212109 City Code: 373 City: RIJEKA Id.No. OIB: 60521475400 Fiscal Period: 2018-12 County Code: 8 Excel Database Version: 6.0.0. Chart Index DESCRIPTION AOP Previous year Accounting year Key (5/4) 1 2 3 4 5 6 INCOMES 3 INCOME (AOP 002+005+008+011+024+040+049) 001 101.489.301 94.265.650 92,9 31 Income from traded goods and services (AOP 003+004) 002 74.718.495 77.661.512 103,9 3111 Income from traded goods 003 - 3112 Income from services rendered 004 74.718.495 77.661.512 103,9 Income from membership fees and members' contributions 32 005 0 0 - (AOP 006+007) 3211 Membership fees 006 - 3212 Members' contributions 007 - 33 Income under special legal provisions (AOP 009+010) 008 1.529 0 0,0 3311 Income under special legal provisions out of the budget 009 - 3312 Income under special legal provisions from other sources 010 1.529 0,0 34 Income from assets (AOP 012+021) 011 9.103.683 5.232.349 57,5 341 Income from financial assets (AOP 013 to 020) 012 8.266.419 4.340.904 52,5 3411 Income from interest on loans granted 013 121.556 27.523 22,6 3412 Income from interest yielding securities 014 - 3413 Interest on term deposits and demand deposits 015 56.255 17.201 30,6 3414 Income from interest on arrears 016 119.434 167.254 140,0 3415 Income from exchange rate yields 017 7.969.174 4.128.926 51,8 3416 Income from dividends 018 - Income from profits of companies, banks & other financial 3417 019 - institutions under special legal provisions 3418 Other Income from financial assets 020 - 342 Income from non-financial assets (AOP 022+023) 021 837.264 891.445 106,5 3421 Income from lease and rental assets 022 837.264 891.445 106,5 3422 Other Income from non-financial assets 023 - 35 Income from donations (AOP 025+030+033+036+037) 024 15.771.226 10.074.404 63,9 Financial statements 10 THE PORT OF RIJEKA AUTHORITY - RIJEKA 351 Income from donations out of the budget (AOP 026+029) 025 15.241.844 8.398.698 55,1 3511 Income from donations out of the government budget 026 15.241.844 8.255.557 54,2 Income from donations out of the local/regional selfgovernment 3512 027 - units 3513 Income from donations out of the state budget for EU projects 028 143.141 - Income from donations out of the budget of local and regional 3514 029 - self-government units for EU projects Income from foreign governments and international 352 030 479.382 1.645.706 343,3 organisations (AOP 031+032) Revenues from foreign governments and international 3521 031 479.382 530.927 110,8 organizations 3522 Revenue from EU institutions and bodies 032 1.114.779 - Income from companies and other legal entities (AOP 353 033 50.000 30.000 60,0 034+035) 3531 Income from companies and other legal entities 034 50.000 30.000 - Revenues from companies and other legal entities for EU 3532 035 - projects 354 Income from physical entities and households 036 - 355 Other Income from donations (AOP 038+039) 037 0 0 - 3551 Other income from donations 038 - 3552 Other income from donations for EU projects 039 - 36 Other Income (AOP 041+044+045) 040 1.894.368 1.297.385 68,5 361 Income from damage indemnities and refunds (AOP 042+043) 041 1.771.878 982.281 55,4 3611 Income from damage indemnities 042 89.360 342.341 383,1 3612 Income from refunds 043 1.682.518 639.940 38,0 362 Income from fixed assets sold 044 9.100 149.747 1645,6 363 Other Income (AOP 046 to 048) 045 113.390 165.357 145,8 3631 Written-off liabilities 046 - 3632 Collected written-off receivables 047 113.390 164.314 144,9 3633 Other Income 048 1.043 - Income from non-profit organisation subsidiaries 37 049 0 0 - (AOP 050 to 053) 3711 Current revenues from related non-profit organizations 050 - 3712 Capital Income from non-profit organisation subsidiaries 051 - Current revenues from related non-profit organizations for EU 3713 052 - projects Capital income from related non-profit organizations for EU 3714 053 - projects EXPENSES 4 EXPENDITURES (AOP 055+067+108+109+120+128+139) 054 82.445.627 78.771.892 95,5 41 Expenditures for employees (AOP 056+061+062) 055 10.286.677 11.024.898 107,2 411 Salaries (AOP 057 to 060) 056 8.556.615 8.465.910 98,9 4111 Salaries for normal work hours 057 8.556.615 8.465.910 98,9 4112 Salaries in kind 058 - 4113 Salaries for overtime 059 - 4114 Salaries for special working conditions 060 - 412 Other expenditures for employees 061 324.634 1.173.035 361,3 413 Contributions on salaries (AOP 063 to 066) 062 1.405.428 1.385.953 98,6 4131 Contributions for health insurance 063 1.266.806 1.249.079 98,6 4132 Contributions for the unemployed 064 138.622 136.874 98,7 4133 Contributions for pension insurance payable by employer 065 - 4134 Special contribution for employment of the disabled 066 - 42 Material expenses (AOP 068+072+077+082+087+097+102) 067 18.517.783 25.247.580 136,3 Financial statements 11 THE PORT OF RIJEKA AUTHORITY - RIJEKA 421 Cost reimbursement to employees (AOP 069 to 071) 068 648.346 617.895 95,3 4211 Business trips 069 324.798 307.861 94,8 4212 Commutation, field work and subsistence allowance 070 255.400 227.680 89,1 4213 Employees' professional training 071 68.148 82.354 120,8 Remuneration to members of representative and executive 422 072 293.975 313.658 106,7 bodies, committees and the like (AOP 073 to 076) 4221 Remuneration for activity performance 073 293.975 313.658 106,7 4222 Reimbursement of business trip costs and expenses 074 - 4223 Reimbursement of other costs and expenses 075 - 4224 Other remunerations 076 - 423 Remunerations to volunteers (AOP 078 to 081) 077 0 0 - 4231 Remuneration for activity performance 078 - 4232 Reimbursement of business trip costs and expenses 079 - 4233 Reimbursement of other costs and expenses 080 - 4234 Other remunerations 081 - Remunerations to persons outside employment contract 424 082 2.051 1.293 63,0 (AOP 083 to 086) 4241 Remuneration for activity performance 083 - 4242 Reimbursement of business trip costs and expenses 084 1.293 - 4243 Reimbursement of other costs and expenses 085 2.051 0,0 4244 Other remunerations 086 - 425 Expenses for services (AOP 088 to 096) 087 14.216.931 20.752.464 146,0 4251 Telephone, mail and transport services 088 236.679 228.088 96,4 4252 Regular and investment maintenance services 089 5.026.902 8.424.602 167,6 4253 Promotion and information services 090 479.444 262.333 54,7 4254 Utilities 091 6.598.907 7.936.521 120,3 4255 Rentals 092 99.898 154.167 154,3 4256 Medical and veterinary services 093 2.550 1.750 68,6 4257 Intellectual and personal services 094 643.333 1.139.964 177,2 4258 Computer services 095 175.838 253.745 144,3 4259 Other services 096 953.380 2.351.294 246,6 426 Expenses for material and energy (AOP 098 to 101) 097 1.974.706 2.340.731 118,5 4261 Stationery and other material expenses 098 293.168 306.818 104,7 4262 Materials and raw materials 099 - 4263 Energy 100 1.672.099 2.024.959 121,1 4264 Small inventory and tyres 101 9.439 8.954 94,9 429 Other material expenses (AOP 103 to 107) 102 1.381.774 1.221.539 88,4 4291 Insurance premiums 103 296.368 211.490 71,4 4292 Entertainment expenses 104 122.677 162.586 132,3 4293 Membership fees 105 177.427 174.299 98,2 4294 Registration fees 106 14.559 9.304 63,9 4295 Other material expenses 107 770.743 663.860 86,1 43 Depreciation expenses 108 17.637.841 15.364.753 87,1 44 Financial expenses (AOP 110+111+115) 109 14.208.103 9.134.085 64,3 441 Interest for securities issued 110 - 442 Interest for loans and advances received (AOP 112 to 114) 111 5.261.858 3.983.496 75,7 4421 Interest for loans from banks & other creditors 112 5.261.858 3.983.496 75,7 4422 Interest for commodity and other loans received 113 - 4423 Interest for loans and credits granted yet not realized 114 - 443 Other financial expenses (AOP 116 to 119) 115 8.946.245 5.150.589 57,6 Financial statements 12 THE PORT OF RIJEKA AUTHORITY - RIJEKA 4431 Bank services and payment agency services 116 133.640 115.629 86,5 4432 Exchange rate losses and foreign currency clause 117 8.811.616 5.034.910 57,1 4433 Interest on arrears 118 989 50 5,1 4434 Other financial expenses 119 - 45 Donations (AOP 121+125) 120 0 1.000.000 - 451 Donations in course (AOP 122 to 124) 121 0 1.000.000 - 4511 Donations in course 122 1.000.000 - 4512 Scholarships 123 - 4513 Current donations from EU funds 124 - 452 Capital donations (AOP 126+127) 125 0 0 - 4521 Capital donations 126 - 4522 Capital donations from EU funds 127 - 46 Other expenses (AOP 129+134) 128 21.795.223 17.000.576 78,0 461 Penalties and damages claimed (AOP 130 to 133) 129 0 0 - 4611 Damages paid to legal and physical persons 130 - 4612 Penalties, demurrage and similar 131 - 4613 Damages paid to employees 132 - 4614 Contractual penalties and other damages paid 133 - 462 Other expenses (AOP 135 to 138) 134 21.795.223 17.000.576 78,0 Non-written-off value and other expenses of written-off fixed 4621 135 12.313 512 4,2 assets 4622 Written-off receivables 136 103.728 230.033 221,8 4623 Expenses for other taxes 137 - 4624 Other expenses 138 21.679.182 16.770.031 77,4 Funding expenses for non-profit org. subsidies (AOP 140 to 47 139 0 0 - 143) Recurring funding expenses for non-profit organisation 4711 140 - subsidies Capital expenses for funding of non-profit organisation 4712 141 - subsidies Current expenditures related to the financing of related non- 4713 142 - profit organizations for EU projects Capital expenditures related to the financing of related non- 4714 143 - profit organizations for EU projects Stores of production and finished products in the beginning of 144 - the accounting period Stores of production and finished products at the end of the 145 - accounting period Increase in production and finished products stores 146 0 0 - (AOP 145-144) Decrease in production and finished products stores 147 0 0 - (AOP 144-145130) TOTAL EXPENDITURES (AOP 054-146 or 054+147) 148 82.445.627 78.771.892 95,5 INCOMES SURPLUS (AOP 001-148) 149 19.043.674 15.493.758 81,4 INCOMES DEFICIT (AOP 148-001) 150 0 0 - 5221 Incomes surplus – carried over 151 93.013.270 112.056.943 120,5 5222 Revenue deficit – carried over 152 - Liabilities for profit tax 153 - Incomes surplus available in the next period 154 112.056.944 127.550.701 113,8 (AOP 149+151-150-152-153) Incomes deficit to be covered in the next period 155 0 0 - (AOP 150+152-149-151+153) ADDITIONAL DATA 11 Financial assets at the beginning of the period 156 52.436.835 90.070.847 171,8 Financial statements 13 THE PORT OF RIJEKA AUTHORITY - RIJEKA 11-debit Total inflows to bank accounts and cash desk 157 700.729.355 519.298.184 74,1 11-credit Total outflows from bank accounts and cash desk 158 663.095.343 478.605.537 72,2 11 Balance of funds at the end of the period (AOP 141+142-143) 159 90.070.847 130.763.494 145,2 Average number of employees at the end of reporting period 160 58 56 96,6 (full number) Average number of employees based on work hours 161 57 55 96,5 (full number) Number of volunteers 162 - Number of volunteers' work hours 163 - Realized Value VALUE OF REALISED INVESTMENTS IN in the same in the Index AOP NEW FIXED ASSETS period of the accounting (5/4) previous year period 051 Construction in progress 164 162.145.492 766.037.719 472,4 052 Plant and equipment in progress 165 1.223.431 789.620 64,5 053 Means of transport in progress 166 405.489 0,0 054 Perennial plants and basic herd in progress 167 055 Other non-material produced assets in progress 168 056 Other non-financial assets in progress 169 2.800.417 27.977.728 999,1 Position as at Position as at Index Item Description AOP 01th January the end of the (5/4) period Inventory 170 Control sum (AOP 145 to 156) 171 166.574.944 794.805.178 477,1 Legal Representative: DENIS VUKOREPA Legal Representative: Datum: 28.02.2019. Contact Person: IVANA BULJAN COTA Telephone: 051351172 Telefax: 051351193 e-mail address: ivana.buljancota@portauthority.hr Financial statements 14 THE PORT OF RIJEKA AUTHORITY - RIJEKA Notes to the Financial Statements for 2018 _______________________________________________________________ Financial statements 15 THE PORT OF RIJEKA AUTHORITY - RIJEKA 1. GENERAL INFORMATION ON NON-PROFIT ORGANISATION 1.1. DATA ENTERED IN REGISTERS OF COMPANIES The Port of Rijeka Authority is entered as a legal entity in the following registers: 1.1.1. Data entered in the Register of Companies Data entered in the Register of Companies in respect of legal entity: Competent Court: Commercial Court of Rijeka Name: The Port of Rijeka Authority Legal Seat: Riva 1, Rijeka Reg. No. (MBS): 040037333 Id. No. (OIB): 60521475400 Legal form: non-profit organisation Founder: Government of the Rep. of Croatia Authorized representative: since September 7th 2017 Denis Vukorepa, B.Sc. Executive Director 1.1.2. Data entered in the Register of Non-profit Organisations (RNO) Data entered in the Register of Non-profit Organisations: RNO No.: 0112054 Date of entry in RNO: February 15th 2010 Date of latest change: September 20th 2017 Reg. No.: 01212109 Activity code: 5222 1.2. LEGAL STATUS AND DEFINITION 1.2.1. Legal status The Entity has been established on the basis of the RC Government Decision on establishment of the Port of Rijeka Authority (Official Gazette No. 42/96), whereas its structure and activity are defined by the Act on Maritime Demesne and Sea Ports (Official Gazette Nos. 158/03, 100/04, 141/06, 123/11- Constitutional Court Decision) and by the Port of Rijeka Authority Statute. 1.2.2. Definition Based on the above mentioned legal documents, entity is defined as a non-profit legal entity established for the management, construction and exploitation of the port of Rijeka as a port open to public transport of special (international) economic interest for the Republic of Croatia. Hereinafter, the Port of Rijeka Authority may be called Port Authority, Entity or the Subject as synonyms. Financial statements 16 THE PORT OF RIJEKA AUTHORITY - RIJEKA 1.3. FOUNDING AND HEADQUARTES The Entity was incorporated on May 23rd 1996 with legal seat in Rijeka, Riva 1. 1.4. OPERATING ACTIVITIES 1.4.1. Operating activities based on the basic Law – non-profit activities In compliance with the Act on Maritime Demesne and Sea Ports and in connection with the Port of Rijeka Authority Statute, the Entity carries out the following activities as entered in the Register of Companies: 1. care for the construction, maintenance, management, protection and upgrading of the maritime demesne representing the port area; 2. construction and maintenance of port infrastructure, funded out of the Port Authority founders' budget; 3. professional supervision over construction, maintenance, management and protection of the port area (port infrastructure and suprastructure); 4. ensuring permanent and undisturbed port traffic, technical and technological uniformity and navigation safety; 5. provision of services of general interest or those missing other economic entities’ economic interest; 6. coordination and monitoring operations of concessionaires carrying out commercial activities within the port area; 7. decision making on establishment and management of free zone within the port area, in compliance with legal provisions governing free zones; 8. other activities provided for by the Law. The entity carries out its registered activity on maritime demesne. Based on the Act on Maritime Demesne and Sea Ports, maritime demesne is managed by the Port of Rijeka Authority. Port Authority is also the maritime demesne concession grantor. As stated in art. V of the Decision on Establishment of the Port of Rijeka Authority, the Port authority shall grant concessions in respect of existing port infrastructure and suprastructure facilities, whereas based on art. XI, Port Authority shall acquire the right to use and exploit the facilities specified on the infrastructure and suprastructure list mentioned in art. V of the Decision and those assets shall not be property of the Port Authority. As stated in art. XV of the Decision on Establishment of the Port of Rijeka Authority, Port Authority shall be liable for its liabilities to the full extent of its assets, whereas the Republic of Croatia shall have unlimited joint and several liability for Port Authority’s liabilities. Pursuant to art. XVI of the Decision, profit realized by Port Authority business operation shall be used exclusively for the construction and maintenance of port infrastructure and suprastructure. 1.5. MANAGING BODIES In compliance with the Act on Maritime Demesne and Sea Ports, and in connection with the Port of Rijeka Authority Statute, managing bodies are the Management Board (A) and the Director (B). Financial statements 17 THE PORT OF RIJEKA AUTHORITY - RIJEKA A) Management Board consists of the President and 8 members. Here follows the Management Board structure for 2017: - Bojan Hlača, president - Nina Perko, member - Vesna Mrzljak, member - Darko Glažar, member - Josip Rupčić, member - Vojko Obersnel, member - Loris Rak, member - Valter Poropat , member - Đani Poropat, member B) Director: Since September 7th 2017 Denis Vukorepa, B.Sc. Executive Director 1.6. TAX STATUS 1.6.1. Value Added Tax (VAT) The Port of Rijeka Authority is tax payer within the meaning of art. 6, p. 5 of the Act on Value Added Tax (Official Gazette No. 73/13, 99/13 – Decision by the RC Constitutional Court, 148/13 and 153/13 – Decision by the RC Constitutional Court) and has been entered in the Register of VAT Payers since January 1st 2015. The Port of Rijeka Authority is tax payer only in respect of the portion referring to the so-called commercial activity it performs or may perform, and may use the right to input tax for that part of deliveries only. In any other cases, VAT represents Entity’s expenses. 1.6.2. Profit Tax (PT) Pursuant to the Profit Tax Act, the Port of Rijeka Authority is not subject to this tax. According to this Act, should the Entity be engaged in commercial activity so to impair market competition, the RC Tax Authority would be allowed to impose profit tax only in respect of the activity in question. 1.7. EMPLOYEES As at December 31st 2018, there were 52 employees employed by the Entity (previously: 59 as at December 31st 2017). Financial statements 18 THE PORT OF RIJEKA AUTHORITY - RIJEKA 2. LEGAL FRAMEWORK OF FINANCIAL REPORTING 2.1. FINANCIAL REPORTING FRAMEWORK The non-profit organisations’ financial reporting legal framework is the following:  Law on accounting for non-profit organisations (hereinafter the Law) (Official Gazette No. 121/14 )  Rulebook on non-profit accounting and chart of accounts (hereinafter Rulebook 1 or Rulebooks) (Official Gazette No. 1/15, 25/17, 96/18, 103/18)  Rulebook on financial reporting for non-profit organisations and on the registry of non-profit organisations (hereinafter Rulebook 2 or Rulebooks) (Official Gazette No. 31/15, 67/17, 115/18) 3. REPORTING CURRENCY, CURRENCY USED AND RATES OF EXCHANGE These financial statements are expressed in HRK (Croatian kuna) with no lipa, except where the Report states otherwise. In its activity, the Entity has used the following currencies at the mean rate of exchange ruling at the Croatian National Bank as at December 31st of the current year, as presented in the table: Exchange rate as at December 31st Currency name and code of the current year 1 EUR 7,417575 1 USD 6,469192 1 KRW 0,005800 1 GBP 6,588129 4. ACCOUNTING PRINCIPLES According to the reporting framework, basic accounting principles are principles of accuracy, authenticity and reliability in disclosing individual items. A reliable financial report information is free of any material error or partiality, it reflects fairly what it discloses. The principle of disclosing single entries means ensuring data disclosure on an individual basis by the type of income, expenditure, position of assets, liabilities and own funds. Financial statements 19 THE PORT OF RIJEKA AUTHORITY - RIJEKA Non-profit organisation is required to collect data and draw up bookkeeping documents, keep business books and compile financial statements so as to enable verification of business events, assessment of financial position and business operation of the non-profit organisation, while complying with the basic principles of orderly bookkeeping. Subsidiary books are detailed bookkeeping records of business events that are summarized in the general ledger as well as other subsidiary books on positions and changes in assets and liabilities, for the purpose of business activity supervision and monitoring. Non-profit organisation required to apply double entry bookkeeping is obliged to keep the following subsidiary ledgers: 1. subledger of long-term non-financial assets – by the type, quantity and value (purchase and written- off values) 2. subledger of short-term non-financial assets (materials, products and goods supplies) – by the type, quantity and value 3. subledger of financial assets and liabilities, i.e.: receivables and liabilities (by the entity, account, individual amounts, maturity, interest on arrears, and the like), received and issued securities and other financial instruments (by the type, entity, individual value, maturity, balances), receivables and liabilities based on received loans and credits, and granted loans (by the type, entity, individual amount, maturity, balances and accrued interest) 4. cash journal (in HRK, foreign currency, petty cash and others), and 5. record of travel approval forms and use of business vehicles. In addition to books specified under para 2 hereof, non-profit organisation is required to keep special subsidiary records: 1. records of given and received warranties and guarantees 2. incoming invoices ledger 3. outgoing invoices ledger and 4. other subsidiary records in accordance with specific provisions and its own requirements. For the period January 1st to December 31st 2017 the Entity applies double-entry bookkeeping. Financial statements are compiled and submitted at legal entity level with included data on the activity of its organisational units. Where there are organisational units requiring a consolidated approach, they are prepared separately and labelled as consolidated financial statements. Financial statements of non-profit organisation disclose the actual realization of items planned in the financial plan at the end of the accounting/reporting/planning period that coincides with the calendar year. Namely, pursuant to the Rulebook on financial management, control and planning system, income and expenses are planned at the level of chart of account groups (two characters) and in compliance with the accepted accrual accounting principle. Financial statements 20 THE PORT OF RIJEKA AUTHORITY - RIJEKA 5. ACCOUNTING RULES DEFINED BY THE LAW The basic accounting rules derive from provisions of the Law and accompanying rules and regulations (Rulebooks) and definitions of single items through explanation of the given chart of accounts for non- profit organisation that all non-profit organisations are obliged to apply. Assets, liabilities and own funds define the financial position of a non-profit organisation. Assets and liabilities are disclosed following the accrual accounting principle. Here follow the basic rules by the financial statement item groups. 5.1. ASSETS REPORTING RULES 5.1.1 General provisions Assets are resources controlled by non-profit organisation as the result of past events, expected to yield future benefits in business performance. Assets are classified by the type, durability and function in business performance. Classification by the type and function distinguishes non-produced and produced assets and financial and non-financial ones, whereas in terms of duration there are long-term and short-term assets. In fixed assets, the useful life exceeds one year and it retains the same manifestation form for more than one year. Initially, they are disclosed at the purchase value, or the assessed value. 5.1.2 Non-produced fixed assets Non-produced fixed assets consist of tangible and intangible assets. Tangible assets mentioned in the preceding paragraph comprise natural resources over which the non- profit organisation has ownership rights. Civil engineering structures constructed in order to upgrade quality, increase land productivity or prevent it from erosion and other forms of destruction are recorded as land value increase. Intangible assets comprise: patents, concessions, licences and other similar rights and goodwill. 5.1.3 Fixed (produced and non-produced) non-financial tangible assets Long-term non-financial intangible assets of individual purchase cost (purchase value) not exceeding HRK 3.500,00 may be written off on a one-time basis, by putting to use, with mandatory individual or group monitoring during their useful life. The purchase cost (purchase value) of non-financial assets consists of the purchase cost increased by customs duties, non-refundable taxes, transport expenses and any other expenses that can be directly added to the cost of purchase and training for use. The value of every single item of long-term non-financial assets is subject to depreciation, i.e. to adjustment by the linear method during its useful life, starting from the first day of the month following the month when put in use. By exception, the value of land, renewable natural resources, books, art pieces and other show-piece values and precious metals and other values kept in custody is not depreciated, or adjusted. The basis for fixed assets value adjustment is its initial or revaluated purchase value, i.e. the assessed value. The effect of fixed assets revaluation is added to own funds. Financial statements 21 THE PORT OF RIJEKA AUTHORITY - RIJEKA The Rulebook on non-profit accounting and chart of accounts issued by the Ministry of finance prescribes depreciation rates according to fixed assets groups and their estimated useful life, grouping and depreciating them at the rates presented in the following table, in compliance with the defined useful life of individual fixed assets items. 5.1.3.1. Produced fixed tangible assets Produced fixed assets comprise civil engineering structures, plants and equipment, means of transport, books, art pieces, and other show-piece values, perennial crops and basic herd, and intangible produced assets. Buildings and other civil engineering structures are disclosed separately from the land on they are erected on. Where the value of the structure and the value of the land cannot be separated, the whole amount is recorded under the asset of superior value. 5.1.3.2. Produced fixed intangible assets Produced fixed intangible assets comprise investments in computer programmes, pieces of art, literature and scientific work, and the like Investments in computer programmes include purchase costs or costs incurred from the own programme creation and development. 5.1.3.3. Depreciation rates for produced tangible and intangible assets Ord. Annual rate Name of assets or group of assets Useful life No. (%) I CIVIL ENGINEERING STRUCTURES 1. Residential and business structures Made of concrete, metal, stone and bricks 80 1,25 Made of wood and other material 20 5 2. Roads, railways and similar civil engineering structures 25 4 3. Other civil engineering structures 20 5 II PLANTS AND EQUIPMENT 1. Office equipment and furniture Computers and computer equipment 4 25 Office furniture 8 12,5 Other office equipment 5 20 2. Communication equipment Communication devices 5 20 Mobile communication devices 2 50 3. Maintenance and protection equipment 5 20 4. Medical and laboratory equipment 5 20 5. Instruments, devices and machinery 8 12,5 Precise and optical instruments 5 20 Gauging and control devices: - mechanical 8 12,5 - electronic 5 20 6. Sports and musical equipment 5 20 Financial statements 22 THE PORT OF RIJEKA AUTHORITY - RIJEKA Ord. Annual rate Name of assets or group of assets Useful life No. (%) 7. Devices, Plant and equipment for other purposes 5 20 III MEANS OF TRANSPORT 1. Means of road transport 8 12,5 Passenger cars and ambulances 5 20 VI INTANGIBLE PRODUCED ASSETS 2. Investments in computer programmes 4 25 3. Other produced intangible assets 4 25 VII NON-PRODUCED INTANGIBLE ASSETS Patents, concessions, licences, right of use on third party's Duration as per contract assets, perennial lease, and the like 5.1.4 Books, art pieces and other show-piece valuables Books, art pieces and other showpiece valuables are objects exhibited to serve the public. Where such objects are kept in custody and are not used for service providing purposes, they are recorded as books, art pieces and similar values in custody. 5.1.5 Small inventory Small inventory consists of small inventory supplies and small inventory in use. Small inventory belongs to long-term tangible assets which, due to individual purchase value lower than HRK 3.500, may be recorded separately from fixed assets. Small inventory is to be written off on a one-time basis by putting it into use or through calculation in proportion with its wear and tear rate. Small inventory in use is to be kept on record and to be disclosed in the balance sheet until the moment when sold, donated, or otherwise alienated or destructed. 5.1.6 Non-financial assets in progress Non-financial assets in progress contain investments in the course of production or procurement of produced fixed assets. Investments extending the useful life, increasing capacity, changing purpose or improving considerably the non-financial assets' functional features such as investments in renewal, reconstruction or increase of non-financial assets that need not be conditioned by assets position, are recorded as value increase of the assets being the subject of investments. 5.1.7 Short-term non-financial assets Short-term non-financial assets are those intended for carrying out business activity or for further sale within a period shorter than one year. Their purchase cost is subject to provisions applicable to long- term non-financial assets. Financial statements 23 THE PORT OF RIJEKA AUTHORITY - RIJEKA 5.1.8 Cash Cash in the bank and in hand consists of: cash at bank, cash in hand, allocated funds and cash and securities in hand. Allocated funds are funds set aside to the designated account in order to secure payments in respect of issued cheques, treasury notes, bills of exchange, letters of credit, bonds, and the like. 5.1.9 Deposits, escrow money and receivables from employees, prepaid taxes, etc. Deposits, escrow money and receivables from employees and prepaid taxes and the like contain: deposits in banks and other financial institutions, escrow money, receivables from employees, receivables from prepaid taxes and contributions, and some other receivables. Deposits are a form of receivables on the basis of money deposited with banks or other financial institutions. Escrow money is money deposited with a third party as a security for execution of contractual liabilities. 5.1.10 Loans Loans comprise lending classified according to borrowers, namely: physical persons and households, legal entities – entrepreneurs, and other legal entities. 5.1.11 Receivables for operating income Receivables for operating income include receivables from customers, from membership fees and membership contributions, for income under special legal provisions, income from assets and other not specified receivables. 5.1.12 Prepayments and accrued income Prepayments and accrued income (accrued interest and other assets) contain: prepaid expenses not referring to the accounting period and income pertaining to a certain accounting period when either their collection was not yet due or their invoicing was not possible. 5.2. LIABILITY REPORTING RULES 5.2.1. General provisions Liabilities are unpaid debts ensuing from past events, which are expected to be settled through outflow of resources. Liabilities are classified according to purpose and maturity. 5.2.2. Liabilities for expenses Liabilities for expenses contain liabilities recognised at the moment they arise as expenses in class 4 accounts – Expenses, and they comprise liabilities for employees, material expenses, financial expenses, collected financial aids, penalties and damage indemnities, and other current liabilities. Liabilities for gathered financial aid (for areas hit by natural disasters, for population groups with special needs, institutions for procurement of medical equipment, etc.) are recorded the moment the Financial statements 24 THE PORT OF RIJEKA AUTHORITY - RIJEKA money or other types of assets are received. Where the collected financial aid is forwarded by non- profit organisation to its end users, expenses in respect of the granted donation and income from donation are recognised. Liabilities for interest in respect of issued securities are disclosed within liabilities for operating expenses. Liabilities for interest in respect of received credits and loans are recorded within liabilities for operating expenses. 5.2.3. Liabilities for loans and credits Liabilities for loans and credits cover liabilities in respect of received loans and credits. 5.2.4. Accrued expenses and deferred income Accrued expenses and deferred income contain non-invoiced expenses debiting current period and income collected or accrued in the current period while referring to future accounting period. 5.3. INCOME REPORTING RULES 5.3.1. General provisions Income and expenses are recognised applying the accrual accounting principle. The accrual accounting principle means that the reciprocal income (income based on delivered goods and services) is recognised in the period it refers to, provided that it can be measured independently from their collection; non-reciprocal income (income under special legal provisions, donations, membership fees, subsidies, contributions and other similar incomes) is recognised in the reporting period it refers to, provided that it is available (collected) in the reporting period, and it may be recognised in the reporting period if collected no later than the moment the financial statements for that period are presented; donations linked to the execution of contractual programmes (projects and activities) are recognised in the balance sheet as deferred income and as the reporting period income in proportion with the contracted programmes (projects and activities) execution costs; donations linked to non-financial assets subject to depreciation are recognised in the balance sheet as deferred income, and as the reporting period income on a systemic basis, in proportion with the non-financial assets usage costs during the period of use. Income represents increase in economic benefits or service providing potential in the course of the reporting period, taking the form of assets inflow without simultaneous increase in liabilities or decrease in liabilities without simultaneous asset outflows. 5.3.2. Income from traded goods and services (reciprocal) Income from traded goods or provided services comprises income received by non-profit organisation from customers through the sale of goods and/or provision of services. 5.3.3. Incomes under special legal provisions (non-reciprocal) Income under special rules comprises income from budget and from other sources, under special legal provisions. Income from the state budget under special provisions is received by non-profit organisation in compliance with statutory and other rules and regulations from the government budget and from budgets of local and regional self-government units. Financial statements 25 THE PORT OF RIJEKA AUTHORITY - RIJEKA Income from other sources under special legal provisions is received by non-profit organisation from legal and/or physical entities in compliance with laws and other rules and regulations. 5.3.4. Income from assets (reciprocal) Income from assets refers to financial and non-financial assets. Income from financial assets is made of interest (for granted loans and credits, securities, term and sight deposits, interest on arrears), exchange rate gains, dividends, profits realised by companies, banks and other financial institutions. Income from non-financial assets consists of income from property rentals and equipment lease fees and other income from non-financial assets. 5.3.5. Income from donations (non-reciprocal) Income from donations comprises money and other assets which is received by non-profit organisation, without any repayment or counteraction obligation, from the state budget, budget of local and regional self-government units, from foreign governments and international institutions, from companies and other legal entities as well as from physical persons and households. 5.3.6. Other incomes Other income consists of income from indemnities for damage and refunds, in addition to income from sale of long-term intangible and tangible assets. Written-off liabilities and collected written off receivables are recorded within this group. The sale of long-term intangible and tangible assets is recorded by debiting the corresponding account - Receivables from customers - within group 16 and by simultaneous crediting the account of Income from sale of long-term intangible and tangible assets within group 36. At the same time, the account of sold long-term tangible and intangible assets is credited within class 0, and the corresponding account of Assets value adjustment within class 0 as well as the account of Expenses for sold long-term intangible and tangible assets – non written off value within group 46 (gross principle). 5.4. EXPENDITURE REPORTING RULES 5.4.1. General provisions Expenses are recognised applying the accrual accounting principle, meaning that expenses are recognised in the reporting period they refer to independently from payment, expenses for expenditure of short-term non-financial assets are recognised at the moment of actual expenditure, that is of the sale and costs of fixed assets procurement are capitalized, and recognised as expenses during their useful life. Expenditure means reduction of economic benefit or service providing potential, in the form of reduction of assets or increase in liabilities without simultaneous increase in financial assets. 5.4.2. Expenses for employees Expenses for employees contain salaries (gross amount), other expenses for employees such as: performance bonus, awards (seniority bonuses, special occasion annual awards, special awards, etc.), Financial statements 26 THE PORT OF RIJEKA AUTHORITY - RIJEKA gifts (to employees, their children, etc.), severance payments, sick pay compensations (for sick leave exceeding 90 days), disability allowances, death allowances, and – contributions on salaries. Salaries are remuneration payable by employer to employees for the work performed by them. Salaries for ordinary work consist of salary and related compensations: for sick leave, holidays, paid absences and other compensations (child care, military training etc.). Salaries in kind are goods and services of a certain financial value payable by non-profit organisation to employees for the work performed, to be used by them for leisure or any other private purposes. 5.4.3. Material expenses Material expenses are made of expenses related to utilization of services and goods required for regular functioning and carrying out of business activity. Remuneration of costs to employees comprises business trip expenses, commutation, fieldwork and subsistence allowance as well as employees' professional training. Remunerations to persons outside employment contract with the employer include remuneration for work and levies on remunerations (taxes, contributions, etc.), business trip cost refund and other refunds. Current and investment maintenance implies continued activities for maintenance or restoration of assets to functional condition, such as: overhauling of devices and equipment, renovation of interior and exterior walls, repairs and substitution of worn-out parts, periodic plant and equipment overhauling, etc. 5.4.4. Depreciation expenses Depreciation expenses include the purchase cost of fixed assets subject to depreciation during their useful life, in accordance with prescribed depreciation rates. Depreciation calculation starts from the first day in the month following the month the assets were put into use, applying the prescribed depreciation rates. 5.4.5. Financial expenses and exchange rate differences Financial expenses include interest-related expenses – for issued securities and for received loans and lending, expenses for bank services and payment services, exchange rate losses and currency clause effects, interest on arrears and other not specified financial expenses. Exchange rate differences occur exclusively in foreign currency transactions due to changes in the exchange rate between the date of transaction and the date of settlement of the items resulting from the transaction or from the date of value adjustment of the financial means denominated in foreign currency. Exchange rate gains are recorded as income, losses as expenses. Interest on arrears is disclosed separately from the value of the transaction it derives from. 5.4.6. Other expenses Other expenses include: fines, penalties and damage indemnities, non-written-off value and other expenses for alienated and written off fixed assets, written-off receivables, expenses for other taxes and other non-specified expenses. Financial statements 27 THE PORT OF RIJEKA AUTHORITY - RIJEKA 5.5. OWN-SOURCES PRESENTATION RULES 5.5.1. General provisions Own sources represent the residual value of assets after deduction of all liabilities. They contain share capital and revaluation of assets value, and accumulated and current income deficit/surplus. 5.5.2. Own funds Own funds consist of: Share capital and operating result. 5.5.3. Revaluation Value changes (revaluation) are events influencing the balance between assets and liabilities and are not the result of activities or transactions. Revaluation effects are recorded on corresponding accounts of assets and liabilities, either to the credit or to the debit of the revaluation reserve 5.5.4. Income surplus/deficit Cumulated and current results for non-profit organisation are disclosed under income surplus/deficit items. 5.6. BUSINESS RESULT REPORTING RULES At the end of the reporting period, business (operating activities) result is assessed by crediting expenses distribution accounts within group 49 with the total amount of expenses and by debiting income and expenses settlement accounts within group 52. Income distribution accounts within group 39 are debited with the total amount of income, while crediting the income and expenses settlement accounts within group 52. If the credit side in the income and expenses settlement account within group 52 is higher than the debit side, the respective balance is put to the debit of the operating income and expenses settlement account, while crediting the corresponding income surplus account within group 52. If the debit side in the income and expenses settlement account within group 52 exceeds the credit side, the relative balance is put to the debit of the income and expenses settlement account, while debiting the income deficit account within group 52. Balances established in subgroup 522 basic accounts and disclosed in the financial statements for the business year are distributed in the following business year in accordance with the Decision on distribution of business result. 5.7. OFF-BALANCE SHEET ITEMS REPORTING RULES Third-party assets are monitored on off-balance sheet records. Off-balance sheet records contain items connected to yet not included in the balance sheet categories, namely: third-party tangible assets, rights and securities. Financial statements 28 THE PORT OF RIJEKA AUTHORITY - RIJEKA 6. OTHER RULES APPLIED IN THE COMPILATION OF THE FINANCIAL STATEMENTS GENERAL PROVISIONS - PRINCIPLES Income and expenditure accounting principle In disclosing income and expenses, unless otherwise provided for in the Accounting Rules, non-profit organisation’s incomes and expenses which have not been realized (yet accrued) are not recorded under the respective items, but rather, for the sake of balance sheet items realistic disclosure, under deferred/accrued incomes and expenses. In this way, they do not affect the business result. 6.1. ADJUSTMENTS RELATING TO PREVIOUS PERIODS Errors referring to previous periods for which financial statements had already been issued, which were identified in the reporting period, are adjusted in the manner that total effects are disclosed separately in the notes, and the final effect, if any, is disclosed as the initial balance correction within equity. 6.2. FOREIGN EXCHANGE RATE DIFFERENCES Pursuant to the Accounting Rules defined by the law, exchange rate differences related to foreign long-term loans and credits are disclosed as value adjustments in special accounts, and not as income or expenses of the current period. In order to disclose fairly the balance of assets and liabilities, the Port Authority assesses also the exchange rate differences resulting from such an adjustment, disclosing the effects on accrued income or expenses items until their realization. 6.3. VALUE ADJUSTMENT OF NON-FINANCIAL ASSETS ACTIVATED BY DECEMBER 31st 2007 Bearing in mind the specific nature of the Rijeka Port Authority, and the obligation of maximum compliance with the Regulation in 2008, a very important change concerned the recognition of accrued expenses and income (prepayments and deferred income). This position includes the acquisition value of the asset that was activated by December 31, 2007, which was financed from credit facilities (Loan of Exim Bank of Korea and Bank of the World Bank (IBRD) No. 47150-HR). This property is not amortized, but by the end of its useful life it adjusts and reduces the value of the assets. Rising the annuities, the Harbor Administration reduces the expenses of the future period and increases the costs of current operations, which are faced with the inflow of principal repayments. This way they do not affect the business results. 6.4. CAPITALIZATION OF LOAN INTEREST AND EXPENSES Up to September 15th 2014 and pursuant to the Loan Contract, loan and lending costs (capitalized interest) under the IBRD loan No. 7368 HR were added to the debt and recorded as increase in the Financial statements 29 THE PORT OF RIJEKA AUTHORITY - RIJEKA purchase value of the assets. The loan-related interest accrued for the period after September 15th 2014 is paid and recorded as expenditure of the current period. 6.5. CAPITALIZATION OF PROJECT COSTS Project-related costs are capitalized i.e. entered in the project's purchase value. This applies to capital and current costs linked to a certain project. Project costs are defined as costs that directly or indirectly contribute to the project realisation. Subsequent cancellation of a project results in reporting the project costs associated with it as expenses. 6.6. INVESTMENT IN STUDIES Port Authority's significant activities refer to creating studies. Said studies can be special or general- purpose studies. Special purpose studies are capitalized to the project they directly refer to and general-purpose studies are reported as special assets contributing to general goals of the Port Authority and are depreciated correspondingly within 5 years. 6.7. VALUE ADJUSTMENT OF RECEIVABLES FROM CUSTOMERS For the sake of a fair disclosure of receivables from customers, the Subject applies the value adjustment policy, and this implies disclosure of expenses in the period the mentioned value adjustment refers to. Namely, value adjustments are applied to all receivables according to the following criteria: receivables that have been overdue for more than 3 years, in amounts lower than HRK 1.000, out-of-court and court settlements (the balance between the total debt and the settlement amount is written off), and business partner's liquidation (cancellation from the Register of Companies). The amount of doubtful receivables from customers is entered under the item of Receivables value adjustment. In this way, receivables from customers continue to be recorded in the analytic bookkeeping of customers, thus allowing for customers' total debts to be continually identifiable from accounting records and all collection activities and measures to be taken. At the end of the year, all receivables on ordinary account which are deemed to be uncollectable through ordinary procedure (future executions, amounts below HRK 1.000,00, receivables overdue for more than 3 years, out-of-court, court settlements etc.) are recorded in the doubtful collection account. When all collection activities and measures are exhausted, a write-off proposal is submitted to the Management Board. The final writing-off of receivables from customers, if any, (removal from the books) shall be based on prior decision by the Management Board. Receivables are written off in the books as of the date of the Decision. Financial statements 30 THE PORT OF RIJEKA AUTHORITY - RIJEKA 6.8. PREPAYMENTS The purchase value of assets activated up to December 31st 2007 in compliance with the Decree, and financed out of credit funds is disclosed by the Port Authority under Prepayments. Owing to the fact that the purchase cost for the mentioned assets was not recorded because the funds had not been secured either from the budget, or from own funds, it was decided for the fixed assets procured in that period and financed by loan, to be disclosed under deferred expenses and within sources corresponding to ownership. Those assets being not subject to depreciation, but instead their value will be adjusted according to their useful life in the future period whereby reducing assets, the Port Authority will, in accordance with the amount of capital repayment adjusted by exchange rate differences, reduce prepayments and increase the current operating expenses, entered under the item of other not specified expenses, which will be confronted with the inflow of funds for capital repayment, whereby the result will only be influenced by the exchange rate difference referring to the less remitted funds. In terms of exchange rate differences resulting from due and paid annuities for the long-term loan granted by the Exim Bank Korea, already used in full, and the assets thereby funded which were activated by December 31st 2007, the Port Authority has reduced the exchange rate differences accumulated under accrued interest and other assets/liabilities either by crediting incomes or by debiting expenses based on exchange rate differences. For the loan HR 47150 that was used in full in 2011 (completely repaid in 2018 - Note 8.2.) and the loan HR 47151 with the last drawing in 2012 (in repayment since 2011), in 2012 the Port Authority defined the historic exchange rate policy in order to avoid the impact of exchange rate differences upon repayment of the loan financed out of RC budget-based subsidies. The same applies to the Sub-loan (IBRD – welfare programme for Luka d.d. Rijeka), the funds being provided for by Luka Rijeka d.d. 7. CONTRACTUAL AND SIMILAR RELATIONS LIKELY TO BECOME EITHER LIABILITIES OR ASSETS, PROVIDED SATISFACTION OF CERTAIN REQUIREMENTS (LETTERS OF CREDIT, MORTGAGES, COURT ACTIONS IN PROGRESS) Possible receivable Active legal actions Conditioned by Probability amount Enforceable Defendants – physical entities 953.438 50% judgments Enforceable Defendants – Legal entities 1.563.692 50% judgments Out-of-Court Settlements 0,00 n/o n/o Taking into consideration the probability of TOTAL POSSIBLE ASSETS 2.517.130 occurrence 1.258.565 kn Financial statements 31 THE PORT OF RIJEKA AUTHORITY - RIJEKA Possible liability I. Active legal actions Conditioned by Probability amount Enforceable Prosecutors – Legal entities 18.964.542 20% judgments Possible liability II. Passive legal actions Conditioned by amount Enforceable Prosecutors – Legal entities 16.000.000 10% judgments Taking into consideration the probability of TOTAL POSSIBLE 34.964.542 occurrence LIABILITIES 5.392.908 kn 8. POSITION AND MATURITY DATES FOR LONG-TERM AND SHORT-TERM LOANS AND FINANCIAL LEASING 8.1. LOAN AGREEMENT NO. HRV-1, SIGNED ON JANUARY 16th 2001 1. Loan amount: 44.169.062.930 Korean Won (counter value of 34 540 000 USD) 2. Repayment term: 25 years, inclusive of 7 year grace period 3. Interest rate: fixed at 3.5% 4. Repayment annuities and Semestral annuities becoming due on February 20th and August maturity: 20th each year (the first annuity was due on August 20th 2008, and the last one will be due on February 20th 2026) 5. Loan amount used 44.169.062.930,00 Korean Won 6. Repaid principal up to 31.12.2018 25.765.292.930,00 Korean Won 7. Non-repaid principal as at 31.12.2018 18.403.770.000,00 Korean Won = 106.741.866,00 HRK 8.2. LOAN AGREEMENT NO. 4715 HR, SIGNED ON JULY 12th 2003 1. Loan amount: 55 100 000,00 USD 2. Repayment term: 15 years, inclusive of 5 year grace period 3. Interest rate: Variable interest rate (semestral LIBOR on USD) 4. Repayment annuities and Semestral annuities becoming due on June 15th and December maturity: 15th each year (the first annuity was due on December 15th 2008, and the last one will be due on June 15th 2018) 5. Total loan amount used 55.100.000,00 USD 6. Repaid up to 31.12.2018 55.100.000,00 USD 7. Non-repaid principal as at 31. 12.2018 0,00 USD Financial statements 32 THE PORT OF RIJEKA AUTHORITY - RIJEKA 8.3. LOAN AGREEMENT NO. 4715-1 HR, SIGNED ON JUNE 11th 2007 1. Loan amount: 35 300 000,00 EUR 2. Repayment term: 13 years, inclusive of 4 year grace period 3. Interest rate: Variable interest rate (EURIBOR + variable margin) 4. Repayment annuities and Semestral annuities becoming due on April 15th and October maturity: 15th each year (the first annuity was due on October 15th 2011, and the last one will be due on April 15th 2020) 5. Total loan amount used 19.045.288,89 EUR 6. Total not used 1.254.711,11 EUR 7. Repaid up to 31.12.2018 15.619.440,78 EUR 8. Cancelled loan portion 15.000.000,00 EUR 9. Non-repaid principal 3.425.848,11 EUR = 25.411.485,29 HRK as at 31. 12.2018 8.4. LOAN AGREEMENT NO.7638 HR, SIGNED ON APRIL 17th 2009 1. Loan amount: 84 000 000,00 EUR 2. Repayment term: 23 years, inclusive of 10 years' grace period 3. Interest rate: Variable interest rate (EURIBOR + variable margin) Semestral annuities becoming due on March 15th and September 4. Repayment annuities and 15th each year maturity: (the first annuity will be due on March 15th 2019, and the last one on September 15th 2031) 5. Total loan amount used as at 31.12.2018 82.584.364,43 EUR 6. Total not used as at 31.12.2018 1.415.635,57 EUR 7. Repaid up to 31.12.2018 0,00 EUR 8. Non-repaid principal 82.584.364,43 EUR = 612.575.716,99 HRK As at 31.12.2018 9. ABBREVIATED BALANCE SHEET AND STATEMENT OF INCOME AND EXPENDITURE In the introduction, there are the Balance Sheet and Statement of Income and Expenditure presented in the form prescribed by the law. Since the Law and the accompanying by-laws do not prescribe presentation of abbreviated accounts held on record by the Entity, it is for easier reference that abbreviated forms of the balance sheet and statement of income and expenditure are presented in this note, displaying only the totalled items from official forms and only those ones containing balances or transactions. Details of such totalled accounts are presented in the notes to follow. Financial statements 33 THE PORT OF RIJEKA AUTHORITY - RIJEKA BALANCE SHEET Key to Position as at Position as at Index Chart of DESCRIPTION AOP Accounts January 1st December 31st (5/4) 1 2 3 4 5 6 ASSETS ASSETS (AOP 002+074) 001 1.856.432.791 2.015.187.459 108,6 Non-financial assets 0 002 1.552.623.538 1.675.188.532 107,9 (AOP 003+018+047+051+055+064) Non-produced fixed assets 01 003 214.936.998 212.720.769 99,0 (AOP 004+008-017) Tangibles – natural resources 011 004 209.861.063 209.861.063 100,0 (AOP 005 to 007) 012 Intangible assets (AOP 009 to 016) 008 57.942.141 58.035.946 100,2 019 Provisions for non-produced fixed assets 017 52.866.206 55.176.240 104,4 Produced fixed assets 02 018 681.687.448 665.087.005 97,6 (AOP 019+023+031+034+039+042-046) 021 Civil engineering structures (AOP 020 to 022) 019 2.596.999.044 2.602.410.250 100,2 Plant & Equipment 022 023 519.813.046 515.692.561 99,2 (AOP 024 to 030) 023 Means of transport (AOP 032+033) 031 3.791.311 2.521.175 66,5 Intangible produced assets 026 042 2.989.589 3.326.751 111,3 (AOP 043 to 045) 029 Provisions for produced fixed assets 046 2.441.905.542 2.458.863.732 100,7 Precious metals and other values in custody (AOP 03 047 2.575.691 2.575.691 100,0 048) Precious metals and other values in custody 031 048 2.575.691 2.575.691 100,0 (AOP 049+050) 04 Small inventory (AOP 052+053-054) 051 0 0 - 042 Small inventory in use 053 389.543 365.301 93,8 049 Provisions for small inventory 054 389.543 365.301 93,8 Non-financial assets in progress 05 055 653.423.401 794.805.067 121,6 (AOP 056 to 059+062+063) 051 Building structures in progress 056 633.957.815 766.037.719 120,8 052 Plant & equipment in progress 057 265.119 789.620 297,8 056 Other non-financial assets in progress 063 19.200.467 27.977.728 145,7 Financial assets 1 074 303.809.253 339.998.927 111,9 (AOP 075+083+100+105+125+133+142) Cash in bank and in hand 11 075 90.070.847 130.763.494 145,2 (AOP 076+080+081+082) 111 Cash in bank (AOP 077 to 079) 076 90.026.642 130.738.021 145,2 113 Cash in hand 081 44.205 25.473 57624,7 Deposits, escrow accounts and receivables from 12 employees, prepaid taxes etc. 083 56.555.704 77.768.583 137,5 (AOP 084+087+088+089+095) Deposits in banks and other financial institutions (AOP 121 084 29.001 29.064 100,2 085+086) 123 Receivables from employees 088 0 1.190 - Receivables for prepaid taxes and contributions (AOP 124 089 0 92 - 090 to 094) 129 Other receivables (AOP 096 to 099) 096 56.526.703 77.738.237 137,5 13 Loans (AOP 101+102+103-104) 100 16.071.172 9.843.745 61,3 132 Loans to legal entities - contractors 102 16.071.172 9.843.745 61,3 Financial statements 34 THE PORT OF RIJEKA AUTHORITY - RIJEKA Key to Position as at Position as at Index Chart of DESCRIPTION AOP Accounts January 1st December 31st (5/4) Receivables for income 16 133 9.916.314 9.056.210 91,3 (AOP 134 to 137+140-141) 161 Receivables from customers 134 12.986.383 11.859.695 91,3 163 Receivables for incomes under special legal provisions 136 283.986 299.872 105,6 Receivables for incomes from assets 164 137 7.605 1.871 24,6 (AOP 138+139) 169 Provisions for receivables 141 3.361.660 3.105.228 92,4 Prepayments and accrued income 19 142 131.195.216 112.566.895 85,8 (AOP 143+144) 191 Prepayments 143 131.195.216 112.566.895 85,8 LIABILITIES AND OWN SOURCES LIABILITIES AND RESERVES (AOP 146+195) 145 1.763.970.866 1.856.432.792 105,2 2 Liabilities (AOP 147+174+182+190) 146 1.856.432.792 2.015.187.459 108,6 Liabilities for expenditures 24 147 1.297.290.706 1.450.686.842 111,8 (AOP 148+156+164+168+169+170) Liabilities for employees 241 148 138.298.171 222.835.914 161,1 (AOP 149 to 155) 242 Liabilities for material expenses (AOP 157 to 163 ) 156 493.805 799.447 161,9 Liabilities for financial expenses 244 164 49.959.286 73.458.227 147,0 (AOP 165 to 167) 249 Other liabilities (AOP 171 to 173) 170 1.612.007 1.380.369 85,6 Liabilities for loans and credits 26 182 86.233.073 147.197.871 170,7 (AOP 183+186-189) Liabilities for bank and other creditors' loans 261 183 683.948.915 744.729.068 108,9 (AOP 184+185) Liabilities for commodity loans and other loans (AOP 262 186 683.674.869 744.729.068 108,9 187+188) Accrued expenses and deferred income 29 190 274.046 0 0,0 (AOP 191+192) 292 Deferred incomes (AOP 193+194) 192 475.043.620 483.121.860 101,7 5 Own sources (AOP 196+199-200) 195 559.142.086 564.500.617 101,0 51 Own sources (AOP 197+198) 196 447.085.143 436.949.916 97,7 511 Own sources 197 447.085.143 436.949.916 97,7 5221 Surplus income 199 112.056.943 127.550.701 113,8 5222 Deficit income 200 - Financial statements 35 THE PORT OF RIJEKA AUTHORITY - RIJEKA STATEMENT OF INCOME AND EXPENDITURES Key to Chart Accounting Index of DESCRIPTION AOP Previous year year (5/4) Accts. 1 2 3 4 5 6 INCOME INCOME (AOP 3 001 101.489.301 94.265.650 92,9 002+005+008+011+024+040+049) Income from traded goods and services 31 002 74.718.495 77.661.512 103,9 (AOP 003+004) Income under special legal provisions 33 008 1.529 0 0 (AOP 009+010) 34 Income from assets (AOP 012+021) 011 9.103.683 5.232.349 57,5 341 Income from financial assets (AOP 013 to 020) 012 8.266.419 4.340.904 52,5 Income from non-financial assets (AOP 342 021 837.264 891.445 106,5 022+023) 35 Income from donations (AOP 025+028 to 031) 024 15.771.226 10.074.404 63,9 Income from donations out of the budget 351 025 15.241.844 8.398.698 55,1 (AOP 026+029) Income from foreign governments and 352 030 479.382 1.645.706 343,3 international organisations (AOP 031+032 Income from companies and other legal entities 353 033 50.000 30.000 60,0 (AOP 034+035) 36 Other Income (AOP 033+036+037) 040 1.894.368 1.297.385 68,5 Income from damages and refunds claimed 361 041 1.771.878 982.281 55,4 (AOP 042+043) 362 Income from fixed assets sold 044 9.100 149.747 1.645,6 363 Other Income (AOP 046 do 048) 045 113.390 165.357 145,8 EXPENDITURES EXPENDITURES 054 82.445.627 78.771.892 95,5 (AOP 055+067+108+109+120+128+139) 41 Expenses for employees (AOP 056+061+062) 055 10.286.677 11.024.898 107,2 411 Salaries (AOP 057 to 060) 056 8.556.615 8.465.910 98,9 412 Other expenses for employees 061 324.634 1.173.035 361,3 413 Contributions on salaries (AOP 033 to 066) 062 1.405.428 1.385.953 98,6 Material expenses 42 067 18.517.783 25.247.580 136,3 (AOP 068+072+077+082+087+097+102) Cost reimbursement to employees 421 068 648.346 617.895 95,3 (AOP 069 do 071 Remuneration to members of represent. and 422 executive bodies, committees and the like 072 293.975 313.658 106,7 (AOP 073 do 076) Remunerations to other persons outside 424 082 2.051 1.293 63,0 employment contract (AOP 083 do 086) 425 Expenses for services (AOP 098 do 096) 087 14.216.931 20.752.464 146,0 Expenses for material and energy (AOP 098 do 426 097 1.974.706 2.340.731 118,5 101) 429 Other material expenses (AOP 103 do 107) 102 1.381.774 1.221.539 88,4 43 Depreciation expenses 108 17.637.841 15.364.753 87,1 Financial statements 36 THE PORT OF RIJEKA AUTHORITY - RIJEKA 44 Financial expenses (AOP 110+111+115) 109 14.208.103 9.134.085 64,3 Interest for loans and credits received (AOP 442 111 5.261.858 3.983.496 75,7 112 to 114) 443 Other financial expenses (AOP 116 do 119) 115 8.946.245 5.150.589 57,6 45 Donations (AOP 121+125) 120 0 1.000.000 - 451 Donations in course (AOP 122 do 124) 121 0 1.000.000 - 46 Other expenses (AOP 129+134) 128 21.795.223 17.000.576 78,0 462 Other expenses (AOP 135 do 138) 134 21.795.223 17.000.576 78,0 TOTAL EXPENDITURES 148 82.445.627 78.771.892 95,5 (AOP 054-146 ili 054+147) INCOME SURPLUS (AOP 001-148) 149 19.043.674 15.493.758 81,4 10. NOTES TO THE 'BIL-NPF' FORM ITEMS 10.1. NON-PRODUCED FIXED ASSETS (AOP 004+008-017) (AOP 003) 10.1.1. Basic table ITEM AOP 2017 2018 Change % Land 005 209.861.063 209.861.063 100,0 Licences 011 599.596 620.277 103,4 Other rights 012 1.131.220 1.131.220 100,0 Development expenses 015 49.419.540 49.492.665 100,1 Other intangibles 016 6.791.785 6.791.784 100,0 Provisions for non-produced fixed assets 017 (52.866.206) (55.176.240) 104,4 TOTAL 214.936.998 212.720.769 99,0 10.1.2. Basic table with turnover As at Jan 1st As at Dec 31st ITEM AOP Increase Decrease current year current year Land 005 209.861.063 209.861.063 Licences 011 599.596 20.681 620.277 Other rights 012 1.131.220 1.131.220 Development expenses 015 49.419.540 73.125 49.492.665 Other intangibles 016 6.791.784 6.791.784 Provisions for non-produced fixed 017 (52.866.206) (2.310.034) (55.176.240) assets TOTAL 214.936.997 (2.216.228) 0 212.720.769 Financial statements 37 THE PORT OF RIJEKA AUTHORITY - RIJEKA 10.2. PRODUCED FIXED ASSETS (AOP 019+023+031+034+039+042-046) (AOP 018) 10.2.1. Basic table ITEM AOP 2017 2018 Change % Business premises 021 378.177.980 378.239.605 100,0 Other Civil engineering structures 022 2.218.821.064 2.224.170.645 100,2 Office equipment & furniture 024 17.764.513 13.384.656 75,3 Communication equipment 025 2.434.107 2.423.259 99,6 Maintenance & Protection equipment 026 2.437.999 2.510.091 103,0 Instruments, Devices & machinery 028 1.307 1.307 100,0 Devices, Plant & equipment for other 030 497.175.120 497.373.248 100,0 purposes Road means of transport 032 2.067.247 797.111 38,6 Other means of transport 033 1.724.064 1.724.064 100,0 Investments in computer programs 043 2.989.589 3.326.751 111,3 Provisions for produced fixed assets 046 (2.441.905.542) (2.458.863.732) 100,7 TOTAL 681.687.448 665.087.005 97,6 10.2.2. Basic table with turnover As at Jan 1st As at Dec 31st ITEM AOP Increase Decrease current year current year Business premises 021 378.177.980 61.625 378.239.605 Other Civil engineering structures 022 2.218.821.064 5.349.581 2.224.170.645 Office equipment & furniture 024 17.764.513 354.028 4.733.885 13.384.656 Communication equipment 025 2.434.107 10.848 2.423.259 Maintenance & Protection 026 2.437.999 72.092 2.510.091 equipment Instruments, Devices & machinery 028 1.307 1.307 Devices, machinery & equipment 030 497.175.120 198.128 497.373.248 for other purposes Road means of transport 032 2.067.247 217.398 1.487.534 797.111 Other means of transport 033 1.724.064 1.724.064 Investments in computer programs 043 2.989.589 337.162 3.326.751 (2.441.905.54 Provisions for produced fixed assets 046 (23.255.193) (6.297.003) (2.458.863.732) 2) TOTAL 681.687.448 (16.665.179) (64.736) 665.087.005 10.2.2.1. Explanation Value of Other civil engineering structures (AOP 22) has been increased in 2018 in the amount of HRK 5.349.581. The increase is mostly the result of investment in port Omišalj – Janaf (HRK 5.246.343), while the reduction in editorial equipment and furniture was due to the disposal of useless equipment. Financial statements 38 THE PORT OF RIJEKA AUTHORITY - RIJEKA 10.3. PRECIOUS METALS AND OTHER VALUES IN CUSTODY (AOP 048) (AOP 047) 10.3.1. Basic table ITEM AOP 2017 2018 Change % Books, art pieces and similar values in 050 2.575.691 2.575.691 100,0 custody TOTAL 2.575.691 2.575.691 100,00 10.3.1.1. Explanation Item AOP 50 refers to two cranes at the Rijeka breakwater, proclaimed pieces of protected cultural monuments by the Ministry of Culture Decree UP-1-612-08/06-06/0162 of March 23rd 2006 and letter from the Heritage authority of Rijeka Cl: 612-08/14-05/0046 of Feb 10th 2014. 10.4. SMALL INVENTORY (AOP 052+053-054) (051) 10.4.1. Basic table ITEM AOP 2017 2018 Change % Small inventory in use 053 389.543 365.301 93,8 Value adjustment for small inventory 054 389.543 365.301 93.8 TOTAL 0 0 - 10.5. NON-FINANCIAL ASSETS IN PROGRESS (AOP 056 DO 059+062+063) (055) 10.5.1. Basic table ITEM AOP 2017 2018 Change % Buildings/construction in progress 056 633.957.815 766.037.719 120,8 Plant & equipment in preparation 057 265.119 789.620 297,8 Other non-financial assets in progress 063 19.200.467 27.977.728 145.7 TOTAL 653.423.401 794.805.067 121,6 Financial statements 39 THE PORT OF RIJEKA AUTHORITY - RIJEKA 10.5.2. Basic table with turnover DESCRIPTION 2017 Increase Decrease 2018 Construction of Zagreb coast 631.462.680 125.480.585 0 756.943.265 Construction of CT Brajdica 5.050.767 7.721.241 0 12.772.008 Infrastructure upgrade on Raša terminal 529.909 51.750 0 581.659 Removal of alluvial material Raša 0 4.866.490 0 4.866.490 Infrastructure upgrade on Bakar terminal 31.479 0 0 31.479 Infrastructure upgrade in Rijeka pool 182.129 0 0 182.129 IT system of port community (PCS) 385.868 524.501 0 910.369 Development of 'Delta' and 'Porto Baroš' (Urban redev.) 10.518.296 0 0 10.518.296 Plant & equipment in progress 265.119 881.611 881.611 265.119 Development of environment protection system 772.013 276.961 0 1.048.974 One time fee and intercalate interest on IRBD loan 2.074.858 0 0 2.074.858 Other non-financial assets in progress 2.150.283 8.330.422 5.870.284 4.610.421 TOTAL 653.423.401 148.133.561 6.751.895 794.805.067 Increase in non-financial assets in progress mostly results from investment in the documentation and the construction of Zagreb coast (HRK 125 mil.), investment in JANAF infrastructure (HRK 5,2 mil.), project documentation for deepening draught on Brajdica and Brajdica railway station (HRK 4,8 mil.) and purchased equipment. Decrease in non-financial assets in progress is mostly the result of transferring into use i.e. activation of investment in JANAF infrastructure (HRK 5,2 mil.) and activation of purchased equipment (see Note 10.2.2 During 2018 there were no changes in the One-time fee and intercalar interest on IBRD loan No. 7638 HR because they are no longer added to the principal, in accordance with the Contract. Accrued and paid interest are reported within expenses of the current period (see Note 6.4.). During 2018 no changes in items referring to investment in development of Delta and Porto Baroš (Development of city-port interface – Urban redevelopment). The Porto Baroš area is excluded from the port area managed by the Port Authority of Rijeka by the decision of the Government of the Republic of Croatia (Official Gazette No. 72/2018 of 08.08.2018), while the concept of the future development of Delta, or agreement on further activities to accelerate the realization of the project in progress. Financial statements 40 THE PORT OF RIJEKA AUTHORITY - RIJEKA 10.6. CASH IN BANKS AND IN HAND (AOP 076+080+081+082) (AOP 075) 10.6.1. Basic table ITEM AOP 2017 2018 Change % Cash in national commercial banks 077 90.026.642 130.738.021 145,2 Cash in hand 081 44.205 25.473 57,6 TOTAL 90.070.847 130.763.494 145,2 10.6.1.1. Explanation Bank accounts of the Port Authority mostly contain own funds (HRK 73.4 mil), a significant portion of the funds are related to the financing of EU funds projects (HRK 23 mil), and the funds in the project account opened for the realization of the Rijeka Gateway Project (HRK 34.3 mil.). In order to withdraw the loan within the agreed deadline (until 31 December 2018), the bank has proposed a retroactive increase in the percentage of loan utilization no. 7638 HR. Subsequent retrospective withdrawal from the loan up to 95% of the expenditures from 2017 was made in October 2018 in the amount of EUR 4.5 million (33,832,789.13 kuna was allocated to the project account of the Port Authority on 23 October 2018.). 10.7. DEPOSITS, ESCROW ACCOUNTS AND RECEIVABLES FROM EMPLOYEES, PREPAID TAXES AND THE LIKE (AOP 084+087+088+089+095) (AOP 083) 10.7.1. Basic table ITEM AOP 2017 2018 Change % Deposits at national banks and other 085 29.001 29.064 100,2 financial institutions Receivables from employees 088 0 1.190 - Receivables for prepaid taxes 090 0 92 - Receivables for refundable damages 096 13.482 26.652 197,7 prepaid Receivables for advances paid 098 56.513.221 76.579.782 135,5 Other non-specified receivables 099 0 1.131.803 - TOTAL 56.555.704 77.768.583 137,5 Financial statements 41 THE PORT OF RIJEKA AUTHORITY - RIJEKA 10.7.1.1. Explanation Receivables for advances paid (AOP 098) in the largest amount (HRK 68, 4 mil.) refer to the advances to the partner in projects funded under the CEF (Connecting Europe Instrument): 48,3 Million Euros for the Infrastructure Improvement project Rijeka Port - Container Terminal Zagreb Harbor (partner in project: HŽ Infrastruktura), HRK 13,4 mil, for the project Infrastructure upgrading at Rijeka port - Rijeka pool (partner in project: Luka Rijeka dd), and 6,7 mil. for the project Improvement of infrastructure in Rijeka - terminal for bulk cargo in Bakar (partner in project: Luka Rijeka dd). 10.8. LOANS (AOP 101+102+103-104 (AOP 100) 10.8.1. Basic table ITEM AOP 2017 2018 Change % Loans to legal entities - entrepreneurs 102 16.071.172 9.843.745 61,3 TOTAL 16.071.172 9.843.745 61,3 10.8.1.1. Explanation The value of loans in 2018 is lower (AOP 100) due to the repayment of loans granted to the Port of Rijeka (Luka Rijeka d.d. – the IBRD sub-loan and Fantuzzi crane). This item presents long-term and short-term receivables from Luka Rijeka d.d., Rijeka for the portion of the IBRD sub-loan used for investments in respect of the Luka Rijeka d.d. welfare plan, severance pays to employees, consulting services, and for port mobile cranes, at the mean rate of exchange ruling in the Croatian National Bank (HNB) on December 31st 2018. Due portion of exchange rate differences is allocated to accrued expenses. 10.9. RECEIVABLES FOR INCOMES (AOP 134 DO 137+140-141) (AOP 133) 10.9.1. Basic table ITEM AOP 2017 2018 Change % Trade receivables 134 12.986.383 11.859.695 91,3 Receivables for incomes under special 136 283.986 299.872 105,6 legal provisions Receivables for incomes from financial 138 7.605 1.871 24,6 assets Value adjustment for receivables 141 (3.361.660) (3.105.228) 92,4 TOTAL 9.916.314 9.056.210 91,3 Financial statements 42 THE PORT OF RIJEKA AUTHORITY - RIJEKA 10.9.1.1. Explanation Receivables for income as at 31 December 2018 amount to HRK 9.056.210 and mainly refer to receivables from customers. The increase in receivables for incomes under special legal provisions (AOP 136) refers to receivables from international financial institutions (EU projects). During the year HRK 163.581 of previously value adjusted receivables has been collected. In accordance with the accounting policy explained in point 6.7 all receivables that, in accordance with the stated criteria, become receivables with doubtful collection are adjusted in order to report them objectively and realistically. As seen in the table, HRK 11.859.695, out of total HRK 3.105.228, are categorised as being difficult to collect that were reported in the result of previous periods because they are considered as expenses of those periods. Since legal collection procedures have been started with regard to the stated adjusted receivables, these receivables are recorded as such until their collection or written-off when the collection becomes unatainable in accordance with the suggestions of the Director and based on a decision of the Management Board. 10.10. PREPAYMENTS AND ACCRUED INCOME (AOP 143+144) (AOP 142) 10.10.1. Basic table ITEM AOP 2017 2018 Change % Prepayments 143 131.195.216 112.566.895 85,8 TOTAL 131.195.216 112.566.895 85,8 10.10.1.1. Explanation Under prepayments, the Port Authority reports the purchase value of assets activated up to December 31st 2007 in compliance with the Decree, which had been funded by loans. For more details see Note 6.8. 10.10.2. Basic table with turnover As at Jan 1st As at Dec 31st ITEM AOP Increase Decrease current year current year Prepayments 143 131.195.216 18.628.321 112.566.895 TOTAL 131.195.216 112.566.895 Financial statements 43 THE PORT OF RIJEKA AUTHORITY - RIJEKA 10.11. LIABILITIES FOR EXPENSES (AOP 148+156+164+168+169+170) (AOP 147) 10.11.1. Basic table ITEM AOP 2017 2018 Change % Liabilities for salaries – net 149 315.716 468.481 148,4 Liabilities for fringe benefits – net 150 0 4.977 - Liabilities for income tax and surtax 152 24.027 77.996 324,6 from salaries Liabilities for contributions from salaries 153 84.936 136.596 160,8 Liabilities for contributions on salaries 154 69.126 111.397 161,2 Other liabilities for employees 155 - Reimbursement of expenses to 157 20.023 16.945 84,6 employees Fees to representative and executive 158 26.092 26.092 100,0 body members, committees, etc. Fees to volunteers 159 - Liabilities toward suppliers at home 161 4.457.873 12.439.631 279,0 Liabilities toward suppliers abroad 162 45.455.298 60.975.559 134,1 Liabilities for interest on loans and 166 1.612.007 1.380.369 85,6 credits received Liabilities for VAT 172 1.442.078 4.465.549 309,7 Liabilities for advances, deposits, received escrow accounts and other non- 173 84.790.995 142.732.322 168,3 specified liabilities TOTAL 138.298.171 222.835.914 161,1 10.11.1.1. Explanation Trade payables (AOP 147) have increased by HRK 84.5 million compared to 2017. Most significant increase (HRK 57,9 mil) refers to Liabilities for advances (AOP 173). Of this, the amount of 33.8 million is budget funds allocated to the project account Port Authority Rijeka on 23.10.2018. based on a retroactive withdrawal of the loan up to 95% of costs from 2017. (see Note 10.6.1.1), while HRK 24.1 million are advance payments from the EU projects financed from CEF funds. Increase in domestic trade payables (AOP 161) compared to 2017 is the result of liabilities as at 31 December 2018 according to the performance of works at Brajdica for works done in December 2018. Foreign trade payables (AOP 162) have increased by HRK 15.5 million compared to 2017. It is a liability on 31.12.2018. according to the contractors of the works on the Zagreb coast based on the situation for works carried out in December 2018 and the amount retained. Financial statements 44 THE PORT OF RIJEKA AUTHORITY - RIJEKA 10.12. LIABILITIES FOR CREDITS AND LOANS (AOP 183+186-189) (AOP 182) 10.12.1. Basic table ITEM AOP 2017 2018 Change % Liabilities for loans from abroad 185 683.674.869 744.729.068 108,9 Liabilities for loans at home 187 274.046 0 0,0 TOTAL 683.948.915 744.729.068 108,9 10.12.1.1. Explanation Liabilities for loans from abroad (AOP 185) – see Note 8. 10.12.2. Basic table with turnover As at Jan 1st As at Dec 31st ITEM AOP Increase Decrease current year current year Liabilities for loans from abroad 185 683.674.869 108.145.195 47.090.996 744.729.068 Liabilities for loans at home 187 274.046 274.046 0 TOTAL 683.948.915 108.145.195 47.365.042 744.729.068 10.13. ACCRUED EXPENSES AND DEFERRED INCOME (AOP 191+192) (AOP 190) 10.13.1. Basic table ITEM AOP 2017 2018 Change % Deferred income 194 475.043.620 483.121.860 101,7 TOTAL 475.043.620 483.121.860 101,7 10.13.1.1. Explanation Accrued expenses and deferred income contain: expenses which have not yet been invoiced and are recorded as a current period liability, and income which has been collected and are recorded as a current period income yet referring to the next accounting period. Deferred income mostly refers to grants received for procurement of non-financial assets funded from outside sources (State Budget and EU funds), in respect of which income recording will commence at the moment such assets are put to use, in proportion to depreciation costs, with a neutral effect on depreciation expenses as well as on the Port Authority operating activities in those amounts. Financial statements 45 THE PORT OF RIJEKA AUTHORITY - RIJEKA 10.13.2. Basic table with turnover As at Jan 1st As at Dec 31st ITEM AOP Increase Decrease current year current year Deferred income 194 475.043.620 16.375.949 8.297.709 483.121.860 TOTAL 475.043.620 16.375.949 8.297.709 483.121.860 10.13.2.1. Explanation The majority of increase of this item in 2018 refers to deffered income from the RC State Budget for capital donations (domestic share in the financing of the project Rijeka Gateway II) – HRK 5.046.268, for current donations for repayment of World Bank loans of HRK 27,328,066, and for capital donations for domestic financing for projects co-financed from EU funds 1,099,947 HRK. Deffered income from EU for capital donations amount to HRK 6,637,409. The remaining amount refers to deferred income of foreign exchange differences in accordance with section 6.2. Deffered income was decreased by HRK 8.297.709 in accordance to depreciation and reported as income in the same amount. The domestic share in financing investments in RGP II was reduced (see Note 10.6.1.1). 10.14. RESERVES (AOP 197+199) (AOP 196) 10.14.1. Basic table ITEM AOP 2017 2018 Change % Reserves 197 447.085.143 436.949.916 97,7 Income surplus 199 112.056.943 127.550.701 113,8 TOTAL 559.142.086 564.500.617 101,0 10.14.1.1. Explanation Own sources for 2018 are almost at the same level as last year (AOP 197), whereas the Income surplus (AOP 199) records a 13,8% increase, resulting from the balance between total income and expenditures. 10.14.2. Basic table with turnover As at Dec As at Jan 1st ITEM AOP Increase Decrease 31st current current year year Reserves 197 447.085.143 64.736 10.199.963 436.949.916 Income surplus 199 112.056.943 34.537.432 19.043.674 127.550.701 TOTAL 559.142.086 34.602.168 29.243.637 564.500.617 Financial statements 46 THE PORT OF RIJEKA AUTHORITY - RIJEKA 10.14.2.1. Explanation The increase is explained in the previous point and the decrease refers to reported depreciation for assets procured before January 1st 2008. For more details see point 6.3. 11. NOTES TO ITEMS OF THE (I-E-NP) ‘PR-RAS-NPF’ FORM 2018 Pursuant to provisions from the Rulebook on reporting for non-profit accounting (Official Gazette No. 31/15, 67/17, 115/18) the Notes to the Statement of Income and Expenditure further clarify the reasons for major departures occurred in comparison with the business result for the preceding year. 11.1. INCOME FROM TRADED GOODS AND PROVIDED SERVICES (AOP 002) 11.1.1. Basic table ITEM AOP 2017 2018 Change % Income from provided services 004 74.718.495 77.661.512 103,9 TOTAL 74.718.495 77.661.512 103,9 11.1.1.1. Explanation 2017 2018 Index CARGO TYPES in tonnes in tonnes 2017/16 1. General cargo 561.730 464.006 83 2. Bulk cargo 1.547.797 1.655.261 107 3. Timber 361.805 351.621 97 Total 1 - 3 2.471.332 2.470.888 100 4. Container cargo (Jadranska vrata-Adriatic Gate) 2.069.992 2.241.776 108 5. Container cargo (Port of Rijeka) 75.906 63.534 84 TEU 249.975 260.375 104 Total 1 – 5 4.617.230 4.776.198 103 6. Jadranski naftovod (JANAF) (oil pipeline) 7.997.836 8.8628.586 108 TOTAL 1 – 6 12.615.066 13.404.784 106 In 2018, the total turnover at the port of Rijeka amounted to 13.404.784 tonnes, which is by 6,3% more than in the previous year, when it was 249.975 TEU due to container traffic of company Jadranska vrata d.d. (2,2 million tonnes) and company Janaf d.d.(8,8 million tonnes) Brajdica's container traffic in 2018 was 227,375 TEU units, or 2.241.776 tons, which is by 8.3% better than the end of 2017, in which, for the first time in history at Brajdica, was reloaded more than 200 thousand containers. This result contributed to an increase of 14.88 meters for the operational shore, as Financial statements 47 THE PORT OF RIJEKA AUTHORITY - RIJEKA well as the improvement of rail service towards destinations in the interior. In 2018, Janaf d.d. recorded 8,628,586 tons of turnover, i.e. increase of 7.9% compared to 2017, which is the best result in the Company's history. In the traffic of dry cargo, the Port of Rijeka has totaled 4.7 million tonnes and this is the result at the level of 2017, when it amounted to little more than 4.6 million tons of cargo. The largest share of dry cargo growth was recorded in the bulk cargo segment (7% or 1.6 million tons), while the biggest decrease has the traffic of general cargo (-17%) and the container traffic of the company Luka Rijeka d.d. (- 16%). 11.2. INCOME UNDER SPECIAL LEGAL PROVISIONS (AOP 009+010) (AOP 008) 11.2.1. Basic table ITEM AOP 2017 2018 Change % Income under special legal provisions 010 1.529 0 0,0 from other sources TOTAL 1.529 0 0,0 11.3. INCOME FROM ASSETS (AOP 012+021) (AOP 011) 11.3.1. Basic table ITEM AOP 2017 2018 Change % Income from interest on loans granted 013 121.556 27.523 22,6 Interest on term deposits and demand 015 56.255 17.201 30,6 deposits Income from interest on arrears 016 119.434 167.254 140,0 Income from exchange rate yields 017 7.969.174 4.128.926 51,8 Income from lease and rental assets 022 837.264 891.445 106,5 TOTAL 9.103.683 5.232.349 57,5 11.3.1.1. Explanation Income from assets (AOP 11) is lower (by 42,5%) when compared to the 2017. Increase in income from exchange rate gains (AOP 017) related to repayment of the IBRD loan (No.s 47150 and 47151). The above mentioned facts have to be considered in the context of exchange rate losses recorded in the amount of HRK 5.034.616, see Note Financial expenses (11.9.). Financial statements 48 THE PORT OF RIJEKA AUTHORITY - RIJEKA 11.4. INCOME FROM DONATIONS (AOP 025+030+033+036+037) (AOP 024) 11.4.1. Basic table ITEM AOP 2017 2018 Change % Income from donations out of the 026 15.241.844 8.255.557 54,2 government budget Income from donations out of the 027 0 0 - local/regional selfgovernment units Income from donations from the state 028 0 143.141 - budget for EU projects Income from foreign governments and 031 479.382 530.927 110,8 international organizations Income from EU institutions and bodies 032 0 1.114.779 - Income from companies and other legal 034 50.000 30.000 60,0 entities TOTAL 15.771.226 10.074.404 63,9 11.4.1.1. Explanation Out of total amount of donations from the RC State Budget (HRK 8.255.557), HRK 6.339.144 refers to donations based on the transfer of corresponding amount of deferred income based on depreciation of donated assets. The amount of HRK 215.720 refers to donations for paid interest and HRK 1.700.693 refers to income that should be considered in the context of applied accounting policy, point 6.8 related to other expenses, point 11.10 (AOP 138). 11.5. OTHER INCOME (AOP 041+044+045) (AOP 040) 11.5.1. Basic table ITEM AOP 2017 2018 Change % Income from damage indemnities 042 89.360 342.341 383,1 Income from refunds 043 1.682.518 639.940 38,0 Income from fixed assets sold 044 9.100 149.747 1.645,6 Collected written-off receivables 047 113.390 164.314 144,9 Other Income 048 0 1.043 - TOTAL 1.894.368 1.297.385 68,5 11.5.1.1. Explanation In position Income from refunds (AOP 043), refunds for employee expenses and overheads for projects funded from EU funds (projects: Greenersites, Locations and Talknet) are recorded. Financial statements 49 THE PORT OF RIJEKA AUTHORITY - RIJEKA 11.6. EXPENSES FOR EMPLOYEES (AOP 056+061+062) (AOP 055) 11.6.1. Basic table ITEM AOP 2017 2018 Change % Salaries for ordinary work 057 8.556.615 8.465.910 98,9 Other employee-related expenses 061 324.634 1.173.035 361,3 Health insurance contributions 063 1.266.806 1.249.079 98,6 Employment supporting contributions 064 138.622 136.874 98,7 TOTAL 10.286.677 11.024.898 107,2 11.6.1.1. Explanation In the position Other expenses for employeed (AOP 061) there are paid severance payments for employees who have been canceled a contract of employment (due to business reasons) in accordance with the provisions of article 115 paragraph 1 item 1 of the Labor Act, and therefore they are 261,3% higher than the same costs in the previous 2017. Pursuant to the new Rulebook on Internal Organization and Systematic Classification of Jobs, the Harbor Administration has modernized its internal organizational structure to increase efficiency, rationalize operating costs, partly by reducing labor costs. Based on the business-conditioned cancellation or severance payment for 7 employees, the Port Authority of Rijeka realized a saving of approximately 1.613.800 kn, which derives from the difference in total gross salaries that the Port Authority would pay to its employees until the day of the acquisition of full old-age pension and severance pay in the amount of HRK 6.500 net for each completed year of work at the Port Authority of Rijeka. 11.7. MATERIAL EXPENSES (AOP 068+072+077+082+087+097+102) (AOP 067) 11.7.1. Basic table ITEM AOP 2017 2018 Change % Business trips 069 324.798 307.861 94,8 Commutation, field work and subsistence 070 255.400 227.680 89,1 allowances Professional training 071 68.148 82.354 120,8 Remuneration for activity performance 073 293.975 313.658 106,7 Reimbursement of business trip costs and 084 0 1.293 - expenses Remuneration of other expenses 085 2.051 0 Telephone, mail and transport services 088 236.679 228.088 96,4 Regular and investment maintenance 089 5.026.902 8.424.602 167.6 services Promotion and information services 090 479.444 262.333 54,7 Utilities 091 6.598.907 7.936.521 120,3 Rentals 092 99.898 154.167 154,3 Medical and veterinary services 093 2.550 1.750 68,6 Financial statements 50 THE PORT OF RIJEKA AUTHORITY - RIJEKA ITEM AOP 2017 2018 Change % Intellectual and personal services 094 643.333 1.139.964 177,2 Computer services 095 175.838 253.745 144,3 Other services 096 953.380 2.351.294 246,6 Office supplies and other material 098 293.168 306.818 104,7 expense Energy 100 1.672.099 2.024.959 121,1 Small inventory and car tyres 101 9.439 8.954 94,9 Insurance premiums 103 296.368 211.490 71,4 Entertainment expenses 104 122.677 162.586 132,5 Membership fees 105 177.427 174.299 98,2 Registration fees 106 14.559 9.304 63,9 Other not specified material expenses 107 770.743 663.860 86,1 TOTAL 18.517.783 25.247.580 136,3 11.7.1.1. Explanation Material expenses (AOP 067) in 2018 have been increased by 36,3% when compared to 2017. Relatively largest increase/decrease of certain items is provided as follows: Professional employee training (AOP 071) has increased compared to 2017 due to professsional training at the Maritime Faculty for dangerous cargo handling and consultancy due to public procurement. Under Regular and investment maintenance services (AOP 089) the largest amount refers to maintenance of a portion of the Omišalj (Janaf) port which is under the jurisdiction of the Port Authority Rijeka (HRK 1.770.467). Most of the maintenance items should be mentioned: rehabilitation of the coastal construction of the Orlandov gat (HRK 1.108.214), renovation on the coastal construction of the Podbok terminal in Bakar (HRK 926.007), upgrading and repair of radar (HRK 487.487), asphalt works in Rijeka port (HRK 486.911) repair of substations (HRK 389.660 kn), repairs of the lighthouse at the end of the Rijeka shore (HRK 367.956 ), repair of the shore - Torpedo (HRK 235.513 kn), maintenance of submarine installations (HRK 195.571), works on alignment of customs fences and railway entries with Schengen requirements and repair of equipment on the coastal edge (HRK 177.425), restoration of outdoor lighting in the Sušak brakewater (HRK 149.724). Costs of rentals (AOP 092) are mostly related to the rental of the printer (HRK 80.950) and the rental of floating dams in Bršica harbor (HRK 62.054). The increased costs in intelectual and personal services (AOP 094) compared to 2017 is mostly a result of costs of lawyer services and legal counseling and representation in disputes with contractors, while Computer Services (AOP 95) increased 44.3% due to the cost of renewing licenses and the cost of maintaining software. Other services (AOP 96) increased mainly due to the services related to the implementation of projects co-financed by EU funds (1,083,499.78 kn), which are reimbursed from EU funds (link AOP 32), related to the costs of admission cruisers, support costs in applying for EU projects, the cost of environmental assessment with measures for the terminal in Bakar, the cost of upgrading the GIS systems of the Port Authority. The holding of conferences and meetings for projects funded by EU funds as well as hosting of partners reflected on the increase in the cost of representations - these costs are mostly reimbursed from EU funds. Other non specified material expenses (AOP 107) are made up of utility fees and contributions, water management fees and court expenses, fees and similar. Financial statements 51 THE PORT OF RIJEKA AUTHORITY - RIJEKA 11.8. DEPRECIATION EXPENSES (AOP 108) 11.8.1. Basic table ITEM AOP 2017 2018 Change % Depreciation expenses 108 17.637.841 15.364.753 87,1 TOTAL 17.637.841 15.364.753 87,1 11.8.1.1. Explanation For more details see Notes 6.3 and 10.14. 11.9. FINANCIAL EXPENSES (AOP 110+111+115) (AOP 109) 11.9.1. Basic table ITEM AOP 2017 2018 Change % Interest for loans from banks & other 112 5.261.858 3.983.496 75,7 creditors Bank services and payment agency 116 133.640 115.629 86,5 services Exchange rate losses and foreign 117 8.811.616 5.034.910 57,1 currency clause Interest on arrears 118 989 50 5,1 TOTAL 14.208.103 9.134.085 64,3 11.9.1.1. Explanation Interest for loans from banks & other creditors (AOP 112) are less due to lower principal of substantial part of the repaid loans. Exchange rate losses should be viewed in the context of exchange rate gains in the amount of HRK 4.128.936, see note Income from assets (11.3). Financial statements 52 THE PORT OF RIJEKA AUTHORITY - RIJEKA 11.10. OTHER EXPENSES (AOP 129+134) (AOP 128) 11.10.1. Basic table ITEM AOP 2017 2018 Change % Value not written off and other expenses related to alienated or written-off long- 135 12.313 512 4,2 term assets Receivables written off 136 103.728 230.033 221.8 Other non specified expenses 138 21.679.182 16.770.031 77,4 TOTAL 21.795.223 17.000.576 78,0 11.10.1.1. Explanation The AOP 126 item (account 4622 receivables written off) consists of two sub-accounts: - Written-off receivables– sub-account 46221 - Value adjustment for receivables - sub-account 46222. In 2018, receivables written off amount to HRK 652, while the rest of the amount - HRK 229.381 refers to value adjustment for receivables from customers in accordance with the accounting policies described in points 6.7 and 10.9.1.1. Value adjustment of receivables refers to different customers who were either sued by the Port Authority in 2018, or are subject to a pre-bankruptcy settlement or have been envisaged for legal action in 2019. All value adjustments for receivables under item AOP 136 are still being recorded in the analytic bookkeeping for customers and all activities and other collection measures are being carried out since their final writing-off is only possible with prior approval by the Management. Other non specified expenses (AOP 138) are mostly recorded in accordance with the Note 6.8. 11.11. RESULT FOR THE PERIOD – INCOME SURPLUS (AOP 001-133) (AOP 134) 11.11.1. Basic table ITEM AOP 2017 2018 Change % Income surplus – carried forward 151 93.013.270 112.056.943 120,5 Income surplus available in the next 154 112.056.944 127.550.701 113,8 period (AOP 134-135+136-137) INCOME SURPLUS 149 19.043.674 15.493.758 81,4 11.11.1.1. Explanation In 2018, within the previously stated reporting framework, the Port of Rijeka Authority recorded a positive result. Income surplus is 15,493,758 kn and compared to 2017 it is 18.6% lower. Financial statements 53 THE PORT OF RIJEKA AUTHORITY - RIJEKA 12. RISK MANAGEMENT 12.1. CURRENCY RISK Currency risk arises from possible changes in the value of financial instruments as a consequence of changes in foreign exchange rates. The Entity is exposed to changes in EUR and USD values, due to liabilities under the long-term foreign loans having been agreed in foreign currency, and the national ones applying currency clause, whereby the Entity is exposed to currency risks. Such risks are managed through adjustment of inflows from the State Budget with outflows for settlement of long-term loan liabilities, the State having undertaken to provide the funds for this purpose, i.e. for remittance of funds by Luka Rijeka d.d. - Rijeka for the sub-loan. Since port fees are being collected in EUR, the fixed concession fee is expressed in USD and EUR and the variable part of the concession fee being collected in HRK subject to currency clause, the above mentioned currency outflow risk is thus reduced. 12.2. INTEREST RISK Interest risk arises from possible changes in the value of financial instruments as a consequence of changes in market interest rates in relation to interest rates applicable to financial instruments. Due to liabilities under the long-term loans having been subject to variable interest rates, the Entity is consequently exposed to the risk of interest rate changes. Such risks are managed through adjustment of inflows from the State Budget with outflows for payment of interest, the State having undertaken to provide the funds for this purpose, from inflows provided by Luka Rijeka d.d. and out of own funds. 12.3. CREDIT RISK Interest risk arises from possible failure of a party to a financial instrument to meet its liabilities thereby causing financial loss to the other party. Financial assets potentially likely to expose the Entity to credit risk includes cash and receivables from customers. In accordance with its policy, the Entity discloses receivables from customers reduced by provisions for doubtful and disputable receivables. The Entity is exposed to credit risk in respect of the settlement of short-term liabilities that would affect increase in value of value adjustment for provisions in the amount of reduction in the value of customer and other receivables, should the trend of longer payment term for invoiced receivables continue 12.4. LIQUIDITY RISK The liquidity risk, arises from possible failure of the Port Authority to provide funds for settlement of financial instruments-related liabilities. As at December 31st 2018, short-term liabilities of the Entity were covered by short-term receivables. Financial statements 54 THE PORT OF RIJEIG AUTHORIW. RIJEKA I2.4. LIQI,]IDITYRISK The liquidity risk, arises from possible failure ofthe Port Authority to provide firnds for settlement of financial instruments-related liabilities. As at December 3l' 201E. short-term liabilities of the Entitv were covered by short-term receivables. With the cash flow projections in 2019 and the secured grants from the State Budget of tbe RC for 2019 and tte next twoyear perio4 it is estimated that the Port Authtority will have enough monoy to operate in 2019 as well as future periods. Rijeka, February 2tt 2019 Financial statements 55