CONSOLIDATED

MANAGEMENT REPORT

Beginning of the reporting period

End of the reporting period

Business name

Registration number

Legal address

Telephone

Fax

E-mail

Website

Auditor

CONSOLIDATED

MANAGEMENT REPORT

FOR 2025

1 January 2025

31 December 2025

City Service SE

12827710

Narva mnt. 5, 10117 Tallinn,

the Republic of Estonia

+370 5 239 49 00

+370 5 239 48 48

info@cityservice.eu

http://www.cityservice.eu

Ernst & Young Baltic AS

1. Corporate profile

1.1. City Service Group

1.2. Strategy and objectives

1.3. Mission and vision

1.4. Structure of the Group

1.5. Employees

2. Management and Corporate

Governance report

2.1. Main areas of activity

2.1.1. Administration of apartment buildings

2.1.2. Management of commercial building facilities

2.1.3. Maintenance and cleaning of territories

2.1.4. Other activities

2.1.5. Apartment rental and property management

2.2. Performance improvement

2.3. Significant events

2.4. Key risk activity types and uncertainties

2.5. The main financial ratios concerning the financial year

2.6. The structure of the Company’s share capital

2.7. The shareholders of the Company

2.8. Restrictions on the transfer of securities and restrictions on voting rights

2.9. Company’s supervisory board and management board

2.9.1. Company’s supervisory board

2.9.2. Company’s management board

2.10. Dividend policy

2.11. Procedure of amendment of the Statutes of the Company

2.12. Material agreements concluded by the Company which may be important

after change of control of the Company

2.13. Auditing system and description of the main features of internal audit

and risk management systems in connection with the process of the preparation

of the annual accounts

2.14. Information on compliance with the corporate governance code

2.15. Remuneration report

CONTENT

3. Sustainability Statement 2025

About the report

Sustainability governance

Strategy, business model and value chain

Stakeholder engagement

Double materiality assessment

E1 climate change

Climate risk assessment

Eu taxonomy disclosure

S1 own workforce

S2 workers in the value chain

S4 consumers and end-users

G1 business conduct

Indices

104

109

4. Consolidated financial statements

Consolidated statement of financial position

Consolidated statement of comprehensive income

Consolidated statement of changes in equity

Consolidated statement of cash flows

Notes to the financial statements

Note 1 General information

Note 2 Material accounting policies

Note 3 Use of judgements and estimates in preparation of financial statements

Note 4 Segment information

Note 5 Goodwill

Note 6 Other intangible assets

Note 7 Property, plant and equipment

Note 8 Inventories

Note 9 Prepayments

Note 10 Other non-current and current receivables

Note 11 Trade receivables

Note 12 Cash and cash equivalents

Note 13 Reserves and share premium

Note 14 Borrowings

Note 15 Leases

Note 16 Provision for employee benefits

Note 17 Trade payables and other payables

Note 18 Contract liabilities - advances received

Note 19 Cost of sales

Note 20 General and administrative expenses

Note 21 Income tax

Note 22 Basic and diluted earnings per share (EUR)

Note 23 Dividends per share

Note 24 Financial assets and liabilities and risk management

Note 25 Commitments and contingencies

Note 26 Related party transactions

Note 27 Capital management

Note 28 Subsequent events

Note 29 Parent company’s unconsolidated financial statements

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130

139

141

143

148

149

150

151

152

153

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156

157

158

159

161

162

164

165

167

169

According to Management Board Regulations of City Service SE, Chairman of the Management

Board hereby declares and confirms that according to his best knowledge, the financial statements,

prepared according to the accounting standards in force, present a correct and fair view of the

assets, liabilities, financial situation and loss or profit of the issuer and the undertakings involved in

the consolidation as a whole, and the management and sustainability reports, prepared according

to the accounting standards in force, gives a correct and fair view of the development and results

of the business activities, financial status and aims in environmental, social and governance areas of

the issuer and the undertakings involved in the consolidation as a whole and contains a description

of the main risks and doubts.

Chairman of the Management Board

Artūras Gudelis

DECLARATION

OF THE MANAGEMENT

30 April 2026

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

1.1. CITY SERVICE GROUP

City Service SE is a holding company managing a group of companies operating in the field of

building management and integrated facility services in the Baltic States. The Group provides

comprehensive solutions for the management of residential and commercial real estate.

The companies within the Group are engaged in the administration of building management processes, maintenance

and repair of engineering systems, energy resource management based on artificial intelligence solutions, building

renovation, technical and energy audits. In addition, the Group provides territory maintenance and cleaning services,

apartment rental and administration services, IT services, fuel station maintenance, and debt administration services.

The Group conducts its operations in accordance with sustainable environmental principles, focusing on efficient re-

source use and the long-term preservation of building value.

Administration

of residential

apartment

buildings

Commercial

property

management

Territory

cleaning and

maintenance

Apartment

rental and

administration

Main business areas of the Group:

CORPORATE

PROFILE

Other

activities

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

1.3. MISSION AND VISION

1.2. STRATEGY AND OBJECTIVES

By combining City Service expertise with a deep understanding of local specifics, we provide our

customers with modern and convenient services.

Our long-term objective is very linked with our mission – growth of commercial, public and private property manage-

ment, development of integrated utility services.

16.2

millions m

Currently, City Service SE Group

operates in Lithuania and Latvia.

The total area of buildings

administered by the Group in

these regions amounts to

OUR VISION

is to be a leader in value creation

of residential property.

OUR MISSION

is to represent the interests of

customers by increasing the value

of their property and improving their

living environment.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

LITHUANIA LATVIA

76%

UAB Alytaus namų

valda

100%

UAB Energijos taupymo

paslaugos

100%

UAB Mano Būstas

Kaunas

100%

UAB Mano Būsto

klientų patirčių centras

100%

UAB Rinkų vystymas

100%

SIA BILANCE

100%

SIA MultiHouse

100%

UAB Baltijos NT

valdymas

100%

UAB EPC projektai

100%

UAB Mano Būstas

Klaipėda

100%

UAB Mano Būsto

priežiūra

100%

UAB Šiaulių NT

valdymas

100%

SIA Manas MĀJAS

100%

SIA Latvijas

Namsaimnieks

100%

UAB Baltijos transporto

valdymas

100%

UAB Kapitalo

Sprendimai

100%

UAB Mano Būstas

Neris

100%

UAB Merlangas

100%

UAB Skolos LT

100%

SIA BonoDomo

100%

SIA Livonijas Nami

57.71%

UAB Biržų butų ūkis

100%

UAB Mano aplinka

100%

UAB Mano Būstas NPC

100%

UAB Monto EU

100%

UAB Unitechna

100%

SIA Manas MĀJAS 1

100%

SIA Namu serviss APSE

100%

UAB BonoDomo

100%

UAB Mano bendrabutis

100%

UAB Mano Būstas

Radviliškis

100%

UAB Namų priežiūros

tarnyba

100%

UAB Žemaitijos būstas

100%

SIA Manas MĀJAS 2

100%

SIA Manas MĀJAS

Tukums

100%

UAB BonoDomo Pay

100%

UAB Mano Būstas

100%

UAB Mano Būstas

Šiauliai

100%

UAB Naujininkų ūkis

100%

SIA Manas Majas

Salnas 21

100%

SIA Manas MĀJAS

Jelgava

100%

UAB Būsto aplinka

100%

UAB Mano Būstas

Alytus

100%

UAB Mano Būstas

Sostinė

100%

UAB GS-Servisas

100%

SIA City Service

Engineering

100%

SIA Nia Nami

100%

UAB City Service

Cleaning

100%

UAB Mano Būstas

Aukštaitija

100%

UAB Mano Būstas

Ukmergė

100%

UAB Nacionalinis

renovacijos fondas

100%

SIA Manas MĀJAS 3

100%

UAB City Service

Engineering

UAB Mano Būstas

100%

Baltija

99.97%

UAB Mano Būstas

Vakarai

100%

UAB Pastatų priežiūra

100%

SIA Ēku pārvaldīšanas

serviss

100%

UAB CSG IT

100%

UAB Mano Būstas

Dainava

100%

UAB Mano Būstas

Vilnius

100%

UAB Pastatų valdymas

100%

SIA Manas MĀJAS

Ventspils

1.4. STRUCTURE OF THE GROUP

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

1.5. EMPLOYEES

In 2025, the City Service Group continued to strengthen employee engagement, internal

communication, and organizational culture across all Group companies. To ensure transparent

information sharing and consistent employee awareness, regular in-person meetings with

management were held, during which the Group’s strategy, operational objectives, and achieved

results were presented. This practice has become a sustainable organizational tradition, supporting

a clearer understanding of the business direction, strengthening trust in leadership, and fostering

long-term employee engagement.

Significant focus was placed on digitalization and the de-

velopment of artificial intelligence solutions. The Group

actively continued to develop and implement AI solutions

aimed at improving work quality, increasing operational

efficiency, and promoting innovation. Employees from

various functions were involved in AI initiatives, enabling

interdisciplinary collaboration. Solutions were presented

during project meetings, training sessions, and practical

workshops, while accumulated experience was leveraged

in the development of new processes and services that

enhance the Group’s competitiveness.

The onboarding of new employees was carried out

through a structured integration process, including intro-

ductory training, informational materials, welcome initia-

tives, and active involvement of direct managers. At City

Service Engineering, the new employee day initiative was

continued, introducing newcomers to the Group’s op-

erations, values, strategic priorities, occupational safety,

data protection, and principles of responsible technology

use. This approach supports smooth integration of new

employees, increases job satisfaction, and contributes to

reducing early-stage employee turnover.

Employee well-being and organizational culture remained

among the key priorities of the Group. In 2025, employ-

ees were offered additional benefits, community-building

initiatives were organized, and access to professional,

confidential, and anonymous psychological support was

provided. A traditional summer event was held, holiday

gifts were provided, long-serving employees were recog-

nized, access to seasonal flu vaccination was offered, and

additional allowances were granted to employees work-

ing remotely. Motivational and team-building activities

remained an integral part of the organizational culture,

with employees participating in joint gatherings, team

activities, and informal initiatives aimed at strengthening

interpersonal relationships. The digital MELP platform

was used to support internal communication, employee

recognition, and engagement surveys.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

The Group also actively contributed to social impact

initiatives and the support of local communities. For the

third consecutive year, City Service Engineering imple-

mented a corporate social responsibility initiative, with

six regional teams across Lithuania participating in 2025.

As part of the initiative, support was provided to social

and non-governmental organizations, infrastructure im-

provement works were carried out, technical assistance

was delivered, and support was extended to animal wel-

fare organizations, contributing to community well-being

and the reduction of social exclusion.

In 2025, an employee engagement survey was conducted,

with results indicating an employee NPS

of +23 and an

overall engagement score of 51.1%. The insights from the

survey were communicated to employees, and follow-up

actions were defined to further enhance engagement and

job satisfaction. During annual performance and develop-

ment discussions, employees were assigned performance

objectives and provided with structured feedback on

professional development and values-based behaviours.

In 2025, this process was expanded to more actively in-

clude technical employees, and candidate NPS measure-

ment was also introduced.

The City Service Group continued to invest in employ-

ee skills development by organizing internal and exter-

nal training programs delivered both in person and re-

motely, with particular focus on onboarding, adaptation,

and long-term professional growth. The Group regularly

participates in salary benchmarking surveys and, taking

into account market developments, reviews remunera-

tion systems across countries of operation to ensure a

competitive, transparent, and motivating compensation

policy.

As of the end of 2025, the Group employed a total of

1,339 employees, of whom 1,225 were based in Lithuania

and 114 in Latvia.

Number of employees

by country:

LITHUANIA LATVIA

employees

1,225

114

The total number

of employees of the Group is

1,339

NPS - Net Promoter Score

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

2.1. MAIN AREAS OF ACTIVITY

2.1.1. Administration of apartment buildings

The Group’s companies provide multi-apartment building administration services, performing all

actions necessary to preserve common-use property and ensure its use in accordance with its

intended purpose, as well as carrying out ongoing technical maintenance.

The companies ensure the mechanical stability of the main building structures, eliminate minor defects, conduct pre-

ventive maintenance and adjustment of common engineering systems, ensure safe operation, eliminate emergencies,

and perform preventive maintenance, adjustment, and preparation for the heating season of heat and hot water supply

systems.

The Group provides multi-apartment building administration, technical maintenance, and repair services in Lithuania

and Latvia.

MANAGEMENT

AND CORPORATE

GOVERNANCE REPORT

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

In Lithuania, the Group

expanded its portfolio of

managed multi-apartment

buildings by signing new

agreements with apart-

ment owners. During the

year, comprehensive property maintenance ser

vices were additionally launched for 129 multi-

apartment buildings with a total area exceeding

205 thousand sq. m. The total managed portfolio

amounts to approximately 10 million sq. m. as of

31 December 2025.

In order to improve service quality and better meet cus-

tomer expectations, the Group companies systematically

monitored the customer satisfaction index (NPS) and

adjusted operational processes based on the results.

The stairwell vacuum cleaning service grew significantly

– from only a few stairwells maintained in 2024 to 250

premises serviced in 2025.

Remote management of heating systems was also ex-

panded – in 2025, 519 heating substations were connect-

ed to the remote management platform. This enables

real-time preventive monitoring of parameters and faster

response to system disruptions.

The self-service platform “BonoDomo” continues to play

an important role in the Group’s customer service. In 2025,

44% of the Group’s customers used the platform, and 600

thousand invoices were paid through it. During the report-

ing period, the total number of user logins reached 3.9

million, reflecting the growing use of digital services.

Area of currently maintained buildings

in Lithuania amounts to

million m

Total number of user logins

reached in

BonoDomo was

3.9

million

Area of currently maintained

buildings in Latvia amounts to

0.8

million m

In Latvia, the Group’s

companies actively im-

proved customer inquiry

management, call center,

and invoicing systems, as

well as internal processes.

These changes helped increase operational ef-

ficiency and improve the quality of services pro-

vided.

Customer satisfaction is monitored using the Net Promoter

Score (NPS), which remained stable during the first half of

the year, reflecting customers’ trust in the company.

The Group’s companies plan to continue expanding their

operations in Latvia, both organically and through new ac

quisitions. Activities will also be expanded to other cities

across the country. Currently, services are provided in Riga,

Liepāja, Ventspils, Tukums, Jelgava, and Ogre.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

Changes in the area of managed apartment buildings

in the Group companies, million m

2025

Area of apartment buildings managed by the Group decreased mainly due to sale of business in Poland in 2023

(1.08 million m

2022 2023

2024

11.9

10.6

10.3

10.6

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

2.1.2. Management of commercial building facilities

The Group’s companies provide commercial building facility management services that ensure

reliable operation of building systems and reduced maintenance costs. The companies take care

of building maintenance ranging from engineering equipment, energy resource management and

efficiency, to indoor cleaning services.

The Group’s commercial building facility management

services are provided in Lithuania and Latvia.

City Service Engineering con-

tinues to strengthen its posi-

tion in the Lithuanian building

maintenance market. In 2025,

the company signed 41 new

building maintenance con-

tracts, maintaining a steady pace of growth and expand-

ing the scope of its services.

Among the most significant projects are contracts for

the maintenance of four business centres managed by

the investment company “Capitalica”. The company’s

portfolio was also expanded with two major industrial

facilities – the “Hommanit” and “Narbutas” factories, the

new “Eurovaistinė” logistics warehouse, and the “Tower”

shopping centre. In addition, cooperation with the long-

term client “Telia” continues to be strengthened through

the commencement of refrigeration equipment mainte-

nance services.

The company continues to implement advanced solutions

focused on efficient building maintenance and preserving

the value of clients’ assets. The newly signed contracts

reflect growing clients’ trust and the company’s expertise

in the field of facility management.

contracts with

new customers

were signed in

Lithuania.

A Group company operating

in Latvia has recently signed

several significant contracts

for integrated building facility

management and maintenance

services. Among the key cli-

ents is “RĪGAS SATIKSME” (Riga Transport), for which

ventilation and air conditioning system maintenance ser-

vices are being provided across 38 sites, as well as “MAX-

IMA”, for which full servicing of 40 new locations is being

ensured. In addition, the Group is carrying out ventilation

and air conditioning system maintenance for the “Latvian

Prison Administration” and will provide comprehensive

maintenance of all engineering systems for the “Valmiera

Drama Theatre”.

Multiple

contracts with

customers were

signed

in Latvia.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

Changes in the areas of commercial, public and industrial

buildings in managed by the Group companies, m

2025

5.7

2022

4.7

2023

5.1

2024

5.1

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

2.1.3. Maintenance and cleaning of territories

The Group’s companies provide a full range of territory maintenance and cleaning services: they

carry out indoor and outdoor cleaning works, maintain private territories and the surroundings

of apartment buildings, take care of snow, sand, and leaf removal, mow grass, perform specialized

cleaning works, and supply hygiene products. Cleaning and territory maintenance services are

provided throughout Lithuania.

In Lithuania

, the Group’s companies provide stairwell

and territory maintenance services for apartment buildings

in Vilnius, Kaunas, Klaipėda, Šiauliai, Alytus, Šilutė, Šilalė,

Telšiai, Radviliškis, Panevėžys, Palanga, and Tauragė.

In commercial properties—such as shopping centers,

sports clubs, exhibition halls, manufacturing and energy fa

cilities, and others—the Group’s company provides clean-

ing services in Vilnius, Kaunas, Klaipėda, Šiauliai, Panevėžys,

and Alytus. In 2025, the Group’s company began provid-

ing specialized cleaning services to new business centers

in Vilnius (“Hero” and “AeroCity”) and in Kaunas to the

“Žalgirio” and “Šilainių” swimming pools.

A Group company engaged in the interior cleaning of com

mercial, industrial, and public buildings uses only sustainable

cleaning products instead of conventional chemical clean-

ers—products that do not contain chemicals harmful to

the environment or human health. This step was motivated

by the company’s desire to contribute to environmental

preservation, further ensure the cleanliness of premises,

and take more responsible care of the health of clients and

company employees.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

2.1.4. Other activities

In addition to their core operations, the Group’s companies also provide other services.

2.1.5. Apartment rental and property management

In 2025, the group company “Monto” started providing apartment rental and property management

services. The company assists with all aspects of the real estate rental or sale process—from

preparing the property to finding tenants or buyers, as well as ensuring long-term management

and maintenance.

In Lithuania

, in 2025 the Group’s subsidiaries implemented building renovation projects in 122 residential buildings, pro-

vided maintenance services to 203 fuel stations, and recovered debts for the benefit of clients through judicial and pre-trial

procedures amounting to EUR 3.8 million.

the Group companies

provided maintenance

services to

203

fuel stations.

recovered debts for the

benefit of clients

3.8

million

Having become one of the largest residential rental manage-

ment companies, it currently manages more than 570 real

estate properties across Lithuania, Latvia, and Poland. The

company’s clients include both individual property owners

and institutional investors managing large, distinctive, and

unique real estate portfolios.

The company plans to expand further in Lithuania and oth

er European regions.

The total value of assets managed by “Monto” today ex

ceeds EUR 70 million.

The total value of

assets managed by

“Monto” exceeds

million €

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

In the area of administrative processes, the organization

continued to expand automation initiatives, including the

use of virtual assistants to support internal operations.

The application of AI solutions for document analysis

and evaluation significantly reduced processing times, im-

proved accuracy, and decreased the number of errors

across administrative workflows.

Significant attention is devoted to strengthening employ-

ees’ AI literacy. Regular training sessions are conducted

covering AI fundamentals, application opportunities, asso-

ciated risks, and principles of responsible use. Additional

targeted training is organized on a regular or ad hoc basis

for relevant stakeholders, focusing on practical tool usage,

risk awareness, and best practices. Training programs are

tailored to different competency levels and the specific

needs of individual departments, ensuring effective and re-

sponsible adoption of AI solutions across the organization.

2.2. PERFORMANCE IMPROVEMENT

In 2025, the Customer Service Centre continued the systematic implementation and development

of strategic artificial intelligence solutions aimed at increasing operational efficiency, optimizing

costs, and enhancing customer experience. Artificial intelligence was applied across customer

service, process automation, and sales enablement, enabling faster response to customer inquiries,

reducing manual workload, and ensuring service continuity during peak demand periods.

MANAGEMENT

AND CORPORATE

GOVERNANCE REPORT

In the area of customer service, AI solutions were de-

ployed across both written and voice communication

channels, accelerating request handling, automating re-

petitive tasks, and supporting uninterrupted service de-

livery during seasonal peak loads. Automated solutions

were also introduced to support voting-related processes

and proactive customer engagement, including outbound

communications for service sales, customer activation,

and the collection of additional service needs.

Within maintenance operations, AI-enabled solutions

were implemented to improve the speed and accuracy of

work order documentation and reporting. Voice-based

technologies support the prompt capture of completed

work information, while AI agents developed within in-

ternal systems contribute to the automation of routine

internal tasks, process acceleration, and the reduction of

manual effort.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

On 13 January 2025 UAB “Merlangas” acquired 100%

of the shares of UAB “Naujininkų ūkis” (acquisition price

EUR 1,875 thousand). UAB “Naujininkų ūkis” is engaged

in facility administration activities in Lithuania.

On 27 January 2025 the Company „Monto EU“ en-

tered into a tripartite transfer agreement under which it

assumed from UAB „Newsec Property Management LT“

all rights and obligations under the residential property

management agreement and its amendments in relation

to the transferred property portfolio in amount of EUR

180 thousand. As a result of this transaction, the Com-

pany became the new property manager and service pro-

vider for that portfolio from the effective transfer date.

On 02 April 2025 the title of SIA “Manas MĀJAS” was

changed to SIA “Manas MĀJAS 1”. Other contact details

did not change.

On 02 April 2025 the title of SIA “City Service” was

changed to SIA “Manas MĀJAS”. Other contact details

did not change.

On 05 August 2025 the title of SIA “Nebruk Jelgava”

was changed to SIA “Manas MĀJAS Jelgava”. Other con-

tact details did not change.

On 29 September 2025 UAB “Monto” acquired

100% of the shares of UAB “Stop Kaune” (acquisition

price EUR 123 thousand). UAB “Stop Kaune” is engaged

in rental properties management activities in Lithuania.

On 29 September 2025 UAB “Mano Būstas” acquired

100% of the shares of UAB “Namų Priežiūros Tarnyba”

(acquisition price EUR 134 thousand). UAB “Namų

Priežiūros Tarnyba” is engaged in administration of dwell-

ing-houses in Lithuania.

On 27 November 2025 the title of UAB ”Butų ūkio

valdos” was changed to UAB “Žemaitijos būstas”. Other

contact details did not change.

On 01 December 2025 the title of SIA “Ventspils

Nami” was changed to SIA “Manas MĀJAS Ventspils”.

Other contact details did not change.

On 23 December 2025 UAB “City Service Engineer-

ing” acquired 100% of shares of UAB “GS servisas” (ac-

quisition price EUR 640 thousand). UAB “GS servisas”

operates a niche business specializing in the installation,

maintenance, and servicing of automatic doors, windows,

gates, and related systems.

On 03 December 2025 the composition of the Com-

pany’s Management Board was expanded from two to

six members. The following individuals were appointed as

additional members of the Management Board, effective

as of that date: Giedrius Jakubauskas, Mindaugas Genys,

Aistė Cikanaitė-Jankauskė, and Tomas Sujeta.

On 30 December 2025 UAB “CSG IT” was reor-

ganized by way of division and ceased to exist as a legal

entity. All rights and obligations of UAB “CSG IT” were

transferred to two other subsidiaries of the Company -

UAB “Mano Būstas” and UAB “Baltijos transporto valdy-

mas”. No effect on parent’s unconsolidated statement of

financial position.

On 30 December 2025 the Company’s subsidiary

UAB “Stop Kaune” was merged with UAB “Monto EU”.

Following the completion of the merger, UAB “Stop

Kaune” ceased to exist as a separate legal entity. No ef-

fect on parent’s unconsolidated statement of financial

position.

2.3. SIGNIFICANT EVENTS

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

The risks remain similar to last year‘s: inflation, customers’

ability to pay, competition-influenced stricter demands

from commercial and residential clients, supply of

qualified personnel in the market. Regarding inflation and

customers‘ ability to pay Group doesn‘t see significant

risk as the prices are stabilized and salary growth is stable.

The scope of residential apartment building

administration and maintenance services, the essential

requirements for service providers, and the tariff

calculation procedure are set and regulated in detail by

the national and local authorities. Local authorities are

empowered to set maximum tariffs for such services,

together with the relevant inspectorates control the

proper implementation by service providers of the

administration and maintenance requirements set out in

legislation. In case of incompliance with set requirements,

local authorities may impose sanctions.

Any claims concerning the services provided may be

presented to the authorities or service providers by

individual owners as well. Taking into account the

aforementioned, additional risk factors in the field

of apartment building administration and maintenance

include any possible amendments to the enforced

legislation, the frequency of adoption of such amendments,

resolutions passed by central or local authorities which

provide additional obligations for service providers and

the results of controls carried out by various inspectorates

and local authorities. Timely and correct indexation of

the set maximum tariffs is also a risk factor which has an

impact on the Group’s activities in the field of residential

apartment building administration and maintenance.

There were no other material changes in the legal

regulation of the area of administration and maintenance

of apartment buildings in 2025, and neither were there

any decisions providing significant additional obligations

for service providers. Supervising institutions did not

identify any deficiencies in the provision of the services

or inconsistencies with the legislative requirements.

CREDIT RISK

The Group’s procedures are in force to ensure on a

permanent basis that sales are made to customers with

an appropriate credit history and do not exceed an

acceptable credit exposure limit. There are no individual

customers exceeding 10% of segment sales.

The maximum exposure to credit risk is represented by

the carrying amount of each financial asset. Therefore,

the management considers that its maximum exposure is

reflected by the amount of trade and other receivables,

net of allowance for doubtful accounts recognized at the

date of the statement of financial position.

INTEREST RATE RISK

The major part of the Group’s borrowings (loans and

financial lease obligations) are subject to EURIBOR

which create an interest rate risk (Financial statements’

Notes 14 and 15). There are no financial instruments

designated in the financial statements to manage the

exposure to the interest rate risk outstanding as of 31

December 2025 and 2024.

The sensitivity of the Group’s profit before tax to

a reasonably possible change in interest rates would have

a negative effect on the profit before the income tax in

amount of EUR (296) thousand if the interest rates would

increase by 1 basis point (EUR (275) thousand in the year

2024). The Group doesn‘t see significant interest rates

risk as there were no significant changes in Company’s

financing from last year.

SEASONALITY

The Group doesn’t have observable seasonality as usually

revenues from facility management and residential building

administration are based on contractual flat terms and

services and works are provided continuously. However,

the most profitable is Q3 as the major part of additional

works are completed during this season due to favorable

weather conditions.

2.4. KEY RISK ACTIVITY TYPES AND UNCERTAINTIES

In 2025 the market was stable, prices and purchasing power did not decline in comparison with

2024. Due to heavy competition in facility management market the Group had to concentrate

on further efficiency of activities. Building administration tariff has not changed significantly in a

year. Improved customers experience and active sales led to rapid increase in additional services

sales volume.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

2.5. THE MAIN FINANCIAL RATIOS CONCERNING

THE FINANCIAL YEAR

KEY FINANCIAL INDICATORS*

2022 2023 2024 2025

Sales in Baltics (Lithuania and Latvia)

84,145 101,561 109,891 115,566

Sales in foreign markets (Poland, CIS and Spain)**

31,207 7,919 - -

Area under management in Lithuania and Latvia

(thousand sq. m)

14,945 15,233 15,322 16,276

Area under management in foreign markets

(Poland, CIS and Spain)**

1,080 - - -

GROSS PROFIT

EBITDA

664 10,377 10,490 13,061

EBITDA margin

0,6% 9,5% 9,5% 11,3%

Operating profit (EBIT)

(3,177) 6,577 8,336 10,825

EBIT margin

-2,8% 6,0% 7,6% 9,4%

Earnings before tax (EBT)

(4,400) 7,461 7,123 10,487

EBT margin

-3,8% 6,8% 6,5% 9,1%

Net profit

(5,179) 5,150 6,549 9,564

Net profit in foreign markets (Poland, Russia and Spain)**

(10,749) (1,760) - -

Net profit margin

-6.15% 5.07% 5.96% 8.28%

Profit per share (EUR)

-0.15 0.19 0.21 0.30

Return on equity (ROE)

-28.7% 24.6% 22.7% 29.0%

Return on assets (ROA)

-6.7% 7.1% 7.1% 9.6%

* Key financial data and ratios in 2022 - 2023 are represented

including subsidiaries that were disposed in 2022 - 2023.

All amounts in key financial indicators are in EUR thousand unless

otherwise stated.

** Group companies operating in Russia were disposed during

2022, Poland, Spain, Czech and Portugal disposed during 2023.

EBITDA = Net profit + Income Tax + Depreciation and Amortization + Other finance

income (expenses) + Interest income (expenses) + Loss (gain) on sale of investments

EBITDA margin = EBITDA / Revenue from contracts with customers * 100 %

Profit (loss) from operations (EBIT) = Net profit + Income Tax + Other finance income

(expenses) + Interest income (expenses) + Loss (gain) on sale of investments

EBIT margin = EBIT / Revenue from contracts with customers * 100 %

Profit (loss) before tax (EBT) = Net profit (loss) - Income Tax

EBT margin = EBT / Revenue from contracts with customers * 100 %

Net profit (loss) = EBT + Income Tax

Net profit (loss) margin = Net profit / Revenue from contracts with customers

Profit (loss) per share (EUR) = Net profit / Amount of shares

Return on equity (ROE) = Net profit / Equity * 100 %

Return on assets (ROA) = Net profit / Assets * 100%

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

* Group companies operating in Russia were disposed during 2022, Poland, Spain, Czech and Portugal disposed during 2023

Area under

management,

thousand m

NET profit (loss),

thousand Eur

NET profit (loss),

margin %

Sales,

thousand Eur

84,145 101,561

1,080

31,207

7,919

Area in foreign markets

(Russia, Poland, Czech and Portugal)*

Area under management in Lithuania and Latvia

Sales in foreign markets

(Russia, Poland, Czech and Portugal)*

Sales in Lithuania and Latvia market

14,945 15,32215,233

5.07

5,150

6,549

9,564

-6.15

-5,179

2022 2023

2023 2023

2022 2023

2022 2022

HIGHLIGHTS

2024

109,891

2024

2024 2024

5.96

8.28

2025 2025

2025

16,276 115,566

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

2.6. THE STRUCTURE OF THE

COMPANY’S SHARE CAPITAL

The share capital of the Company is EUR 9,483 thousand as of 31 December 2025. It is divided

into 31,610 thousand ordinary shares with the nominal value of EUR 0.30 each. All shares of the

Company are paid up.

As of 31 December 2025 all 31,610 thousand ordinary

shares of the Company are included into the Parallel

Market of Warsaw Stock Exchange and Baltic First North

Foreign Shares trading list of NASDAQ Baltic Market (ISIN

Code of the shares is EE3100126368). Trading Code of the

shares on Warsaw Stock Exchange is CTS, on NASDAQ

Baltic Market - CTS1L.

The Company does not have any other classes of shares

than ordinary shares mentioned above, there are no any

restrictions of share rights or special control rights for the

shareholders settled in the Statutes of the Company. No

shares of the Company are held by itself or its subsidiaries.

No convertible securities, exchangeable securities or

securities with warrants are outstanding; likewise, there

are no outstanding acquisition rights or undertakings to

increase share capital. There are no shareholders with

special control rights in the Company; the ordinary shares

grant equal rights to all the shareholders of the Company.

THE RIGHTS CONFERRED BY THE SHARES ARE AS FOLLOWS:

● to receive a portion of the Company’s profit

(dividends);

● to receive the Company’s funds when the capital of

the Company is reduced with intend to pay out the

Company’s funds to the shareholders;

● to receive shares without payment if the capital is

increased from the shareholders’ equity (bonus issue);

● to have a pre-emption right in acquiring the shares

or convertible debentures issued by the Company,

except in the case when the General Meeting

decides to withdraw the pre-emption right for all the

shareholders;

● to receive a part of the assets of the Company in

liquidation;

● to attend General Meetings;

● to vote at General Meetings according to voting rights

carried by their shares;

● to receive information on the activities of the

Company from the Management Board at the General

Meeting, unless this may cause significant damage to

the interests of the Company;

● to demand the calling of a General Meeting, if this is

demanded by shareholders whose shares represent

at least one-twentieth of the share capital of the

Company;

● to call a General Meeting, if the Management Board

does not call a General Meeting within one month

after receipt of such a demand by shareholders whose

shares represent at least one-twentieth of the share

capital of the Company;

● to demand at the General Meeting a resolution to

conduct a special audit on matters regarding the

management or financial situation of the Company,

if this is demanded by shareholders whose shares

represent at least one-tenth of the share capital of the

Company;

● other property and non-property rights set out in the

Commercial Code.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

2.7. THE SHAREHOLDERS OF THE COMPANY

On 31 December 2025 the total number of shareholders of the Company was 72.

2.8. RESTRICTIONS ON THE TRANSFER OF SECURITIES

AND RESTRICTIONS ON VOTING RIGHTS

To the best knowledge of the Company and its management, the transfer of the shares was free

from any restrictions on the transfer of the Company’s shares in 2025.

Company’s shares distribution among shareholders who have more than 5 % shares of the Company as of 31 December

2025 was the following:

To the best knowledge of the Company and its management, the voting rights were free from any other restrictions on

the shares issued by the Company. To the best knowledge of the Company, all shareholders of the Company have the

voting right in the General Meeting.

* Number of the shareholders includes shareholders who hold more than 0.5 per cent of the votes through a nominee

accounts (according to amendments that entered into force in 10 September 2020 in the Securities Register Maintenance

Act (§ 6 Nominee account (subsection 9.2)) and the shareholders who hold their shares directly (not through nominee

accounts).

NUMBER OF

SHARES HELD

OWNED PERCENTAGE

OF THE SHARE

CAPITAL AND VOTES, %

UAB Unit Invest, legal entity

code 305873584, address:

Ozo str. 12A-1, Vilnius,

Lithuania

26,813,293 84.83 %

Other private and institutional

shareholders

4,796,707 15.17 %

TOTAL

31,610,000 100 %

Other private and institutional shareholders

UAB Unit Invest

84.83%

15.17%

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

2.9. COMPANY’S SUPERVISORY BOARD

AND MANAGEMENT BOARD

2.9.1. Company’s supervisory board

The Supervisory Board is a collegial management body of the Company. The Supervisory Board

shall consist of one (1) to seven (7) members elected for a term of 4 (four) years by the General

meeting in accordance with the procedure provided for by the Law on Companies of the Republic

of Estonia.

Only a natural person may be elected to serve on the Supervisory Board. There is no limitation on the number of

terms of offices a member of the Supervisory Board may serve. The Supervisory Board shall elect its chairman from

among its members. The General Meeting may remove from office the entire Supervisory Board or its individual mem-

bers before the expiry of their term of office.

A member of the Supervisory Board may resign from office prior to the expiry of his term of office by giving a written

notice thereof to the Company. The powers of the Supervisory Board shall cover consideration of the following issues

and taking of the following decisions:

● to elect and remove from the office the members of

the Management Board, set their remuneration, other

terms of office (employment), approve Management

Board regulations;

● to appoint and remove procurators;

● for the Company to become a founder or a member

of other legal entities, to acquire, transfer or dissolve

(liquidate) any such entities, as well as decisions to

transfer or encumber any shares (parts, shares of

stock) or rights assigned thereto held by the Company

to other persons;

● to establish or terminate activities of affiliates or

representative offices of the Company, approve their

regulations;

● to transfer, lease or encumber immovables or registered

movables of the balance value exceeding 1/20 (one-

twentieth) of the Company’s share capital (per each

type of transaction);

● to make investments exceeding approved budget for

the current financial year;

● to assume loans or debt obligations exceeding approved

budget for the current financial year;

● to offer surety or guarantee of obligations of third

parties for an amount in excess of 1/20 (one-twentieth)

of the share capital of the Company;

● to acquire long-term assets at a price exceeding 1/20

(one-twentieth) of the Company’s share capital;

● to engage the Company into new business activities or

to discontinue any specific activity currently performed;

● to approve participation and (or) conclusion of peaceful

settlement agreements in legal proceedings where the

amount of claims made to or by the Company exceeds

1/5 (one fifth) of the share capital of the Company;

● to issue debentures of the Company or other forms of

borrowing from any natural or legal persons (regardless

of the amount);

● to conclude transactions between the Company and

the management board members which are beyond the

scope of everyday economic activities of the Company

or exceed the market price;

● to determine which information will be considered

the Company’s commercial (industrial) secret and

confidential information;

● to approve operating strategy, annual report, interim

report, management structure of the Company, as

well as positions of employees, positions to which

employees are recruited by holding competitions;

● to approve merger, acquisition, reorganization,

separation, foundation of new legal entities or similar

corporate legal actions;

● to approve acquisition of all long-term assets (including

but not limited companies, real estate, cars, tools,

equipment, computers, software, telephones etc.);

● to determine the methods used by the Company to

calculate the depreciation of tangible assets and the

amortization of intangible assets.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

The Supervisory Board shall plan the activities of the Company, organize the Management of the Company and supervise

the activities of the Management Board. The Supervisory Board also has the right to decide on other issues which are not

assigned to the competence of the Management Board or the General Meeting of shareholders pursuant to law or the

Statutes. The Supervisory Board analyses and assesses the Company’s draft of its annual set of financial statements and

draft of profit/loss appropriation and along with annual report shall submit them to the General Meeting.

● the implementation of the operating strategy of

the Company;

● the organization of the activities of the Company;

● the financial status of the Company; of the

Management Board or the General Meeting of

shareholders pursuant to law or the Statutes.

The Supervisory Board analyses and assesses

the Company’s draft of its annual set of financial

statements and draft of profit/loss appropriation

and along with annual report shall submit them

to the General Meeting;

● the results of business activities, income and

expenditure estimated, stocktaking;

● data and other accounting data of changes in the

assets;

● quarterly investment plans.

The Supervisory Board shall analyze and evaluate

documents submitted by the Management Board of the

company on:

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

NAME AND SURNAME POSITION START OF TERM END OF TERM

Andrius Janukonis Chairman of the Supervisory Board June 21, 2023 June 21, 2027

Gintautas Jaugielavičius Member of the Supervisory Board June 21, 2023 June 21, 2027

As of 31 December 2025, the Supervisory Board of

the Company comprises of the following persons:

Andrius Janukonis is the Chairman of the Supervisory

Board of City Service SE. In 2004, he worked as a con-

sultant to UAB “ICOR” and has since served as Chair-

man of the Board of the company. From 2009 to 2015,

he was Chairman of the Board of AB “City Service”. Mr.

Janukonis holds a Master’s degree in Law.

Gintautas Jaugielavičius is a Member of the Super-

visory Board of City Service SE. In 2004, he worked as a

consultant to UAB “ICOR” and has since been a Member

of the Board of the company. From 2009 to 2015, he

served as a Member of the Board of AB “City Service”.

Mr. Jaugielavičius holds a Bachelor’s degree in Economics.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

The Management Board of the Company comprises of six (6) members who are representing and

directing the Company. The members of the Management Board are elected by Supervisory Board

for a term of four (4) years. Supervisory Board has right to elect and remove from the office the

members of the Management Board, set their remuneration, other terms of office (employment),

approve Management Board regulations. A member of the Management Board may resign from

office prior to the expiry of his term of office by giving a written notice.

Management Board members are authorized to represent the Company in all legal acts which do not fall within com-

petence are of other Management bodies. The individual members of the Management Board have competence, are

accountable and responsible within the following jurisdictions and areas of activity of the Company and its directly

controlled subsidiaries under Management Board regulations. Management Board member isn’t authorized to issue or

repurchase shares of the Company. Also there is no agreements between the Company and its Management Board

or employees.

As of 31 December 2025 the Management Board of the Company comprises of the following persons:

2.9.2. Company’s management board

NAME AND SURNAME

POSITION WITHIN

THE GROUP

START OF TERM END OF TERM

Artūras Gudelis Chairman of the Management Board June 26, 2021 June 26, 2029

Vytautas Turonis Member of the Management Board June 26, 2021 June 26, 2029

Mindaugas Genys Member of the Management Board December 03, 2025 December 03, 2029

Aistė Cikanaitė-Jankauskė Member of the Management Board December 03, 2025 December 03, 2029

Giedrius Jakubauskas Member of the Management Board December 03, 2025 December 03, 2029

Tomas Sujeta Member of the Management Board December 03, 2025 December 03, 2029

They do not own any shares of the Company.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

Artūras Gudelis

Artūras Gudelis has been working within the ICOR group of companies since

2006 and has served as Chairman of the Management Board of City Service SE

since 2017. From 2015 to 2017, he was a Member of the Supervisory Board

of the Company. Mr. Gudelis is responsible for performing the functions of the

Chairman of the Management Board, ensuring the efficient organization of the

Board’s activities, and overseeing the implementation of strategic decisions. He

ensures proper corporate governance of the Company, coordinates the activities

of the Management Board, and contributes to the development and execution

of the Company’s long-term strategy. His professional experience enables him to

ensure the Company’s sustainable development, transparency, and responsible

management in the interests of shareholders and investors. Mr. Gudelis holds a

Bachelor’s degree in Economics and a Master’s degree in Business Administration.

Vytautas Turonis

Vytautas Turonis has been working within the Group since 2004, initially as

Head of the Market Development Department, and subsequently held vari-

ous managerial positions. Since 2017, he has been a Member of the Board

of City Service SE and is currently responsible for the Baltic countries. Mr.

Turonis oversees the strategic and operational management of the Group’s

activities in Lithuania and Latvia. His responsibilities include operational plan-

ning and execution, supervision of financial performance, budget control, en-

hancement of operational efficiency, risk management, and ensuring compli-

ance and sustainability. Mr. Turonis holds a Bachelor’s degree in International

Business.

Mindaugas Genys

Mindaugas Genys has been working within the Group since 2007. He began

his career as a Project Manager, later served as Head of the Klaipėda Region,

and also led the Multi-Apartment Building Administration Department. Since

2023, he has been the CEO of the “Mano BŪSTAS” group of companies,

and since 2025 – a Member of the Board of City Service SE. Mr. Genys is re-

sponsible for the strategic and operational management of “Mano BŪSTAS.”

His responsibilities include operational planning and implementation, ensuring

service quality and efficiency, supervision of financial results, budget control,

improvement of organizational processes, coordination of team performance,

and creation of long-term business value. Mr. Genys has completed studies in

history, theology, and business.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

Aistė Cikanaitė-Jankauskė

Aistė Cikanaitė-Jankauskė has been working within the Group for 21 years and

currently serves as Chief Executive Officer of City Service SE. During this pe-

riod, she has gained significant experience in legal affairs, operational manage-

ment, and the building maintenance services sector. Since 2025, she has been a

Member of the Board of City Service SE. Ms. Cikanaitė-Jankauskė is responsible

for the legal, human resources, procurement, real estate, and fleet manage-

ment functions across the Group. Her responsibilities include strengthening

internal processes, increasing organizational maturity, and ensuring sustainable

growth of the Group. Ms. Cikanaitė-Jankauskė is an experienced executive

with competencies in data analytics, strategic planning, business development,

legal affairs, and sales management. She holds a Master’s degree in Law.

Giedrius Jakubauskas

Giedrius Jakubauskas joined the City Service SE group of companies in 2025

as Group Chief Financial Officer. He has extensive experience in financial

management and has worked in companies operating in the building main-

tenance sector, as well as in corporate groups such as AB “Achema Group,”

“KIKA Group,” and others. Since 2025, he has been a Member of the Board

of City Service SE. Mr. Jakubauskas is responsible for the overall financial

management of the Group. His responsibilities include financial planning and

control, budgeting and budget supervision, organization of accounting, and

ensuring the efficiency of financial processes across all jurisdictions in which

the Group operates. Mr. Jakubauskas holds a Master’s degree in Finance.

Tomas Sujeta

Tomas Sujeta has been working within the group of companies since 2006.

He started his career as a Manager and later became Director of City Service

Engineering. Since 2025, he has been a Member of the Management Board

of City Service SE. Within the Group, Mr. Sujeta is responsible for com-

mercial buildings segment. He oversees engineering operations management,

ensuring the quality of technical solutions, service efficiency, and technological

advancement across commercial real estate properties. His responsibilities

include operational planning and implementation, coordination of engineering

teams, process improvement, and the creation of long-term value for clients.

Mr. Sujeta holds a Bachelor’s degree in Law.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

2.10. DIVIDEND POLICY

The Company does not have an approved policy on dividend distributions and any restrictions

thereon. Decision on distribution of dividends to shareholders is adopted by the General Meeting.

2.11. PROCEDURE OF AMENDMENT OF THE

STATUTES OF THE COMPANY

The Statutes of the Company shall be amended in accordance with the procedure provided for by

the Law on Companies of the Republic of Estonia and the Statutes of the Company. The Statutes of

the Company may be amended only by the decision of the General Meeting, exceptions may occur

under the Law on Companies of the Republic of Estonia.

The resolution regarding amendment of the Statutes of the Company shall be taken in the General Meeting by at least

2/3 of all votes conferred by the shares of the shareholders present at the General Meeting. Following the decision

taken by the General Meeting to amend the Statutes of the Company, the full text of the amended Statutes shall be

drawn up and signed by the person authorized by the General Meeting. The amended Statutes shall become effec-

tive and may be used as the basis following registration of the amended Statutes with the Commercial register of the

Republic of Estonia.

In the period since the 1st of January 2025 by the 31st of December 2025 and the day of Annual Report is released

Company‘s Statutes are valid in wording registered in Estonian Commercial register on Register of Legal Entities. The

relevant Statutes of the Company is available on its website at www.cityservice.eu.

2.12. MATERIAL AGREEMENTS CONCLUDED BY THE

COMPANY WHICH MAY BE IMPORTANT AFTER

CHANGE OF CONTROL OF THE COMPANY

There were no material agreements concluded by the Company which came into effect, were amend-

ed or terminated following a change of control of the Company during the reporting period.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

2.13. AUDITING SYSTEM AND DESCRIPTION OF THE

MAIN FEATURES OF INTERNAL AUDIT AND RISK

MANAGEMENT SYSTEMS IN CONNECTION WITH

THE PROCESS OF THE PREPARATION OF THE

ANNUAL ACCOUNTS

The Company has the Audit Committee in place. The Regulations of the activity of the Audit

Committee were approved by the Supervisory Board. According to the Regulations of the activity

of the Audit Committee the main functions of this committee are as follows:

● to monitor and analyze processing of financial

information, including observing the process of the

preparation of financial reports of the Company;

● to provide the Supervisory Board with

recommendations regarding the selection and/or

removal of an external audit company;

● to provide the Supervisory Board with

recommendations regarding the selection and/or

removal of the internal auditor;

● to observe the efficiency of the internal control

systems, risk management and internal audit systems;

● to observe the process of carrying out an external

audit;

● to observe how the external auditor or audit company

follow the principles of independence and objectivity;

● to fulfil other functions specified in the legal acts of the

Republic of Estonia, including to:

● monitor and analyze efficiency of risk management

and internal control;

● monitor and analyze the process of auditing of annual

accounts and consolidated accounts;

● monitor and analyze independence of an audit firm

and a sworn auditor representing an audit firm on

the basis of law and compliance of the activities

thereof with other requirements of the Auditors

Activities Act of the Republic of Estonia (in Estonian:

audiitortegevuse seadus);

● make recommendations or proposals to the

Supervisory Board regarding prevention or elimination

of problems and inefficiencies in an organization

and compliance with laws and the good practice of

professional activities;

● to immediately inform the Supervisory Board about

the information presented to the Audit Committee by

the audit company regarding any issues arisen during

the audit especially in case of significant shortcomings

of internal control related to financial reports.

Members of the Audit Committee shall be appointed by

the Supervisory Board.

The Audit Committee consists of 3 members, one of

whom shall be independent and the other two members

shall be appointed out of the non-overhead staff of the

Administration of the Company or Subsidiaries of the

Company. The internal auditor, a member of the Man-

agement Board of the Company or a procurator or a

person performing an audit of the Company shall not be

a member of the Audit Committee.

At least two of the members of the Audit Committee

shall be experts in accounting, finance or law. The cri-

teria of independency and eligibility requirements to be

appointed a member of the Audit Committee are de-

termined in the Regulations of the activity of the Audit

Committee.

The term of office of the Audit Committee shall be 4

(four) years. An uninterrupted term of office of a mem-

ber of the Audit Committee shall be no longer than 12

years. A member of the Audit Committee shall have the

right to resign upon submitting before 10 days written

notice to the Supervisory Board. The Supervisory Board

shall have the right to recall one or all the members of

the Audit Committee should they fail to perform their

functions and/or should they no longer conform to the

requirements specified in the applicable legal acts or the

Regulations of the activity of the Audit Committee.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

The principal objective of the Audit Committee is to

generate higher added value to the Company. Audit

Committee operates in accordance with the Regula-

tions approved by the General Meeting of Sharehold-

ers of the Company. The Audit Committee follows in

its activities the requirements of effective legal acts and

seeks overall implementation of the recommendations

of Corporate Governance Code, for the Companies

Listed on Warsaw Stock Exchange.

MRS. ILONA MATUSEVIČIENĖ – a chairman

of the Audit committee, independent member, does

not work at the Company.

MRS. AUŠRA ANIULYTĖ – independent

member, does not work at the Company.

The Audit Committee monitors the external audit firm

of the Company at the performance of Company’s An-

nual Report and the Annual set of the Financial State-

ments audit.

The conclusions of the Audit Committee are presented

to the Supervisory Board of the Company in accord-

ance with the requirements of the Regulations of the

Audit Committee.

The Group does not have internal audit department.

MR. ROBERTAS RATKEVIČIUS – independent

member, does not work at the Company.

Audit Committee members do not own shares of

the Company.

Members of the audit committee of the company:

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

2.14. INFORMATION ON COMPLIANCE WITH THE

CORPORATE GOVERNANCE CODE

The Company observes applicable legislation, the rules of the Warsaw Stock Exchange, and the

Best Practice for GPW Listed Companies 2025 (hereinafter also referred to as the “WSE Corporate

Governance Code”).

The Company intends to be as transparent as it is legally and practically possible using multilingual Company’s website.

However, due to, inter alia, differences between Polish and Estonian corporate law the Company does not comply with

the following rules of the WSE Corporate Governance Code:

1.5. Companies disclose at least on an annual basis the

amounts expensed by the company and its group in support

of culture, sports, charities, the media, social organizations,

trade unions, etc. If the company or its group have such ex-

penses in the reporting year, the disclosure presents a list of

such expenses. Company does not publish the information

about the amounts expensed in support of culture, sports,

charities, the media, social organisations, trade unions, etc.

2.1. Companies should have in place a diversity policy appli-

cable to the management board and the supervisory board,

approved by the supervisory board and the general meeting,

respectively. The diversity policy defines diversity goals

and criteria, among others including gender, education, ex-

pertise, age, professional experience, and specifies the target

dates and the monitoring systems for such goals. With regard

to gender diversity of corporate bodies, the participation of

the minority group in each body should be at least 30%. The

Company does not have a formal diversity policy, it does not

apply any limitations to the diversity of its bodies and makes

every effort to ensure diversity in bodies in all areas, also in

terms of gender. The selection criteria for performing func-

tions in the Company’s bodies are the competences, experi-

ence, education as well as time and organizational capacity of

the candidate for a given function.

2.2. Decisions to elect members of the management board

or the supervisory board of companies should ensure that

the composition of those bodies is diverse by appointing

persons ensuring diversity, among others in order to achieve

the target minimum participation of the minority group of

at least 30% according to the goals of the established diver-

sity policy referred to in principle 2.1. As at the date of this

report, the Company does not have a diversity policy with

regard to the Management Board and Supervisory Board of

the Company. The most important selection criteria are the

competences of the members of the Management Board and

the Supervisory Board. The Company is not able to appoint

candidates for positions in governing bodies and to influence

the decisions of the Shareholders and the Supervisory Board

of the Company.

2.3. At least two members of the supervisory board meet

the criteria of being independent referred to in the Act of 11

May 2017 on Auditors, Audit Firms and Public Supervision,

and have no actual and material relations with any sharehold-

er who holds at least 5% of the total vote in the company.

However, taking into consideration that following the Stat-

utes of the Company the Supervisory Board is comprised

of three to five members, depending on circumstances, the

Company does not rule out proposing to the General Meet-

ing to elect two independent members to the Supervisory

Board in the future.

2.11.5. Assessment of the rationality of expenses referred

to in principle 1.5.

2.11.6. Information regarding the degree of implementation

of the diversity policy applicable to the management board

and the supervisory board, including the achievement of goals

referred to in principle 2.1. The Company does not have a

formal diversity policy with respect to the Management

Board and Supervisory Board of the Company.

3.4. The remuneration of persons responsible for risk and

compliance management and of the head of internal audit

should depend on the performance of delegated tasks rather

than short-term results of the company. The Company does

not have separate units responsible for this scope of tasks

that would be remunerated on this account.

3.5. Persons responsible for risk and compliance manage-

ment report directly to the president or other member of

the management board. The Company has no separate units

responsible for the scope of tasks described in principle 3.5.

3.6. The head of internal audit reports organizationally to

the president of the management board and functionally to

the chair of the audit committee or the chair of the supervi-

sory board if the supervisory board performs the functions

of the audit committee. The Company has no separate units

responsible for the scope of tasks described in principle 3.6.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

3.7. Principles 3.4 to 3.6 apply also to members of the com-

pany’s group which are material to its activity if they appoint

persons to perform such tasks. Among the entities from the

Company’s group, no persons were appointed to perform

the tasks referred to in principles 3.4. - 3.6.

4.1. Companies should enable their shareholders to partici-

pate in a general meeting by means of electronic communica-

tion (e-meeting) if justified by the expectations of sharehold-

ers notified to the company, provided that the company is in

a position to provide the technical infrastructure necessary

for such general meeting to proceed. Company does not rule

out applying thereof in the future whenever the shareholders

submit such request, provided that it has sufficient technical

conditions, in particular ensuring technical and legal security.

4.3. Companies provide a public real-life broadcast of the

general meeting. The Company will consider the possibility of

broadcasting the general meeting, provided that it has suffi-

cient technical conditions, in particular ensuring technical and

legal security.

4.9.1. Candidates for members of the supervisory board

should be nominated with a notice necessary for sharehold-

ers present at the general meeting to make an informed de-

cision and in any case no later than three days before the

general meeting; the names of candidates and all related doc-

uments should be immediately published on the company’s

website; Candidates for members of the Supervisory Board

may be put forward by shareholders during a general meeting

containing an item on the agenda regarding the appointment

of supervisory board members.

4.9.2. Candidates for members of the supervisory board

make a declaration concerning fulfilment of the requirements

for members of the audit committee referred to in the Act of

11 May 2017 on Auditors, Audit Firms and Public Supervision

and having actual and material relations with any shareholder

who holds at least 5% of the total vote in the company. The

Company is established in Estonia and it follows Estonian law

when concerning fulfilment of the requirements for members

of the Supervisory Board.

4.11. Members of the management board and members of

the supervisory board participate in a general meeting, at the

location of the meeting or via means of bilateral real-time

electronic communication, as necessary to speak on mat-

ters discussed by the general meeting and answer questions

asked at the general meeting. The management board pre-

sents to participants of an annual general meeting the finan-

cial results of the company and other relevant information,

including non-financial information, contained in the financial

statements to be approved by the general meeting. The man-

agement board presents key events of the last financial year,

compares presented data with previous years, and presents

the degree of implementation of the plans for the last year.

Only members of the Management Board participate in the

general meeting.

2.14. INFORMATION ON COMPLIANCE WITH THE

CORPORATE GOVERNANCE CODE

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025 Management report

2.15. REMUNERATION REPORT

The management remuneration is set based on the long-term objectives of the Group, considering

the financial results of the Group and the legitimate interests of investors and creditors.

The remuneration of the management in respect of the financial year 2025 was granted without derogation. The

Group‘s management remuneration amounted to EUR 759 thousand in 2025 (EUR 218 thousand in 2024). Manage-

ment remuneration increased due to increased number of board members in 2025.

SUSTAINABILITY

STATEMENT

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

BP-1 – General basis for preparation of sustainability

statements

BP-2 – Disclosures in relation to specific circumstances

In this report the Group applies ESRS, ensuring that all indicators are presented in accordance with

ESRS requirements.

ABOUT THE REPORT

This section presents the Sustainability Statement

(hereafter - Sustainability Report and/or report) of the City

Service SE group of companies (hereinafter - City Service;

the Group), prepared in accordance with the Corporate

Sustainability Reporting Directive (CSRD) and the

European Sustainability Reporting Standards (ESRS). The

Sustainability Report covers the 2025 reporting period.

The scope of consolidation of sustainability information is

the same as that of financial statements.

Time horizons

City Service has not deviated from the short, medium

or long-term horizons defined by ESRS, which are: short

term - up to 1 year, medium term - 2-5 years, long term -

more than 5 years.

Value chain estimation

The measurement methodology used to calculate Scope

3 GHG emissions and the level of accuracy is provided

in section E1 Climate Change. Relevant assumptions,

measurement uncertainties, and judgements related

to quantitative metrics are disclosed where applicable

alongside Scope 3 disclosures E1-6. The Group plans to

explore opportunities to enhance the accuracy of metrics

based on indirect data sources in the future.

No other indicators include data from the upstream or

downstream value chain.

The Sustainability Report provides information of the

Group’s performance and aims in environmental, social and

governance areas covering the Group’s direct operations

and the upstream and downstream value chain. The

group used the option provided by the ESRS to withhold

confidential information related to the standard disclosure

requirements on the S1 topic - Adequate Wages.

Sources of estimation and outcome uncertainty

There are no quantitative metrics and monetary amounts

disclosed in the report that are subject to a high level of

measurement uncertainty. In cases where any level of

uncertainty exists, it is clearly explained alongside the

relevant metric, including the assumptions, approximations,

and judgments applied in the measurement process, to

ensure transparency and accuracy in reporting.

No metrics in this report have been confirmed by an

external body other than the sustainability report limited

assurance provider.

Changes in preparation or presentation of

sustainability information

As this is the second year in which the Group applies

the ESRS standards, the approach to the preparation and

presentation of the sustainability information remains

consistent with the prior reporting period. No significant

changes were made to the structure, methodology, or

presentation of the sustainability report compared to the

previous year.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Reporting errors in prior periods

There were no material reporting errors identified in the

prior reporting period.

Use of phase-in provisions in accordance with

Appendix C of ESRS 1

Annex C of ESRS 1 provides for transitional provisions

allowing certain disclosure requirements to be phased in

and omitted during the initial years of ESRS application.

In accordance with the Quick Fix Directive, undertakings

are permitted to continue applying these transitional

exemptions for an additional two-year period. Accordingly,

the Group continues to apply these exemptions and has

not disclosed information under SBM-1 points 40(b) and

40(c), SBM-3 point 48(e), E1-9, S1-7, S1-13, and S1-14

points 88(d) and 88(e).

In addition, the Group has applied the transitional

exemption from disclosures under the S2 Workers in the

Value Chain standard. However, the management principles

related to this topic are disclosed in accordance with the

requirements of ESRS 2 in the chapter S2 Workers in the

Value Chain.

Disclosures stemming from other legislation

or generally accepted sustainability reporting

pronouncements

This sustainability report includes the information

requirements set forth in Article 8 of Regulation

(EU) 2020/852 (Taxonomy Regulation). The report

also includes all other applicable sustainability-related

disclosure requirements in accordance with the national

legislation and regulatory frameworks of Lithuania, Latvia,

and Estonia.

Disclosures incorporated by reference Where they are disclosed in the report

BP-2 10 (b), (c), (d) E1-6

BP-2 11 (b.i), (b.ii) E1-6

E1 GOV-3 13 ESRS 2 GOV-3

E1 IRO-1, E2 IRO-1, E3 IRO-1, E4 IRO-1, E5 IRO-1, G1 IRO-1 ESRS 2 IRO-1

MDR-P - entity-specific sub-topic: Energy efficiency for society and

customers

E1-2

E1-2 MDR-P

Partly covered in Minimum disclosure requirements; Sustainability

Policy (MDR-P)

S1 SBM 2 ESRS 2 SBM-2

S1 SBM-3 14 (d) ESRS 2 SBM-3

S1-1 20 (b) S1-2

S1-4 38 (d), AR 42 S1-5

S1-5 46 ESRS 2 SBM-1

S2 SBM-2 ESRS 2 SBM-2

S4 SBM-2 ESRS 2 SBM-2

G1 GOV-1 ESRS 2 GOV-1

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Incorporation by reference

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

GOV-1 – The role of the administrative, management and

supervisory bodies (G1 GOV-1)

SUSTAINABILITY

GOVERNANCE

The Group’s administrative, management, and supervisory

bodies are as follows:

● Supervisory Board: 2 non-executive members.

● Management Board: 6 executive members. The

Management Board members do not hold any shares

in the Group.

● Chief Operating Officer (COO).

The aforementioned members have extensive expertise

in building management and administration, cleaning

services, and energy efficiency. Their in-depth knowledge

of the Group’s operations in the Baltic region (Lithuania

and Latvia) ensures a strong understanding of the local

regulatory and market dynamics.

Gender distribution:

● Supervisory Board: 100% male; gender diversity ratio

– 0:2.

● Management Board: 83% male, 17% female; gender

diversity ratio – 1:5.

● COO: 100% female.

There are no employee representatives among the

administrative, management, or supervisory bodies. There

are no independent members on the Supervisory Board.

More information on the administrative, management, and

supervisory bodies is provided in the Management Report

section: Company’s Supervisory Board and Management

Board.

Sustainability governance processes

During the reporting period, the Group formally defined

and embedded its sustainability governance processes

through the approval of the Sustainability Policy. The

roles, responsibilities, and management and oversight

arrangements related to sustainability are clearly established

and are described in the table below. These responsibilities

are directly reflected in the Sustainability Policy, which

serves as the primary document defining sustainability-

related mandates, roles and oversight arrangements across

the Group.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

FUNCTION / ROLE RESPONSIBILITIES

Management Board Member

responsible for the Baltic State

● Defines and oversees the Group’s sustainability (ESG) strategy,

strategic priorities, and objectives.

● Approves sustainability-related policies and key strategic

decisions.

● Oversees the implementation of the sustainability strategy at

Group level.

● Ensures prioritisation of key sustainability impacts, risks,

and opportunities (IROs), including oversight of the double

materiality assessment process.

● Approves sustainability targets, budgets, and key initiatives.

● Reviews and approves the Group’s sustainability reports and

conducts annual reviews of progress against sustainability targets

and ESRS requirements.

● Participates in sustainability-related meetings and promotes the

development of a sustainability culture across the Group.

Chief Operating Officer (COO)

● Oversees day-to-day sustainability-related matters across the

Group.

● Coordinates the implementation of sustainability policies and

action plans.

● Ensures the integration of sustainability practices and targets

into operational and strategic decisions, including energy

efficiency initiatives and emission reduction targets.

● Together with the Sustainability Officer, oversees the

identification, assessment, and prioritisation of sustainability

impacts, risks, and opportunities (IROs).

● Participates in scheduled sustainability discussion meetings and

provides regular updates to the Management Board Member

responsible for sustainability oversight.

Sustainability Officer (Person Responsible

for the Sustainability Process)

● Organises sustainability meetings and prepares agendas as

required.

● Prepares sustainability KPI analyses, progress reviews, and data

reports.

● Coordinates the double materiality assessment process and

supports the monitoring of material IROs.

● Ensures the collection, consistency, and consolidation of data for

sustainability reporting.

● Coordinates the preparation of the annual sustainability report

in line with ESRS requirements.

Group Business Unit Heads

● Integrate sustainability principles into business operations,

services, and product development.

● Ensure implementation of sustainability objectives at operational

and client levels.

● Participate in sustainability-related investment and business

development decisions.

● Monitor sustainability performance indicators within their

business areas and initiate corrective actions where necessary.

● Participate in sustainability meetings and represent business unit

perspectives.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

FUNCTION / ROLE RESPONSIBILITIES

Chief Financial Officer (CFO)

● Ensures integration of sustainability objectives and indicators

into budgeting, financial planning, and resource allocation

processes.

● Incorporates sustainability KPIs into periodic financial and

management reporting to support informed decision-making.

Human Resources Manager

● Ensures employee well-being, diversity, and inclusion.

● Oversees occupational health and safety practices and

employee-related sustainability initiatives.

Business Support Manager (Procurement)

● Integrates sustainability criteria into supplier evaluation and

selection processes.

● Implements and oversees the sustainable procurement policy.

Person Responsible for Transport Management

● Manages transport-related emissions and supports the

achievement of emission reduction targets.

● Ensures the sustainability and efficiency of the vehicle fleet.

Person Responsible for Asset Management

● Oversees initiatives to improve energy efficiency and

environmental performance in managed buildings and

equipment.

Head of Legal Department

● Ensures compliance with sustainability-related regulatory and

legal requirements.

● Oversees data protection and compliance with applicable

privacy regulations.

Head / Responsible Person

for Occupational Health and Safety

● Coordinates the implementation of occupational health and

safety measures across the Group.

● Oversees occupational risk assessments and preventive action

plans.

● Contributes to the creation of a safe and sustainable working

environment.

Head of IT Department

● Supports the collection, management, and analysis of

sustainability-related data.

● Oversees the maintenance and development of sustainability

data management systems.

Responsibilities of the Management Board

In addition to the sustainability governance structure

described above, the Group applies formal internal control

and risk management mechanisms to support the effective

management and oversight of sustainability-related

impacts, risks, and opportunities (IROs).

Risk assessments across business areas are coordinated

centrally in line with the ISO 31000 risk management

standard to ensure a consistent approach at Group level.

Sustainability risks are integrated into the Group’s overall

risk management framework and are addressed through

established internal control standards, including ISO 14001

and ISO 45001.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Sustainability Expertise

City Service’s administrative, management, and supervisory

bodies comprise members with a diverse range of skills

and expertise directly related to the Group’s material

sustainability impacts, risks, and opportunities:

● One of the Management Board Members responsible

for the Baltic countries has extensive experience in

environmental management and energy efficiency,

gained over many years of managing Group companies.

● The Group Managing Director possesses expertise

in corporate governance and regulatory compliance,

ensuring alignment with ESG reporting frameworks.

● The Group’s business executives have specialised

knowledge in real estate management and engineering,

which are crucial for addressing sustainability risks and

opportunities in the building maintenance sector.

● The management bodies have hands-on experience

in implementing sustainability projects such as smart

building solutions.

● Governance-related competencies are primarily

concentrated within the Management Board and the

COO, while social sustainability expertise resides at

the business unit leadership level.

The administrative, management, and supervisory bodies

collectively leverage their expertise to formulate policies

and strategies, while also consulting with third-party

sustainability experts to remain informed about emerging

risks, opportunities, and best practices. Designated

employees attend annual workshops on sustainability

reporting, climate risk management, and regulatory

developments to enhance their knowledge.

Independent consultants specialising in sustainability

strategy and reporting assist Group’s management bodies

in:

● Ensuring compliance with regulatory requirements.

● Conducting materiality assessments and reporting in

accordance with ESRS frameworks.

● Providing guidance on the calculation and management

of Scope 1, 2, and 3 emissions.

Their expertise helps the Group align with evolving

sustainability standards and enhance transparency in ESG

reporting.

City Service ensures that the expertise of its governing

bodies remains directly relevant to the Group’s core

sustainability priorities, including:

● Managing energy efficiency initiatives in buildings.

● Reducing carbon emissions through operational

improvements.

● Addressing regulatory risks related to ESG

compliance.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Sustainability-related IROs, such as climate change impacts,

regulatory compliance, and energy efficiency trends, are

integrated into the Group’s strategic planning process.

The Management Board and executive managers actively

incorporate sustainability considerations into decision-

making processes, including major transactions and risk

management. Key areas of focus include:

● Balancing trade-offs:

● Aligning economic performance with sustainability

commitments.

● Implementing energy-saving measures while

minimizing operational disruptions.

● Prioritizing long-term value creation, even when

requiring higher initial investments, such as

transitioning to renewable energy.

● Major transactions: When acquisitions occur, the same

sustainability objectives and requirements set for City

Service apply to the acquired companies, ensuring

consistency in ESG commitments.

● Corporate strategy alignment: The management team

ensures that the Group’s strategic initiatives reflect

long-term sustainability priorities and stakeholder

expectations.

Material impacts, risks, and opportunities

addressed during the reporting period

During the reporting period, the administrative,

management, and supervisory bodies of City Service

have specifically addressed the following key sustainability

matters (IROs) listed in the table below.

GOV-2 – Information provided to and sustainability

matters addressed by the undertaking’s administrative,

management and supervisory bodies

The COO holds quarterly meetings with the Management Board to discuss key sustainability issues

and risks. These updates cover identified impacts, risks, opportunities, and the effectiveness of

policies, actions, metrics, and targets.

SUSTAINABILITY MATTER ADDRESSED

ADMINISTRATIVE, MANAGEMENT,

AND SUPERVISORY BODIES

ESG discussion following the Sustainability Report audit Management Board Member responsible for the Baltic States; COO

Group business continuity plan; Group policies, procedures, and

strategies; readiness for the 2025 sustainability report audit

COO; Director of SKOLOS LT, UAB; Head of Legal Department;

Human Resources Manager (Lithuania); Sustainability Officer; Busi-

ness Support Manager (Procurement); Head / Responsible Person for

Occupational Health and Safety; Person Responsible for Transport

Management; Person Responsible for Asset Management

Sustainability action plan and actions review COO; Director of SKOLOS LT, UAB; Head of Legal Department;

Human Resources Manager (Lithuania); Sustainability Officer; Busi-

ness Support Manager (Procurement); Head / Responsible Person for

Occupational Health and Safety; Person Responsible for Transport

Management; Person Responsible for Asset Management

Sustainability risk assessment Business Support Manager (Procurement); Sustainability Officer

Approval of sustainability risks COO; Business Support Manager (Procurement); Sustainability Of-

ficer

Approval of the sustainability questionnaire for partners Business Support Manager (Procurement); Sustainability Officer

Sustainability status review Management Board Member responsible for the Baltic States; COO

Sustainability status and action plan reviews COO; Director of SKOLOS LT, UAB; Head of Legal Department;

Human Resources Manager (Lithuania); Sustainability Officer; Busi-

ness Support Manager (Procurement); Head / Responsible Person for

Occupational Health and Safety; Person Responsible for Transport

Management; Person Responsible for Asset Management

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

SUSTAINABILITY MATTER ADDRESSED

ADMINISTRATIVE, MANAGEMENT,

AND SUPERVISORY BODIES

NPS management sessions COO; CFO; Human Resources Manager (Lithuania); Regional Manag-

ers; Group Business Unit Heads

Transition plan preparation review COO; Director of UAB SKOLOS LT; Head of Legal Department;

Human Resources Manager (Lithuania); Sustainability Officer; Busi-

ness Support Manager (Procurement); Head / Responsible Person for

Occupational Health and Safety; Person Responsible for Transport

Management; Person Responsible for Asset Management

Transition plan preparation review (operational level) Sustainability Officer; Business Support Manager (Procurement);

Head / Responsible Person for Occupational Health and Safety; Per-

son Responsible for Transport Management; Person Responsible for

Asset Management

Data collection for the sustainability report COO; Project Manager (Latvia); Sustainability Officer; Head of Legal

Department (Latvia); Human Resources Manager (Latvia); CFO (Lat-

via); Customer Service Specialist

ESG status review Management Board Member responsible for the Baltic States; COO;

Business Management Director; Commercial Director

Taxonomy data review COO; CFO; Sustainability Officer; Financial Controller

ESG strategic aspects review Management Board Member responsible for the Baltic States; COO

GOV-3 – Integration of sustainability-related performance

in incentive schemes (E1 GOV-3)

The current remuneration policy for members of City Service’s administrative, management and supervisory bodies

does not contain specific provisions on sustainability issues. Currently, incentive schemes and performance-related

remuneration are focused on financial and performance indicators including revenue growth, cost efficiency and per-

formance targets.

Certain elements of sustainability due diligence are ap-

plied within the Group companies. The key due diligence

aspects and steps outlined in ESRS 1, Section 4 “Due

GOV-4 - Statement on due diligence

The Group is not subject to legal requirements regarding comprehensive sustainability due diligence

and has not implemented a dedicated due diligence system. However, the Group continuously

assesses potential negative impacts within its operations and value chain, takes measures to prevent

them, and is committed to cooperating in remedying adverse impacts if it causes or contributes to

them.

Diligence”, relate to several horizontal and thematic dis-

closure requirements under the ESRS framework (see a

table below).

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Key elements of due diligence (GOV-4)

CORE ELEMENTS OF DUE DILIGENCE

DISCLOSURES IN THE SUSTAINABILITY

STATEMENT

a) Embedding due diligence in governance,

strategy and business model

GOV-1

GOV-2

GOV-3

SBM-3, E1 SBM-3, S1 SBM-3, S2 SBM-3, S4 SBM-3, G1 SBM-3

b) Engaging with affected stakeholders in all

key steps of the due diligence

GOV-2

SBM-2

IRO-1

S1-2

S4-2

c) Identifying and assessing adverse impacts

SBM-3, E1 SBM-3, S1 SBM-3, S2 SBM-3, S4 SBM-3, G1 SBM-3

IRO-1

E1-2

S1-1

S2 Workers in the value chain

S4-1

G1-1

d) Taking actions to address those adverse impacts

E1-3

S1-4

S2 Workers in the value chain

S4-4

G1-1

e) Tracking the effectiveness of these efforts

and communicating

E1-4

S1-2

S1-5

S2 Workers in the value chain

S4-2

S4-5

G1-4

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

GOV-5 - Risk management and internal controls over

sustainability reporting

The Group has established a structured and formalised sustainability reporting process supported by

internal controls to ensure the accuracy, completeness, consistency, and traceability of sustainability

information.

Sustainability reporting risks (completeness, accuracy and timeliness) are managed as part of the Group’s overall governance

and internal control framework, described in the table below.

Role / Function Key responsibilities

Sustainability Committee / Management

● Sets strategic direction and sustainability objectives.

● Approves sustainability targets and allocates resources.

● Reviews and approves the final sustainability report.

Person responsible for the sustainability process

● Acts as the central coordinator of the sustainability reporting

process.

● Organises and oversees data collection across the Group.

● Performs quality checks and consistency reviews.

● Prepares draft versions of the sustainability report.

● Ensures effective communication among all involved functions.

Department heads / Data owners

● Collect sustainability-related data within their areas of

responsibility (e.g. HR, operations, finance, logistics).

● Ensure the accuracy, completeness, and reliability of the data

provided.

● Submit data and supporting information to the sustainability

coordinator.

Communications Department

● Supports the design, layout, and narrative development of the

sustainability report.

● Coordinates publication and external communication of the

report.

External auditor

● Acts as an independent third party providing limited assurance

over sustainability information and disclosures.

Roles and responsibilities in the sustainability reporting process

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Key stages in the sustainability reporting process

The sustainability reporting process is carried out through

the following key stages:

● Preparation and planning. The scope of reporting,

applicable standards, and responsibilities are defined

and aligned with the Group’s sustainability strategy

and regulatory requirements.

● Data collection. Sustainability-related quantitative

and qualitative data is gathered across business units

using consistent approaches and clearly assigned data

ownership.

● Data consolidation and quality control. Plausibility

checks, consistency reviews, and comparisons with

prior periods are performed to identify potential

gaps or inconsistencies. Identified issues are clarified

and corrected in cooperation with the relevant data

owners.

● Analysis and report drafting. Consolidated data is

analysed, key trends and progress are assessed, and

the sustainability narrative is prepared in line with

ESRS requirements.

● Internal review and approval. Factual validation by

responsible departments and strategic review by

management are completed to ensure accuracy,

completeness, and alignment with the Group’s

objectives.

● Independent limited assurance and publication.

Sustainability information is subject to limited

assurance and is subsequently approved and published.

To ensure data integrity and minimise discrepancies,

sustainability data from various departments, including

operations, procurement, and human resources, is

centrally consolidated in a dedicated SharePoint platform.

City Service is also exploring AI-driven solutions to further

streamline sustainability data collection in the coming years.

These innovations are aimed at simplifying the process and

reducing the risk of errors, ultimately enhancing the quality

and reliability of future sustainability reports.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Main areas of activities include:

● Administration of apartment buildings.

● Management of commercial building facilities.

● Maintenance and cleaning of territories.

● Other activities (e.g. premises rental).

The Group’s business model is focused on providing high-

quality services to owners of residential, commercial

and public buildings in Lithuania and Latvia. The Group

continuously implements convenient digital tools for

clients in its operations, leveraging artificial intelligence

and expert knowledge, with particular attention paid to

energy resource savings in both commercial and residential

buildings.

In addition to its core operations, the Group is also

involved in building renovation, gas station maintenance,

and provides debt management services.

The main City Service customer groups are:

● Residents (inhabitants of multi-apartment buildings),

who receive building administration, maintenance,

renovation, and cleaning services.

● Business clients, such as owners or tenants of

office, commercial, and industrial properties, who

are provided with engineering system maintenance,

energy solutions, and cleaning services.

● Public sector entities - public institutions that are

offered engineering system maintenance, energy

solutions, and cleaning services.

At the end of the reporting period the Group had 1 324

employees in Lithuania and 157 in Latvia – a total of 1 481

employees by headcount.

For the 2025 reporting period, no significant changes

were recorded in relation to the services or product range

provided by the City Service Group. The Group continued

its core activities. More detailed information about the

Group’s activities is available in the Annual Report.

Key sustainability directions and goals

The table below outlines the main directions and goals

of the Group’s sustainable development, and performance

in 2025, aligned with its overall business strategy through

2025–2027.

The Group’s strategy will further define its sustainability

priorities and address key environmental and social

challenges in the years ahead. To enable effective

implementation, the Group plans to empower its teams

through several measures: allocating a dedicated budget

for sustainability initiatives, assigning new responsibilities

across relevant functions, enhancing internal competencies,

and expanding the sustainability team to strengthen

execution capacity.

The Group recognises that the adoption and

implementation of a climate Transition Plan will be a

key sustainability challenge in the coming years. This will

require setting science-based GHG reduction targets,

aligning investments and operations with those targets

and integrating transition-related considerations into core

business decisions.

SBM-1 – Strategy, business model and value chain

City Service operates in the Baltic region (Lithuania and Latvia). The Group is active in the building

management sector: the core activity of the Group of companies is focused on the comprehensive

maintenance of apartment buildings as well as commercial, public, and industrial properties.

STRATEGY, BUSINESS MODEL

AND VALUE CHAIN

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Sustainabil-

ity pillar

Directions

(policy

objectives)

Indicators Goals Results 2024 Results 2025

Environment

Climate impact and

GHG emissions re-

duction (in line with

Paris Agreement and

EU Green Deal)

GHG emis-

sions (Scope

1, 2 & 3)

Set GHG emissions reduction

targets and adopt a Transition

Plan until 2028.

Calculated Scope 1, 2 &

3 emissions.

Calculated Scope 1, 2 &

3 emissions.

Transition Plan is under

development.

Social area

Employee health &

safety

Recordable

work-related

incidents

Zero recordable incidents.

Fatal incidents – 0;

Severe incidents – 0;

Minor incidents – 17.

Fatal incidents – 1

;

Severe incidents – 0;

Minor incidents – 16.

Employee well-

being, fair remunera-

tion, and engage-

ment in company

activities

Employee

Engagement

Surveys

(incl. eNPS

- Employee

Experience

Survey

Employee net promoter score

– minimum values:

50.6 in 2025,

52.7 in 2026 and

55 in 2027.

48.7 51.1

Continuous

employee skills

development

No specific

indicator set

yet.

No specific target set. No specific target set. Not available yet

Client experience

and satisfaction

Net Pro-

moter Score

• Net Promoter Score –

minimum values 2025–

2027:

• 15 at “Mano Bustas”

• 50 in the CS engineering

business

• 25 in the CS cleaning

business

• 15 in the Latvian business

• -19.1 at “Mano

Bustas”

• 61 in the CS engi-

neering business

• Not yet measured

in the CS cleaning

business

• -44 in the Latvian

business2

• 20.4 at “Mano

Bustas”

• 71 in the CS engi-

neering business

• Not yet measured

in the CS cleaning

business

• -25 in the Latvian

business2

Personal data pro-

tection (in line with

GDPR)

Major data

protection

incidents

Monitoring of personal data

protection incidents with the

aim of maintaining zero major

incidents (ongoing target).

0 0

Governance

Ethical business,

anti-corruption, and

transparency

Confirmed

breaches

of business

ethics/cor-

ruption

0 confirmed breaches of busi-

ness ethics/corruption (ongo-

ing target).

0 0

The incident refers to a severe criminal act that occurred during the course of work-related activities.

The results vary significantly as different business units began measuring NPS at different times. Improvements are planned to enhance and standardise the measurement process going forward.

In 2025, five minor incidents were recorded, defined as isolated cases with very limited effect. No major incidents, such as large-scale data exposure (e.g., recipient lists exceeding 100 individuals or

disclosure of sensitive data), were registered during the year.

Sustainability is an integral part of the Group’s strategy,

reflected in its services, stakeholder relationships, and

long-term goals across key markets. In the commercial

services segment, the Group provides solutions focused

on improving energy efficiency, reducing electricity and

heating costs, and enhancing indoor air quality. For pri-

vate customers, the Group contributes to the renovation

of residential buildings, aiming to increase their energy

performance and overall property value.

In Lithuania, the Group seeks to supply green electric-

ity - specifically wind power - for the common areas of

apartment buildings, supporting the broader shift toward

renewable energy sources.

Since 2023, City Service Cleaning business has adopt-

ed a policy to actively use only environmentally friendly

cleaning products that are certified for their ecological

credentials (e.g., EcoLabel). The Group promotes the

use of biodegradable and eco-certified cleaning agents

wherever possible. Clients are offered sustainable prod-

uct options, with the flexibility to select what best suits

their specific needs. In exceptional cases, such as when

dealing with more persistent or complex cleaning chal-

lenges, non-ecological products may still be used to en-

sure effective results, although such use is minimised and

carefully considered.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Description of the business model and value chain

Upstream value chain Group’s activities

Downstream

value chain

Activity

• Various goods and services

(from external suppliers)

• Hire of equipment/means

• Transport services

• Administration of apartment buildings

• Commercial building management

• Cleaning and maintenance of premises and grounds

• Artificial intelligence solutions for building management

• Maintenance and repair of engineering systems

• Energy management and renovation

• Technical and energy audits of buildings

• IT services

• Petrol station maintenance services

• Debt management services

• Premises rental

• Use of build-

ings/facilities/

areas

Location

Contractors (partners): Lithu-

ania, Latvia

Suppliers (Tier 1): EU

Suppliers (Tier 2 and beyond):

global

Lithuania, Latvia Lithuania, Latvia

Stakeholders

and key

business actors

• Investors (shareholders)

• Municipalities and other

public authorities, regula-

tory authorities

• Suppliers and partners (incl. contractors). Value chain employees

• Customers (residents, commercial and public building owners, incl. communities)

Sustainability standards are also embedded in supplier

relationships. The Group previously followed a Supplier

Code of Conduct, which has since been enhanced and

expanded. As of 2024, all new contracts with partners

include mandatory compliance with the updated Code of

Conduct, supported by contractual annexes. In addition,

during 2025 the Group conducted a partner survey to

assess suppliers’ and business partners’ approaches to sus

tainability, awareness of ESG principles, and alignment with

the Group’s expectations. The results of this engagement

support the further development of supplier sustainability

management practices and dialogue with partners.

Inputs

City Service operates in the building management sec-

tor, with a focus on residential, commercial, industrial,

and public properties. The Group’s business model is

built on reliable inputs such as skilled human resources

and advanced technological solutions (including AI). To

ensure long-term value creation, the Group collaborates

with suppliers who comply with EU standards, fostering

durable partnerships through long-term contracts. The

supply chain is diversified to reduce geopolitical and eco-

nomic risks, and continuous employee training ensures

high service quality and technological adaptability.

Outputs and outcomes

The Group’s outputs are integrated building management

services aimed at increasing energy efficiency, reducing

operational costs, and improving the living and work-

ing environment for clients. Services include engineering

system maintenance, energy audits, renovation projects,

cleaning, emergency services, and public space upkeep.

For customers, these services translate into cost savings,

increased comfort, and access to modern, energy-effi-

cient buildings.

For investors, long-term service contracts ensure steady

revenue streams and reduce operational risks.

For society, the Group’s work supports environmental

goals, particularly CO₂ reduction, and contributes to im-

proved urban quality of life.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

The table below lists the Group’s key stakeholders, the

methods of their engagement, the most important topics,

and a brief explanation of how the Group incorporates

stakeholder opinions and interests into its business model

and strategy. These aspects are described in more detail

throughout the report in the relevant topic-specific

sections.

The main stakeholders are groups for whom the Group’s

activities are particularly relevant and/or have a significant

impact, as well as individuals and organisations that have

substantial influence on the Group itself. The content of

the Sustainability Report is prepared with consideration

of the views, needs, and expectations of all the key

stakeholders.

The administrative, management and supervisory bodies

are regularly informed about the views and interests of

stakeholders concerning the Group’s sustainability-related

impacts through regular meetings, strategy sessions, etc.

SBM-2 – Interests and views of stakeholders (S1 SBM-2, S2

SBM-2, S4 SBM-2)

City Service’s stakeholder engagement processes are designed to ensure that the needs, expectations

and concerns of all stakeholders are heard and appropriately reflected in the Group’s activities.

STAKEHOLDER

ENGAGEMENT

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Stakeholder engagement overview

Key

stakeholders

Category Methods of engagement

Key concerns /

expectations

How the Group takes

into account the con-

cerns and expectations

of stakeholders

Employees

Affected

stakeholders

• Employee opinion survey

(eNPS)

• Employee meeting (con-

ference)

• Internal communication

channels

• Employee well-being, fair re-

muneration, and engagement

in company activities

The Group takes active

ongoing measures to improve

employee well-being, engage-

ment, and improve remu-

neration system

Customers

(residents,

commercial and

public building

owners, incl.

communities)

Affected

stakeholders

• Ongoing communica-

tion during provision of

services

• Information sharing via

email and website

• 24/7 customer self-

service

• Complaint platform

• App for commercial

service clients

• Sustainable solutions and

services for clients

• Competent employees

• Employee health and safety

• Responsibility and sustainabil-

ity in the service supply chain

• Innovation

• Climate impact and GHG

emissions

• Service quality

The Group actively responds

to customer needs in its day-

to-day operations to ensure

good customer experience

and satisfaction, and an over-

all high-quality of service

Municipalities

and other public

authorities,

regulatory

authorities

Users of

sustainability

information

• Direct communication

through e-mails

• All required information

is provided

• Institutions set sustain-

ability requirements

• Customer experience and

satisfaction

• Employee well-being and fair

remuneration

• Energy efficiency for the

public and clients

• Innovation

• Public education on energy

consumption

The Group complies with

regulatory requirements by

providing all necessary infor-

mation, supporting sustaina-

bility policies, promoting and

contributing to public aware-

ness on energy efficiency

Suppliers and

partners (incl.

contractors)

Value chain

employees

Affected

stakeholders

• Daily communication,

ongoing contact

• Periodic review of con-

tracts and agreements

• Supplier audits as needed

•

Regular dialogue on service

improvements, changes,

and other matters

• Supplier ESG survey

(since 2025)

• Competent employees

• Sustainable solutions and

services for clients

• Employee well-being and fair

remuneration

The Group maintains close

cooperation with suppliers

and partners while promot-

ing fair practices and ensuring

regular dialogue on service

improvements, changes and

other issues

Investors

(shareholders)

Users of

sustainability

information

• Weekly meetings

• Board meetings

• Quarterly and annual

activity reports

• Innovation

• Efficiency in resource use

• Customer experience and

employee well-being

The Group ensures transpar-

ency and accountability to

the investors

Stakeholder engagement and feedback have not indicated a

need for major changes to the Group’s strategy or business

model. The interests and expectations of stakeholders are

well aligned with the Group’s current strategic direction,

particularly in the area of service delivery and sustainability

priorities. The Group’s services are already structured to

address stakeholder needs, and no conflicting interests

have been identified.

As a result, the Group has not made and does not anticipate

any major amendments to its strategy or business model

based on stakeholder input. Accordingly, no material

changes in stakeholder relationships or perceptions are

expected in the near term.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

SBM-3 - Material impacts, risks and opportunities and their

interaction with strategy and business model

DOUBLE MATERIALITY

ASSESSMENT

Double materiality matrix

The matrix below summarises sustainability topics linked to the Group’s material impacts, risks and/or opportunities

(IRO’s). The vertical axis represents impact materiality, while the horizontal axis – financial materiality. Sustainability

topics are considered material when they are related to material IRO’s through either impact or financial materiality,

or both.

Impact

materiality

High

• E1 Climate Change:

Climate impact and GHG

emissions

• S1 Own Workforce: Em-

ployee health & safety

• S1 Own Workforce:

Employee well-being,

fair remuneration, and

engagement in company

activities

• G1 Business Ethics: Ethi-

cal business, anti-corrup-

tion, and transparency

• S1 Own Workforce:

Competent employees

now and in the future

• S4 Consumers and End-

Users: Client experience

and satisfaction

Medium • S2 Value Chain Workers

• E1 Climate Change: Energy

efficiency for the public and

clients

Low

Low Medium High

Financial materiality

The table below details the Group’s material (ESRS) sus-

tainability topics, sub-topics and their relationship to ma-

terial impacts, risks/opportunities, while indicating where

they are concentrated in the value chain. The topics have

been grouped to provide a comprehensive picture and to

reveal all information that may be relevant to stakeholders.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

City Service entity-specific topic / sub-topic / sub-sub-topic

positive impact actual impact risks

negative impact potential impact opportunities

Material

topic

Material

sub-topic

Material

sub-sub-topic

Material IROs Description

Value chain Time horizon

Upstream

Own

Operations

Down-

stream

Short,

medium, or

long term

Climate

change

Climate change

mitigation

GHG emissions

in direct activities and

throughout the value chain

contributing to climate

change.

The Group operates in a sector classified

as high climate impact (NACE code L),

and its activities generate greenhouse

gas (GHG) emissions both directly and

across the value chain. These emissions

contribute to climate change and have

environmental and social consequences.

✓ ✓ ✓

All

Adaptation to

climate change

Transition op-

portunities

Opportunity to rein-

force the Group's image

with science-based GHG

reduction targets and

actions.

Developing science-based GHG reduction

targets and taking supportive action is

both a necessity and an opportunity

for the Group. As expectations around

corporate climate action grow, this can

help build stakeholder trust and enhance

the Group’s public image.

✓ ✓ ✓

Medium and

long term

Opportunities to

expand climate change

adaptation services (e.g.

cooling systems).

The Group already provides energy

efficiency services for residential and

commercial buildings - an essential part

of its business model. With growing client

demand, this area presents clear potential

for growth.

✓ ✓

Medium and

long term

Energy

Opportunity of fleet

renewal with electric

vehicles and other ap-

plicable energy efficiency

measures (cost reduction,

reputational benefits).

Renewing the Group’s fleet with electric

vehicles and improving energy efficiency

of office premises could help reduce

operational costs and emissions over

time. These steps may also enhance

the Group’s reputation, as clients of all

business areas increasingly value visible

sustainability efforts.

✓ ✓

Medium and

long term

Energy efficiency

for society and

customers

The Group’s energy

efficiency services con-

tribute to the EU Green

Deal’s goals of climate

change mitigation (e.g.,

building renovation, EV

charging stations).

The Group delivers services that are EU

taxonomy-eligible and/or aligned with

the EU’s climate change mitigation goals

(in both administration of apartment and

commercial buildings businesses). The

taxonomy-eligible revenue disclosures for

this reporting period are limited to EV

charging stations due to data collection

constraints. The Group plans to expand

the list of disclosed taxonomy activities

in the upcoming reporting periods. This

period’s Taxonomy KPIs can be found in

chapter EU Taxonomy disclosure.

✓ ✓

All

Opportunities to

expand climate change

mitigation and adaptation

services (e.g. cooling

systems).

The Group already provides energy

efficiency services for residential and

commercial buildings - an essential part

of its business model. With growing client

demand, this area pres

✓ ✓

Medium and

long term

S1 Own

work-

force

Working condi-

tions

Health and Safety Accidents at work

worsen workers’ physical

and emotional health and

cause financial losses.

While the Group’s business model does

not lead to elevated health and safety

risks, minor workplace accidents do

occur across all business segments. The

overall negative impact is limited, but

remains material due to its connection

to employee health and well-being. The

Group has the necessary accident preven-

tion policies and systems in place for all

its hired employees.

✓

All

Additional health-

related benefits, such

as, vaccinations, and

partnerships contribute to

the health and wellbeing of

employees.

The Group supports employee well-being

through paid health checks, vaccinations,

free psychological support (only in

Lithuania), and health-related seminars

and other measures. These measures are

continuously provided and updated when

necessary.

✓

All

Reduced worker pro-

ductivity due to injuries.

The Group’s business model does not

lead to elevated health and safety risks.

Reduced worker productivity due to

injuries is a potential risk only in the

case of a serious accident, which could

lead to increased costs, higher insurance

premiums, reputational damage or legal

action. The Group considers this risk to

be well managed.

✓

All

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Material

topic

Material

sub-topic

Material

sub-sub-topic

Material IROs Description

Value chain Time horizon

Upstream

Own

Operations

Down-

stream

Short,

medium, or

long term

S1 Own

workforce

Equal treatment

and opportuni-

ties for all

Training and skills

development

An engaging work en-

vironment and educational

opportunities improve the

emotional background.

The Group already provides training and

educational opportunities in key focus

areas, contributing to a more engag-

ing work environment and enhanced

employee well-being. Creating an

engaging workplace and investing in talent

development is a strategic priority for the

Group, resulting in positive impacts on

employees.

✓

All

High employee turnover

due to lack of training and

competencies.

Lack of adequate onboarding and career

development opportunities can lead

to increased employee turnover. This

risk affects all employee groups and is

particularly relevant to the Group’s busi-

ness model, which includes a significant

number of lower-skilled roles. The Group

places strong emphasis on this area in its

strategy, manages the risk on an ongoing

basis, and expects it to decrease over the

long term.

✓

Short and

medium

term

Cybersecurity training

increases awareness,

improves data protection,

and benefits employees

personally.

The Group handles a large volume of cli-

ent data, which is why employees receive

thorough training on cybersecurity -

covering both work-related and personal

safety topics. This creates a positive im-

pact not only at the organisational level

but also for employees personally.

✓

All

Improved service quality

and customer satisfaction

thanks to the growing

competencies of our

employees.

Service quality and customer satisfaction

are central to the Group’s value proposi-

tion. The Group sees opportunities to

further strengthen this across all business

segments by investing in employee

competencies. Continued strategic focus

in this area is expected to generate a

growing positive financial impact.

✓ ✓

All

Integrating AI solutions

and training employees

on their usage improves

productivity and the range

of services.

AI solutions increase

employee efficiency and

reduce workload.

AI solutions are currently being integrated

to streamline and support employee

tasks, aiming to improve efficiency with-

out replacing staff. This creates opportu-

nities for the Group and a positive impact

on employees. The focus is on reducing

workload, particularly in the commercial

and residential building segments. Ongo-

ing AI projects and investments in digitali-

sation reflect the Group’s commitment to

smarter, more efficient operations.

✓ ✓

All

Working

conditions

Adequate wages

Lack of clarity in

the remuneration system

can reduce employee

motivation.

Due to internal policies and the confi-

dential nature of the information, further

details cannot be disclosed.

✓ ✓

Short and

medium

term

An attractive

reward system promotes

employee engagement and

productivity.

While not specific to the business

model or segments, improvements to

the incentive system reflects a strategic

focus of the Group, so a potential positive

impact on employees is foreseen over the

medium to long term.

✓

Medium to

long term

Engagement/

Satisfaction

A positive organisa-

tional culture has a positive

impact on psychological

employee well-being.

Market dynamics in Lithuania and Latvia

highlight the importance of employee

engagement and well-being. The Group

actively focuses on these areas, with a

steadily increasing eNPS reflecting an

ongoing positive impact on employees.

✓

All

Employee complaints

can cause reputational and

financial damage

Employee complaints pose a potential

risk in the event of a serious complaint

that could lead to reputational or financial

damage. There are currently no formal

complaints filed with the labour dispute

commission, and this risk is not directly

driven by the Group’s business model.

✓

Short and

medium

term

Increased focus on the

well-being of unskilled

workers through engage-

ment surveys.

The Group employs a large number of

technical and maintenance staff. Enhancing

engagement with this employee group

presents an opportunity to strengthen

inclusion and organisational alignment.

This is already a priority and is expected

to be further improved over time.

✓

All

More effective internal

communication strength-

ens organisational culture.

Internal communication is a constant

area of focus, with ongoing opportunities

for improvement. It is relevant across all

business segments and reflects a broader

good practice rather than being tied to

the Group’s business model.

✓

All

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Material

topic

Material

sub-topic

Material

sub-sub-topic

Material IROs Description

Value chain Time horizon

Upstream

Own

Operations

Down-

stream

Short,

medium, or

long term

S2 Value

chain

workers

Working condi-

tions

Health and safety

Work-related ac-

cidents among contractors

performing tasks on behalf

of the Group.

Partners (upstream value chain workers)

operate at the Group’s client sites, making

it essential for the Group to ensure

worker health and safety. This responsibil-

ity applies equally across all business

segments and is overseen on an on-going

basis. Occupational safety is prioritised

as the most important social factor and

is explicitly addressed in partnership

agreements. Expectations are clearly

defined in the Group’s Code of Conduct

for Partners and form part of the supplier

selection process.

✓

All

Consumers

and end-

users

Customer

experience and

satisfaction

Providing poor-

quality services can lead to

reputational damage and

financial losses.

Poor quality services

can lead to customer dis-

satisfaction, financial loss,

and psychological damage.

Providing high-quality services is closely

linked to the Group’s reputation, which is

critical to the continuity of its operations.

As such, service quality is managed as a

key risk and business priority across all

segments. Poor service could harm both

the Group’s reputation and its clients,

although this risk is not unique to the

Group’s business model and applies

broadly across industries.

✓

All

Disputes between

clients can lead to lengthy

and costly legal proceed-

ings.

This potential impact is most relevant to

the Group’s residential building mainte-

nance segment, which operates under

strict legal regulation and is therefore

more exposed to misunderstandings or

human error. While disputes between

customers may arise on service delivery

related matters, they are rarely the direct

result of the Group’s actions.

✓ ✓

All

Digitalisation and

24/7 self-service improve

customer experience, ac-

cessibility, and speed.

This is already a strong area of focus and a

key opportunity for further improvement,

aimed at enhancing the Group’s efficiency

and competitiveness while delivering clear

benefits to clients. It is relevant across all

business segments and projects, and is

partly driven by shareholder expectations.

A positive financial impact is expected to

materialise over the long term.

✓ ✓

All

Digitalised processes

and self-service increase

customer convenience and

satisfaction.

✓ ✓

Long term

New technologies

increase operational ef-

ficiency and competitive-

ness, strengthens the

long-term growth of

Group’s businesses

New technologies - including AI, innova-

tion, and robotics - enhance operational

efficiency and strengthen the Group’s

competitiveness. As an integral part of

the business model across all segments,

this is already a priority and presents

ongoing opportunities for continuous

improvement and long-term growth.

✓ ✓

All

Information-

related impacts

for consumers

and/or end-

users

Privacy and data

protection

Personal data

breaches can lead to

discrimination, material

and non-material damage

for clients.

While no significant incidents have oc-

curred to date, a major data breach could

negatively impact clients. This risk is linked

to the Group’s business model, which in-

volves handling personal data of individu-

als in the residential buildings segment,

and managing contractual obligations and

commercially sensitive information in the

commercial segment. The risk is expected

to decrease over time as the Group

continues to invest in cybersecurity.

✓ ✓

Short and

medium

term

Inappropriate use of

personal data may violate

the GDPR and lead to

legal consequences.

This is a general business risk not specific

to the Group’s business model.

✓ ✓

All

Increasing costs of

data protection due to

stricter laws and breach

prevention.

A large client base and upcoming legal

changes require the Group to invest

in additional security measures. More

investments are foreseen in the medium

to long term.

✓ ✓

Medium and

long term

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Material

topic

Material

sub-topic

Material

sub-sub-topic

Material IROs Description

Value chain Time horizon

Upstream

Own

Operations

Down-

stream

Short,

medium, or

long term

Business

ethics

Corporate

culture

Corruption and

bribery

Corruption and non-

compliance with the law

can damage the Group’s

reputation and cause

material and psychological

damage to stakeholders.

While not directly linked to the Group’s

business model or specific segments,

ongoing prevention of negative impacts

remains essential. The likelihood of

corruption is very low and effective

prevention measures are in place. How-

ever, if such an incident were to occur,

it could have a severe and widespread

impact on employees, clients, and other

stakeholders.

✓ ✓

All

Violations of the law

(e.g., competition law or

illegal subcontracting)

can lead to financial and

reputational damage for

the Group.

This risk is more relevant in the residential

buildings segment due to stricter regula-

tion and a higher likelihood of human

error. As reputation is critical to business

continuity, the risk is actively and continu-

ously managed aiming to prevent any

cases of non-compliance, and is expected

to diminish in the long term.

✓ ✓

Short and

medium

term

Implementing good

sustainability governance

practices can enhance

Group’s image and attract

customers and partners.

As sustainability-related services (energy

efficiency improvement) are central to the

Group’s commercial building maintenance

business, growing client demand presents

clear opportunities to further strengthen

the Group’s sustainability governance and

reputation.

✓ ✓

Medium and

long term

Corruption and

bribery

Prevention and

detection includ-

ing training

The availability of a

whistleblowing channel

increases the possibility

of reporting corruption

anonymously.

The availability of an anonymous whistle-

blowing channel increases the likelihood

of reporting potential corruption. This

is considered a market best practice and

serves as a preventive measure, though

it is not directly linked to the Group’s

business model.

✓ ✓

All

Protection of

whistleblowers

Supplier rela-

tionship man-

agement

Cases where contrac-

tors fail to meet their

contractual obligations

with Group companies

(mostly in the administra-

tion of apartment buildings

business) can result in

material and psychological

harm to stakeholders.

This is a potential negative impact linked

to the Group’s business model, which re-

lies on external partners to deliver certain

services. While no such incidents have

occurred recently, the risk of harm to

clients and related stakeholders remains

and is actively managed through contrac-

tual obligations and other measures. The

likelihood for such impacts is expected to

decrease in the long term.

✓ ✓ ✓

All

Financial impact of sustainability topics

During the reporting period, the Group identified and

assessed sustainability-related risks and opportunities

across the short, medium and long term as part of its

double materiality assessment. While certain risks were

identified as potentially material, the extent of their

potential financial effects on the Group’s financial position,

performance or cash flows has not yet been assessed.

The resilience of the Group’s operations to sustainability-

related risks was assessed to the extent covered by the

double materiality assessment. In addition, the resilience of

the Group’s strategy and business model to climate change

was specifically evaluated, with the results presented in the

section Climate Risk Assessment.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

The results of the DMA were reviewed and reconfirmed

for the 2025 reporting period, with no material changes

identified. While the ESRS does not prescribe a specific

methodology for conducting a double materiality assess-

ment, the Group developed a process that adheres to the

principles and guidelines outlined in ESRS 1, considering

the nature and circumstances of its operations, as well as

the established sustainability practices already in place.

The Group relies on the general requirements of ESRS

and the European Financial Reporting Advisory Group’s

(EFRAG) practical application guidance. In the material-

ity assessment, the Group considered both impact and

financial materiality and their interrelationships.

The principle of double materiality:

● A sustainability issue is considered material from

an impact perspective when it relates to an entity’s

significant actual or potential positive or negative

impacts on society or the environment, both in the

short, medium and long term. This reflects an inside-

out perspective.

● A sustainability issue is financially material when the

sustainability issue arises to risks or opportunities that

have, or could have, a significant effect on the entity’s

changes in its business activities, financial position,

financial performance, cash flows, access to finance or

cost of capital in the short, medium and long term.

This reflects an outside-in perspective.

The materiality assessment was carried out in consultation

with the external and internal experts, taking into account

the best available information at the time of the assess-

ment. It is noted that it is the first time the Group has car-

ried out a double materiality assessment, and the Group

is continuously improving its processes to identify actual

and potential IROs, and therefore the list of sustainability

matters identified in this assessment is not exhaustive, but

may be reviewed and expanded in the future.

The process of identifying and assessing material IROs

involved the managers and specialists responsible for the

activities related to the Group’s material sustainability

topics, as identified in the previous materiality assess-

ment and/or identified in the list of sustainability issues

to be included in the materiality assessment under ESRS

1, AR 16.

The company has assessed the materiality of each sus-

tainability matter individually, in accordance with the

ESRS criteria, taking into account the specificities of its

operations, sector and circumstances. The assessment of

materiality was based, to the extent possible, on objec-

tive information, expert insights and generally accepted

scientific advice. IROs have been assessed in the short,

medium and long-term, which are consistent with the

definitions of the time periods set out in ESRS.

The main steps in the assessment of the

Group’s double materiality are:

● Understanding the operational context: value chain

and business model.

● Overview of stakeholder views.

● Identification of existing and potential IROs.

● Assessment of the materiality of IROs.

● Final review and validation of the materiality of IROs.

The DMA process in 2025 was based on a review of

the DMA conducted in 2024. No separate stakeholder

engagement was carried out as part of this process; in-

stead, the assessment relied on ongoing stakeholder en-

gagement practices.

Impact materiality assessment

The impact materiality assessment has been carried out

by considering the Group’s significant actual or potential,

positive or negative impacts on people and the environ-

ment in the short, medium and long term. The material-

ity of actual negative impacts was based on the severity

of the impact, and the materiality of potential negative

impacts was based on their severity and likelihood. The

severity of impacts was determined on the basis of scale,

scope and the nature of the irreversible impacts. In as-

sessing the potential adverse impact on human rights, the

severity of the impact was considered more important

than the likelihood. The significance of positive impacts

was based on scale and scope in the case of actual im-

pacts, scale, scope and likelihood in the case of potential

impacts.

IRO-1 - Description of the process to identify and assess

material impacts, risks and opportunities (E1 IRO-1, E2

IRO-1, E3 IRO-1, E4 IRO-1, E5 IRO-1, G1 IRO-1)

To identify and assess material impacts, risks and opportunities, the Group conducted a double

materiality assessment (DMA) in 2024 in alignment with the ESRS criteria.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Based on the impact materiality assessment methodol-

ogy, actual and potential impacts have been classified into

three categories:

● High – Considered highly significant/material (final

assessment scores: 15–25).

● Medium – Deemed material unless justified otherwise

(final assessment scores: 4–14).

● Low – Assessed as non-material (final assessment

scores: 0–3).

The materiality assessment analysed the entire value

chain of the Group companies, taking into account the

operations of the Group companies, the business rela-

tionships, the geographical location of the value chain and

the affected stakeholders. The materiality of topics was

also assessed at the company level to ensure that signifi-

cant impacts are not excluded, even if they occur within

a single company rather than across the entire Group.

Based on various sources (see list below) and informa-

tion available to the Group, the factors that could lead

to a risk of negative impacts were taken into account.

The assessment was carried out by evaluating the views

of stakeholders as identified by the Group through its

ongoing dialogue with stakeholders in its operations (for

a more detailed disclosure, see SBM-2), publicly available

information provided by competent organisations and

the stakeholder survey carried out as part of a previous

materiality assessment.

To accurately assess climate change risks and opportuni-

ties, the Group conducted an evaluation of both tran-

sition and physical climate risks and opportunities. The

results of this assessment are presented in detail in the

section Climate Risk Assessment.

Biodiversity-related transition and physical risks were not

assessed separately, as the Group’s companies are not

located in or near protected biodiversity areas, and no

direct negative impact on biodiversity, nor related risks

or opportunities have been identified in the Group’s op-

erations.

Financial materiality assessment

The financial materiality assessment was carried out by

taking into account the magnitude of the financial im-

pact and the likelihood of risks and opportunities that

may arise in the immediate business or value chain in the

short, medium and long term.

Based on the financial materiality assessment formula,

the risks and opportunities have been categorised into

three categories:

● High – Considered highly significant/material (final

assessment scores: 15–25).

● Medium – Deemed material unless justified otherwise

(final assessment scores: 4–14).

● Low – Assessed as non-material (final assessment

scores: 0–3).

Risks and opportunities related to sustainability may

arise from the Group’s impacts on the environment and

stakeholders or resource dependencies. Therefore, the

assessment of financial materiality has been carried out in

conjunction with the assessment of impact materiality by

first assessing the impacts and then considering the link-

ages of impacts and dependencies to risks and opportu-

nities. Dependencies were analysed both during the value

chain assessment, such as reliance on key resource inputs

like skilled human capital, and throughout the process of

identifying and assessing IROs. The double materiality as-

sessment prioritised sustainability-related risks, i.e. risks

directly related to the sustainability matters previously

identified by the organisation and the sustainability topics

given by the ESRS standard.

The DMA was carried out by senior management and

specialists responsible for the relevant sustainability top-

ics. The results were reviewed and approved by the Man-

agement Board.

The DMA process is not integrated into the Group’s

overall risk management or overall management process-

es—however, it is intended to be integrated in the future,

in line with the improvement of sustainability governance

and adherence to established sustainability practices in

the market.

Sustainability-related risks are not currently prioritised

separately within the Group’s overall risk management

framework. Risk management is conducted in accord-

ance with the ISO 31000 standard. All risks, including

sustainability and other business risks, are assessed using

the same evaluation methodology, and their prioritisation

is based on the outcome of the risk assessment process.

At present, strategic risks include certain sustainability-

related risks, reflecting their relevance to the Group’s

long-term objectives.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

The parameters of severity and likelihood of impact, and

magnitude and likelihood of financial impact have been

assessed on the basis of available information from vari-

ous sources:

● Policies developed and implemented by the Group,

reports and internal documents.

● Value chain analysis: nature of activities, geographical

locations.

● Stakeholder survey results, 2023, and other

information available to the Group on sustainability

issues relevant to stakeholders.

● Annual reports from other industry players and

identified material topics.

● Industry rankings and materiality maps such as SASB

and MSCI.

● City Service’s Annual Report.

● Auditor’s Report on the Organization’s Management

System Compliance with the requirements of ISO

9001:2015, ISO 14001:2015, and ISO 45001:2018

standards.

● City Service’s employee engagement survey results.

● Risk Management Procedure of UAB “Mano Būstas”.

● Risk Management Policy of UAB “Mano Būstas” Group

of Companies.

● City Service Risk List and Risk Management Measures

Plan.

The Group reviews the double materiality assessment

process annually and updates the information provided.

The results of the DMA were reviewed and reconfirmed

for the 2025 reporting period, with no material changes

identified.

A list of the disclosure requirements followed in prepar-

ing the sustainability report is provided in the section

“List of ESRS Disclosures Included in This Report”. The

Group’s DMA was followed by the identification of mate-

rial disclosures and data points to be reported, in align-

ment with EFRAG’s Implementation Guidance 3 (IG 3).

The Group’s material sustainability topics are addressed

through the corresponding topical ESRS standards, ensur-

ing a focused and standards-aligned reporting approach.

Data points selected from the ESRS directly reflect the

Group’s material topics and have been included in this

report to provide a transparent and complete picture of

sustainability performance. This process ensures that no

material information has been omitted.

IRO-2 – Disclosure Requirements in ESRS covered by the

undertaking’s sustainability statement

The Group’s Sustainability Report is prepared based on a double materiality assessment, with the

process and results described in detail in the IRO-1 disclosure section.

A table of all data points required under other EU legisla-

tion, as referenced in Annex B of the ESRS 2 standard,

is available in the section “List of datapoints in ESRS that

derive from other EU legislation.” Climate change is con-

sidered a material topic for the Group and is included in

this report.

Minimum disclosure requirements

The Group applies and discloses information in accord-

ance with the minimum disclosure requirements on poli-

cies (MDR-P), actions (MDR-A), metrics (MDR-M), and

targets (MDR-T), along with the relevant disclosure re-

quirements set out in the topic-specific ESRS further in

this report.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Sustainability policy (MDR-P)

In 2025, as part of strengthening its sustainability frame-

work, the Group approved a comprehensive Sustain-

ability Policy covering all material sustainability matters

identified through the double materiality assessment.

The policy establishes a common approach to manag-

ing sustainability-related impacts, risks, and opportunities

across the Group and refers to the European Sustain-

ability Reporting Standards (ESRS) as the main reporting

and disclosure framework.

Key elements of the Sustainability Policy include:

● Sustainability principles and objectives across

environmental, social, and governance (ESG) areas.

● Integration of sustainability considerations into

the Group’s activities, decision-making, and risk

management processes.

● Commitments related to responsible resource use,

climate impact mitigation, employee well-being, ethical

and transparent business conduct, data protection,

customer satisfaction, and responsible use of digital

technologies, including artificial intelligence.

● Monitoring of sustainability performance through

defined indicators and regular reporting.

● Group’s commitment to its key stakeholder groups,

including employees, clients, partners, and society, as

defined in the policy.

The Sustainability Policy applies to all Group companies

and employees. Its provisions are further detailed in oth-

er internal documents, strategies, and action plans. The

policy covers the Group’s own operations and activities.

Sustainability expectations towards partners and suppli-

ers are addressed through separate procurement- and

partner-related arrangements.

Overall responsibility for the implementation of the

Sustainability Policy lies with the Group’s senior man-

agement, in line with the governance arrangements de-

scribed in the Sustainability Governance section of this

report.

The Sustainability Policy is communicated to all Group

employees through internal document management sys-

tems and written or electronic means and is publicly

available on the Group’s website.

Other policies addressing specific material sustainability

topics are described further in this report within the re-

spective topic-specific sections.

All policies are applicable to every employee, and all staff

members are required to familiarise themselves with

them.

All policies were developed with stakeholder interests in

mind. While no direct stakeholder engagement was con-

ducted specifically for their development, policies reflect

the Group’s understanding of key stakeholder expecta-

tions and are aligned with established good practice.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

ENVIRONMENTAL AREA

E1 GOV-3 Integration of sustainability-related performance

in incentive schemes

E1 SBM-3 – Material impacts, risks and opportunities and

their interaction with strategy and business model and

E1 IRO-1 – Description of the processes to identify

and assess material climate-related impacts, risks

and opportunities

E1 CLIMATE CHANGE

This information is provided alongside the ESRS 2 GOV-3 disclosure in the chapter Sustainability

Governance of this report.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

CLIMATE RISK ASSESSMENT

To prepare for the upcoming CSRD sustainability reporting requirements, the Group undertook

a climate risk and opportunity assessment in 2024, aligning with ESRS standards and the ‘Do

No Significant Harm’ criteria for climate change adaptation under the EU Taxonomy Regulation

(Annex A of Delegated Regulations No. 2021/2178 and No. 2023/2486). The methodology followed

guidance from the Task Force on Climate-related Financial Disclosures (TCFD) and scenario analysis

recommendations tailored to non-financial undertakings. The results of this assessment were

reviewed and remain applicable for the 2025 reporting period, with no material changes identified.

The assessment involved scenario-based analysis to iden-

tify and evaluate both physical climate risks and transi-

tion-related risks and opportunities. It was based on the

best currently available data and will be reviewed on an

annual basis and/or in the event of significant changes in

business context or updated forecasts of relevant physi-

cal or transition developments.

Assessment of physical climate risks

The assessment of physical climate risks was conducted

in proportion to the scale and expected duration of the

Group companies’ operations. Three time horizons were

defined: short-term (up to 2026), medium-term (2026–

2030), and long-term (2030–2050). The Group assessed

climate-related hazards across its entire operations and

supply chain.

During the climate risk assessment, the full list of physical

hazards provided in Annex A of Commission Delegated

Regulation (EU) 2021/2139 was examined. A compre-

hensive assessment concluded that there are no material

physical climate risks to the Group’s operations or as-

sets. As the Group operates in the service sector, with

activities distributed across urban areas in Lithuania and

Latvia, no potential risks were identified that could have

a material financial impact.

While isolated incidents may occur – such as heavy

rainfall affecting drainage systems in buildings under the

Group’s maintenance – these are unlikely to significantly

impact operational performance. Only in extreme cases

might there be minor effects, such as temporary custom-

er dissatisfaction, but these would not affect the Group’s

overall economic activity.

To carry out the assessment, the Group used climate

data from two key national sources: the report Prepa-

ration of Climate Change Projections until 2100, com-

missioned by Lithuania’s Ministry of Environment (with

projections based on a 12x12 km grid), and the Study on

climate change risks by the middle of the 21st century

by the Lithuanian Hydrometeorological Service (with

regional-level projections). Both sources were used to

analyse the IPCC’s RCP4.5 and RCP8.5 scenarios, which

show very little difference in projected outcomes up to

mid-century. Since reliable data was available for Lithu-

ania, and Latvia’s climate conditions are very similar, the

Group confidently used Lithuanian projections to assess

risks in both countries, given that operations in both

markets are similar and focused in urban areas. During

the assessment, the Group carefully evaluated whether

any physical hazards might result in materially different

outcomes for its operations in Latvia. No such risks were

identified.

Assessment of transition risks and

opportunities

The assessment of transition risks was carried out using

the following timeframes: short-term (up to 2026), medi

um-term (2026–2030), and long-term (2030–2050). The

Group analysed expected and potential developments un

der a net-zero emissions by 2050 scenario, which aligns

with the Paris Agreement and the overarching goal of the

European Green Deal to achieve climate neutrality by

2050. The evaluation followed the TCFD guidelines, us

ing the TCFD classification of climate-related transition

events.

At this stage, the climate risk assessment remains prelimi

nary, as the Group has not yet developed a formal Transi-

tion Plan and therefore the costs of transitioning to lower-

emission technologies remain uncertain. The assessment

will be refined once the Transition Plan is in place.

The main assumptions considered, along with the identi

fied transition risks and opportunities, are summarised in

the table below.

Preparation of climate change projections, national study on the vulnerability and sensitivity of Lithuanian municipalities to climate change, and adaptation plan for the most vulnerable municipality.

Stage I: Preparation of climate change projections until 2100. Introductory report (report prepared by order of the Ministry of Environment of the Republic of Lithuania, Riga, 2022). Available here.

Study on Climate Change Risks by Mid-21st Century (Lithuanian Hydrometeorological Service, Climate and Research Division; analysis conducted on behalf of the Lithuanian Banking Association,

Vilnius, 2023). Available here.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Overview of climate-related transition risks and opportunities

No risks/opportunities Medium – material

Low – not material High – highly significant/material

Transition events (TCFD) Risks Opportunities

Materiality

2026 2030 2050

Policy and

Legal

Increased pricing of

GHG emissions

No risks identified As fuel prices rise, demand increases

among clients for building energy effi-

ciency improvements (e.g. insulation and

related upgrades). This trend presents

an opportunity to expand service

offerings and strengthen the Group’s

position as a provider of sustainable,

energy-efficient building maintenance

solutions and is expected to materialise

medium- to long- term.

Increased reporting

obligations

No risks identified No opportunities identified

Mandates on and

regulation of existing

products and services

No risks identified Regulatory requirements for building

energy efficiency are becoming more

stringent.

This drives growing demand for related

services and opens opportunities to de-

velop and offer new, regulation-aligned

solutions. These services are already

embedded in the Group’s business

model and are expected to contribute

to even stronger financial performance

in the medium to long term.

Litigation risk No risks identified No opportunities identified

Technol-

ogy

Costs to transition

to lower emissions

technology

No risks identified No opportunities identified

Unsuccessful invest-

ment in new tech-

nologies

No risks identified No opportunities identified

Substitution of

existing products and

services with lower

emissio

No risks identified Replacing existing products and ser-

vices with lower-emission alternatives

presents an opportunity to strengthen

the Group’s competitive advantage by

aligning with client expectations for

sustainable solutions and positioning

the Group as a forward-looking market

leader. This is expected to increasingly

drive material performance improve-

ments in the medium to long term.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Transition events (TCFD) Risks Opportunities

Materiality

2026 2030 2050

Market

Changing consumer

behavior

No risks identified Clients are increasingly favouring sus-

tainable solutions, creating a favourable

environment for expanding the Group’s

offering of environmentally responsible

services.

Uncertainty in mar-

ket signals

No risks identified No opportunities identified

Increased cost of raw

material

More complex sales

processes due to

rising raw material

costs, which increase

the overall cost of

works (suppliers un-

able to guarantee raw

material availability).

This may limit sales

growth potential.

However, as the

Group’s services are

not easily substitut-

able, the overall

financial impact is ex-

pected to be limited.

No opportunities identified

Reputa-

tion

Shifts in consumer

preferences

No risks identified No opportunities identified

Increased stakeholder

concern or negative

stakeholder feedback

No risks identified Increased investor concern regarding

sustainability issues may lead to more

favourable financing conditions. How-

ever, as such benefits largely depend

on state-level policy decisions which

are unknown, the opportunity is not

considered material.

Stigmatization of

sector

No risks identified No opportunities identified

Climate related impact assessment

As part of its climate-related impact assessment, the

Group considered the nature of its operations and calcu-

lated its Scope 1, Scope 2, and Scope 3 greenhouse gas

(GHG) emissions. Based on this assessment, the Group

concluded that its impact on climate change is material.

At present, the Group does not foresee any significant

changes to its operations in the short, medium, or long

term that would affect this materiality evaluation.

E1-1 – Transition plan for climate change

mitigation

Currently City Service does not have a Transition Plan in

place. A Transition Plan is a roadmap that outlines how

an organisation will adapt its business model and op-

erations to contribute to a low-carbon, climate-resilient

economy. The Group plans to adopt a Transition Plan

aimed at implementing a long-term climate change miti-

gation strategy aligned with the EU Green Deal and the

Paris Agreement. The Transition Plan is expected to be

adopted within the next 2–3 years, taking into account

stakeholder expectations and updates to the operational

strategy.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

E1-2 – Policies related to climate change

mitigation and adaptation

The Group’s overarching policy covering all material sus-

tainability matters, including climate change, is described

in the Sustainability Policy (MDR-P) section. The Sustain-

ability Policy covers all material impacts, risks, and op-

portunities related to climate change identified through

the double materiality assessment, including climate

change mitigation; climate change adaptation and energy

efficiency.

In particular, the policy includes the following commit-

ments:

● Reducing energy consumption and greenhouse gas

emissions in the Group’s operations and supporting

clients in reducing their energy use and related

emissions.

● Improving energy efficiency and promoting building

modernisation, including the use of smart and digital

solutions in managed buildings.

● Increasing the use of renewable energy in the Group’s

operations and encouraging renewable energy

solutions in client-managed properties.

● Developing and offering sustainable, energy-saving

services, including the expansion of solutions based

on smart technologies and client-focused sustainability

support.

● Ensuring transparent and consistent measurement

and disclosure of greenhouse gas emissions.

In addition, the Group’s policy commitments are further

detailed through its Quality, Environmental Protection,

and Occupational Health and Safety Policy, which has

been developed in alignment with relevant ISO stand-

ards. This policy applies to all Group operations, in-

cluding those carried out by outsourced partners and

contractors executing projects on behalf of clients. The

COO holds the highest level of accountability for its im-

plementation.

The policy addresses climate change mitigation, climate

change adaptation and energy efficiency through the fol-

lowing commitments:

● Compliance and continuous improvement of the

environmental management system, in line with

applicable legal and regulatory requirements.

● Ongoing monitoring and evaluation of environmental

and energy performance.

● Oversight of external processes, ensuring that selected

partners meet legal and environmental protection

standards.

● Renovation of buildings and equipment to reduce

environmental impact.

● Enhancing client environments by maintaining

engineering systems in an environmentally responsible

manner.

● Reducing annual energy consumption, taking into

account climate and other influencing factors.

● Developing and implementing energy-saving services

to support broader sustainability goals.

● Continuously improving employee competencies in

environmental protection and energy management,

while fostering engagement, responsibility, and

professional development.

● Raising awareness among employees about their roles

in preserving the environment and promoting energy

efficiency.

● Ongoing improvement of the integrated management

system, including performance analysis and actions to

increase its overall effectiveness.

The policy has been developed with stakeholder inter-

ests taken into consideration, particularly those of cli-

ents, employees, and nature as a silent stakeholder, rec-

ognising expectations for the Group’s contribution to

environmental protection.

The policy is made available to all Group employees, who

are responsible for its implementation, via the Group’s

internal document-sharing platforms.

E1-3 – Actions and resources in relation to

climate change policies and

E1-4 – Targets related to climate change

mitigation and adaptation

The Group’s GHG emission reduction strategy (Transi-

tion Plan) is currently under development. As such, City

Service has not yet adopted specific actions, targets, or

a formal action plan related to climate transition without

a clear strategy in place. Consequently, there are no rel-

evant disclosures to report at this stage in relation to the

minimum disclosure requirements for MDR-A or MDR-T.

To track its performance to date, the Group has been

calculating its Scope 1 and Scope 2 greenhouse gas

(GHG) emissions since 2022. Since 2024, Scope 3 emis-

sions were included in the assessment. The results are

presented in the tables below.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Energy efficiency for society and customers

(MDR-P, MDR-A, MDR-T)

The policy addressing this sub-topic is provided alongside

the E1-2 disclosure in this report.

Energy efficiency services form a core part of City Ser-

vice’s value proposition to both society and its custom-

ers. The Group provides these services as part of its

ongoing commercial and residential building maintenance

activities, contributing to reduced energy consumption

and lower utility costs for clients.

In the commercial building segment, Group companies

deliver tailored energy consumption reduction plans to

clients. While actual savings vary depending on the spe-

cific project, the objective is always to optimise building

performance and improve energy efficiency outcomes.

In the residential segment, energy efficiency is promoted

through renovation projects, the installation of smart me-

tering systems, and partial renovation initiatives. These

efforts are aimed at reducing household energy bills and

improving the overall energy performance of buildings.

Entity-specific metric – energy savings from

renovated residential buildings

As an entity-specific metric, the Group monitors energy

savings achieved through residential building renovation

projects. Based on available data for the 2024–2025 pe-

riod, a total of 28 apartment buildings were renovated.

The estimated annual energy savings achieved in these

buildings amount to approximately 9,746.49 MWh, cal-

culated based on average post-renovation performance.

As a result of these energy savings, an estimated 502.51

tonnes of CO₂ emissions are avoided annually.

Taxonomy eligible activities

Given that energy efficiency services are taxonomy-eli-

gible under the EU Taxonomy for sustainable activities -

specifically contributing to climate change mitigation - the

Group plans to enhance the granularity of its Taxonomy

disclosures in future reporting periods.

Currently, the disclosure of taxonomy-aligned revenue

from these services is limited only to installment of EV

charging stations. This is due to system limitations in the

Group’s accounting practices, which currently do not al-

low for the precise identification and calculation of reve-

nue specifically linked to other energy efficiency services.

The Group is committed to addressing this matter over

the next few years, with the goal of achieving more de-

tailed and accurate reporting on its contribution to the

EU’s climate goals.

E1-5 – Energy consumption and mix

The data on energy consumption is considered accurate,

with a high level of reliability. Calculations are based on

the Group’s fuel accounting records reflecting actual con-

sumption, as well as purchase invoices, meter readings,

and guarantees of origin provided by energy suppliers

for electricity procured from the grid and district heating

used in buildings under operational control.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Energy consumption and mix

Energy consumption and mix 2022 2023 2024 2025

YoY

(change vs.

previous year

vs. Base

year

(1) Fuel consumption from coal and coal

products (MWh)

0 0 0 0 - -

(2) Fuel consumption from crude oil and

petroleum products (MWh)

9 407.04 10 645.37 10 443.68 10 054.05 -3.7% 6.9%

(3) Fuel consumption from natural gas

(MWh)

186.98 350.32 243.42 228.37 -6.2% 22.1%

(4) Fuel consumption from other fossil

sources (MWh)

0 0 0 0 - -

5) Consumption of purchased or

acquired electricity, heat, steam, and

cooling from fossil sources (MWh)

796.24 583.19 390.87 396.58 1.5% -50.2%

(6) Total fossil energy consumption

(MWh) (calculated as the sum of lines 1

to 5)

10 390.26 11 578.88 11 077.97 10 679.00 -3.6% 2.7%

Share of fossil sources in total energy

consumption (%)

99.9 100 98.3 98.5 - -

(7) Consumption from nuclear sources

(MWh)

Share of consumption from nuclear

sources in total energy consumption (%)

(8) Fuel consumption for renewable

sources, including biomass (also

comprising industrial and municipal waste

of biologic origin, biogas, renewable

hydrogen, etc.) (MWh)

11.39

(9) Consumption of purchased or

acquired electricity, heat, steam, and

cooling from renewable sources (MWh)

0 0 196.15 162.38 -17.2%

(10) The consumption of self-generated

non-fuel renewable energy (MWh)

0 0 0 0

(11) Total renewable energy

consumption (MWh) (calculated as the

sum of lines 8 to 10)

11.39 0 196.15 162.38 -17.2% -

Share of renewable sources in total

energy consumption (%)

0.1 0 1.7 1.5 - -

Total energy consumption (MWh)

(calculated as the sum of lines 6, and 11)

10 401.65 11 578.88 11 274.12 10 841.38 -3.8% 4.2%

Notes: The cells market in grey in the table are not applicable. The Group does not generate energy from renewable sources. Production from non-renewable sources amounted to 10 687.1 MWh

in 2024 and 10 278.0 MWh in 2025.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Energy intensity

Energy intensity is calculated by dividing the total energy

consumption from activities in high climate impact sec-

tors by the Group’s total revenue. In the Group’s case,

E1-6 – Gross Scopes 1, 2, 3 and Total GHG

emissions

GHG emissions inventory methodology

The emission assessment was carried out in accordance

with the Greenhouse Gas Protocol (GHG Protocol)

guidelines and ESRS requirements. The calculation in-

cludes not only CO₂ but also all other greenhouse gases

generated by the Group’s operations (CO₂, N₂O, CH₄),

converted into CO₂ equivalent using standard conversion

factors from IPCC AR5, with the final total reported as

CO₂e.

The chosen consolidation approach for emissions is the

operational control method. The base year for Scope 1

and Scope 2 GHG emissions is 2022. For Scope 3 emis-

this means dividing total energy consumption (in MWh) -

as all activities fall under sectors classified as high climate

impact - by the revenue figure in euros reported in the

Group’s financial statements (see cross-reference in the

note below the following table).

sions, the base year is 2024, as it marks the first year in

which the Group assessed emissions resulting from its

value chain activities.

All emission-generating activities falling under the op-

erational control approach are included in the Group’s

greenhouse gas (GHG) assessment. Exceptions are made

only in cases where the reliability of available data is very

low and the estimated emissions are considered immate-

rial to the overall GHG inventory. To determine whether

emissions are material, the Group applies a quantitative

threshold: emission sources contributing more than 5%

to the total GHG inventory are classified as material and

prioritised for monitoring and management.

Sources of emission factors used are detailed in the ta-

bles below.

Energy consumption and mix 2022 2023 2024 2025

YoY

(change vs.

previous year

vs. Base

year

Total energy consumption from

activities in high climate impact sectors

per net revenue from activities in high

climate impact sectors (MWh/Eur)

0.0001236 0.0001114 0.0001026 0.00009381 -7.3% -23.0%

Notes:

1) According to the NACE codes, the Group’s activities are classified under the sector L68.3.2 - Management of real estate on a fee or contract basis, which is a high climate impact sector.

Therefore, all Group’s revenue is included in the calculation of energy intensity.

2) Cross-reference to the corresponding revenue amount in the financial statements: Consolidated statement of comprehensive, Revenue from contracts with customers.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Calculation and reporting coverage of Scope 1 and Scope 2 GHG emissions

Scope 1 and Scope 2: Assessment boundaries, assumptions, and data accuracy

Assessment

category

Assumptions and

boundaries

Emission sources Emission factor sources

Data accuracy

/ reliability of

calculations

Scope 1 – Direct

emissions

The company does not

operate any commercial

refrigeration equipment

and therefore does not

incur any refrigerant

leakages.

Fuel for company-

controlled transport.

Natural gas for heating.

LT NIR 2024, Annex V, Natural gas,

Table 5-3. Country specific CO2

emission factors of natural gas, t/TJ;

EMEP/EEA air pollutant emission

inventory guidebook 2019.

The data is accurate,

and the reliability of

the calculation is high.

It is based on the

company’s fuel accounting

records reflecting actual

consumption.

Scope 2 –

Indirect emissions

(purchased

electricity and

district heating)

Procured electricity and

district heating

Electricity procured

from the grid and district

heating used in buildings

under operational control.

AIB 2023

Residual Mix (market-based) and

Production Mix (location-based).

Heating emission factors are based:

on official letter from the Ministry

of Environment of the Republic of

Lithuania regarding the approval

of the construction technical

regulation STR 2.01.02:2016

“Design and Certification of

Building Energy Performance.”

The data is accurate,

and the reliability is high.

It is based on purchase

invoices, meter readings,

and supplier-provided

guarantees of origin

documentation.

Note: Guarantees of Origin bundled with Energy purchases are used in some locations (100%). Please refer to the E1-5 part for Green/Brown electricity shares.

Calculation and reporting coverage of Scope 3

GHG emissions

100% of the Group’s Scope 3 GHG emissions were as-

sessed using data based on specific activities within its

upstream and downstream value chain. However, no pri-

mary data (0%) was obtained from suppliers or other

value chain entities.

The table below summarises Scope 3 assessment catego-

ries, calculation sources and methods, and the resulting

data accuracy. Categories no. 1-7 are significant Scope

3 categories based on the magnitude of their estimated

GHG emissions and other criteria provided by GHG Pro-

tocol.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Scope 3: Assessment boundaries, assumptions, and data accuracy

Assessment

category

Assumptions and boundaries Emission sources

Emission factor

sources

Data accuracy / reliability of

calculations

1. Purchased

goods and

services

All expenses for the purchase of goods

and services are assessed.

Goods (materials and goods

purchased for resale) and third-

party services acquired during the

reporting year.

BEIS 2019

(DEFRA), inflation

adjusted (EU27).

The data is accurate; however,

the reliability of the calculations

is considered medium, as

the assessment is based on

expenditure data.

2. Capital goods

All expenses related to capital goods are

assessed.

Long-term asset acquisitions

during the reporting year.

BEIS 2019

(DEFRA), inflation

adjusted (EU27).

The data is accurate; however,

the reliability of the calculations

is considered medium, as

the assessment is based on

expenditure data.

3. Fuel and

energy-related

activities (not

included in Scope

1 or 2)

Based on actual energy and fuel

consumption

Well-to-tank emissions related

to fuel and energy, and energy

transmission losses.

IEA 2022;

DEFRA 2023;

Glec v3, based on

Ecoinvent v3.9.1

The assessment is based on

accurate data.

4. Upstream

transportation

and distribution

All transportation expenses (third-party

services) are assessed.

Transportation expenses (third-

party services)

BEIS 2019

(DEFRA), inflation

adjusted (EU27).

The data is accurate; however,

the reliability of the calculations

is considered medium, as

the assessment is based on

expenditure data.

5. Waste

generated in

operations

Waste generated based on GPAIS report.

Additionally small amounts of municipal

waste is generated in offices - it is

assessed together with office maintenance

costs and not included in Waste category

due to limited data access.

Expenses for waste management

services.

DEFRA 2023.

The data is accurate and based

on GPAIS reports.

6. Business

traveling

Includes expenses for flights, bus and train

tickets, taxis, and accommodation.

Expenses for flights, bus and train

tickets, and taxi services, as well

as accommodation costs.

BEIS 2019

(DEFRA), inflation

adjusted (EU27).

The data is accurate; however,

the reliability of the calculations

is considered medium due to the

expenditure-based assessment.

7. Employee

commuting

Employee commute using private vehicles

(results extrapolated from survey

responses).

Employee commuting by private

transport.

DEFRA 2023.

The data is accurate but

extrapolated from a subset of

employees who participated in

the survey.

8. Upstream

leased assets

Not applicable. All related emissions are

included in Scope 1 and 2 assessments.

Some refrigerant leakage

9. Downstream

transportation

Not applicable.

10. Processing of

sold products

Not applicable.

11. Use of sold

products

Not applicable.

12. End-of-life

treatment of sold

products

Not calculated due to low materiality and

lack of reliable data. Assessment planned

in future years.

13. Downstream

leased assets

Not applicable.

14. Franchises Not applicable.

15. Investments Not applicable.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

GHG emissions

Emission type

Retrospective

Base year

2022

2023 2024 2024

YoY

(change vs.

previous year)

Vs. Base year

Scope 1 GHG

emissions

Gross Scope 1 GHG

emissions (tCO2eq)

2 563.24 2 927.93 2 852.25 2 742.35 -3.9% 7.0%

Percentage of Scope 1

GHG emissions from

regulated emission

trading schemes (%)

0 0 0 0

Scope 2 GHG

emissions*

Gross market-based

Scope 2 GHG emissions

(tCO2eq)

238,34 216,04 86,82 85.81 -1.17% -64.0%

Gross location-based

Scope 2 GHG emissions

(tCO2eq)

138.63 80.228 70,70 60.86 -14.0% -56.1%

Significant Scope 3

GHG emissions

Total Gross indirect

(Scope 3) GHG

emissions (tCO2eq)

10 668,18 10 851.1 1.7%

1. Purchased goods and

services

8 029.08 8168.99 1.7%

2. Capital goods 295.51 369.79 25.1%

3. Fuel and energy-

related activities (not

included in Scope 1

or 2).

1 000.14 945.2 -5.5%

4. Upstream

transportation and

distribution

645.16 756.26 17.2%

5. Waste generated in

operations

0.19 0.36 86.9%

6. Business traveling 6.56 37.91 477.6%

7. Employee commuting 691.54 573.03 -17.1%

8. Upstream leased

assets

0 0

9. Downstream

transportation

0 0

10. Processing of sold

products

0 0

11. Use of sold products 0 0

12. End-of-life treatment

of sold products

0 0

13. Downstream leased

assets

0 0

14. Franchises 0 0

15. Investments 0 0

Total GHG

emissions (tCO2eq)

Total GHG emissions

(market-based) (tCO₂e)

2 751.27** 3 110.30** 13 607,26 13 679.69 0.5%

Total GHG emissions

(location-based) (tCO₂e)

2 651.56** 2 974.54** 13 627,07 13 684.51 0.4%

* In 2025 small amount of biogenic emissions were emitted due to district heating usage, however they are not estimated due to lack of detail in emission factors data.

** Scope 1&2 only

Notes: The cells market in grey in the table are not applicable. City Service group does not own any other companies that are not integrated within the Group boundary and therefore does not allocate

additional GHG emissions. There were slight changes in organisational structure, however the impact in GHG inventory was negligible, so there is no impact on GHG comparability over the years.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

GHG intensity

Greenhouse gas (GHG) intensity is calculated by dividing

the total GHG emissions by the Group’s total revenue.

In the Group’s case, this means dividing total GHG emis-

sions (in tonnes of CO₂ equivalent) by the revenue figure

E1-7 – GHG removals and GHG mitigation projects financed through carbon credits and

E1-8 – Internal carbon pricing

The Group does not currently have such practices in place and therefore has no relevant information to disclose.

reported in the Group’s financial statements, expressed

in euros (Eur) (see cross-reference in the note below the

following table).The indicator is presented using both the

location-based and market-based approaches.

GHG intensity per net revenue 2024 2025 YoY

Total GHG emissions (location-based) per net revenue (tCO2eq/Eur)* 0.00012382 0.00011837 -4.4%

Total GHG emissions (market-based) per net revenue (tCO2eq/Eur)* 0.00012400 0.00011841 -4.5%

Notes: *Cross-reference to the corresponding revenue amount in the financial statements: Consolidated statement of comprehensive, Revenue from contracts with customers.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

EU TAXONOMY DISCLOSURE

The European Union (EU) Taxonomy (Regulation 2020/852 and associated delegated acts) serves

as a classification system for economic activities, aiming to channel private investment into

environmentally sustainable initiatives that align with the EU Green Deal’s environmental goals.

The Taxonomy outlines six key environmental objectives:

● CCM – Climate Change Mitigation.

● CCA – Climate Change Adaptation.

● WTR – Sustainable Use and Protection of Water

and Marine Resources.

● CE – Transition to a Circular Economy.

● PPC – Pollution Prevention and Control.

● BIO – Protection and Restoration of Biodiversity

and Ecosystems.

It sets out science-based technical screening criteria to

assess the environmental sustainability of various eco-

nomic activities. Activities that fall within the scope of

the Taxonomy and meet these criteria may be consid-

ered environmentally sustainable and eligible for green

investment.

A taxonomy-eligible activity is one that is included in

the delegated acts of the Taxonomy Regulation. Com-

panies whose revenues (Turnover), capital expenditures

(CapEx), and/or operating expenses (OpEx) are linked

to such activities are required to analyse and report the

Taxonomy Key Performance Indicators (KPIs) and the

extent to which their operations meet the relevant Tax-

onomy criteria. A taxonomy-aligned activity is one that

not only qualifies as eligible but also fulfills the technical

screening criteria by:

● Substantially contributing to at least one of the six

environmental objectives.

● Doing no significant harm (DNSH) to the other five

objectives.

● Complying with the minimum safeguards requirements.

This section, prepared in accordance with the Taxonomy

Regulation and its delegated acts, presents the key per-

formance indicators of the Group (City Service and its

subsidiaries), along with details on how its activities align

with the Taxonomy framework.

In this report, the Group applies the updated EU Tax-

onomy disclosure requirements established by the “Om-

nibus” Delegated Act, applicable from 1 January 2026.

Identification of eligible activities

The Group is engaged in activities and/or makes invest-

ments that qualify as taxonomy-eligible and contribute to

climate change mitigation. The Group does not currently

perform activities that support the other five environ-

mental objectives under the EU Taxonomy.

The scope of taxonomy-eligible activities disclosed by the

Group is determined based on the availability and reliabil-

ity of financial data required to calculate and substantiate

the Taxonomy KPIs in line with regulatory requirements.

Where relevant financial information is not available or

cannot be robustly evidenced, such activities are not in-

cluded in the disclosed taxonomy scope, as this would

not provide meaningful or decision-useful information.

At the same time, the Group is committed to gradually

expanding the scope and quality of its Taxonomy disclo-

sures as data availability and internal processes further

develop. In this context, the 2025 disclosures have been

expanded to include information related to CCM 6.6

Freight transport services by road, covering the acquisi-

tion of freight vehicles for the 2024 and 2025 reporting

periods.

Evaluation of alignment with Taxonomy criteria

In 2024, the Group conducted a comprehensive climate

risk assessment to evaluate whether the identified activi-

ties do not cause significant harm to climate change ad-

aptation. The assessment found no material physical risks

to the Group’s operations or assets, therefore meeting

the DNSH criterion for this objective. The results of the

assessment remain applicable for the 2025 reporting pe-

riod, with no material changes identified.

The Group also complies with the minimum safeguards

requirement. It adheres to socially responsible and ethical

business practices, following the OECD Guidelines for

Multinational Enterprises and the UN Guiding Principles

on Business and Human Rights. Compliance was verified

based on the European Commission’s Platform on Sus-

tainable Finance’s “Final Report on Minimum Safeguards”

(2022).

The Group’s activity CCM 7.4 Installation, maintenance

and repair of charging stations for electric vehicles in

buildings (and parking spaces attached to buildings) is

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

considered taxonomy-aligned. The Group generates rev-

enue from the installation of EV charging stations, an ac-

tivity recognised as making a substantial contribution to

climate change mitigation. As no physical climate-related

risks were identified during the assessment, this activity

meets the DNSH criteria for climate change adaptation

and is fully aligned with the Taxonomy criteria. Compared

to 2024, the revenue disclosed for this activity in 2025 is

approximately four times lower, reflecting fluctuations in

demand, as the Group implemented fewer related pro-

jects during the reporting period.

In 2025, the Group’s list of taxonomy-aligned activities

was expanded to include an additional activity. City Ser-

vice leased a new building in Kaunas that meets the crite-

ria of Taxonomy activity CCM 7.7. The building was con-

structed in 2025 and was assessed against the substantial

contribution criteria applicable at the time of acquisition,

in line with the requirements of CCM 7.1. The building’s

primary energy demand, used to determine its post-con-

struction energy performance, is at least 10% lower than

the threshold for nearly zero-energy buildings. Specifi-

cally, the building’s primary energy consumption amounts

to 58.95 kWh/m² per year, which is approximately 65%

lower than the applicable normative level. No additional

substantial contribution criteria are applicable to this

building. No physical climate-related risks were identified

during the assessment, and therefore the activity meets

the applicable DNSH criteria for climate change adapta-

tion. This contributed to a significant increase in taxon-

omy-aligned CapEx and OpEx percentages compared to

2024.

Other activities are not considered aligned, either be-

cause they do not meet one or more of the necessary

criteria, or due to the absence of sufficient information

to support a conclusive assessment.

Calculation of Taxonomy KPIs

The following information presents the calculated Tax-

onomy indicators. All disclosed indicators related to Tax-

onomy-eligible activities avoid double counting, as each

specific amount of revenue/expenditure is attributed to

only one Taxonomy activity.

During the reporting period, the Group made additional

efforts to more accurately identify and allocate expenses

and revenues to Taxonomy-eligible and Taxonomy-aligned

activities. As a result, the 2024 figures have been recalcu

lated to ensure consistency and improved comparability

with the current year. The updated 2024 data are reflected

in the following indicators: Taxonomy-aligned activities in

previous financial year 2024 and Proportion of Taxonomy-

aligned activities in previous financial year 2024.

Revenue (turnover)

A portion of the revenue received by the Group in

2024–2025 corresponds to the following activity defined

in the Taxonomy:

● Installation of EV charging stations – CCM 7.4

Installation, maintenance and repair of charging

stations for electric vehicles in buildings (and parking

spaces attached to buildings).

● Leasing of premises to third parties – CCM 7.7

Acquisition and ownership of buildings.

● Leasing of vehicles to third parties – CCM 6.6 Freight

transport services by road and CCM 6.5 Transport

by motorcycles, passenger cars and light commercial

vehicles.

The share of revenue from this taxonomy-aligned activity

was determined by dividing the revenue from services di

rectly related to this activity by the Group’s total revenue.

Turnover corresponds to “Revenue from contracts with

customers” as reported in the financial statements (i.e.

operating revenue recognised under applicable account

ing standards). Cross-reference to the corresponding rev-

enue amount in the financial statements: Consolidated

statement of comprehensive, Revenue from contracts

with customers

Capital Expenditures (CapEx)

A portion of the Group’s long-term asset investments in

2024 corresponds to the following activities defined in

the Taxonomy:

● Acquisition of assets under IFRS 16 – CCM 7.7

Acquisition and ownership of buildings.

● Acquisition of EV charging stations for own use – CCM

7.4 Installation, maintenance and repair of charging

stations for electric vehicles in buildings (and parking

spaces attached to buildings).

● Acquisition of cars/commercial vehicles – CCM 6.5

Transport by motorbikes, passenger cars and light

commercial vehicles.

The share of capital expenditures (CapEx) relating to

taxonomy-eligible activities was calculated by dividing the

investments associated with eligible activities, as defined

in the Taxonomy, by the Group’s total capital expendi-

tures in accordance with the Taxonomy definition.

The note in the consolidated financial statement that

best corresponds to the CapEx indicator under the Tax-

onomy is note 17 Leases.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Operational Expenditures (OpEx)

A portion of the Group’s operating expenses in 2024–

2025 corresponds to the following activities defined in

the Taxonomy:

● Maintenance, repair and/or cleaning costs related to

buildings for own use – CCM 7.7 Acquisition and

ownership of buildings.

● Maintenance and/or lease-related costs of EV charging

stations – CCM 7.4 Installation, maintenance and

repair of charging stations for electric vehicles in

buildings (and parking spaces attached to buildings).

● Maintenance and/or repair of Group’s vehicles – CCM

6.5 Transport by motorbikes, passenger cars and

light commercial vehicles; CCM 6.6 Freight transport

services by road.

The definition of operating expenses (OpEx) under the

EU Taxonomy differs from the commonly accepted defi-

nition in financial accounting, covering only a narrow sub-

set of expenses.

Based on the Group’s current expense classification struc-

ture, only a limited portion of OpEx can be separately

identified and directly attributed to Taxonomy-eligible

activities. Specifically, costs related to technical main-

tenance and repairs are partially identifiable and were

included in the calculation. Consequently, the disclosed

OpEx is based solely on clearly identifiable amounts and

represents the best available estimate given the current

level of cost granularity.

The OpEx indicator was calculated by dividing the operat-

ing expenses related to taxonomy-eligible activities by the

total operating expenses as defined under the Taxonomy.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

KPI

Total

Proportion of Taxonomy-

eligible activities

Taxonomy-aligned activities

Proportion of Taxonomy-

aligned activities

Breakdown by environmental objectives of Taxonomy-

aligned activities

Proportion of enabling

activities

Proportion of transitional

activities

Not assessed activities

considered non-material

Taxonomy-aligned activities

in previous financial year

2024

Proportion of Taxonomy-

aligned activities in previous

financial year 2024

Climate Change

Mitigation

Climate Change

Adaptation

Water

Circular

Economy

Pollution

Biodiversity

Te x t %

Thousand

Eur

% % % % % % %

(E where

applicable)

(T where

applicable)

Thousand

Eur

Turnover 115566 0% 43.82 0.04% 0.04% - - - - - 0.04% 0 0% 166.15 0.2%

CapEx 3713 32% 1000.02 26.93% 26.93% - - - - - 0.03% 0 0% 0.71 0.02%

OpEx 768 48% 13.96 2% 2% 0.64% 0 0% 0 0.00%

The 2024 data has been restated for turnover and CapEx. In the 2024 sustainability report, taxonomy-aligned activities were disclosed as EUR 166.28 thousand in turnover and EUR 0 in CapEx,

representing 0.2% of turnover and 0% of CapEx. The restatement reflects updated revenue figures based on the latest financial data, as well as the identification in 2025 of a previously unreported amount

of CapEx related to the acquisition of electric vehicle charging stations for own use.

SUMMARY KPIs

Proportion of turnover, CapEx, OpEx from products or services associated with Taxonomy-eligible or Taxonomy-

aligned economic activities – disclosure covering year 2025 (summary KPIs)

Note: In the 2024 sustainability report, the following figures were reported: taxonomy-aligned revenue from CCM 7.4 amounted to EUR 166.28 thousand (0.2%). No taxonomy-eligible but non-aligned

revenue from CCM 7.7 and CCM 6.5 was reported.

Turnover (revenue) / Financial year 2025

Economic

activities

Code(s)

Taxonomy-eligible KPI

(Proportion of Taxonomy-eligible

Turnover)

Taxonomy-aligned KPI (monetary

value of Turnover)

Taxonomy-aligned KPI

(Proportion of Taxonomy-aligned

Turnover)

Environmental objective of Taxonomy-aligned activities

Enabling activity

Transitional activity

Proportion of Taxonomy-aligned

in Taxonomy-eligible

Climate Change

Mitigation

Climate Change

Adaptation

Water

Circular Economy

Pollution

Biodiversity

Te x t %

Thousand

Eur

% % % % % % %

(E where

applicable)

(T where

applicable)

Acquisition and

ownership of

buildings

CCM 7.7 0.10% 0 0.00% 0.00% - - - - - - - 0%

Installation,

maintenance and

repair of electric

vehicle charging

stations in buildings

(and in parking spaces

attached to buildings)

CCM 7.4 0.04% 43.82 0.04% 0.04% - - - - - - - 100%

Freight transport

services by road

CCM 6.6 0.002% 0 0.00% 0.00% - - - - - E - 0%

Transport by

motorcycles,

passenger cars and

light commercial

vehicles

CCM 6.5 0.03% 0 0.00% 0.00% - - - - - - - 0%

Sum of alignment per objective 0.04% 0.00% 0.00% 0.00% 0.00% 0.00%

Total KPI (Turnover) 0.16% 43.82 0.04% 0.04% 0.00% 23%

TURNOVER KPI

Proportion of turnover from products or services associated with Taxonomy-eligible or Taxonomy-aligned economic

activities – disclosure covering year 2025 (activity breakdown)

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

CapEx / Financial year 2025

Economic

activities

Code(s)

Taxonomy-eligible KPI

(Proportion of Taxonomy-eligible

Turnover)

Taxonomy-aligned KPI (monetary

value of Turnover)

Taxonomy-aligned KPI

(Proportion of Taxonomy-aligned

Turnover)

Environmental objective of Taxonomy-aligned activities

Enabling activity

Transitional activity

Proportion of Taxonomy-aligned

in Taxonomy-eligible

Climate Change

Mitigation

Climate Change

Adaptation

Water

Circular Economy

Pollution

Biodiversity

Te x t %

Thousand

Eur

% % % % % % %

(E where

applicable)

(T where

applicable)

Acquisition and

ownership of

buildings

CCM 7.7 27.35% 999.05 26.91% 26.91% - - - - - - - 98%

Installation,

maintenance and

repair of electric

vehicle charging

stations in buildings

(and in parking spaces

attached to buildings)

CCM 7.4 0.03% 0.97 0.03% 0.03% - - - - - E - 100%

Freight transport

services by road

CCM 6.6 0.00% 0 0.00% 0.00% - - - - - - - 0%

Transport by

motorcycles,

passenger cars and

light commercial

vehicles

CCM 6.5 4.52% 0 0.00% 0.00% - - - - - - - 0%

Sum of alignment per objective 26.93% 0.00% 0.00% 0.00% 0.00% 0.00%

Total KPI (CapEx) 32% 1000.02 27% 0.03% 0.00% 84%

CAPEX KPI

Proportion CapEx from products or services associated with Taxonomy-eligible or Taxonomy-aligned economic

activities – disclosure covering year 2025 (activity breakdown)

Note: In the 2024 sustainability report, no taxonomy-aligned CapEx was reported. Taxonomy-eligible but non-aligned CapEx from CCM 7.7 amounted to EUR 52.31 thousand (2%), and CapEx from

CCM 6.5 amounted to EUR 67.36 thousand (2%).

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Note: In the 2024 sustainability report, taxonomy-eligible but non-aligned OpEx from CCM 6.5 amounted to EUR 186.15 thousand (34%). The activities CCM 7.7 and CCM 6.6 were not reported.

CapEx / Financial year 2025

Economic

activities

Code(s)

Taxonomy-eligible KPI

(Proportion of Taxonomy-eligible

Turnover)

Taxonomy-aligned KPI (monetary

value of Turnover)

Taxonomy-aligned KPI

(Proportion of Taxonomy-aligned

Turnover)

Environmental objective of Taxonomy-aligned activities

Enabling activity

Transitional activity

Proportion of Taxonomy-aligned

in Taxonomy-eligible

Climate Change

Mitigation

Climate Change

Adaptation

Water

Circular Economy

Pollution

Biodiversity

Te x t %

Thousand

Eur

% % % % % % %

(E where

applicable)

(T where

applicable)

Acquisition and

ownership of

buildings

CCM 7.7 1.52% 9.04 1.18% 1.18% - - - - - - - 77%

Installation,

maintenance and

repair of electric

vehicle charging

stations in buildings

(and in parking spaces

attached to buildings)

CCM 7.4 0.64% 4.92 0.64% 0.64% - - - - - E - 100%

Freight transport

services by road

CCM 6.6 29.81% 0 0.00% 0.00% - - - - - - - 0%

Transport by

motorcycles,

passenger cars and

light commercial

vehicles

CCM 6.5 16.20% 0 0.00% 0.00% - - - - - - - 0%

Sum of alignment per objective 1.82% 0.00% 0.00% 0.00% 0.00% 0.00%

Total KPI (CapEx) 48.17% 13.96 1.82% 0.64% 0.00% 4%

OPEX KPI

Proportion OpEx from products or services associated with Taxonomy-eligible or Taxonomy-aligned economic

activities – disclosure covering year 2025 (activity breakdown)

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

S1 SBM-2 – INTERESTS AND VIEWS OF STAKEHOLDERS

This information is provided alongside the ESRS 2 SBM-2 disclosure in the chapter Stakeholder

Engagement of this report.

S1 SBM-3 – MATERIAL IMPACTS, RISKS AND OPPOR-

TUNITIES AND THEIR INTERACTION WITH STRATEGY

AND BUSINESS MODEL

As a service and technology-driven company, City Service’s business model is dependent on engaged

and skilled employees. The risks and opportunities arising from this dependency are detailed in the

ESRS 2 SBM-3 disclosure table “Material Impacts, Risks, and Opportunities”, under the sub-topics

“Training and Skills Development” and “Engagement/Satisfaction.”

S1 OWN WORKFORCE

Employee well-being, fair remuneration, engagement,

and continuous skills development are strategic priorities

that directly influence the Group’s success and customer

satisfaction, while driving positive impacts on employees.

The Group continuously manages and updates its strat-

egy in these topics.

Given the nature of the work - often performed on-site

and outdoors - the Group places strong emphasis on

employee health and safety. In addition, it ensures the

protection of employee’s personal data.

The workforce subject to material impacts by City Ser-

vice’s operations are the Group’s hired employees. There

are no widespread or systematic negative impacts caused

by the Group’s operations or related to individual inci-

dents, as defined in ESRS. Of course, the risk of occu-

pational safety accidents is ever-present. However, The

Group effectively mitigates these risks through proactive

measures. A continuous monitoring of the supply chain

and the activity of contractors is also carried out in order

to prevent negative impacts.

Currently there are no material impacts foreseen on the

Group’s own employees that arise from the Transition

Plan, as such a plan is not approved yet.

There are no operations that would be at a significant

risk of incidents of forced labour, compulsory labour or

child labour.

The Group strives to ensure that all employees, regard-

less of the type of employment contract, are subject to

the same standards of working conditions and social pro-

tection.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

S1-1 – POLICIES RELATED TO OWN WORKFORCE (MDR-P)

In 2025, the Group strengthened its sustainability governance by adopting a comprehensive

Workforce Management Policy covering all material workforce-related topics.

The policy sets out the Group’s approach and commit-

ments to responsible workforce management, including

respect for human rights, equal opportunities and inclu-

sion, occupational health and safety, fair remuneration

and social protection, skills development and career op-

portunities, work–life balance, employee engagement,

and social dialogue. It addresses the management of ma-

terial workforce-related impacts, risks, and opportunities

and supports their integration into the Group’s overall

strategy and business model.

The policy applies to the entire workforce of City Service

SE Group, including employees working under employ-

ment contracts and, where relevant based on the na-

ture of activities, self-employed persons and third-party

workers (such as contractors and suppliers’ employees)

performing work for or on behalf of the Group at its

managed sites. The policy covers direct operations of all

Group companies and geographies and extends, where

applicable, to the upstream value chain.

The policy establishes mechanisms for monitoring and

accountability, including regular risk assessments, perfor-

mance indicators (such as employee turnover, accident

frequency, training hours, pay gap indicators, and em-

ployee engagement metrics), and ongoing social dialogue

with employees and their representatives. Progress and

outcomes are reviewed annually and disclosed in the

Group’s sustainability reporting.

The member of the Board of City Service SE respon-

sible for the Baltic countries holds the highest level of

accountability for oversight of the policy, while its imple-

mentation is ensured by Group company management

and the human resources function. The policy applicable

to every employee, and all staff members are required to

familiarise themselves with it.

Health and safety

The Group’s commitments to employee health and safety

are also outlined in its Quality, Environmental Pro-

tection, and Occupational Health and Safety

Policy, developed in line with ISO standards. The policy

applies to all Group employees and the scope of the pol-

icy is the same as that of the Group. The COO holds the

highest level of accountability within the organisation for

the implementation of the policy.

Human rights, non-discrimination and remedy

The Group’s human rights commitments are defined in its

Workforce Management Policy. Through this policy, City

Service SE Group commits to respecting and protecting

human rights across its workforce by ensuring equal op-

portunities and non-discrimination, safeguarding freedom

of association and the right to collective bargaining, pro-

viding safe and healthy working conditions, ensuring fair

remuneration and access to statutory social protections,

and fostering an inclusive, respectful, and dignified work-

ing environment. The Group does not tolerate forced

labour, child labour or any form of human trafficking.

Although the policy does not explicitly reference interna-

tional human rights instruments, its provisions are aligned

with internationally recognised human rights frameworks,

including the United Nations Global Compact, the UN

Guiding Principles on Business and Human Rights, the

ILO Declaration on Fundamental Principles and Rights at

Work, and the OECD Guidelines for Multinational En-

terprises.

In 2025, the Group formalised its approach to grievance

handling and remedy by adopting a dedicated Report-

ing of Violations and Whistleblower Protection

Policy, which complements the Group’s Workforce

Management Policy and forms an integral part of its sus-

tainability governance framework. The policy establishes

confidential and secure reporting channels, investigation

procedures, defined timelines, and protection against re-

taliation for individuals who raise concerns in good faith.

No human rights complaints or confirmed violations have

been recorded within City Service to date. The Group’s

general approaches to employee engagement, including

those related to human rights, are disclosed alongside the

information provided under ESRS S1-2.

City Service has also adopted a Harassment, Sexual

Harassment, and Prevention of Violence policy.

This policy outlines behavioural expectations for all em-

ployees, emphasizing respect for others, including col-

leagues, customers, suppliers, and other stakeholders.

It promotes sensitivity to privacy, beliefs, views, and the

physical and mental integrity of individuals, while prohib-

iting any verbal, written, or physical conduct that could

cause discomfort or disturbance in the workplace.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

The Group’s Workforce Management Policy explicitly

prohibits discrimination on a range of grounds, includ-

ing gender, age, race, nationality, religion, disability, sexual

orientation, beliefs, and other personal characteristics,

and the Group adheres to all applicable national and EU

regulations prohibiting discriminatory practices.

At present, the Group does not have specific policy com-

mitments related to the inclusion of or positive action

for individuals from groups at particular risk of vulner-

ability as no such groups have been identified within the

Group’s current workforce. The Group is committed to

ensuring a safe, respectful, and non-discriminatory work

environment for all employees.

These commitments are implemented through inter-

nal procedures, including management accountability,

employee training, confidential reporting and grievance

mechanisms, and investigation processes defined in the

Group’s internal policies.

Policies applied to business partners

Information on policy applicable to value chain employees

(business partners) is provided in the section S2 Workers

in the Value Chain of this report.

S1-2 – PROCESSES FOR ENGAGING WITH OWN

WORKFORCE AND WORKERS’ REPRESENTATIVES

ABOUT IMPACTS

The Group maintains active, ongoing engagement with its employees as part of daily operations. A

combination of direct and indirect communication channels is used to ensure employee voices are

heard and considered in decision-making.

A key channel of engagement is collaboration with the

Labour Union, which facilitates regular dialogue with em-

ployee representatives. In addition, the Group engages

directly with employees through various tools such as

Employee Engagement Surveys (incl. eNPS - Employee

Experience Survey), employee meetings and conferences,

and internal communication platform and direct commu-

nication with line managers.

Employee perspectives are recognised as essential to the

Group’s success. Communication takes place as needed

to ensure that feedback is continuously gathered and

used to inform relevant business decisions. The HR Man-

ager is responsible for overseeing these engagement pro-

cesses and ensuring that input from employees and their

representatives is integrated into the Group’s operations

and planning.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

S1-3 – PROCESSES TO REMEDIATE NEGATIVE IMPACTS

AND CHANNELS FOR OWN WORKFORCE TO RAISE

CONCERNS

Following the adoption of the Reporting of Violations and Whistleblower Protection Policy in 2025,

the Group has established formal processes to receive, assess, investigate, and address reported

workforce-related concerns, including potential human rights impacts.

To date, no systemic material negative impacts on em-

ployees requiring remediation have been identified. An

isolated work-related incident involving an external crimi-

nal act occurred during the reporting period, and the

Group is addressing its consequences in line with applica-

ble legal requirements and internal procedures.

Health and safety incidents are managed through estab-

lished procedures aligned with ISO 45001 standards.

City Service provides multiple channels for employees

to raise concerns, express needs, or provide feedback,

including both informal engagement mechanisms and for-

mal reporting procedures:

● Direct communication with line managers through

meetings, phone calls, email, or performance appraisals;

● Employee representation through the Labour Union;

● Anonymous employee feedback collected through the

annual Engagement and eNPS survey; and

● A dedicated, confidential reporting channel established

under the Reporting of Violations and Whistleblower

Protection Policy, allowing employees to report

suspected violations, including human rights or labour-

related concerns, with protection against retaliation.

The whistleblowing channel constitutes the Group’s for-

mal grievance and complaints handling mechanism for

employee-related matters. Employees are informed about

available channels through internal communication tools,

onboarding processes, regular briefings, e-learning plat-

form eCITY, ensuring accessibility across the workforce.

Issues raised through different channels are reviewed and

handled by the responsible functions. While the Group

does not operate a single centralised tracking system,

relevant matters are documented at functional level, es-

calated where necessary, and discussed through internal

management processes. The effectiveness of channels is

reviewed periodically, including through employee feed-

back collected via the annual survey and direct engage-

ment with employee representatives.

Employee awareness of and trust in these channels is pri-

marily assessed through the annual eNPS survey, which

includes questions on communication, the ability to raise

concerns, and management responsiveness. The Group

follows applicable laws and its internal whistleblower

protection policy to ensure that individuals raising con-

cerns, including workers’ representatives, are protected

against retaliation.

More information on whistleblowing channels and pro-

tections is provided in section G1-1 of this report.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

S1-4 – TAKING ACTION ON MATERIAL IMPACTS ON

OWN WORKFORCE, AND APPROACHES TO MANAGING

MATERIAL RISKS AND PURSUING MATERIAL

OPPORTUNITIES RELATED TO OWN WORKFORCE,

AND EFFECTIVENESS OF THOSE ACTIONS (MDR-A)

City Service aims to ensure that its ongoing practices do not cause or contribute to material

negative impacts on its employees.

To prevent negative and manage positive impacts related

to its own employees, the Group allocates a range of

resources, including:

● Internal processes and dedicated personnel, such as

occupational safety officers and HR partners, who

are directly responsible for overseeing and managing

employee-related impacts;

● Investments in systems and capacity-building, including

IT tools for data monitoring and employee training

programmes aimed at strengthening awareness and

competence;

● Collaboration with external partners, such as

consultants and relevant stakeholders, to support the

implementation of effective mitigation and monitoring

measures.

The Group allocates internal financial resources as need-

ed to manage material matters related to employees, in-

cluding a dedicated budget for initiatives such as training

programmes (e.g., individual training allowances). These

resources are funded from the Group’s own budget.

The effectiveness of initiatives is monitored through a

combination of employee surveys, performance inter-

views, and feedback collected during and after training

activities. Depending on the nature of the training, tests

or other evaluation methods may be used to assess

learning outcomes.

The implementation of process improvements is re-

viewed through management follow-up and operational

oversight, drawing on the Group’s continuous improve-

ment principles. The combined effect of employee-re-

lated initiatives is expected to contribute to improved

employee engagement and satisfaction, as reflected in the

eNPS survey (please refer to S1-5 for more details).

Based on the 2025 results, overall progress is assessed as

positive, with the employee engagement index reaching

51.1% and meeting the set target. The results indicate

strong performance in areas such as workplace atmos-

phere, management accessibility, organisational stability,

and development opportunities. At the same time, the

analysis highlighted pay transparency as the main area for

improvement, which has been identified as a priority fo-

cus for further actions.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

TRAINING AND SKILLS DEVELOPMENT

COMPETENT EMPLOYEES – NOW AND FOR

THE FUTURE

Ensuring a skilled and capable workforce, both now and in the future, is a core objective embedded

in the Group’s strategy. To support this, Group companies take a number of ongoing actions:

regularly develop and implement training plans, conduct employee surveys. Specialised training

programmes are also delivered in partnership with vocational training centres. These actions are

aimed at developing employee competencies and supporting long-term employee retention, in line

with the Group’s strategic priorities.

The Group actively encourages employee development

and collaboration. Employees are involved in proposing

and implementing efficiency improvements, and regular-

ly participate in training sessions and seminars. In both

operating countries, annual development interviews

are held between employees and their direct managers.

These meetings focus on goal-setting, performance feed-

back, career planning, and identifying areas for profes-

sional growth.

In the engineering segment, the Group maintains ongoing

collaboration with vocational training centres, including

apprenticeship programmes and participation in career

days. In one of the Group’s companies, this cooperation

has proven effective in attracting young talent, as par-

ticipants of vocational training programmes increasingly

choose to start their careers within the organisation. The

Group is already working with educational institutions to

co-develop targeted training programmes that align with

future business needs and aims to expand and strengthen

these partnerships further. The overarching objective is

to attract and retain talent.

Managers are provided with ample opportunities to learn

and develop their competencies through both structured

training and targeted sessions. This includes participation

in strategic or topic-specific workshops, such as NPS ses-

sions at Mano Būstas or AI solutions sessions, which may

also involve employees beyond management roles.

The Group is already taking ongoing action to seize the

opportunity of integrating AI solutions into its opera-

tions. These tools are designed to improve productivity

and reduce workload without replacing employees. In

parallel, employee training on the use of AI and digital

tools is actively promoted to ensure effective adoption.

The development and implementation of AI and digitali-

sation tools is an ongoing process, with positive results

expected to continue in the coming years.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

The Group monitors employee development through

training participation and recorded learning hours based

on internal training records. The metric reflects unique

training participants and total learning hours completed

during the reporting period, with average learning hours

calculated per participant and presented by gender.

Differences in average learning hours between women

and men reflect variations in job roles and training needs

across the workforce. The Group provides equal access

to training opportunities and does not differentiate train-

ing allocation based on gender.

Note: Data provided for Lithuania only. Calculations are not available for Latvia, as gender-disaggregated data and information on unique training participants are not currently tracked.

2025

Total Male Female

Number of training participants (unique) 767 391 376

Learning hours 17 932 5 949 11 974

Average learning hours per participant 23.4 15.2 31.8

Entity-specific metric. Employee training participation and learning hours in Lithuania

At present, the Group does not have the technical ca-

pability to calculate ESRS S1-13 metric in line with the

standard methodology, as the e-learning platform is not

fully integrated into central reporting systems, and learn-

ing hours for non-qualified personnel are not systemati-

cally captured. The Group therefore discloses this entity-

specific metric as the most accurate representation of

employee training activities.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

ADEQUATE WAGES; ENGAGEMENT/SATISFACTION

EMPLOYEE WELL-BEING, FAIR REMUNERATION, AND

ENGAGEMENT

Employee well-being, fair pay, and engagement are key priorities embedded in the Group’s overall

strategy and detailed in strategic plans, which are reviewed annually.

Fostering employee engagement is essential, as it directly

impacts performance and overall results. To support this,

the Group organises various social and internal initiatives

that promote a sense of community and inclusion across

its companies.

The Group has a defined remuneration policy, which is

reviewed and adjusted as needed. Each company within

the Group may apply specific bonus structures in addi-

tion to base salaries. Pay policies are overseen internally

by senior and middle management. In some cases, and

with client agreement, pay may be increased for employ-

ees working extensively on client premises.

The Group is continuously improving its remunera-

tion and motivational systems, with the aim of increas-

ing transparency and aligning benefits and salaries more

closely with employee functions. This ongoing develop-

ment includes regular review of compensation and bene-

fits, with the goal of remaining competitive in the market,

attracting new talent, and retaining existing employees.

In parallel, the Group is preparing for the implementa-

tion of the EU Pay Transparency Directive, which will

become applicable from June 2026. A dedicated internal

project has been prepared, and the Group continuously

monitors legislative developments to ensure timely and

compliant implementation once the national legal frame-

work is established.

The initiative also seeks to strengthen employee moti-

vation and long-term engagement. Areas for improve-

ment have been identified through ongoing employee

engagement and recruitment processes, where feedback

has shown a need to better align the Group’s offer with

market and sector expectations. Challenges such as long-

er recruitment timelines and difficulties attracting can-

didates, along with employee feedback regarding salary

expectations, have highlighted the need for adjustments

in the current system.

There are no compensation differences based on em-

ployment type. However, differences in benefits may ap-

ply to employees who are members of a Labour Un-

ion. In Lithuania, collective agreements are in place at all

Group companies.

City Service also actively promotes emotional well-being

and inclusive work culture. Free, anonymous psychologi-

cal counselling is available to all staff. Employees can ac-

cess internal and external training opportunities, with

some programmes developed in-house. Additional dis-

counts and benefits are offered through the MELP app,

sponsored by the Group.

City Service also has a GDPR regulation expert who en-

sures compliance and mitigates potential negative impact

on the workforce.

The Group recognises the opportunity to further

strengthen the engagement and well-being of all em-

ployees, including unskilled workers. Based on market

practices and internal insights, the Group anticipates

the possibility of further developing measures that could

contribute to the engagement of this employee segment

in the future, such as better participation in eNPS sur-

veys or other initiatives. At the same time, it is empha-

sised that all employees are already integrated into the

Group’s overall well-being, communication, and cultural

initiatives, with the most important role in their daily ex-

perience being played by their immediate managers and

close cooperation between business and HR.

The Group recognises that more effective internal com-

munication contributes to a stronger organisational cul-

ture. In 2023, a dedicated internal communication app

was introduced to ensure that a broader segment of em-

ployees, including those without regular access to com-

puters, can easily access up-to-date information. This

tool has improved the reach and timeliness of internal

updates.

Occupational health and safety

The Group places strong emphasis on employee health

and safety, recognising that safe working conditions and

social protection depend largely on the Group’s efforts.

The occupational health and safety (OHS) management

system applies to all employees across the Group.

The Group operates in line with the ISO 45001:2018

standard. Internal safety knowledge checks are conduct-

ed annually, with follow-up actions taken where needed

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

to maintain a safe work environment. Regular health and

safety audits are also carried out across sites and will

continue going forward.

In 2025, a total of 125 OHS audits (in 2024 - 86 OHS

audits) were conducted across various locations. These

audits helped identify potential accident risks and assess

compliance with safety protocols. Based on the findings,

the Group introduced additional safety measures to miti-

gate risks and enhance workplace safety.

In 2025, there were 16 recorded minor workplace inci-

dents, for which no remedial actions were required. Each

case was managed in accordance with pre-defined pro-

cedures established under the ISO 45001:2018 standard

and in full compliance with applicable local legislation.

One fatal incident occurred in 2025. Based on the infor-

mation available to date, the incident involved a criminal

act and was not related to employer fault. The case is

currently under investigation by the competent authori-

ties; therefore, no further details can be disclosed at this

stage.

The Group has defined a clear process in the event of

a serious incident resulting in significant harm to an em-

ployee or the company. In such cases, a dedicated inves-

tigation commission is formed to examine the circum-

stances thoroughly. All Group’s employees are informed

of the investigation outcomes and are encouraged to

provide feedback. Additional training or safety remind-

ers are immediately organised, and further measures or

process improvements are introduced if needed, based

on the findings of the investigation.

The Head of OHS oversees all safety-related matters on

a daily basis. OHS specialists continually improve their

knowledge through training. In addition, a strong Labour

Union plays an active role in ongoing consultations and

dialogue on health and safety topics.

To further support employee well-being, the Group of-

fers a range of preventative measures, including addition-

al accident insurance, free vaccinations against tick-borne

encephalitis and flu, and partnerships providing employee

discounts on health check-ups.

Additionally, any material negative impacts related to em-

ployee data use are prevented through the strict imple-

mentation of all applicable laws and regulations, including

the GDPR, across the Group’s operations.

S1-5 – TARGETS RELATED TO MANAGING MATERIAL

NEGATIVE IMPACTS, ADVANCING POSITIVE IMPACTS,

AND MANAGING MATERIAL RISKS AND

OPPORTUNITIES (MDR-T)

The targets related to managing employee-related impacts, risks and opportunities in accordance

with ESRS 2 MDR-T are summarised at a table in ESRS 2 SBM-1.

City Service sets its employee-focused targets based on

internationally recognised good practices, such as En-

gagement index, eNPS, zero recordable injuries, zero ma-

jor data protection violations, and continuous tracking of

training hours per employee. While targets are not set

through direct employee consultation, they are designed

to support overall employee well-being and develop-

ment. Progress is reviewed annually to assess outcomes

and identify areas for improvement.

The Group uses a standardised eNPS methodology,

based on the question: “How likely are you to recom-

mend us as an employer to your friends or acquaintanc-

es?” Responses are rated on a 0–10 scale, and the final

eNPS index is calculated accordingly to measure overall

employee loyalty and engagement.

In 2025, employee engagement showed positive progress,

with the engagement index reaching 51.1% and meeting

the set target, indicating stable employee sentiment and

overall improvement in engagement levels.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

S1-6 – CHARACTERISTICS OF THE UNDERTAKING’S

EMPLOYEES

The following table provides the number of employees (headcount), including a breakdown by

gender and by country. The figures are based on the number of active employment contracts on

the last day of the reporting period, as recorded in the Group’s HR systems.

Cross-reference the number of employees in financial statements: section Employees (page 10)

The majority of employees are based in Lithuania, which reflects the concentration of the Group’s business operations

in that market. The gender distribution indicates that the Group offers a diverse range of roles that appeal to both

men and women across different functions and service areas.

Employee breakdown by gender and country

Gender

Total number of employees (head count)*

Group Lithuania Latvia

2024

Male 745 688 57

Female 860 754 106

Other** not applicable not applicable not applicable

Not reported 0 0 0

Total 1605 1442 163

Notes:

* The table presents an actual number of employees (as headcount), regardless of the worked FTE (full-time equivalent), on 31st December.

** *The “other” category is not applicable because registering as having a third, often neutral, gender is not legally possible in the countries where the Group operates.

Gender

Total number of employees (head count)*

Group Lithuania Latvia

2025

Male 684 623 61

Female 797 701 96

Other** not applicable not applicable not applicable

Not reported 0 0 0

Total 1 481 1 324 157

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Employee breakdown by gender and country

2024

Number of employees (headcount)

Female Male Other* Not disclosed Total

Number of employees

Group

860 745 not applicable 0 1605

Number of permanent employees 819 730 not applicable 0 1549

Number of temporary employees 41 15 not applicable 0 56

Number of non-guaranteed hours

employees

not applicable not applicable not applicable not applicable not applicable

Number of employees

Lithuania

754 688 not applicable 0 1442

Number of permanent employees 713 673 not applicable 0 1386

Number of temporary employees 41 15 not applicable 0 56

Number of employees

Latvia

106 57 not applicable 0 163

Number of permanent employees 106 57 not applicable 0 163

Number of temporary employees 0 0 not applicable 0 0

2025

Number of employees (headcount)

Female Male Other* Not disclosed Total

Number of employees

Group

797 684 not applicable 0 1481

Number of permanent employees 739 656 not applicable 0 1395

Number of temporary employees 58 28 not applicable 0 86

Number of non-guaranteed hours

employees

not applicable not applicable not applicable not applicable not applicable

Number of employees

Lithuania

701 623 not applicable 0 1324

Number of permanent employees 644 595 not applicable 0 1239

Number of temporary employees 57 28 not applicable 0 85

Number of employees

Latvia

96 61 not applicable 0 157

Number of permanent employees 95 61 not applicable 0 156

Number of temporary employees 1 0 not applicable 0 1

Notes:

* The table presents an actual number of employees (as headcount), regardless of the worked FTE (full-time equivalent), on 31-12-2024.

** *The “other” category is not applicable because registering as having a third, often neutral, gender is not legally possible in the countries where the Group operates.

In line with its business model, the Group does not employ temporary agency staff. All employment contracts within

the Group in both Lithuania and Latvia are either permanent or fixed-term. This reflects the Group’s commitment to

direct employment relationships, ensuring workforce stability, supporting long-term operational planning, and enhanc-

ing employee engagement.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Employee turnover

* The aggregate of the number of employees (headcount) who left voluntarily or due to dismissal, retirement, or death in service.

** The number of employees who left divided by the total number of employees (headcount).

The overall employee turnover rate is primarily driven by the turnover of unskilled cleaning employees within the

City Service Cleaning business, which is characteristic of this job category due to the nature of the work and market

specifics.

The figures are based on the number of active employment contracts on the last day of the reporting period, as re-

corded in the Group’s HR systems.

S1-9 – DIVERSITY METRICS

Gender distribution at top level management

2025 2024

Group Group

Number Percentage Number Percentage

Male 7 70% 6 67%

Female 3 30% 3 33%

To t a l 10 100% 9 100%

Note: The Group’s top management is defined as: a Member of the Management Board, the COO, Business Managers/Directors, and the Head of Human Resources.

Group Lithuania Latvia

Employees

who left*

Employee

turnover

rate**

Employees

who left*

Employee

turnover

rate**

Employees

who left*

Employee

turnover

rate**

2025 845 57% 768 58% 77 49%

2024 901 56% 823 57% 78 48%

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

S1-14 – HEALTH AND SAFETY METRICS

All City Service own employees are covered by a health and safety management system based

on recognised international standard ISO 45001. While not all Group companies are ISO 45001

certified, the same health and safety practices are applied consistently across the Group.

In the reporting period, the Group recorded one fatal

incident and a total of 16 minor incidents, all of which

were reported in Lithuania in accordance with applicable

national laws. Preventative measures were implemented

following the incidents.

The fatal incident resulted from an external criminal act

that occurred during a work-related client meeting within

one of the Group’s real estate activities. Following the

incident, the Group reviewed existing procedures related

to employee safety during in-person meetings with cli-

S1-10 – ADEQUATE WAGES

All City Service employees are paid adequate wages that are in line with applicable benchmarks.

S1-11 – SOCIAL PROTECTION

All City Service employees are covered by social protection, through public programs and benefits

offered by the Group, against loss of income due to the major life events.

Distribution of employees by age group

2025

Group Lithuania Latvia

Number Percentage Number Percentage Number Percentage

<30 years old 167 11% 157 12% 10 6%

30-50 years old 654 44% 587 44% 67 43%

>50 years old 660 45% 580 44% 80 51%

Total 1481 100% 1324 100%

157 100%

2024

Group Lithuania Latvia

Number Percentage Number Percentage Number Percentage

<30 years old 153 10% 143 10% 10 6%

30-50 years old 692 43% 622 43% 70 43%

>50 years old 760 47% 677 47% 83 51%

Total 1605 100% 1442 100% 163 100%

ents and is assessing additional organisational and tech-

nical measures aimed at strengthening employee pro-

tection in such situations. One of the measures under

consideration is the introduction of a prior registration

process for property viewings and other in-person meet-

ings, which would allow the identification of individuals

attending meetings and support the investigation of inci-

dents, should they occur. The Group continues to evalu-

ate additional preventive measures as part of its ongoing

review of employee safety procedures.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Health and safety indicators

2025 2024

Group Lithuania Latvia Group Lithuania Latvia

Company employees

Number of deaths due to work-

related injuries and work-related

ill health

1* 1* 0 0 0 0

Number of recordable work-

related accidents

16 16 0 17 17 0

Total hours worked per year by

all employees

2 227 267 1 996 579 230 688 n/a** n/a** n/a**

Recordable work-related

accident rate per million hours

worked, %

7,63 8,51 0 n/a** n/a** n/a**

Number of recordable work-

related health problems

0 0 0 0 0 0

Non-employees classified as own labour

Number of deaths due to work-

related injuries and work-related

ill-health among non-employees

working at the company’s sites

0 0 0 0 0 0

*The fatal incident resulted from an external criminal act that occurred during a work-related client meeting within one of the Group’s real estate activities. Competent authorities have classified the

incident as work-related as it occurred in the course of work. The Group is addressing the consequences in accordance with applicable legal requirements and internal procedures.

**Information is not available as data on total hours worked was not collected.

Note: Metrics provided in the table were derived from the internal HR systems and are not based on estimates.

S1-15 – WORK-LIFE BALANCE METRICS

All Group employees are entitled to family-related leave in accordance with applicable national

legislation and social policies in the countries where the Group operates.

The Group applies the exemption provided under the Quick Fix Directive and does not disclose detailed quantitative

information on the percentage of employees taking family-related leave by gender. The Group will continue to support

equitable access to such benefits across its operations, promoting a workplace culture that respects and encourages

work-life balance.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

S1-16 – REMUNERATION METRICS

(PAY GAP AND TOTAL REMUNERATION)

At present, the Group has evaluated the following remu-

neration-related indicators as not material:

● Ratio of the annual total remuneration of the highest-

paid individual to the median remuneration of all

employees – This indicator is currently assessed

as not material due to the lack of a consistent and

appropriate methodology for calculation. Given the

Group’s operational structure, where a significant

portion of employees perform non-skilled work at

or near minimum wage levels, and the proportion of

administrative roles is relatively small, the result would

provide a distorted and potentially misleading picture

of the Group’s overall remuneration practices.

● Gender pay gap – The Group does not consider this

indicator material, as there is no evidence of gender-

based pay discrimination. Employees in equivalent

positions receive equal pay regardless of gender, and

there have been no employee complaints received on

this matter. Additionally, there is no significant negative

impact on employees attributable to gender-based

pay disparities.

The Group remains committed to remuneration fairness,

equal treatment, and transparency, and will continue to

monitor and re-evaluate the relevance of these indicators

in future reporting cycles.

S1-17 – INCIDENTS, COMPLAINTS AND SEVERE HUMAN

RIGHTS IMPACTS

During the reporting period, no incidents of discrimination, harassment, or severe human rights

violations (such as forced labour, human trafficking, or child labour) were identified or reported

within the Group. One complaint related to alleged psychological harassment at work was recorded

and reviewed in accordance with the Group’s internal procedures. The investigation concluded

that the complaint was unfounded, and no psychological harassment was identified.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

S2 SBM-2 – INTERESTS AND VIEWS OF STAKEHOLDERS

This information is provided alongside the ESRS 2 SBM-2 disclosure in the chapter Stakeholder

Engagement of this report.

S2 SBM-3 MATERIAL IMPACTS, RISKS AND

OPPORTUNITIES AND THEIR INTERACTION

WITH STRATEGY AND BUSINESS MODEL

The Group depends on value chain workers to deliver its building maintenance services across

residential, commercial, and public sectors. The most important of these are contractors (referred

to as partners) who handle tasks like installing energy efficiency solutions, carrying out renovations,

or performing technical upgrades. While they are not employed directly by the Group, their work

is essential to daily operations and closely tied to the Group’s overall business model and strategy.

S2 WORKERS IN THE

VALUE CHAIN

Because of their important role, the Group has built

clear expectations for how it works with contractors. All

partners must follow the Group’s Code of Conduct for

Partners, which sets out rules around environmental re-

sponsibility, workplace safety, ethical behaviour, and over-

all reputation. The Group regularly checks that partners

follow these rules, and carries out on-the-spot audits.

Health and safety is especially important - not only when

choosing contractors, but throughSuppliers commit to

comply with the Group’s Code of Conduct for Partners

through contractual agreements.

If a contractor does not meet expectations, the Group

can end the partnership and bar them from tenders for

one year. So far, the Group has not identified or received

reports on human rights or labor law violations by con-

tractors. All contractors are considered to be equally

exposed to potential impacts, with no specific groups of

workers identified as being at greater risk of harm.

The policy (Code of Conduct for Partners) covers up-

stream value chain workers (there are no material im-

pacts related to downstream value chain workers).

Other suppliers - those who provide materials, equip-

ment, or general services - are also expected to follow

the Code of Conduct for Partners. However, the Group

does not currently carry out detailed checks on this

group, and no major social impacts/risks have been iden-

tified so far.

While no negative impacts have been reported, the

Group recognises that risks could exist deeper in the

supply chain, especially where the origins of materials are

not fully known, such as when sourcing from outside the

EU. This could include issues like forced or child labour.

However, there is no current evidence of such risks, and

they are not considered material to the Group at this

time. The Group’s Code of Conduct for Partners stipu-

lates that all those involved in our operations must en-

sure that no child labour or forced labour is used. It also

explicitly stipulates that all suppliers must comply with

labour rights requirements.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

Policies related to value chain workers

The Group’s commitments to human and labour rights

for value chain workers are outlined in the Code of Con-

duct for Partners, which also addresses issues such as hu-

man trafficking, precarious work, forced or compulsory

labour, and child labour, and includes provisions address-

ing the safety of workers. The Board of City Service has

approved and holds accountability for the implementa-

tion of the policy.

The policy (Code of Conduct for Partners) covers up-

stream value chain workers (there are no material im-

pacts related to downstream value chain workers). The

Code also encourages partners to continuously improve

responsible business practices, guided by internationally

recognised sustainability principles.

In 2025, the Group strengthened its supply chain sustain-

ability governance by conducting a sustainability survey of

suppliers and business partners. The survey covered en-

vironmental, social, and governance topics, including oc-

cupational health and safety, employee well-being, non-

discrimination, and responsible labour practices. Based

on the results of the survey, no indications of material

human rights risks related to value chain workers were

identified.

The Group does not have a separate policy for direct en-

gagement with value chain workers or specific measures

for providing remedy, as no negative impacts have been

identified. Contractors and direct suppliers are based in

Lithuania, Latvia, or other EU countries and are subject

to national labour laws aligned with EU standards, which

provide adequate worker protections.

Information on Group’s whistleblowing channels and

protections is provided in section G1-1 of this report.

The Group does not require the availability of such chan-

nels in the workplace of value chain workers.

The Group monitors the effectiveness of its policies and

actions related to value chain workers through grievance

mechanisms (including whistleblowing channels), contrac-

tor selection procedures and on-the-spot audits. In 2025,

the Group also initiated a sustainability survey of selected

suppliers and business partners as an additional meas-

ure to strengthen oversight. The Group’s current level

of ambition is to ensure compliance with the principles

set out in the Code of Conduct for Partners. Progress is

assessed qualitatively, based on the absence of confirmed

violations, audit findings and available supplier informa-

tion.

As no actual negative impacts have been identified to

date, the Group has not engaged value chain workers

directly on working conditions and has not set specific

actions or targets related to them. Accordingly, there are

no additional relevant disclosures under ESRS S2 Value

Chain Workers in this report.

CITY SERVICE SE CONSOLIDATED MANAGEMENT REPORT 2025

Sustainability Statement

S4 SBM-2 – INTERESTS AND VIEWS OF STAKEHOLDERS

This information is provided alongside the ESRS 2 SBM-2 disclosure in the chapter Stakeholder

Engagement of this report.

S4 SBM-3 – MATERIAL IMPACTS, RISKS AND

OPPORTUNITIES AND THEIR INTERACTION

WITH STRATEGY AND BUSINESS MODEL

Customer experience and satisfaction, high service quality are essential to City Service’s business

model and overall competitiveness. They reflect the Group’s core values and approach to service.

To meet the needs of clients across residential, commercial, and public sectors, the Group regularly

invests in modern tools and technologies that help improve service quality and user experience.

These solutions also increase efficiency and support the Group’s strong position in the market.

S4 CONSUMERS AND

END-USERS

To deliver its services, the Group needs to manage a

large amount of personal data. This makes data privacy

and security a key priority. Protecting personal data is

important for keeping customer trust and meeting legal

requirements. The Group collects and stores only the

data that is necessary, ensures that access is controlled,

and carries out regular security checks. Customers are

clearly informed about how their data is used. These

practices follow national and international standards and

apply equally to all customers.

Although there have been no major data breaches in the

reporting period, the Group understands that risks ex-

ist. Misuse of data could lead to harm for customers or

legal consequences under the General Data Protection

Regulation (GDPR). As privacy laws become stricter, the

Group is aware of the rising costs of compliance and

continues to improve its data protection systems. City

Service serves a wide range of clients, such as residents,

public and commercial institutions, building managers, of-

fices, factories, and shopping centres. End-users include

anyone who uses or visits the buildings and facilities the

Group manages or maintains - such as building occu-

pants, employees, visitors, and customers. These users

benefit from the Group’s strong commitment to privacy,

safety, and fair treatment. The Group also ensures that

marketing, pricing, and presentation of services do not

negatively affect vulnerable users and avoids aggressive

sales tactics.

The Group’s activities also create positive results for cli-

ents and end-users. Well-maintained and clean buildings,

digitalised services, and better energy efficiency are ex-

amples of improvements that benefit both residential and

business clients.

City Service has looked at whether any user groups are

particularly vulnerable to Group’s impacts but has not

identified any such groups. The Group has also not found

material risks or opportunities linked to specific types of

users - all impacts are considered relevant to clients and

end-users in general.

There are no known widespread or systemic negative

impacts on users from the Group’s activities. At the same

time, the Group has not identified any material risks and

opportunities arising from impacts and dependencies on

end-users, that would relate to specific groups rather

than to all end-users.

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Sustainability Statement

S4-1 – POLICIES RELATED TO CONSUMERS

AND END-USERS (MDR-P)

CUSTOMER EXPERIENCE AND SATISFACTION

The Group’s commitments to client experience and satisfaction are embedded in its integrated

management system and formalised through its Quality, Environmental Protection, and

Occupational Health and Safety Policy, which is aligned with ISO standards. This policy applies

across all Group operations and covers all clients. The COO holds the highest level of accountability

within the organisation for the implementation of the policy.

The policy is publicly available on the City Service web-

site in Lithuanian and is planned to be translated into ad-

ditional languages to ensure accessibility for all partners,

not only those based in Lithuania.

To fully meet customer needs and expectations and en-

sure high-quality operations, the Group’s management is

committed to:

● Complying with applicable legal and regulatory

requirements and continuously improving the quality

management system.

● Ensuring ongoing monitoring and evaluation of the

quality system.

● Delivering only high-quality services and minimising

instances of customer dissatisfaction.

● Continuously enhancing service delivery and

management processes, guided by best practice

standards.

● Managing external processes that may impact service

quality, and working only with partners who comply

with legal obligations.

● Improving clients’ working environments and quality

of life through the environmentally responsible

maintenance of engineering systems.

● Continuously developing employee competencies,

encouraging their engagement in improvement

initiatives, supporting professional development and

self-expression, and fostering accountability for quality.

● Improving the effectiveness of the integrated

management system by implementing policy and

company objectives, monitoring performance, and

ensuring ongoing system optimisation.

The policy has been developed with stakeholder inter-

ests taken into consideration. While no direct engage-

ment was conducted specifically for its development, the

process was informed by existing insights, the Group’s

understanding of key issues relevant to clients, and align-

ment with established best practices, as the policy is

based on a recognised ISO standard.

Privacy

The Group’s Privacy Policy ensures that clients have a

clear understanding of how their personal data is pro-

cessed and kept, and ensures them the right to request

its removal. The COO is responsible for overseeing the

implementation of the policy across the Group. All cli-

ents have the right to access the Privacy Policy and may

also submit feedback regarding its content or the Group’s

data protection practices.

In 2025, the Group updated its internal Personal Data

Processing Rules, establishing a unified framework for

personal data governance across all Group companies.

The updated rules strengthen data protection practic-

es and ensure continued alignment with the EU Gen-

eral Data Protection Regulation (GDPR) and applicable

national legislation, with a focus on data minimisation,

security, confidentiality, and accountability. The COO

oversees the implementation of data protection policies

across City Service SE, and clients may access the Privacy

Policy and submit feedback regarding data protection

practices through established channels.

Protection of client human rights

The Group’s commitment to respecting and protecting

the human rights of its clients and end-users is defined in

its Sustainability Policy, as disclosed under ESRS 2 MDR-

P. City Service SE ensures respectful treatment of clients,

protection of personal data, service quality, and fair han-

dling of complaints. The Group engages with clients on

a day-to-day basis through operational communication

channels and feedback mechanisms, and addresses cli-

ent complaints and concerns in a timely and transparent

manner.

The Group’s Sustainability Policy and related internal

procedures are aligned with internationally recognised

human rights principles, including the UN Global Com-

pact, the UN Guiding Principles on Business and Human

Rights, the ILO Declaration on Fundamental Principles

and Rights at Work, and the OECD Guidelines for Mul-

tinational Enterprises. No client-related human rights

complaints or confirmed violations have been recorded

to date.

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Sustainability Statement

S4-2 – PROCESSES FOR ENGAGING WITH CONSUMERS

AND END-USERS ABOUT IMPACTS

The Group actively engages with end-users to understand and manage actual or potential impacts

related to its services. Feedback is collected through several channels, including 24/7 customer

service platforms, direct communication, and regular customer satisfaction surveys (NPS). Further

details on the scope and results of client NPS are disclosed in the SBM-1 section of the report.

S4-3 – PROCESSES TO REMEDIATE NEGATIVE IMPACTS

AND CHANNELS FOR CONSUMERS AND END-USERS

TO RAISE CONCERNS

The Group takes prompt action when it identifies that it has caused or contributed to a material

negative impact on end-users. Its general approach to remedy is based on the following principles:

Engagement occurs at key stages such as during service

delivery, in response to enquiries or complaints, and

through periodic consultations, especially in the B2B seg-

ment. The main types of engagement include informing,

consulting, and inviting suggestions for improvement.

Operational responsibility for managing engagement lies

with Customer Service Centre line managers and other

designated employees. These teams ensure feedback is

captured, analysed, and used to inform service quality

and impact management.

● Responding quickly to ensure that customer rights

are protected, with a target response time of 8 hours

for customer complaints.

● When dissatisfaction is identified, conducting internal

analysis at the regional level, where each region is

responsible for complaint management and quality

review, including tracking complaints through

dedicated reporting tools and identifying necessary

corrective measures (e.g. service improvements or

process changes).

Effectiveness is assessed based on response time and

changes in NPS following resolution.

Clients can raise concerns through various channels:

email, phone, online forms, social media, NPS surveys

and the whistleblowing channel. These options are clear-

ly listed on the Group’s website, in service terms, and

Effectiveness is monitored through customer feedback

analysis, satisfaction indices, and online sentiment track-

ing. A review of the customer engagement strategy is

planned to further enhance these processes.

The Group has not identified any particularly vulnerable

or marginalised groups of consumers or end-users that

would be disproportionately affected by its services, and

related impacts are not considered material. Accordingly,

no specific additional measures are currently in place to

gain further insight into such groups.

provided by customer service. The Group’s experience

shows that clients trust the available channels and freely

express their views on all matters important to them.

Given the nature of the sector, there is no need to in-

troduce additional measures to ensure or formally assess

client trust in these channels.

All complaints are logged in an internal system and as-

signed to the relevant team or staff member. Each case

is tracked from registration to resolution, with regular

updates provided to the customer.

While the Group maintains strong internal processes, it

does not currently require business partners to provide

equivalent grievance channels.

All concerns are handled confidentially and in accordance

with GDPR. Information on whistleblowing channels and

protections is provided in section G1-1 of this report.

While the Group does not operate a dedicated human

rights remediation mechanism for clients, clients may

raise concerns, including potential human rights-related

issues, through existing complaint-handling processes and

the Group’s whistleblowing channels, which are availa-

ble to external stakeholders. Should any adverse human

rights impacts occur, the Group commits to addressing

them in line with applicable laws and internal procedures.

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Sustainability Statement

S4-4 – TAKING ACTION ON MATERIAL IMPACTS ON

CONSUMERS AND END- USERS, AND APPROACHES

TO MANAGING MATERIAL RISKS AND PURSUING

MATERIAL OPPORTUNITIES RELATED TO CONSUMERS

AND END-USERS, AND EFFECTIVENESS OF THOSE

ACTIONS (MDR-A)

Customer satisfaction is a key priority for the Group and is embedded in its overall strategy. To

ensure high-quality and user-focused services, the Group invests in modern tools and regularly

reviews its customer service standards. While no dedicated action plans were in place during the

reporting period beyond routine operations, customer experience remains a strategic focus, and

all the related actions are ongoing.

The Group recognises two potential types of negative

impacts on clients: those related to data protection and

those related to service quality. To prevent and address

those impacts, the Group ensures full compliance with

GDPR, provides clear service terms, and applies internal

standards to maintain transparency and accuracy in com-

munication.

If a data breach or issue were to occur, remedies would

be provided in accordance with the procedures outlined

in applicable GDPR legislation.

In the case of insufficient service quality, the Group con-

ducts internal analysis and implements corrective actions,

such as service or process improvements, when dissat-

isfaction is identified. No formal remedies to individual

clients are foreseen, as such cases are considered highly

exceptional. The nature of the Group’s services typically

does not lead to significant harm to clients, and therefore

does not give rise to the need for compensation or other

individual-level remedies.

The Group also supports positive outcomes through

clear communication (e.g. FAQs), and by training employ-

ees to respond effectively to customer needs. Feedback

and complaints are analysed regularly.

Opportunities related to end-users are pursued through

digitalisation and automation initiatives, such as IoT so-

lutions, which improve efficiency. While specific impact-

related targets are still under development, NPS remains

the key metric for tracking client satisfaction.

In 2025, 5 minor personal data protection breaches were

recorded, defined as isolated cases with very limited ef-

fect (no material negative impact was caused, hence, no

remedies were enabled). No major incidents, such as

large-scale data exposure (e.g., recipient lists exceeding

100 individuals or disclosure of sensitive data), were reg-

istered during the year.

The management of material IROs is financed using the

Group’s own financial resources. No external funding or

sustainable finance instruments are currently used for

this purpose.

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Sustainability Statement

S4-5 – TARGETS RELATED TO MANAGING MATERIAL

NEGATIVE IMPACTS, ADVANCING POSITIVE IMPACTS,

AND MANAGING MATERIAL RISKS AND

OPPORTUNITIES (MDR-T)

The targets related to managing impacts, risks and opportunities in accordance with ESRS 2 MDR-T

are summarised at a table in ESRS 2, SBM-1.

City Service sets targets related to customer experience

and satisfaction based on NPS tracking and adherence

to GDPR requirements. While these targets are not de-

veloped through direct consultation with clients, they

are aligned with recognised best practices. Progress is

reviewed annually to evaluate results and identify areas

for improvement.

Overall, the results in 2025 indicate a decline in cer-

tain segments, primarily linked to ongoing operational

transformation initiatives rather than changes in service

quality or scope. These include process standardisation,

increased use of subcontractors, and efficiency improve-

ments, which had a short-term impact on customer ex-

perience.

At the same time, the Group is strengthening its qual-

ity management approach, including the introduction of

quarterly performance reviews that incorporate both

results and behavioural aspects. Differences in perfor-

mance across business units have been identified, and

more targeted actions at segment level are planned. In

addition, ongoing investments in automation and AI-

based solutions are expected to contribute to improve-

ments in customer experience over the medium term.

The Group applies a standardised NPS methodology,

across all of its companies and for all clients. The ap-

proach is based on the question: “How likely are you

to recommend us as a service provider to your friends

or acquaintances?” Respondents rate their likelihood on

a 0–10 scale, and an NPS index is calculated to assess

overall customer satisfaction and loyalty. The NPS is a

widely used and well-established customer loyalty and

satisfaction metric, but it is not considered a scientifically

validated tool.

No changes to targets have been made compared to the

previous reporting period.

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Sustainability Statement

Regardless of the business segment, employee meetings

are held twice a year, reaching all regions. These sessions

provide a platform to discuss corporate culture, share

updates, and address employee questions. In addition,

monthly onboarding sessions (or more frequently when

new hire groups are formed) also cover culture-related

topics, helping new employees integrate into the Group’s

values from the outset.

Current issues and key updates are communicated

through various internal communication channels, in-

cluding emails and the MELP employee recognition app,

which reinforces cultural values by highlighting positive

employee behaviours and achievements.

The Group’s values are embedded in and operational-

ised through the Group’s Sustainability Policy (see ESRS

2 MDR-P) and Workforce Management Policy (see S1-1).

These policies set out clear principles related to ethical

conduct, respect for human rights, inclusion, employee

well-being, and responsible management practices, which

together form the foundation of the Group’s corporate

culture. Through their consistent application, leadership

engagement, and internal communication, the Group en-

sures that its corporate culture is clearly defined, actively

reinforced, and continuously developed.

Anticorruption policy

The Group has an Anticorruption policy consistent with

the United Nations Convention against Corruption. The

policy applies across all entities within the Group and

is binding for all employees, as well as stakeholders en-

gaging with the Group. A member of the Management

Board responsible for the Baltic countries is the most

senior person in the organisation accountable for the

implementation of this policy. The Group adheres to a

GOVERNANCE AREA

G1 BUSINESS

CONDUCT

G1 GOV-1 – THE ROLE OF THE ADMINISTRATIVE,

MANAGEMENT AND SUPERVISORY BODIES

This information is provided alongside the ESRS 2 GOV-1 disclosure in the chapter Sustainability

Governance of this report.

G1 IRO-1 – DESCRIPTION OF THE PROCESSES TO

IDENTIFY AND ASSESS MATERIAL IMPACTS, RISKS

AND OPPORTUNITIES

This information is provided alongside the ESRS 2 IRO-1 disclosure in the chapter Double Materiality

Assessment of this report.

G1-1 – BUSINESS CONDUCT POLICIES AND

CORPORATE CULTURE (MDR-P)

City Service has established and clearly communicated its core values and purpose, which actively

shape and guide its corporate culture. These principles are regularly reinforced by the leadership

team through ongoing communication. Challenges and opportunities related to the continuous

improvement of the Group’s culture are consistently addressed during management meetings,

ensuring that the culture remains dynamic and inclusive.

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Sustainability Statement

strict zero-tolerance approach to corruption and any

form of criminal or unethical conduct. This principle is

embedded in the Group’s operations and is reflected in

its Anti-Corruption Policy, which prohibits, among other

things:

● Soliciting, offering, giving, receiving, or authorizing

bribes - whether directly or indirectly - as well as

trading in influence.

● Bribery of public officials, both in Lithuania and abroad.

● Participation in cartel agreements or other violations

of competition law.

● Facilitation payments intended to speed up routine

business processes.

● Improper financial accounting and tax evasion.

● Engagement in criminal or other unethical business

practices.

● Misuse of funds or unjustified expenditures.

● Giving or accepting gifts, donations, or other benefits

that could influence or appear to influence unlawful or

unethical decision-making.

Internal stakeholders were involved in the development

of this policy, including representatives from HR, legal,

various business units, the COO, and a member of the

Management Board. The final policy is made accessible to

all employees via the Group’s internal system, ensuring

broad awareness and understanding of its principles and

requirements.

This policy reflects the Group’s firm commitment to in-

tegrity, transparency, and compliance with both local and

international anti-corruption laws and standards.

Reporting channels and whistleblower

protection

In 2025, City Service SE formalised and strengthened

its whistleblowing framework by adopting a dedicated

Reporting of Violations and Whistleblower Protection

Policy. The policy was developed taking into account the

needs and expectations of both internal and external

stakeholders, ensuring safe, confidential and accessible

reporting channels. The policy applies across all entities

within the Group and covers employees, former employ-

ees, candidates, contractors, suppliers, partners, share-

holders and other stakeholders who have or have had

a professional relationship with the Group. The policy is

publicly available on the Group’s website and internally

via the eCity system, ensuring it is easily accessible to all

relevant stakeholders.

Group employees have been formally informed about the

policy and confirmed their acknowledgement by signature.

In addition, a dedicated digital reporting platform (acces

sible via QR code) is available across all offices and dis-

played in common areas. The Head of the Legal function

is the most senior person in the organisation accountable

for the implementation and oversight of the policy.

The Group provides secure, confidential, and, where ap-

propriate, anonymous channels for reporting suspected

violations, including unlawful conduct, breaches of inter-

nal policies, corruption, or human rights concerns. Re-

ports can be submitted through:

● dedicated digital whistleblowing platform (accessible

via QR code);

● a dedicated email address pranesk@cityservice.eu;

● written submissions by registered mail; or

● external competent authorities, in accordance with

applicable whistleblower protection legislation.

These channels are available to employees, former em-

ployees, candidates, contractors, suppliers, partners, cli-

ents, and other external stakeholders. Customers may

also raise concerns through established client commu-

nication channels, including phone, email, or feedback

mechanisms.

The Group complies with national legislation transposing

Directive (EU) 2019/1937 on the protection of whistle

blowers. All reports are handled impartially and confiden-

tially, with strict safeguards in place to protect the identity

of the reporting person and to prevent retaliation.

Reports received through the whistleblowing channels

are assessed and investigated by a designated competent

person and, where necessary, an ad hoc investigation

commission. Investigations are carried out by persons

who are not directly involved in the matter and are in-

dependent from the management chain related to the

case, ensuring objectivity and impartiality. Investigations

are conducted within defined timeframes, with findings

reported to company management and escalated to sen-

ior management as appropriate. Where criminal conduct

is suspected, relevant authorities are notified.

In 2025 and 2024, no reports were received through the

Group’s whistleblowing channels.

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Sustainability Statement

Anti-corruption awareness and training

The Group’s policy is to enhance employees’ awareness

of ethical conduct and anti-corruption by regularly shar-

ing relevant information and organising targeted training

initiatives. Participation in business ethics and anti-cor-

ruption training is mandatory for all employees in one

form or another.

Business ethics and anti-corruption training is organised

by the Legal function and delivered based on identified

needs, typically in group sessions. The Group aims to

hold such training sessions at least on a quarterly basis. In

addition, within City Service Engineering, anti-corruption

topics are systematically addressed during the monthly

“New Employee Day” onboarding sessions, ensuring that

new employees are familiar with ethical standards and

reporting mechanisms from the outset.

Within the Group, the functions identified as being most

exposed to corruption and bribery risks include procure-

ment, business representation, and, in some cases, oper-

ational roles related to the engagement and management

of contractors. Training content and awareness-raising

activities place particular emphasis on these higher-risk

functions.

At present, quantitative data on the number of trainings

delivered and participants is not systematically tracked

across the Group and is therefore not disclosed. The

Group intends to strengthen data collection processes

and provide such information in future reporting periods.

G1-2 – MANAGEMENT OF RELATIONSHIPS WITH

SUPPLIERS (MDR-P)

City Service manages supplier relationships through a structured selection process and a Code of

Conduct for Partners (approved and overseen by the Board), which outlines expectations related

to sustainability, reputation, and other key principles. The Group conducts ongoing monitoring to

ensure that suppliers comply with contractual obligations. In 2025, this approach was complemented

by a supplier sustainability survey, used to gather information on suppliers’ environmental, social,

and governance practices and to support the identification of potential risks in the supply chain.

If a supplier is found to have breached the Code of Con-

duct for Partners, Group companies may refuse to en-

gage in any business relationship with the supplier and/or

add them to an internal list of unreliable entities.

The Group does not apply discriminatory practices to-

ward small and medium-sized enterprises (SMEs), includ-

ing in its payment practices.

The supplier selection process incorporates both social and

environmental criteria. Occupational safety is prioritised as

the most important social factor and is explicitly addressed

in partnership agreements. Environmental expectations

are defined in the Code of Conduct for Partners.

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Sustainability Statement

G1-3 – PREVENTION AND DETECTION OF

CORRUPTION AND BRIBERY (MDR-A)

There are no additional procedures of prevention and detection of corruption or bribery aside

from those described in the G1-1 disclosure requirement (Anticorruption policy, whistleblowing

channels and investigation procedures), and the existing procedures are considered sufficient to

minimise related risks.

City Service communicates its Anti-Corruption Policy to

all relevant stakeholders, including employees, contrac-

tors, and suppliers. The policies and guidelines are ac-

cessible on the Group’s internal communication platform

eCity. Relevant information is regularly included in the

internal newsletter.

Implications of the Group’s anti-corruption policies are

periodically explained through the mandatory training.

The Group’s anti-corruption training is designed to equip

employees with a clear understanding of corruption and

bribery risks, potential breaches, prevention mechanisms,

and the company’s internal policies.

Training topics include:

● Definitions and examples of corruption and bribery.

● The Group’s Anti-Corruption Policy and its practical

application.

● Whistleblowing mechanisms and how to use them.

● Legal consequences of engaging in corrupt activities.

● The importance of ethics and integrity in the

workplace.

The training is targeted at all employees and is delivered

through interactive working sessions. At the City Service

Engineering business the anti-corruption policies are also

presented during entry-level onboarding days. Training

frequency is determined by the Head of the Legal Team

and provided as needed, with the overarching goal of en-

suring that all employees are trained.

Anti-corruption training is mandatory for all managers,

including those in administrative, management, and su-

pervisory roles. It is conducted annually or upon updates

to the Anti-Corruption Policy.

The training ensures that managers:

● Understand the risks and potential impact of

corruption and bribery on business operations.

● Are equipped to implement and oversee anti-

corruption policies.

● Can make informed strategic decisions and

appropriately manage associated risks.

The actions related to anti-corruption training as listed

above are the Group’s ongoing measures to ensure cor-

ruption prevention. No additional action plans are in

place as defined in ESRS 2 MDR-A.

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Sustainability Statement

G1-4 – INCIDENTS OF CORRUPTION OR BRIBERY

(MDR-T)

During the reporting period, no cases of corruption or bribery were identified within the Group.

There were no legal proceedings, penalties, or confirmed incidents involving employees or business

partners, nor any contract terminations related to such violations. The Group and its employees

were also not involved in any corruption or bribery cases involving actors in its value chain.

The Group has set a target to maintain zero confirmed breaches of business ethics or corruption on an annual basis

in its own operations and in those related to direct business partners (suppliers and contractors). A breach is consid-

ered confirmed following an internal investigation that verifies a violation of the Anti-Corruption Policy or Code of

Conduct for Partners.

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Sustainability Statement

INDICES

Health and safety indicators

Applicable ESRS Sector

Not available

ESRS 2 General Disclosures

Disclosure Requirement Page

BP-1 General basis for preparation of sustainability statements 39

BP-2 Entities included in the organisation's sustainability reporting 39

GOV-1 The role of the administrative, management and supervisory bodies 41

GOV-2

Information provided to and sustainability matters addressed by the undertaking’s

administrative, management and supervisory bodies

GOV-3 Integration of sustainability-related performance in incentive schemes 46

GOV-4 Statement on due diligence 46

GOV-5 Risk management and internal controls over sustainability reporting 48

SBM-1 Strategy, business model and value chain 50

SBM-2 Interests and views of stakeholders 53

SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model 55

IRO-1 Description of the process to identify and assess material impacts, risks and pportunities" 60

IRO-2 Disclosure Requirements in ESRS covered by the undertaking’s sustainability statement 62

Policies MDR-P Policies adopted to manage material sustainability matters 63

Actions MDR-A Actions and resources in relation to material sustainability matters 69

Metrics MDR-M Metrics in relation to material sustainability matters 69

Targets MDR-T Tracking effectiveness of policies and actions through targets 69

Environmental topics

Disclosure Requirement Page

E1 GOV-3 Integration of sustainability-related performance in incentive schemes 64

E1-1 Transition plan for climate change mitigation 67

E1 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model 64

E1 IRO-1

Description of the processes to identify and assess material climate-related impacts, risks and

opportunities

E1-2 Policies related to climate change mitigation and adaptation 68

E1-3 Actions and resources in relation to climate change policies 68

E1-4 Targets related to climate change mitigation and adaptation 68

E1-5 Energy consumption and mix 69

E1-6 Gross Scopes 1, 2, 3 and Total GHG emissions 71

E1-7 GHG removals and GHG mitigation projects financed through carbon credits 75

E1-8 Internal carbon pricing 75

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Sustainability Statement

ESRS E2 Pollution (not material) Page

E2 IRO-1

Description of the processes to identify and assess material climate-related impacts, risks and

opportunities

ESRS E3 Water and marine resources (not material) Page

E3 IRO-1

Description of the processes to identify and assess material climate-related impacts, risks and

opportunities

ESRS E4 Biodiversity and ecosystems (not material) Page

E4 IRO-1

Description of the processes to identify and assess material climate-related impacts, risks and

opportunities

ESRS E5 Resource use and circular economy (not material) Page

E5 IRO-1

Description of the processes to identify and assess material climate-related impacts, risks and

opportunities

Social topics

ESRS S1 Own workforce Page

S1 SBM-2

Interests and views of stakeholders 82

S1 SBM-3

Material impacts, risks and opportunities and their interaction with strategy and business model 82

S1-1

Policies related to own workforce 83

S1-2

Processes for engaging with own workers and workers’ representatives about impacts 84

S1-3

Processes to remediate negative impacts and channels for own workers to raise concerns 85

S1-4

Taking action on material impacts on own workforce, and approaches to mitigating material

risks and pursuing material opportunities related to own workforce, and effectiveness of those

actions

S1-5

Targets related to managing material negative impacts, advancing positive impacts, and managing

material risks and opportunities

S1-6

Characteristics of the undertaking’s employees 91

S1-9

Diversity metrics 93

S1-10

Adequate wages 94

S1-11

Social protection 94

S1-14

Health and safety metrics 94

S1-15

Work-life balance metrics 95

S1-16

Remuneration metrics (pay gap and total remuneration) 96

S1-17

Incidents, complaints and severe human rights impacts 96

ESRS S2 Workers in the value chain Page

S2 SBM-2

Interests and views of stakeholders 97

S2 SBM-3

Material impacts, risks and opportunities and their interaction with strategy and business model 97

S2-1

Policies related to value chain workers 98

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Sustainability Statement

ESRS S2 Workers in the value chain Page

S4 SBM-2

Interests and views of stakeholders 99

S4 SBM-3

Material impacts, risks and opportunities and their interaction with strategy and business mode 99

S4-1

Policies related to consumers and end-users 100

S4-2

Processes for engaging with consumers and end-users about impacts 101

S4-3

Processes to remediate negative impacts and channels for consumers and end-users to raise

concerns

101

S4-4

Taking action on material impacts on consumers and end-users, and approaches to managing

material risks and pursuing material opportunities related to consumers and end-users, and

effectiveness of those actions

102

S4-5

Targets related to managing material negative impacts, advancing positive impacts, and managing

material risks and opportunities

103

Governance topics

ESRS G1 Business Conduct Page

G1 GOV-1

The role of the administrative, supervisory and management bodies 104

G1 IRO-1

Description of the processes to identify and assess material impacts, risks and opportunities 104

G1-1

Corporate culture and bBusiness conduct policies and corporate culture 104

G1-2

Management of relationships with suppliers 106

G1-3

Prevention and detection of corruption and bribery 107

G1-4

Confirmed incidents of corruption or bribery 108

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Sustainability Statement

List of datapoints in cross-cutting and topical standards that derive from other EU legislation

This appendix is an integral part of the ESRS 2. The table below illustrates the datapoints in ESRS 2 and topical ESRS

that derive from other EU legislation.

Disclosure

Requirement and

related datapoint

SFDR

reference Pillar 3

reference

Benchmark

Regulation

reference

Climate

Law

reference

Page

ESRS 2 GOV-1

Board’s gender diversity

paragraph 21 (d)

Indicator number

13 of Table #1 of

Annex 1

Commission

Delegated

Regulation (EU)

2020/1816

Annex II

ESRS 2 GOV-1

Percentage of board

members who are

independent paragraph

21 (e)

Delegated

Regulation (EU)

2020/1816,

Annex II

ESRS 2 GOV-4

Statement on due

diligence paragraph 30

Indicator number 10

Table #3 of Annex 1

ESRS 2 SBM-1

Involvement in activities

related to fossil fuel

activities paragraph 40 (d) i

Indicators number 4

Table #1 of Annex 1

Article 449a Regulation (EU) No

575/2013;

Commission Implementing

Regulation (EU) 2022/2453

Table

1: Qualitative information on

Environmental risk and Table 2:

Qualitative information on Social risk

Delegated

Regulation (EU)

2020/1816,

Annex II

Not applicable

(the Group is

not involved in

such activities)

ESRS 2 SBM-1

Involvement in activities

related to chemical

production paragraph 40

(d) ii

Indicator number 9

Table #2 of Annex 1

Delegated

Regulation (EU)

2020/1816,

Annex II

Not applicable

(the Group is

not involved in

such activities)

ESRS 2 SBM-1

Involvement in activities

related to controversial

weapons paragraph 40

(d) iii

Indicator number 14

Table #1 of Annex 1

Delegated

Regulation (EU)

2020/1818

Article 12(1)

Delegated

Regulation (EU)

2020/1816,

Annex II

Not applicable

(the Group is

not involved in

such activities)

ESRS 2 SBM-1

Involvement in activities

related to cultivation and

production of tobacco

paragraph 40 (d) iv

Delegated

Regulation (EU)

2020/1818,

Article 12(1)

Delegated

Regulation (EU)

2020/1816,

Annex II

Not applicable

(the Group is

not involved in

such activities)

1 Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (Sustainable Finance Disclosures

Regulation) (OJ L 317, 9.12.2019, p. 1).

2 Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No

648/2012 (Capital Requirements Regulation “CRR”) (OJ L 176, 27.6.2013, p. 1).

3 Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance

of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (OJ L 171, 29.6.2016, p. 1).

4 Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and

(EU) 2018/1999 (‘European Climate Law’) (OJ L 243, 9.7.2021, p. 1)

5 Commission Delegated Regulation (EU) 2020/1816 of 17 July 2020 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards the explanation in the benchmark

statement of how environmental, social and governance factors are reflected in each benchmark provided and published (OJ L 406, 3.12.2020, p. 1).

6 Commission Implementing Regulation (EU) 2022/2453 of 30 November 2022 amending the implementing technical standards laid down in Implementing Regulation (EU) 2021/637 as regards the

disclosure of environmental, social and governance risks (OJ L 324,19.12.2022, p.1.).

7 Commission Delegated Regulation (EU) 2020/1818 of 17 July 2020 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards minimum standards for EU

Climate Transition Benchmarks and EU Paris-aligned Benchmarks (OJ L 406, 3.12.2020, p. 17).

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Sustainability Statement

Disclosure

Requirement and

related datapoint

SFDR reference Pillar 3 reference

Benchmark

Regulation

reference

Climate

Law

reference

Page

ESRS E1-1

Transition plan to reach

climate neutrality by 2050

paragraph 14

Regulation

(EU)

2021/1119,

Article 2(1)

ESRS E1-1

Undertakings excluded

from Paris-aligned

Benchmarks paragraph

16 (g)

Article 449a

Regulation (EU) No 575/2013;

Commission Implementing

Regulation (EU) 2022/2453 Template

1: Banking book-Climate Change

transition risk: Credit quality of

exposures by sector, emissions and

residual maturity

Delegated

Regulation (EU)

2020/1818,

Article12.1 (d) to

(g), and Article

12.2

ESRS E1-4

GHG emission reduction

targets paragraph 34

Indicator number 4

Table #2 of Annex 1

Article 449a

Regulation (EU) No 575/2013;

Commission Implementing

Regulation (EU) 2022/2453 Template

3: Banking book – Climate change

transition risk: alignment metrics

Delegated

Regulation (EU)

2020/1818,

Article 6

ESRS E1-5

Energy consumption

from fossil sources

disaggregated by sources

(only high climate impact

sectors) paragraph 38

Indicator number

5 Table #1 and

Indicator n. 5 Table

#2 of Annex 1

ESRS E1-5 Energy

consumption and mix

paragraph 37

Indicator number 5

Table #1 of Annex 1

ESRS E1-5

Energy intensity associated

with activities in high

climate impact sectors

paragraphs 40 to 43

Indicator number 6

Table #1 of Annex 1

ESRS E1-6

Gross Scope 1, 2, 3 and

Total GHG emissions

paragraph 44

Indicators number

1 and 2 Table #1 of

Annex 1

Article 449a; Regulation (EU) No

575/2013; Commission Implementing

Regulation (EU) 2022/2453 Template

1: Banking book – Climate change

transition risk: Credit quality of

exposures by sector, emissions and

residual maturity

Delegated

Regulation (EU)

2020/1818,

Article 5(1), 6

and 8(1)

ESRS E1-6

Gross GHG emissions

intensity paragraphs 53

to 55

Indicators number 3

Table #1 of Annex 1

Article 449a Regulation (EU) No

575/2013; Commission Implementing

Regulation (EU) 2022/2453 Template

3: Banking book – Climate change

transition risk: alignment metrics

Delegated

Regulation (EU)

2020/1818,

Article 8(1)

ESRS E1-7

GHG removals and carbon

credits paragraph 56

Regulation

(EU)

2021/1119,

Article 2(1)

ESRS E1-9

Exposure of the

benchmark portfolio to

climate-related physical

risks paragraph 66

Delegated

Regulation (EU)

2020/1818,

Annex II

Delegated

Regulation (EU)

2020/1816,

Annex II

Phased-in

disclosure

requirement

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Sustainability Statement

Disclosure

Requirement and

related datapoint

SFDR reference Pillar 3 reference

Benchmark

Regulation

reference

Climate

Law

reference

Page

ESRS E1-9

Disaggregation of

monetary amounts by

acute and chronic physical

risk paragraph 66 (a)

ESRS E1-9

Location of significant

assets at material physical

risk paragraph 66 (c).

Article 449a Regulation (EU) No

575/2013; Commission Implementing

Regulation (EU) 2022/2453

paragraphs 46 and 47; Template

5: Banking book - Climate change

physical risk: Exposures subject to

physical risk.

Phased-in

disclosure

requirement

ESRS E1-9 Breakdown

of the carrying value of

its real estate assets by

energy-efficiency classes

paragraph 67 (c).

Article 449a Regulation (EU) No

575/2013; Commission Implementing

Regulation (EU) 2022/2453

paragraph 34;Template 2:Banking

book -Climate change transition risk:

Loans collateralised by immovable

property - Energy efficiency of the

collateral

Phased-in

disclosure

requirement

ESRS E1-9

Degree of exposure of

the portfolio to climate-

related opportunities

paragraph 69

Delegated

Regulation (EU)

2020/1818,

Annex II

Phased-in

disclosure

requirement

ESRS E2-4

Amount of each pollutant

listed in Annex II of

the E-PRTR Regulation

(European Pollutant

Release and Transfer

water and soil, paragraph

Indicator number 8

Table #1 of Annex 1

Indicator number 2

Table #2 of Annex 1

Indicator number 1

Table #2 of Annex 1

Indicator number 3

Table #2 of Annex 1

Not material

ESRS E3-1

Water and marine

resources paragraph 9

Indicator number 7

Table #2 of Annex 1

Not material

ESRS E3-1

Dedicated policy

paragraph 13

Indicator number 8

Table 2 of Annex 1

Not material

ESRS E3-1

Sustainable oceans and

seas paragraph 14

Indicator number 12

Table #2 of Annex 1

Not material

ESRS E3-4

Total water recycled and

reused paragraph 28 (c)

Indicator number 6.2

Table #2 of Annex 1

Not material

ESRS E3-4

Total water consumption

in m3 per net revenue on

own operations paragraph

Indicator number 6.1

Table #2 of Annex 1

Not material

ESRS 2- SBM 3 - E4

paragraph 16 (a) i

Indicator number 7

Table #1 of Annex 1

ESRS 2- SBM 3 - E4

paragraph 16 (b)

Indicator number 10

Table #2 of Annex 1

ESRS 2- SBM 3 - E4

paragraph 16 (c)

Indicator number 14

Table #2 of Annex 1

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Sustainability Statement

Disclosure

Requirement and

related datapoint

SFDR reference Pillar 3 reference

Benchmark

Regulation

reference

Climate

Law

reference

Page

ESRS E4-2

Sustainable land /

agriculture practices or

policies paragraph 24 (b)

Indicator number 11

Table #2 of Annex 1

Not material

ESRS E4-2

Sustainable oceans /

seas practices or policies

paragraph 24 (c)

Indicator number 12

Table #2 of Annex 1

Not material

ESRS E4-2

Policies to address

deforestation paragraph

24 (d)

Indicator number 15

Table #2 of Annex 1

Not material

ESRS E5-5

Non-recycled waste

paragraph 37 (d)

Indicator number 13

Table #2 of Annex 1

Not material

ESRS E5-5

Hazardous waste and

radioactive waste

paragraph 39

Indicator number 9

Table #1 of Annex 1

Not material

ESRS 2- SBM3 - S1

Risk of incidents of forced

labour paragraph 14 (f)

Indicator number 13

Table #3 of Annex I

ESRS 2- SBM3 - S1

Risk of incidents of child

labour paragraph 14 (g)

Indicator number 12

Table #3 of Annex I

ESRS S1-1

Human rights policy

commitments paragraph

Indicator number

9 Table #3 and

Indicator number 11

Table #1 of Annex I

ESRS S1-1

Due diligence policies on

issues addressed by the

fundamental International

Labor Organisation

Conventions 1 to 8,

paragraph 21

Delegated

Regulation (EU)

2020/1816,

Annex II

ESRS S1-1

processes and measures

for preventing trafficking

in human beings paragraph

Indicator number 11

Table #3 of Annex I

ESRS S1-1

workplace accident

prevention policy or

management system

paragraph 23

Indicator number 1

Table #3 of Annex I

ESRS S1-3

grievance/complaints

handling mechanisms

paragraph 32 (c)

Indicator number 5

Table #3 of Annex I

ESRS S1-14

Number of fatalities

and number and rate of

work-related accidents

paragraph 88 (b) and (c)

Indicator number 2

Table #3 of Annex I

Delegated

Regulation (EU)

2020/1816,

Annex II

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Sustainability Statement

Disclosure

Requirement and

related datapoint

SFDR reference Pillar 3 reference

Benchmark

Regulation

reference

Climate

Law

reference

Page

ESRS S1-14

Number of days lost to

injuries, accidents, fatalities

or illness paragraph 88 (e)

Indicator number 3

Table #3 of Annex I

Phased-in

disclosure

requirement

ESRS S1-16

Unadjusted gender pay

gap paragraph 97 (a)

Indicator number 12

Table #1 of Annex I

Delegated

Regulation (EU)

2020/1816,

Annex II

Not material

ESRS S1-16

Excessive CEO pay ratio

paragraph 97 (b)

Indicator number 8

Table #3 of Annex I

ESRS S1-17

Incidents of discrimination

paragraph 103 (a)

Indicator number 7

Table #3 of Annex I

ESRS S1-17 Non-respect

of UNGPs on Business

and Human Rights and

OECD paragraph 104 (a)

Indicator number

10 Table #1 and

Indicator n. 14 Table

#3 of Annex I

Delegated

Regulation (EU)

2020/1816,

Annex II

Delegated

Regulation (EU)

2020/1818 Art

12 (1)

ESRS 2- SBM3 – S2

Significant risk of child

labour or forced labour in

the value chain paragraph

11 (b)

Indicators number 12

and n. 13 Table #3 of

Annex I

ESRS S2-1

Human rights policy

commitments paragraph

Indicator number

9 Table #3 and

Indicator n. 11 Table

#1 of Annex 1

ESRS S2-1 Policies related

to value chain workers

paragraph 18

Indicator number 11

and n. 4 Table #3 of

Annex 1

ESRS S2-1 Non-respect of

UNGPs on Business and

Human Rights principles

and OECD guidelines

paragraph 19

Indicator number 10

Table #1 of Annex 1

Delegated

Regulation (EU)

2020/1816,

Annex II

Delegated

Regulation (EU)

2020/1818, Art

12 (1)

ESRS S2-1

Due diligence policies on

issues addressed by the

fundamental International

Labor Organisation

Conventions 1 to 8,

paragraph 19

Delegated

Regulation (EU)

2020/1816,

Annex II

ESRS S2-4

Human rights issues and

incidents connected to its

upstream and downstream

value chain paragraph 36

Indicator number 14

Table #3 of Annex 1

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Sustainability Statement

Disclosure

Requirement and

related datapoint

SFDR reference Pillar 3 reference

Benchmark

Regulation

reference

Climate

Law

reference

Page

ESRS S3-1

Human rights policy

commitments paragraph

Indicator number 9

Table #3 of Annex 1

and Indicator number

11 Table #1 of Annex

Not material

ESRS S3-1

non-respect of UNGPs

on Business and Human

Rights, ILO principles or

and OECD guidelines

paragraph 17

Indicator number 10

Table #1 Annex 1

Delegated

Regulation (EU)

2020/1816,

Annex II

Delegated

Regulation (EU)

2020/1818, Art

12 (1)

Not material

ESRS S3-4

Human rights issues and

incidents paragraph 36

Indicator number 14

Table #3 of Annex 1

Not material

ESRS S4-1 Policies related

to consumers and end-

users paragraph 16

Indicator number

9 Table #3 and

Indicator number 11

Table #1 of Annex 1

100

ESRS S4-1

Non-respect of UNGPs

on Business and Human

Rights and OECD

guidelines paragraph 17

Indicator number 10

Table #1 of Annex 1

Delegated

Regulation (EU)

2020/1816,

Annex II

Delegated

Regulation (EU)

2020/1818, Art

12 (1)

100

ESRS S4-4

Human rights issues and

incidents paragraph 35

Indicator number 14

Table #3 of Annex 1

102

ESRS G1-1

United Nations

Convention against

Corruption paragraph

10 (b)

Indicator number 15

Table #3 of Annex 1

104

ESRS G1-1

Protection of whistle-

blowers paragraph 10 (d)

Indicator number 6

Table #3 of Annex 1

104

ESRS G1-4

Fines for violation of

anti-corruption and anti-

bribery laws paragraph

24 (a)

Indicator number 17

Table #3 of Annex 1

Delegated

Regulation (EU)

2020/1816,

Annex II)

108

ESRS G1-4

Standards of anti-

corruption and anti-

bribery paragraph 24 (b)

Indicator number 16

Table #3 of Annex 1

108

FINANCIAL STATEMENTS,

FOR THE TWELVE

MONTHS PERIOD ENDED

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

119

Consolidated statement of financial position

		As of 31	As of 31
	Notes	December 2025	December 2024*
ASSETS
Non-current assets
Goodwill	5	10,068	9,129
Other intangible assets	6	22,595	20,156
Property, plant and equipment	7	935	860
Right of use assets	15	2,948	2,252
Receivables from related parties (including loans granted)	26	7,711	-
Non-current receivables	10	5,182	5,278
Deferred income tax asset	21	1,762	1,609
Total non-current assets		51,201	39,284
Current assets
Inventories	8	501	581
Prepayments	9	1,965	1,923
Trade receivables	11	27,204	25,353
Receivables from related parties (including loans granted)	26	3,569	14,443
Other receivables	10	6,035	3,224
Prepaid income tax		224	174
Contract assets		1,143	1,523
Cash and cash equivalents	12	7,459	4,826
Total current assets		48,100	52,047
Total assets		99,301	91,331

(cont’d on the next page)

The accompanying notes are an integral part of these financial statements.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

120

Consolidated statement of financial position (cont’d)

		As of 31	As of 31
	Notes	December 2025	December 2024*
EQUITY AND LIABILITIES
Equity
Share capital	1	9,483	9,483
Share premium	13	8,490	8,490
Reserves	13	948	420
Retained earnings		13,805	10,285
Equity attributable to equity holders of the parent		32,726	28,678
Non-controlling interests		238	220
Total equity		32,964	28,898
Liabilities
Non-current liabilities
Non-current borrowings	14	1,777	19,353
Lease liabilities	15	2,233	1,694
Deferred income tax liability	21	1,203	973
Contract liabilities	18	3,285	2,265
Provisions for employee benefits, non-current	16	100	112
Trade and other payables	17	806	999
Total non-current liabilities		9,404	25,396
Current liabilities
Current loans	14	7,729	5,469
Current portion of non-current borrowings	14	17,629	1,967
Current portion of lease liabilities	15	805	678
Trade and other payables	17, 26	19,355	19,753
Contract liabilities	18	9,816	7,776
Income tax payable	21	1,477	1,185
Provisions for employee benefits, current	16	122	209
Total current liabilities		56,933	37,037
Total liabilities		66,337	62,433
Total equity and liabilities		99,301	91,331

The accompanying notes are an integral part of these financial statements.

* The classification of deferred tax assets and liabilities for the year ended 31 December 2024 has been revised. Further

details regarding this reclassification are disclosed in Note 21.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

121

Consolidated statement of comprehensive income

	Notes	2025	2024
Revenue from contracts with customers	4	115,566	109,891
Cost of sales	19	(84,530)	(81,423)
Gross profit		31,036	28,468
General and administrative expenses	20	(20,233)	(19,990)
Expected credit losses (reversals) on financial assets	9,10,11	92	(638)
Other operating income		266	553
Other operating expenses		(336)	(57)
Gain on sale of investments	1	-	341
Profit from operations		10,825	8,677
Finance income		786	190
Finance costs		(1,124)	(1,744)
Profit before tax		10,487	7,123
		(923)	(574)
Income tax expense	21
Net profit		9,564	6,549
Other comprehensive income for the year, net of tax		-	-
Total comprehensive income for the year, net of tax		9,564	6,549
Net profit attributable to:
The shareholders of the Company		9,546	6,505
Non-controlling interests		18	44
		9,564	6,549
Total comprehensive income attributable to:
The shareholders of the Company		9,546	6,505
Non-controlling interests		18	44
		9,564	6,549
Basic and diluted earnings per share (EUR)	22	0.30	0.21

The accompanying notes are an integral part of these financial statements.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

122

Consolidated statement of changes in equity

							Non-
		Share	Share	Other	Retained		controlling
Group	Notes	capital	premium	reserves	earnings	Subtotal	interest		Total
Balance as of 1 January 2024		9,483	8,490	-	5,874	23,847	176		24,023
Net profit for the year		-	-	-	6,505	6,505	44		6,549
Other comprehensive income		-	-	-	-	-	-		-
Total comprehensive income		-	-	-	6,505	6,505	44		6,549
Transfers to (from) reserves		-	-	420	(420)	-	-		-
Dividends declared		-	-	-	(1,674)	(1,674)	-		(1,674)
Balance as of 31 December		9,483	8,490	420	10,285	28,678	220		28,898
2024
Net profit for the year		-	-	-	9,546	9,546	18		9,564
Other comprehensive income		-	-	-	-	-	-	-
Total comprehensive income		-	-	-	9,546	9,546	18		9,564
Transfers to (from) reserves	13	-	-	528	(528)	-	-		-
Dividends declared	23	-	-	-	(5,498)	(5,498)	-		(5,498)
Balance as of 31 December		9,483	8,490	948	13,805	32,726	238		32,964
2025

The accompanying notes are an integral part of these financial statements.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

123

Consolidated statement of cash flows

	Notes	2025	2024
Cash flows from (to) operating activities
Net profit		9,564	6,549
Adjusting items:
Income tax expenses	21	923	574
Depreciation and amortization	6, 7, 15	2,236	2,154
Impairment (reversal) and write-off of accounts receivable	11	(92)	638
(Gain) loss on disposal of property, plant and equipment		(39)	(147)
(Gain) loss from sale of investments	1	-	(341)
Finance income		(723)	(175)
Finance costs		1,042	1,305
Other financial activity result, net		82	440
		12,993	10,997
Changes in working capital:
(Increase) decrease in inventories		159	(20)
(Increase) decrease in trade receivables, receivables from related parties, contract assets, non-current receivables, other receivables		(5,366)	(374)
(Increase) decrease in prepayments		(10)	(294)
Increase (decrease) in trade payables and payables to related		5,108	(2,053)
parties
Increase (decrease) in contract liabilities, trade payables and other payables, provisions from employee benefits, non-		(2,592)	(1,132)
current payables		10,292	7,124
Income tax (paid)		(824)	(680)
Net cash flows from operating activities		9,468	6,444

(cont’d on the next page)

The accompanying notes are an integral part of these financial statements.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

124

Consolidated statement of cash flows (cont‘d)

	Notes	2025	2024
Cash flows from (to) investing activities
(Acquisition) of non-current assets	6, 7	(2,520)	(2,449)
Proceeds from sale of non-current assets	6, 7	105	245
(Acquisition) of subsidiaries, net of cash acquired	1, 5	(2,337)	125
Disposal of investments in subsidiaries (net of cash disposed) an	1	-	1
Interest received		722	175
Loans (granted)	26	-	(12,012)
Repayments of loans granted	26	4,301	894
Net cash flows from (to) investing activities		271	(13,021)
Cash flows from (to) financing activities
Dividends (paid)	23	(5,498)	(1,674)
Proceeds from loans	14	2,325	10,687
Payment of principal portion of lease liabilities	15	(833)	(786)
Loans (repaid)	14	(1,984)	(4,256)
Interest (paid)	14	(1,116)	(1,744)
Net cash flows from (to) financing activities		(7,106)	2,227
Net (decrease) increase in cash and cash equivalents		2,633	(4,350)
Cash and cash equivalents at the beginning of the year		4,826	9,176
Cash and cash equivalents at the end of the year		7,459	4,826

The accompanying notes are an integral part of these financial statements.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

125

Notes to the financial statements

1 General information

City Service SE (hereinafter – “the Company”) is a public limited liability company registered in the Republic of Estonia on 2

April 2015, which in the course of reorganization has taken over a public limited liability company City Service AS rights and

liabilities.

The Company controls corporate group, engaged in the provision of facility management and integrated utility services. The

City Service group (hereinafter – “the Group”) is the market leader in facility management and integrated utility services in

the Baltic States. It provides services in Lithuania and Latvia.

As of 31 December 2025 the number of employees of the Group was 1.339 (as of 31 December 2024 – 1.494).

As of 31 December 2025 and 2024 all 31.610 thousand ordinary shares of the Company are included into the Parallel Market

of Warsaw Stock Exchange (ISIN Code of the shares is EE3100126368) and Baltic First North Foreign Shares trading list of

NASDAQ Baltic Market (ISIN Code of the shares is EE3100126368). Trading Code of the shares on Warsaw Stock Exchange

is CTS, on NASDAQ Baltic Market - CTS1L.

As of 31 December 2025 and 2024 the shareholders of the Company were:

		2025		2024
		Owned		Owned
		percentage of		percentage of
		the share		the share
	Number of	capital and	Number of	capital and
	shares held	votes, %	shares held	votes, %
UAB Unit Invest	26,813,293	84.83%	26,813,293	84.83%
Other private and institutional shareholders	4,796,707	15.17%	4,796,707	15.17%
Total	31,610,000	100 %	31,610,000	100 %

The ultimate parent of the Company is UAB Unit Invest, a holding company registered in Lithuania.

The parent of City Service SE, UAB Unit Invest has pledged part of the Company’s shares, i.e. 17,396,275 units, which

constitutes 55.03% the authorized capital of the Company, to a bank. The right to transfer, pledge or dispose of the

abovementioned shares otherwise has been restricted. All other property and non-property rights of UAB Unit Invest, as the

shareholder, are free from any encumbrances or restrictions.

Share capital of the Company

The share capital of the Company is EUR 9,483 thousand as of 31 December 2025 and 2024. It is divided into 31,610

thousand ordinary shares with the nominal value of EUR 0.30 each.

All shares of the Company are fully paid. The Company does not have any other classes of shares than ordinary shares

mentioned above, there are no restrictions of share rights or special control rights for the shareholders set in the articles of

association of the Company. No shares of the Company are held by itself or its subsidiaries. No convertible securities,

exchangeable securities or securities with warrants are outstanding; likewise, there are no outstanding acquisition rights or

undertakings to increase share capital as of 31 December 2025 and 2024.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

126

1 General information (cont’d)

Structure of the Group

On 31 December 2025 the City Service SE group consists of the parent City Service SE and the following directly and indirectly

controlled subsidiaries:

		Share of the	Share of the
		stock held by	stock held by
Company	Country	the Group as of	the Group as of	Main activities
		31 December	31 December
		2025	2024
UAB Alytaus namų valda	Lithuania	76%	76%	Dormant
UAB Baltijos NT valdymas	Lithuania	100%	100%	Real estate management
UAB Baltijos transporto valdymas	Lithuania	100%	100%	Asset management
UAB Biržų butų ūkis	Lithuania	57.71%	57.71%	Administration of dwelling-houses
UAB BonoDomo	Lithuania	100%	100%	IT services
UAB BonoDomo Pay	Lithuania	100%	100%	Intermediary activities of an electronic money
				institution
UAB Žemaitijos būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Būsto aplinka	Lithuania	100%	100%	Maintenance and cleaning of dwelling-houses
				territories and premises
UAB Mano būstas	Lithuania	100%	100%	Holding company
UAB City Service Cleaning	Lithuania	100%	100%	Maintenance and cleaning of commercial real
				estate, territories and premises
UAB City Service Engineering	Lithuania	100%	100%	Commercial real estate management and building
				maintenance
UAB CSG IT	Lithuania	-	100%	IT services
UAB Energijos taupymo paslaugos	Lithuania	100%	100%	Energy saving solution services
UAB Kapitalo sprendimai	Lithuania	100%	100%	PPP project company
UAB EPC projektai	Lithuania	100%	100%	Dormant
UAB Mano aplinka	Lithuania	100%	100%	Maintenance and cleaning of public territories and
				premises
UAB Mano bendrabutis	Lithuania	100%	100%	Administration of buildings
UAB Mano Būsto klientų patirčių centras	Lithuania	100%	100%	Client service center services
UAB Mano Būstas Alytus	Lithuania	100%	100%	Administration of dwelling-houses
UAB Mano Būstas Aukštaitija	Lithuania	100%	100%	Administration of dwelling-houses
UAB Mano Būstas Baltija	Lithuania	100%	100%	Administration of dwelling-houses
UAB Mano Būstas Dainava	Lithuania	100%	100%	Administration of dwelling-houses
UAB Mano Būstas Neris	Lithuania	100%	100%	Administration of dwelling-houses
UAB Mano Būstas NPC	Lithuania	100%	100%	Administration of dwelling-houses
UAB Mano Būstas Kaunas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Mano Būstas Klaipėda	Lithuania	100%	100%	Administration of dwelling-houses
UAB Mano Būstas Radviliškis	Lithuania	100%	100%	Administration of dwelling-houses
UAB Mano Būstas Sostinė	Lithuania	100%	100%	Administration of dwelling-houses
UAB Mano Būstas Šiauliai	Lithuania	100%	100%	Administration of dwelling-houses
UAB Mano Būstas Ukmergė	Lithuania	100%	100%	Administration of dwelling-houses
UAB Mano Būstas Vakarai	Lithuania	99.97%	99.97%	Administration of dwelling-houses
UAB Mano Būstas Vilnius	Lithuania	100%	100%	Administration of dwelling-houses
UAB Mano Būsto priežiūra	Lithuania	100%	100%	Building maintenance
UAB Merlangas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Nacionalinis renovacijos fondas	Lithuania	100%	100%	Administration of dwelling-houses renovation
				projects
UAB Pastatų priežiūra	Lithuania	100%	100%	Building maintenance
UAB Pastatų valdymas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Rinkų vystymas	Lithuania	100%	100%	Dormant
UAB Skolos LT	Lithuania	100%	100%	Debt collection services
UAB Šiaulių NT valdymas	Lithuania	100%	100%	Dormant
UAB Unitechna	Lithuania	100%	100%	Maintenance and construction of gas stations
UAB Monto EU	Lithuania	100%	100%	Administration of rented properties

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

127

UAB Namų priežiūros tarnyba	Lithuania	100%	-	Administration of dwelling-houses
UAB Naujininkų ūkis	Lithuania	100%	-	Administration of dwelling-houses
UAB GS-Servisas	Lithuania	100%	-	Automated gates maintenance and installation
SIA BILANCE	Latvia	100%	100%	Administration of dwelling-houses
SIA BonoDomo	Latvia	100%	100%	Dormant
SIA Manas MĀJAS	Latvia	100%	100%	Holding company
SIA City Service Engineering	Latvia	100%	100%	Commercial real estate management and building
				maintenance
SIA Ēku pārvaldīšanas serviss	Latvia	100%	100%	Building maintenance
SIA Latvijas Namsaimnieks	Latvia	100%	100%	Administration of dwelling-houses
SIA Livonijas Nami	Latvia	100%	100%	Administration of dwelling-houses
SIA Namu serviss APSE	Latvia	100%	100%	Administration of dwelling-houses
SIA Manas MĀJAS 1	Latvia	100%	100%	Administration of dwelling-houses
SIA Manas MĀJAS 2	Latvia	100%	100%	Administration of dwelling-houses
SIA Manas Mājas Salnas 21	Latvia	100%	100%	Administration of dwelling-houses
SIA Manas MĀJAS 3	Latvia	100%	100%	Administration of dwelling-houses
SIA Multihouse	Latvia	100%	100%	Administration of dwelling-houses
SIA Manas MĀJAS Ventspils	Latvia	100%	100%	Administration of dwelling-houses
SIA Manas MĀJAS Tukums	Latvia	100%	100%	Administration of dwelling-houses
SIA Nia Nami	Latvia	100%	100%	Administration of dwelling-houses
SIA Manas MĀJAS Jelgava	Latvia	100%	100%	Administration of dwelling-houses

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

1 General information (cont‘d)

Changes in the Group in 2025

On 13 January 2025 UAB "Merlangas" acquired 100% of the shares of UAB "Naujininkų ūkis" (acquisition price EUR 1,875

thousand). UAB "Naujininkų ūkis" is engaged in facility administration activities in Lithuania.

On 27 January 2025, the Company „Monto EU“ entered into a tripartite transfer agreement under which it assumed from

UAB „Newsec Property Management LT“ all rights and obligations under the residential property management agreement

and its amendments in relation to the transferred property portfolio in amount of EUR 180 thousand. As a result of this

transaction, the Company became the new property manager and service provider for that portfolio from the effective transfer

date.

On 02 April 2025 the title of “SIA Manas MĀJAS” was changed into “SIA Manas MĀJAS 1”. Other contact details did not

change.

On 02 April 2025 the title of SIA “City Service” was changed into “SIA Manas MĀJAS”. Other contact details did not change.

On 05 August 2025 the Group changed Latvian subsidiary company name SIA “Nebruk Jelgava” to SIA “Manas MĀJAS

Jelgava”. Other contact details did not change.

On 29 September 2025 UAB "Monto" acquired 100% of the shares of UAB "Stop Kaune" (acquisition price EUR 123

thousand). UAB "Stop Kaune" is engaged in rental properties management activities in Lithuania.

On 29 September 2025 UAB "Mano Būstas" acquired 100% of the shares of UAB "Namų Priežiūros Tarnyba" (acquisition

price EUR 134 thousand). UAB "Namų Priežiūros Tarnyba" is engaged in administration of dwelling-houses in Lithuania.

On 27 November 2025 the title of UAB “Butų ūkio valdos” was changed into UAB “Žemaitijos būstas”. Other contact details

did not change.

On 01 December 2025 the Group changed Latvian subsidiary company name SIA “Ventspils Nami” to SIA “Manas MĀJAS

Ventspils”. Other contact details did not change.

On 23 December 2025 UAB “City Service Engineering” acquired 100% of shares of UAB "GS servisas" (acquisition price

EUR 640 thousand). UAB "GS servisas" operates a niche business specializing in the installation, maintenance, and servicing

of automatic doors, windows, gates, and related systems.

On 03 December 2025 the composition of the Company’s Management Board was expanded from two to six members. The

following individuals were appointed as additional members of the Management Board, effective as of that date: Giedrius

Jakubauskas, Mindaugas Genys, Aistė Cikanaitė-Jankauskė and Tomas Sujeta.

On 30 December 2025 UAB "CSG IT" was reorganized by way of division and ceased to exist as a legal entity. All rights and

obligations of UAB "CSG IT" were transferred to two other subsidiaries of the Company - UAB "Mano Būstas" and UAB

"Baltijos transporto valdymas".No effect on parent’s unconsolidated statement of financial position.

On 30 December 2025 the Company’s subsidiary UAB "Stop Kaune" was merged with UAB "Monto EU". Following the

completion of the merger, UAB "Stop Kaune" ceased to exist as a separate legal entity. No effect on parent’s unconsolidated

statement of financial position. Acquisitions in more details are disclosed in Note 5.

Changes in the Group in 2024

In 2024 the Group, through Latvian subsidiary acquired 100% of the shares of SIA “Nebruk Jelgava” (acquisition price EUR

184 thousand), SIA “Nia Nami” (acquisition price EUR 529 thousand) and SIA “Manas MĀJAS Tukums” (acquisition price

EUR 186 thousand), which are based in Latvia.

Acquisitions in more details are disclosed in Note 5.

128

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

129

1 General information (cont‘d)

On 23 August 2024, the Group, through its Lithuanian subsidiary established a new company “Monto EU”, UAB (share capital

of company is EUR 1 thousand). Company conducts business as administrator for rented properties.

Group company UAB “Exergio” operating in Lithuania was sold to related party on 06 June 2024 and after that date ceased to

be consolidated in these financial statements. Total value of the shares sale – purchase agreement is EUR 2,5 thousand.

Information about the disposed subsidiary is summarized below:

	UAB Exergio
Date of disposal	06 June, 2024
Goodwill	-
Non-current assets other than goodwill	348
Current assets other than cash and cash equivalents	479
Cash and cash equivalents	2
Non-current and current liabilities	(1,167)
Total net assets disposed of	(338)
attributable to equity holders of the parent	(338)
attributable to non-controlling interests	-
Total consideration received, all consisting of cash and cash	3
equivalents

The Group recorded the net gain of EUR 341 thousand from the sale of shares of the subsidiary under the line of Gain on

sale of investments in the consolidated statement of comprehensive income.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

130

2 Material accounting policies

2.1. Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as

adopted by the European Union (hereinafter the EU).

The consolidated financial statements have been prepared on a historical cost basis.

The Company’s management authorized these financial statements on 30 April 2026. The shareholders of the Company

have a statutory right to either approve these financial statements or not approve them and require the management to

prepare a new set of financial statements.

Adoption of new and/or changed International Financial Reporting Standards and International Financial Reporting

Interpretations Committee (IFRIC) interpretations that are effective and have been endorsed by the European Union

The accounting policies adopted are consistent with those of the previous financial year except for the following International

Financial Reporting Standards amendments which do not have a significant impact on the Group’s financial statements:

• IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (Amendments)

The amendments are effective for annual reporting periods beginning on or after January 1, 2025. The amendments

specify how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange

rate when exchangeability is lacking. A currency is considered to be exchangeable into another currency when an entity

is able to obtain the other currency within a time frame that allows for a normal administrative delay and through a market

or exchange mechanism in which an exchange transaction would create enforceable rights and obligations. If a currency

is not exchangeable into another currency, an entity is required to estimate the spot exchange rate at the measurement

date. An entity’s objective in estimating the spot exchange rate is to reflect the rate at which an orderly exchange

transaction would take place at the measurement date between market participants under prevailing economic

conditions. The amendments note that an entity can use an observable exchange rate without adjustment or another

estimation technique. After reviewing the amendment, it has been determined that it does not have an impact on the

consolidated financial statements as the Group doesn’t have material transactions in foreign currency.

Standards issued, endorsed for use in the EU, but not yet effective and not early adopted

Management has preliminary assessed the possible application of the following amendments and concluded that no material

impact is expected for consolidated financial statements, except for IFRS 18 as disclosed below:

• IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures - Classification and Measurement

of Financial Instruments (Amendments). In May 2024, the IASB issued amendments to the Classification and

Measurement of Financial Instruments which amended IFRS 9 Financial Instruments and IFRS 7 Financial Instruments:

Disclosures and they become effective for annual reporting periods beginning on or after January 1, 2026, with earlier

application permitted.

• IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures - Contracts Referencing Nature-

dependent Electricity (Amendments). In December 2024, the IASB issued targeted amendments for a better reflection

of Contracts Referencing Nature-dependent Electricity, which amended IFRS 9 Financial Instruments and IFRS 7

Financial Instruments: Disclosures and they become effective for annual reporting periods beginning on or after January

1, 2026, with earlier application permitted.

• Annual Improvements to International Financial Reporting Standards – Volume 11. In July 2024, the IASB issued

Annual Improvements to International Financial Reporting Standards – Volume 11. An entity shall apply those

amendments for annual reporting periods beginning on or after January 1, 2026. Earlier application is permitted.

• IFRS 18 Presentation and Disclosure in Financial Statements. In April 2024, the IASB issued the IFRS 18 -

Presentation and Disclosure in Financial Statements which replaces IAS 1 - Presentation of Financial Statements and it

becomes effective for annual reporting periods beginning on or after January 1, 2027, with earlier application permitted.

Management has assessed that the application of these amendments may have an impact on the presentation of items

in the consolidated statement of financial position, consolidated statement of comprehensive income, however, the

Group has not yet conducted a comprehensive analysis.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

131

2 Material accounting policies (cont’d)

2.1. Basis of preparation (cont’d)

Standards issued but have not yet been endorsed for use in the EU

Management has preliminary assessed the possible application of the following amendments and concluded that it would

have no effect for consolidated financial statements:

• IFRS 19 Subsidiaries without Public Accountability, Amendments to IFRS 19 Subsidiaries without Public

Accountability: Disclosures (issued on 21 August 2025). In May 2024, the IASB issued the IFRS 19 - Subsidiaries

without Public Accountability: Disclosures, and it becomes effective for annual reporting periods beginning on or after

January 1, 2027, with earlier application permitted.

• IAS 21 The Effects of Changes in Foreign Exchange Rates: Translation to a Hyperinflationary Presentation

Currency (Amendments). In November 2025, the IASB issued amendments to Translation to a Hyperinflationary

Presentation Currency which amend IAS 21 The Effects of Changes in Foreign Exchange Rates, and they become

effective for annual reporting periods beginning on or after January 1, 2027, with earlier application permitted.

• Amendment in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint

Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture. In December

2015, the IASB postponed the effective date of this amendment indefinitely pending the outcome of its research project

on the equity method of accounting.

2.2. Measurement and presentation currency

The amounts shown in these financial statements are presented in the local currency of the Republic of Estonia, Euro (EUR),

rounded to EUR thousand, unless otherwise stated. Due to rounding the amounts presented in the financial statements, notes

may not reconcile by insignificant amounts.

The functional currency of the Company is Euro. The functional currencies of foreign subsidiaries are the respective foreign

currencies of the country of residence. Items included in the financial statements of these subsidiaries are measured using their

functional currency.

Transactions in foreign currencies are initially recorded in the functional currency as of the date of the transaction. Monetary

assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange as at the

date of the statement of financial position.

2.3. Principles of consolidation

The consolidated financial statements of the Group include City Service SE and its subsidiaries. The financial statements of the

subsidiaries are prepared for the same reporting year, using consistent accounting policies.

Subsidiaries are consolidated from the date from which effective control is transferred to the Company and cease to be

consolidated from the date on which control is transferred out of the Group. The net result of disposed subsidiaries is accounted

for under the item of gain (loss) on sale of investments in consolidated statement of comprehensive income. When control over

subsidiaries is lost due to other reasons (bankruptcies, liquidations), the net result of the deconsolidation of subsidiaries is

accounted for under the item of operating expenses in consolidated statement of comprehensive income.

Business combinations

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate

of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the

acquiree. Acquisition costs incurred are expensed and included in administrative expenses.

Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the amount

recognized for non-controlling interest over the net identifiable assets acquired and liabilities assumed.

If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit

or loss.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

2 Material accounting policies (cont’d)

2.3. Principles of consolidation (cont’d)

After initial recognition, goodwill is measured at cost less any accumulated impairment losses (tested annually). For the purpose

of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s

cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the

acquiree are assigned to those units.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill

associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or

loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the

operation disposed of and the portion of the cash-generating unit retained.

2.4. Investments in subsidiaries and associates (the Company)

Investments in subsidiaries and associates in the unconsolidated primary statements of the Company (Note 29) are carried

at cost, less impairment.

2.5. Intangible assets other than goodwill

Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired in a business

combination is fair value as at the date of acquisition.

After initial recognition, intangible assets with finite lives are measured at cost less accumulated amortization and any

accumulated impairment losses. Intangible assets are amortized on a straight-line basis over their useful lives:

Customer relationships	5 – 40 years
Computer software	3 – 4 years
Other intangible assets	3 – 10 years

Intangible assets, other than goodwill, are assessed for impairment whenever there is an indication that the intangible asset

may be impaired.

The useful lives, residual values and amortization method are reviewed annually to ensure that they are consistent with the

expected pattern of economic benefits from items in intangible assets other than goodwill.

The Group does not have any intangible assets with indefinite useful life other than goodwill.

Research costs are expensed as incurred. Development expenditures on an individual project are recognized as an

intangible asset when the Group can demonstrate:

• The technical feasibility of completing the intangible asset so that the asset will be available for use or sale;

• Its intention to complete and its ability and intention to use or sell the asset;

• How the asset will generate future economic benefits;

• The availability of resources to complete the asset;

• The ability to measure reliably the expenditure during development.

Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated

amortization and accumulated impairment losses. Amortization of the asset begins when development is complete, and the

asset is available for use. It is amortized over the period of expected future benefit. Amortization is recorded in cost of

sales. During the period of development, the asset is tested for impairment annually.

132

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

2 Material accounting policies (cont’d)

2.6. Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The useful lives,

residual values and depreciation method are reviewed annually.

Depreciation is computed on a straight-line basis over the following estimated useful lives:

Buildings	15 – 50 years
Vehicles	4 – 10 years
Other property, plant and equipment	3 – 6 years

2.7. Financial assets

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity

instrument of another entity.

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair value through other

comprehensive income (OCI), and fair value through profit or loss.

The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate

cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the

financial assets, or both.

A regular way purchases or sales of financial assets are recognized on the trade date, i.e., the date that the Group commits

to purchase or sell the asset.

Non-current receivables for residential buildings repair works

A portion of the Group’s clients (exclusively natural persons) are offered a deferred payment model for high-value repair and

renovation works. This arrangement allows the clients to settle their liabilities in instalments over an extended period. Upon

completion and acceptance of the works by the clients, a third party - not a financial institution - executes the settlement with

the contractor, based on the Group’s client's consent. The Group acts solely as an intermediary, collecting payments from

the clients and transferring them to the third-party financier. Amounts payable to the financier are accounted in trade and

other payables. These transactions do not contain a financing component, as there is no difference between the amount of

consideration (invoice issued by the contractor) and financed amount. The deferral period generally ranges from 9 to 24

months, although longer periods may be agreed in exceptional cases.

In the financial statements, non-current receivables are measured at their fair value by discounting the repayment schedule

based future cash flows, using the parent company’s average borrowing interest rate 4.163% as of 31 December 2025

(5.155% as of 31 December 2024).

Financial assets at amortized cost (debt instruments)

The Group measures financial assets which have cash flows consistent with solely payment of principal and interest and are

held in a business model to hold and collect the contractual cash flows at amortized cost. Financial assets at amortized cost

are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are

recognized in profit or loss when the asset is derecognized, modified or impaired.

The Group’s financial assets at amortized cost includes trade receivables and non-current receivables. Non-current

receivables mainly comprise of long-term part of receivables for residential buildings’ repair works performed and are received

in from 1 to 3 years period. The Group’s non-current and current receivables from related parties are comprised of loans and

receivables from commissions.

133

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

2 Material accounting policies (cont’d)

2.7. Financial assets (cont’d)

Impairment of trade receivables

For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group

does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date.

The Group has established the provision matrixes based on their historical credit loss experience, adjusted for forward-

looking factors specific to the debtors and the economic environment, including GDP growth and unemployment rates. The

provision matrixes have been structured based on homogeneous customers’ groups. Impairment of non-current receivables

is calculated in the same way as not overdue accounts receivable. In previous years, receivables from municipalities were

excluded from the collective assessment due to their historically low credit risk and the expectation that such balances would

be settled in full. Instead, municipalities were monitored on an individual basis, outstanding balances were consistently

decreasing. As part of a periodic review of the impairment methodology, management determined that including all customer

segments in the calculation provides a more consistent and comprehensive application of the expected credit loss model in

accordance with IFRS 9. Including municipalities in the collective assessment resulted in an additional trade receivables

allowance of EUR 114 thousand as of 31 December 2025.

For material individual customers the Group performs an assessment of specifically expected credit losses, taking into

account the customer’s credit history as well as forward looking factors and risk factors specific to the debtor. The Group

considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group

may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely

to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group.

A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

The Group recognizes an allowance for expected credit losses (ECLs) for all debt instruments, other than trade receivables

and contract assets, not held at fair value through profit or loss. ECLs are based on the difference between the contractual

cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an

approximation of the original effective interest rate. ECLs are recognized in two stages. For credit exposures for which there

has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from

default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has

been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over

the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

At the end of every reporting period it is assessed whether credit risk significantly increased from initial recognition taking

into account change in probability of default during the maturity of the instrument. During this process the Group summarizes

debt instruments into stages 1, 2 and 3:

• Stage 1: on initial recognition the Group recognizes a 12-month ECL. Stage 1 debt instruments include instruments which

credit risk improved and which were transferred back from Stage 2.

• Stage 2: When a loan has shown a significant increase in credit risk since origination, the Group records an allowance for

the lifetime ECL. Stage 2 debt instruments include instruments which credit risk improved, and which were transferred back

from Stage 3. The Group considers that significant increase in credit risk is when debt is overdue more than 60 days or when

it is visible from financial information that debtor is experiencing financial difficulties.

• Stage 3: For loans considered credit-impaired, the Company recognizes the lifetime expected credit losses for these loans.

The Company considers the loan credit-impaired, when debt is overdue more than 180 days or when it is visible from financial

information that debtor is experiencing financial difficulties. The method is similar to that for Stage 2 assets, with the probability

of default set at 100%, while interest income is recognized on the net carrying amount of the asset.

Financial liabilities

Initial recognition and measurement

Financial liabilities are recognized on initial recognition when the Group becomes a party to the contractual terms. Upon initial

recognition financial liabilities are measured at fair value net of any directly attributable transaction costs, and subsequently

at amortized cost. A financial liability is derecognized when the obligation under the liability is discharged, cancelled or

expired. The Group’s financial liabilities include loans and borrowings including bank overdrafts and lease liabilities.

134

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

135

2 Material accounting policies (cont’d)

2.8. Fair value measurements

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to

measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the

fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as

a whole:

•Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities. Level 1 measurement is

used to determine discount rate used in cash generating units fair value valuation, purchase price allocation and provisions

for employee benefits calculation.

•Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly

or indirectly observable. Level 2 measurement is used to determine discount rate for non-current receivables fair value

calculation.

•Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is

unobservable. Level 3 measurement as customer attrition rate is used in purchase price allocation calculations.

2.9. Inventories

Inventories are measured at the lower of cost or net realizable value, after impairment evaluation for obsolete and slow

moving items. Unrealizable inventory is fully written-off.

2.10. Cash and cash equivalents

Cash includes cash on hand and cash in banks.

For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand and in current bank accounts.

Restricted cash balances comprise balances of cash which are restricted as to withdrawal under the terms of long-term

agreements. Restricted cash balances are excluded from cash and cash equivalents in the consolidated statement of cash

flows.

Restricted cash is presented as current and non-current accounts receivable in the statement of financial position as of 31

December 2025 and 2024 and disclosed in Note 10 and 12.

2.11. Right of use assets and lease liabilities

The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at

inception date of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets or the

arrangement conveys a right to use the asset.

Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives

of the assets, as follows:

• Buildings 1 to 10 years

• Vehicles 4 to 10 years

The right-of-use assets are also subject to impairment.

The Group presents rights-of-use assets separately from property, plant and equipment in the statement of financial position.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

136

2 Material accounting policies (cont’d)

2.11. Right of use assets and lease liabilities (cont’d)

If there is a change in the lease term or in the assessment of an option to purchase, the Group determines the revised

discount rate as the interest rate implicit in the lease for the lease term, if that rate can be readily determined, or the lessee’s

incremental borrowing rate at the date of reassessment, if the interest rate implicit in the lease cannot be readily determined.

The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e.,

those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase

option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered

to be low value, in amount less than EUR 5 thousand. Lease payments on short-term leases and leases of low value assets

are recognized as expense on a straight-line basis over the lease term.

2.12. Provision for employee benefits

According to the requirements of Lithuanian Labor Code, each employee leaving company at the age of retirement is entitled

to a one-off payment in the amount of 2 months salary.

Current year cost of employee benefits is recognized as incurred in the statement of comprehensive income. The past service

costs are recognized as an expense as incurred in profit or loss. Any gains or losses appearing as a result of curtailment

and/or settlement are recognized in the statement of comprehensive income as incurred.

The above-mentioned employee benefit obligation is calculated based on actuarial assumptions, using the projected unit

credit method. As of 31 December 2025 the Group adjusted the provision for employee benefits calculation by applying the

actual historical percentage of employees retiring on pension. Obligation is recognized in the statement of financial position

and reflects the present value of these benefits on the preparation date of the statement of financial position. Present value

of the non-current obligation to employees is determined by discounting estimated future cash flows using the discount rate

3.8% as of 31 December 2025 (3.5% as of 31 December 2024) which reflects the interest rate of the Government bonds of

the same currency and similar maturity as the employment benefits (disclosed in Note 16). Actuarial gains and losses are

recognized in statement of other comprehensive income as incurred under General and administrative expenses.

2.13. Income tax

The Group companies are taxed individually, irrespective of the overall results of the Group. Income tax charge is based on

profit for the year and considers deferred taxation. The charge for taxation included in these financial statements is based on

the calculation made by the management in accordance with tax legislation of the Republic of Estonia, the Republic of

Lithuania and the Republic of Latvia.

The standard income tax rate in Lithuania was 15% in 2024. From 1 January 2025 the income tax rate increased by 1 p.p.

to 16%, and from 1 January 2026, it increased further to 17%.

In accordance with Latvian Income Tax Act, income tax is not levied on companies’ profits but on dividends distributed. The

tax rate in 2025 was 20/80 of the amount distributed as the net dividend (20/80 in 2024). As the object of taxation is dividends,

not profit, there are generally no differences between the carrying amounts and tax bases of assets and liabilities which could

give rise to deferred tax assets or liabilities. The income tax payable on dividends is recognized as the income tax expense

of the period in which the dividends are declared. As an exception to the above, deferred income tax is provided on temporary

differences arising on investments in subsidiaries, associates and joint ventures, except where the timing of the reversal of

the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable

future.

In accordance with the effective Estonian Income Tax Act, income tax is not levied on companies’ profits but on dividends

distributed. From 1 January 2025 the tax rate increased from 20% to 22%, thus effectively in 2025 was 22/78 of the amount

distributed as the net dividend (20/80 in 2024). As the object of taxation is dividends, not profit, there are generally no

differences between the carrying amounts and tax bases of assets and liabilities which could give rise to deferred tax assets

or liabilities. The income tax payable on dividends is recognized as the income tax expense of the period in which the

dividends are declared. As an exception to the above, deferred income tax is provided on temporary differences arising on

investments in subsidiaries, associates and joint ventures, except where the timing of the reversal of the temporary difference

can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

137

2 Material accounting policies (cont’d)

2.13. Income tax (cont’d)

As at 31 December 2025, the Group’s retained earnings amounted to EUR 13,805 thousand. Income tax upon the payment

of dividends is 22/78 on the net dividends paid out. However, a number of exemptions are applicable to the Group, thus

dividends received from foreign subsidiaries and permanent establishments can be distributed to the shareholders tax free.

Tax losses in Lithuania can be carried forward for indefinite period, except for the losses incurred as a result of disposal of

securities and/or derivative financial instruments. Such carrying forward is disrupted if the company changes its activities due

to which these losses are incurred except when the company does not continue its activities due to reasons which do not

depend on company itself. The losses from disposal of securities and/or derivative financial instruments can be carried

forward for 5 consecutive years and only be used to reduce the taxable income earned from transactions of the same nature.

Tax losses carried forward can be used to reduce the taxable income earned during the reporting year by maximum 70%.

Deferred taxes are calculated using the liability method. Deferred taxes reflect the net tax effects of temporary differences

between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax

purposes. Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the

years in which those temporary differences are expected to be recovered or settled based on tax rates enacted or

substantially enacted at the date of the statement of financial position. Deferred tax assets have been recognized in the

statement of financial position to the extent the management believes it will be realized in the foreseeable future, based on

taxable profit forecasts. If it is believed that part of the deferred tax is not going to be realized, this part of the deferred tax

asset is not recognized in the financial statements. In Group’s consolidated financial statements deferred tax is calculated

according to an increased income taxation valid from 2026 with a higher income tax rate at 17% (16% during 2025 and 15%

during 2024).

2.14. Revenue recognition

Revenue from contracts with customers

The Group has generally concluded that it is the principal in its revenue arrangements (except for utilities payment collection

services provided in Latvia as described further) even in the cases when subcontractors are used in the process of provisions

of the services, because it typically controls the goods or services before transferring them to the customer. Group companies

also are responsible for the quality of services and have the right to use flexible pricing. In Latvia the Group is providing

services of utility services invoicing and collection of respective fees and for these transactions the Group is acting as an

agent of the utilities suppliers based on the assessment of the management as the Group does not control the services

before they are transferred to the customer, including their pricing. Therefore, the Group nets inflows and outflows of

administered utilities turnovers, associated with residential houses administration activity in Latvia, as the Group’s companies

engaged in such activity primarily act as agent in respect of utilities provision for its clients. Also, funds collected from

residents on behalf of the residential communities as community fund for future repairs and maintenance, are not reported

as the Group’s revenue.

The Group is in the business of providing administration of apartment buildings and commercial facility management services.

The Group concluded that it transfers control of administration of apartment buildings and commercial facility management

services over-time, because the customer simultaneously receives and consumes the benefits provided by the Group’s

performance. Sales revenue for these services are invoiced and accounted on a monthly basis and it relates to one agreed

performance obligation.

The Group also provides cleaning and maintenance services and other on demand services to its customers. Revenue from

contracts with customers is recognized when these services are transferred to the customer at an amount that reflects the

consideration to which the Group expects to be entitled in exchange for those services. The Group concluded that it transfers

control over these services over time depending on the level of performance obligation fulfilment.

Group provides repair or construction works for the clients when required. The Group concluded that it transfers control over

these services over-time, because the customer simultaneously receives and consumes the benefits provided by the Group’s

performance. Also, Group’s performance does not create an asset with alternative use to the Group and the Group has an

enforceable right to payment for performance completed to date. When the Group can reasonably measure its progress

towards complete satisfaction of the performance obligation, the Group recognizes revenue and expenses in relation to each

repair or construction contract over time, based on the progress of performance. The progress of performance is assessed

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

138

2 Material accounting policies (cont’d)

2.14. Revenue recognition (cont’d)

based on the proportion of the costs incurred in fulfilling the contract up to date over to the total estimated costs of the

contract. In such cases, Group has one agreed performance obligation.

Revenue from other than described above services or sales of inventory is recognized when services are rendered or

inventory transferred to the clients and this type of revenue is relatively not material to the financial statements.

Due to the Group’s business nature, apart from what is described in this note, the management did not make any other

significant accounting judgements, estimates and assumptions relating to revenue from contracts with customers recognition,

as there are no complex/multi-elemental goods or services, no variable consideration, financing component, volume rebates,

discounts, rights of return, contract cost or amounts payable to the customers.

Dividend income from subsidiaries is recognized in the Company’s unconsolidated financial statements (Note 29) when the

dividends are declared by the subsidiary.

Interest income or expense is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the

estimated future cash payments or receipts through the expected life of the financial instrument to the net carrying amount

of the financial asset or liability. It is included in interest income or expenses in the statement of comprehensive income.

Contract assets

A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group

performs by transferring goods or services to a customer before the customer pays consideration or before payment is due,

a contract asset is recognized for the earned consideration that is conditional.

Accrued income representing estimated amount of services which has been performed but not have been agreed with and

accepted by the customer until the last day of the month and for which invoice is issued next month is presented as Contract

assets and are reclassified to the account receivable as soon as services are accepted and sales invoices are issued in

subsequent month.

Trade receivables

A receivable represents the Group’s right to an amount of consideration that is unconditional (i.e., only the passage of time

is required before payment of the consideration is due).

Contract liabilities

A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration

(or an amount of consideration is due) from the customer. If a customer pays consideration before the Group transfers goods

or services to the customer, a contract liability is recognized when the payment is made, or the payment is due (whichever

is earlier). Contract liabilities are recognized as revenue when the Group satisfied performance obligation under the contract.

2.15. Impairment of non-financial assets

Non-financial assets

Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that carrying amount

of an asset may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an

impairment loss is recognized in profit or loss. Reversal of impairment losses recognized in prior years is recorded when

there is an indication that the impairment losses recognized for the asset no longer exist or have decreased. The reversal is

accounted for in the same caption of profit or loss as the impairment loss.

Goodwill is tested for impairment annually as at 31 December and when circumstances indicate that the carrying value may

be impaired.

Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the

goodwill relates. The recoverable amount of Lithuania, Latvia cash generating units is determined based on the value in use

calculation using cash flow projections based on the five-year financial forecasts prepared by the management. Both goodwill

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

139

2 Material accounting policies (cont’d)

2.15. Impairment of non-financial assets (cont’d)

and customer relationships intangible assets for each CGU unit are included in the carrying value tested. Significant

assumptions used for the assessment of the value in use are described in the Note 5. When the recoverable amount of the

CGU is less than its carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be

reversed in future periods.

3 Use of judgements and estimates in preparation of financial statements

The preparation of financial statements in conformity with International Financial Reporting Standards as adopted by

European Union requires management to make estimates and assumptions that affect the reported amounts of assets,

liabilities, income and expenses and disclosure of contingencies. The areas of estimation used in the preparation of the

accompanying financial statements relate to depreciation (Note 2.7 and Note 7), amortization (Note 2.6 and Note 6),

impairment evaluation of goodwill, other intangible assets and property, plant and equipment, including allocation of Group

assets to cash generating units (Note 2.3, 2.16 and Note 5, 6, 7), trade receivables loss allowance and trade receivable

classification to current and non-current (Note 2.8, Note 12), other assets impairment (Note 2.8, Note 9, Note 10 and Note

11), recognition and realization of deferred tax asset (Note 21), application of purchase price allocation in business

combinations (Note 5). Future events may occur which will cause the assumptions used in arriving at the estimates to change.

The effect of any changes in estimates will be recorded in the financial statements, when determinable.

At the date of preparing these financial statements, the underlying assumptions and estimates were not subject to a significant

risk that from today’s point of view it is likely that the carrying amounts of assets and liabilities will have to be adjusted

significantly in the subsequent fiscal year.

The management made the following important judgments and estimates in the preparation of these financial statements:

Useful life of customer relationships intangible assets

Estimated useful life of customer relationships intangible assets, which are accounted for under other intangible assets and

their acquisition value amounts to EUR 21,410 thousand as of 31 December 2025 and EUR 19,892 thousand as of 31

December 2024. The management amortizes these customer relationship intangible assets over the estimated validity period

of existing contracts, which is 5-40 years.

Deferred tax recognized from tax loss carry forward

The recognition of deferred tax assets arising from tax loss carryforwards involves significant judgment, as their realization

depends on whether forecasted financial results will be achieved and the tax losses utilized in the foreseeable future. The

management estimated what part of the deferred tax asset will be utilized based on the best knowledge of the operations

and results of the Group companies as at 31 December 2025 and 2024 and remaining amount will be carried on and utilized

in the next reporting periods (Note 21). Additionally, significant judgment is applied in assessing whether and when retained

earnings will be distributed in subsidiaries operating in Latvia, where corporate income tax is levied only upon profit

distribution. As at 31 December 2025 and 2024, the management does not intend to distribute dividends in the foreseeable

future, as profits are planned to be reinvested in operations and development activities, therefore no deferred tax liability has

been recognized on those amounts.

Receivables which are overdue

As disclosed in Note 11 as of 31 December 2025 the Group has EUR 2,790 thousand (EUR 1,375 thousand as of 31

December 2024) overdue more than a year current receivables from trade customers (public and private) which were not

impaired. Management estimate is based on the analysis of individual material overdue balances as well as analysis of

general collection periods in a respective country and taking into account forward looking estimations. Group’s management

reviewed macroeconomic indicators (inflation, GDP, unemployment rate and wages) and changes in overdue trade

receivables in Lithuania and Latvia. Based on Group management’s opinion increased overdue balances are mainly due to

the lower allowance percentage applied starting 31 December 2025 and the acquisition of new entities.

Goodwill and customer related intangible assets

As disclosed in Note 5 and Note 6, as of 31 December 2025 the Group has goodwill and customer related intangibles in the

amount of EUR 24,078 thousand (EUR 22,305 thousand – as of 31 December 2024). Significant management estimates

were required in the cash generating units impairment testing performed as of 31 December 2025 and 31 December 2024,

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

140

3 Use of judgements and estimates in preparation of financial statements (cont’d)

such as forecasting of future EBITDA

levels, determining annual growth rate, determining weighted average cost of capital

(Note 5, 6).

Climate change matters

The Group constantly monitors the latest legislation in relation to climate related matters. The significant accounting estimates

made by management incorporate the future effects of the Group’s strategic decisions and commitments on having its set of

production adhered to the energy transition targets, short and long-term impacts of climate-related matters and energy

transition to lower carbon energy sources. At the current time, no legislation has been passed that will significantly impact

the Group. Also, management considers that climate change matters have no impact on Goodwill, Customer contracts,

Property Plant and Equipment impairment or useful lives setting.

Presentation of contract liabilities

In the statement of financial position Group’s contract liabilities are disclosed as current and non-current. Management used

estimate and as of 31 December 2025 in scope of IAS 37 reclassified EUR 3,285 thousand of the current contract liabilities

to non-current based on the historical yearly usage of such liabilities (as of 31 December 2024 EUR 2,265 thousand) (Note

18).

Lease term

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an

option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the

lease, if it is reasonably certain not to be exercised. The Group has several lease contracts that include extension and

termination options. The Group applies judgement in evaluating whether it is reasonably certain whether to exercise the

option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to

exercise either the renewal or termination. After the commencement date, the Group reassesses the lease term if there is a

significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the

option to renew or to terminate.

Lease interest rate

The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate

(IBR) to measure lease liabilities. The Group estimates the IBR using observable inputs (such as market interest rates).

EBITDA – Earnings Before Interest, Taxes, Depreciation and Amortization Net profit (loss) with added back income tax, interest income

(expenses), gain (loss) on sale of investments, other finance gain (expenses), depreciation and amortization expenses.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

141

4 Segment information

For management purposes, the Group is organized into business units based on services provided and have one main

reportable segment - buildings’ administration.

Segment of buildings’ administration includes services of administration and maintenance of commercial and residential

buildings. The segment also includes services of maintenance of engineering systems to educational institutions and other

different activities which are not material. The administration segment is therefore divided into two segments geographically:

Lithuania and Latvia. The segment information is presented as analyzed by chief operating decision maker of the Group (the

Board).

Segment performance is evaluated based on operating profit or loss calculated as gross profit less general and administrative

expenses. However, general and administrative expenses related to Group’s management activities, financing (including

finance costs and finance income), and income taxes of the Group are managed on a group basis and are not allocated to

operating segments.

Transfer prices between operating segments are based on the prices set by the management, which management considers

to be similar to transactions with third parties.

Operating segments

In these financial statements information about operating segments areas means a constituent part of the Group revenue

from external customers attributed to the Group’s country of domicile and attributed to all foreign countries in total from which

the Group derives revenue.

The following tables present revenue, profit and certain asset and liability information regarding the Group's reportable

operating segments for continuing operations:

Year ended	Buildings’ administration
31 December 2025			Total
	Lithuania	Latvia
Revenue from contracts with customers	108,801	6,765	115,566
Total revenue from contracts with customers			115,566
Cost of goods sold	(80,092)	(4,438)	(84,530)
General and administrative expenses	(15,353)	(2,373)	(17,726)
Segment results	13,356	(46)	13,310
Unallocated expenses (parent company)			(2,485)
Profit from operations			10,825
Net financial income			(338)
Profit before income tax			10,487
Income tax expenses			(923)
Net profit (loss) for the year			9,564
Other segment information
Additions to non-current assets other than financial	2,470	49	2,519
instruments and deferred tax assets
Non-current assets	47,744	3,457	51,201

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

142

4 Segment information (cont’d)

Year ended	Buildings’ administration
31 December 2024			Total
	Lithuania	Latvia
Revenue from contracts with customers	101,283	8,608	109,891
Total revenue from contracts with customers			109,891
Cost of goods sold	(76,139)	(5,280)	(81,419)
General and administrative expenses	(14,631)	(3,775)	(18,406)
Segment results	10,512	(447)	10,066
Unallocated expenses (parent company)			(1,729)
Profit from operations			8,337
Net financial income			(1,213)
Profit before income tax			7,124
Income tax expenses			(574)
Net profit (loss) for the year			6,549
Other segment information
Additions to non-current assets other than financial	2,261	188	2,449
instruments and deferred tax assets
Non-current assets	35,600	3,684	39,284

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

143

5 Goodwill

	Group
Cost:
Balance as of 1 January 2024	10,475
Additions	330
Balance as of 31 December 2024	10,805
Additions	939
Balance as of 31 December 2025	11,744
Impairment:
Balance as of 1 January 2024	1,676
Balance as of 31 December 2024	1,676
Balance as of 31 December 2025	1,676
Net book value as of 31 December 2024	9,129
Net book value as of 31 December 2025	10,068

Acquisitions during 2025

As described in Note 1, during 2025 the Group acquired the following entities:

Name of entity acquired	Acquisition cost	Notes
UAB Stop Kaune	EUR 123 thousand	EUR 123 thousand paid in cash
UAB Namų Priežiūros Tarnyba	EUR 134 thousand	EUR 134 thousand paid in cash
	EUR 1,875 thousand	EUR 1,875 thousand paid in
UAB Naujininkų ūkis		cash
UAB GS Servisas	EUR 640 thousand	EUR 640 thousand paid in cash

At the acquisition of these subsidiaries a total goodwill of EUR 939 thousand has been accounted for in consolidated

statement of financial position. The goodwill appears due to expected synergies, which are expected to be derived from

horizontal expansion of business.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

144

5 Goodwill (cont’d)

The fair values of the assets acquired, liabilities and contingent liabilities assumed at the date of acquisitions made during

2025 were as follows:

Fair value of assets,	UAB	UAB Stop Kaune	UAB Namų	UAB GS Servisas
liabilities and contingent	Naujininkų		Priežiūros
liabilities	ūkis		Tarnyba
	13 January,	29 September,	29 September,	23 December, 2025
Date of acquisition	2025	2025	2025
Customer related
intangibles	1,350	6	160	-
Property, plant and equipment	16	-	2	23
Other non-current assets	-	-	1	-
Deferred tax asset	34	-	-	-
Trade receivables	808	61	48	105
Other current assets	335	82	38	149
Total assets	2,543	149	249	277
Long-term liabilities	90	-	-	-
Trade payables	337	22	41	74
Other current liabilities	329	110	47	81
Deferred tax liability from customer related intangibles	230	1	27	-
Total liabilities	986	133	115	155
Total identifiable net	1,557	16	134	122
assets at fair value
Goodwill	316	105	-	518
Purchase consideration	1,875	121	134	640
transferred
Cash acquired	327	57	32	17
Total purchase
consideration, net of cash	1,548	64	102	623
acquired

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

145

6 Goodwill (cont’d)

	UAB Naujininkų	UAB Stop	UAB Namų	UAB GS
	ūkis	Kaune	Priežiūros	Servisas
			Tarnyba
	13 January,	29 September,	29 September,	23 December,
Date of acquisition	2025	2025	2025	2025
Profit (loss) incurred since
acquisition date to 31 December	(13)	(4)	8	(94)
2025
Total revenue since acquisition	4,983	62	22	58
date to 31 December 2025
Total revenue for the year 2025	4,983	263	135	1,476
(unaudited)
Total profit (loss) for the year	(13)	(7)	27	(102)
2025 (unaudited)

During 2024 the Group acquired the following entities:

Name of entity acquired	Acquisition cost	Notes
SIA Nia Nami	EUR 529 thousand	EUR 453 thousand paid in cash
SIA Nebruk Jelgava	EUR 184 thousand	EUR 184 thousand paid in cash
SIA Manas MĀJAS Tukums	EUR 186 thousand	EUR 186 thousand paid in cash

At the acquisition of these subsidiaries a total goodwill of EUR 330 thousand has been accounted for in consolidated

statement of financial position. The goodwill appears due to expected synergies, which are expected to be derived from

horizontal expansion of business.

The fair values of the assets acquired, liabilities and contingent liabilities assumed at the date of acquisitions made during

2024 were as follows:

Fair value of assets, liabilities and	Manas MĀJAS	Nebruk Jelgava	Nia Nami SIA
contingent liabilities	Tukums SIA	SIA
Date of acquisition	7 March, 2024	7 March, 2024	7 March, 2024
Customer related intangibles	-	109	386
Property, plant and equipment	7	28	19
Trade receivables	45	99	436
Other current assets	319	109	907
Total assets	371	345	1,748
Long-term liabilities	-	-	85
Trade payables	144	37	433
Other current liabilities	301	150	744
Total liabilities	445	187	1,262
Total identifiable net assets at fair value	(74)	158	486
Goodwill	260	26	43
Purchase consideration transferred	186	184	529
Cash acquired	258	93	672
Total purchase consideration, net of cash acquired	(72)	91	(143)

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

146

5 Goodwill (cont’d)

	Manas MĀJAS	Nebruk Jelgava	Nia Nami SIA
	Tukums SIA	SIA
Date of acquisition	7 March, 2024	7 March, 2024	7 March, 2024
Profit incurred since acquisition date to 31	79	3	111
December 2024
Total revenue since acquisition date to 31	333	376	982
December 2024
Total revenue for the year 2024	381	435	1,165
(unaudited)
Total profit for the year 2024 (unaudited)	74	6	82

As part of the purchase agreement with the previous owner of Nia Nami SIA, a contingent consideration has been agreed. A

part of the acquisition price shall be settled within 9 months after signing the sale-purchase agreement if there will be no

significant changes in useful area acquired and no accounting or certifications errors will be revealed. Due to ongoing

nonconcurrence with the seller this contingent consideration has not been settled at the date of the release of the financial

statements. Contingent consideration was considered during the preparation of the purchase price allocation (PPA) model.

For the purpose of impairment evaluation, the goodwill as of 31 December 2025 and 2024 was allocated to the following

CGU:

	Carrying value	Carrying value
	of allocated	of allocated
	goodwill as of	goodwill as of
	31 December	31 December
Cash generating unit	2025	2024
Subsidiaries operating in Lithuania	8,951	8,011
Subsidiaries operating in Latvia	1,118	1,118
	10,068	9,129

As of 31 December 2025 and 2024 there was no impairment of goodwill accounted for in the consolidated statement of

comprehensive income.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

147

5 Goodwill (cont’d)

The forecasted revenues for CGU involved in administration of dwelling houses in Lithuania, Latvia were estimated based

on the area of the dwelling-houses administered as of 31 December 2025 assuming that the area administered will remain

the same in the future years and the growth in revenue will be derived from a service fee increase, which was forecasted to

be in line with the estimated inflation rate. The costs were projected based on the actual cost level taking into account

estimated inflation. Cash flows beyond the five-year period were extrapolated using 2% growth rate in Lithuania and 1,5 –

3% in Latvia in 2025 (2% for Lithuania and Latvia in 2024) that reflects the best estimate of the management based on the

current situation in the respective industry. All these elements and their trends constitute the EBITDA projections applied by

the Group for CGU testing. The pre-tax discount rate used by the management was estimated for each individual cash

generating unit as a weighted average cost of capital for that particular cash generating unit and is equal to 7.07% for cash

generating unit located in Lithuania (8.99 % in 2024), 7.76% for cash generating unit located in Latvia (10.54% in 2024).

In the opinion of the Group’s management, the most important and most change-like assumptions are the forecasted level

of revenues and discount rate. Based on management’s estimations, a reasonable change in these assumptions in Lithuanian

cash generating units would not result in any impairment as of 31 December 2025. At the moment of preparing these financial

statements the management of the Group did not expect any significant changes in the assumptions used.

In Latvia the impairment assessment is highly dependent on the assumptions used in the model. Below is provided sensitivity

analysis for key assumptions of impairment assessment as at 31 December 2025:

- A decrease in annual revenue growth rate by 1.0 p.p. would not result in impairment loss to goodwill (would result

in EUR 493 thousand impairment loss to goodwill in 31 December 2024);

- An increase in pre-tax WACC (discount rate) by 1.0 p.p. would not result in impairment loss to goodwill (would

result in EUR 483 thousand impairment loss to goodwill in 31 December 2024).

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

148

6 Other intangible assets

Movement of other intangible assets in 2025 and 2024 is presented below:

	Customer related		Computer software Total other intangible
	intangibles	and other	assets
		intangibles
Cost:
Balance as of 1 January 2024	19,397	6,911	26,308
Additions	-	1,980	1,980
Additions arising from acquisitions of subsidiaries	495	-	495
Disposals and retirements	-	(405)	(405)
Disposals of subsidiaries	-	(741)	(741)
Reclassifications	-	-	-
Balance as of 31 December 2024	19,892	7,745	27,637
Additions	-	1,992	1,992
Additions arising from acquisitions of subsidiaries	1,518	-	1,518
Disposals and retirements	-	(759)	(759)
Reclassifications from other property, plant and equipment (Note 7)	-	2	2
Balance as of 31 December 2025	21,410	8,980	30,390
Accumulated amortization and impairment:
Balance as of 1 January 2024	6,067	1,286	7,353
Charge for the year	649	337	986
Disposals and retirements	-	(405)	(405)
Disposals of subsidiaries	-	(453)	(453)
Balance as of 31 December 2024	6,716	765	7,481
Charge for the year	686	387	1,073
Disposals and retirements	-	(759)	(759)
Balance as of 31 December 2025	7,402	393	7,795
Net book value as of 31 December	13,176	6,980	20,156
2024
Net book value as of 31 December	14,008	8,587	22,595
2025

The amortization charge of the Group’s other intangible assets for the year 2025 amounts to EUR 1,073 thousand (EUR 986

thousand in the year 2024) and has been included into general and administrative expenses in the Group’s statement of

comprehensive income.

As of 31 December 2025 the Group has capitalized internally generated intangible assets of EUR 1,806 thousand (EUR 929

thousand as of December 2024). Capitalized internally generated intangible assets are related to software, planned to be

used in administration of dwelling houses and facility management activities.

Part of the other intangible assets of the Group with the acquisition value of EUR 332 thousand as of 31 December 2025

were fully amortized but still in use (EUR 1,073 thousand of the Group as of 31 December 2024).

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

149

7 Property, plant and equipment

Movement of property, plant and equipment in 2025 and 2024 is presented below:

	Buildings	Vehicles	Other property,	Total
			plant and
			equipment*
Cost:
Balance as of 1 January 2024	95	1,082	2,155	3,332
Additions arising from acquisitions of subsidiaries	-	18	37	55
Additions	-	44	425	469
Disposals and retirements	(1)	(183)	(267)	(451)
Balance as of 31 December 2024	94	961	2,350	3,405
Additions arising from acquisitions of subsidiaries	-	22	19	41
Additions	-	-	550	550
Disposals and retirements	-	(102)	(789)	(891)
Reclassifications to computer software (Note 6)	-	(55)	(2)	(57)
and vehicles leases (Note 15)
Balance as of 31 December 2025	94	826	2,128	3,048
Accumulated depreciation and impairment:
Balance as of 1 January 2024	95	946	1,478	2,519
Charge for the year	-	54	331	385
Disposals and retirements	(1)	(133)	(226)	(360)
Balance as of 31 December 2024	94	867	1,584	2,545
Charge for the year	-	(3)	376	373
Disposals and retirements	-	(78)	(727)	(805)
Reclassifications	-	2	(2)	-
Balance as of 31 December 2025	94	788	1,231	2,113
Net book value as of 31 December 2024	-	94	766	860
Net book value as of 31 December 2025	-	38	897	935

* other property, plant and equipment mainly consist of cleaning equipment, furniture and other assets .

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

150

7 Property, plant and equipment (cont‘d)

The depreciation charge of the Group’s property, plant and equipment for the year 2025 amounts to EUR 373 thousand (EUR

385 thousand in the year 2024). Amount of EUR 393 thousand for the year 2025 (EUR 382 thousand for the year 2024) has

been included into general and administrative expenses in the Group’s statement of comprehensive income.

Property, plant and equipment of the entire consolidated Group with an acquisition cost of EUR 802 thousand was fully

depreciated as of 31 December 2025 (EUR 1,680 thousand as of 31 December 2024), but were still in active use.

As of 31 December 2025 and 2024 no property, plant and equipment of the Group was pledged to banks as collateral for the

loans (Note 14).

As of 31 December 2025 and 2024 there was no impairment of property, plant and equipment.

8 Inventories

	As of 31	Group	As of 31
	December 2025		December 2024
Raw and auxiliary materials		481		491
Goods for resale		20		90
		501		581

During 2025, EUR 4,347 thousand (EUR 5,092 thousand in 2024) was recognized as an expense in cost of sales.

Amounts are shown with net realizable value allowance of EUR 3 thousand in 31 December 2024 and 31 December

2025.

9 Prepayments

Prepayments of the Group amount to EUR 1,965 thousand (net of EUR 437 thousand allowance) as of 31 December 2025

(EUR 1,923 thousand (net of EUR 432 thousand allowance) as of 31 December 2024) and mainly include prepayments to

suppliers and subcontractors.

10 Other non-current and current receivables

Non-current receivables at the end of the financial year consists of:

	Group
	As of 31	As of 31
	December 2025	December 2024
Non-current receivables for residential buildings' repair works	3,135	2,851
performed
ESCO (Energy saving projects)	1,922	2,294
Other long-term receivables	125	177
Allowance for expected credit losses of long-term part of receivables	-	(44)
for residential buildings' repair works performed	5,182	5,278

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

151

10 Other non-current and current receivables (cont’d)

Non-current receivables mainly consist of long-term part of receivables for residential buildings repair works performed in the

amount of EUR 3,135 thousand (EUR 3,327 thousand offset by a discounting adjustment of EUR 192 thousand.) as of 31

December 2025 (EUR 2,851 thousand (EUR 3,090 thousand offset by a discounting adjustment of EUR 44 thousand

allowance and EUR 439 thousand discounting) as of 31 December 2024). Non-current part of the projects related to ESCO

(Energy saving projects) amounted to EUR 1,922 thousand as of 31 December 2025 (EUR 2,294 thousand as of 31

December 2024).

Current receivables at the end of the financial year consist of:

	Group
	As of 31	As of 31
	December 2025	December 2024
Restricted cash and guarantees provided	1,574	2,067
Other receivables, current, gross	4,969	923
Other receivables, allowance for expected credit losses	(1,172)	(119)
Receivable VAT	162	264
Taxes paid in advance (except income tax)	502	89
	6,035	3,224

As of 31 December 2025 other receivables increased due to not yet received subsidies from municipalities for renovation of

dwelling houses.

11 Trade receivables

	Group
	As of 31	As of 31
	December 2025	December 2024
Trade receivables, gross	32,424	31,400
Less: allowance for expected credit losses	(5,220)	(6,047)
	27,204	25,353

Change in allowance for expected credit losses for trade receivables for the years 2025 and 2024 has been included into

credit loss expenses on financial assets in the statement of comprehensive income.

Trade receivables and other receivables are generally non-interest bearing and are usually collectible on 30 - 90 days terms.

Movements in the allowance for impairment of the Group’s trade receivables were as follows:

	Individually	Collectively	Total
	assessed	assessed
Balance as of 1 January 2024	1,117	5,132	6,249
Charge for the year	-	896	896
Reversed during the year	-	(1,098)	(1,098)
Balance as of 31 December 2024	1,117	4,930	6,047
Charge for the year	-	424	424
Reversed during the year	-	(1,251)	(1,251)
Balance as of 31 December 2025	1,117	4,103	5,220

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

152

11 Trade receivables (cont’d)

As of 31 December 2025 the average percentages used for allowance formation were revised and are as follows: 0.37% for

not past due, 0.37% for past due less than 30 days, 0.37% for past due 30-60 days, 0.37% for past due 60-90 days, 10% for

past due 90-180 days, 15% for past due 180-360 days, 50% for past due 1-3 years, 100% for past due more than 3 years

(1.63% for not past due, 1.63% for past due less than 30 days, 1.63% for past due 30-60 days, 1.63% for past due 60-90

days, 25% for past due 90-180 days, 35% for past due 180-360 days, 65% for past due 1-3 years, 100% for past due more

than 3 years as of 31 December 2024). The ageing analysis of the Group’s trade receivables (presented net of loss allowance)

as of 31 December 2025 and 2024 is as follows:

			Trade receivables
			Days past due			More
	Trade receivables not	Less than	30 – 60	60 – 90	90 – 360	than 360
	past due	30 days	days	days	days	days	Total
2024	19,844	1,683	649	426	1,376	1,375	25,353
2025	18,213	1,697	1,252	1,156	2,096	2,790	27,204

12 Cash

		Group
	As of 31	As of 31
	December 2025	December 2024
Cash at bank	7,456	4,723
Cash on hand	3	-
Short-term deposits	-	103
	7,459	4,826

As of 31 December 2025 and 2024 the Group had restricted cash, held in the bank as guarantee provided to customers -

see further information in Note 10.

13 Reserves and share premium

Legal reserve

A legal reserve is a compulsory reserve under Estonian legislation and the Statutes of the Company. Annual transfers of not

less than 1/20 (one-twentieth) of net profit, calculated for statutory reporting purposes are required until the reserve reaches

1/10 (one-tenth) of the share capital. As of 31 December 2025 upon profit distribution the reserve was fully formed with EUR

528 thousand transfer from Group’s retained earnings.

Share premium

Share premium represents the excess of the share issue price over nominal value of the shares issued. In December 2025

and 2024 share premium amounts to EUR 8,490 thousand.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

153

14 Borrowings

The list of borrowings of the Group as of 31 December 2025 and 2024 are as follows:

		Group
		As of 31	As of 31
	Currency of the loan	December 2025	December 2024
Current loans
Bank loans	EUR	7,729	5,469
Current loan balance		7,729	5,469
Non-current loans
Bank loans	EUR	19,406	21,320
Less: current portion of long term loans		(17,629)*	(1,967)
Non-current loan balance		1,777	19,353

*As of 31 December 2025 the Group exceeded amount of allowed investments stated in the loan agreement with the bank.

As a result, bank borrowings in amount of EUR 15,508 previously classified as long-term have been reclassified to short-

term. The breach and reclassification did not affect the Group’s and the Company’s cash flows or its ability to meet obligations,

as reflected in the liquidity ratios before and after reclassification (Note 24), because subsequently to the reporting date, the

Group received a waiver from the bank, dated as of 10 February 2026. The Group was in compliance with its bank covenants

as of 31 December 2024.

For the loans of the Group variable interest rates apply. Actual interest rates are close to effective interest rates. As of 31

December 2025 the weighted average annual interest rate of borrowings outstanding was 3.92% (4.85% as of 31 December

2024). In 2025 and 2024 the period of re-pricing of floating interest rates on borrowings was 3 months. Interest is paid

monthly.

The Group didn’t have unutilized borrowing facilities as of 31 December 2025 (EUR 3,531 as of 31 December 2024).

For the loans and overdraft, the Company and its subsidiaries have pledged the bank accounts of the Company and its

subsidiaries in Lithuania. Shares of UAB Mano būstas are pledged to AB Swedbank bank as well.

Terms of repayment of non-current debt are as follows:

		Group
	As of 31	As of 31
Term	December 2025	December 2024
Within one year	17,629*	1,967
From one to five years	699	18,058
More than five years	1,078	1,295
	19,406	21,320

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

154

14 Borrowings (cont‘d)

The following tables present financial liabilities movement during the financial year:

		Cash flows from	Cash flows to	New leases	31 December 2025
		proceeds from	loans and leases
		loans	repaid
	1 January 2025
Current interest-bearing loans and borrowing (excluding items listed
below)	5,469	3,971	-	-	9,440
Non-current interest-bearing loans
and borrowings (excluding items	18,987	65	(3,185)	-	15,867
listed below)
Obligations under lease contracts
(Note 15)	2,288	-	(932)	1,504	2,860
Total liabilities from financing
activities	26,744	4,036	(4,117)	1,504	28,167

		Cash flows from	Cash flows to
	1 January 2024	proceeds from loans	loans and leases	New leases	31 December 2024
			repaid
Current interest-bearing loans
and borrowing (excluding	9,000	-	(3,531)	-	5,469
items listed below)
Non-current interest-bearing
loans and borrowings	10,130	10,687	(1,830)	-	18,987
(excluding items listed below)
Obligations under lease
contracts (Note 15)	2,223	-	(870)	935	2,288
Total liabilities from financing activities	21,353	10,687	(6,231)	935	26,744

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

155

15 Leases

As of 31 December 2025 the contractual interest rate on the lease liabilities obligations for vehicles is 6 month EURIBOR +

1.49 – 2.05%, 3 month EURIBOR + 2.37 – 2.49% (as of 31 December 2024 - 6 month EURIBOR + 1.49% - 2.05%, 3 month

EURIBOR + 2.29 – 2.39%). Interest is paid monthly. The terms of the lease agreements are from 1 to 10 years. The currency

of the lease agreements is EUR.

Set out below are the carrying amounts of right-of-use assets recognized and the movements during the period:

Acquisition cost	Buildings	Vehicles	Total
Balance as of 1 January 2024	2,440	2,471	4,911
Additions	645	262	907
Decrease related to lease termination	(9)	-	(9)
Balance as of 31 December 2024	3,076	2,733	5,809
Additions	1,271	206	1,477
Decrease related to lease modifications	(945)	(78)	(1,023)
Reclassification from vehicles (Note 7)	-	56	56
Balance as of 31 December 2025	3,402	2,917	6,319
Accumulated depreciation and impairment
Balance as of 1 January 2024	509	2,249	2,758
Charge for the year	656	144	800
Decrease related to lease modifications	(1)	-	(1)
Balance as of 31 December 2024	1,164	2,393	3,557
Charge for the year	698	137	835
Decrease related to lease modifications	(943)	(78)	(1,021)
Balance as of 31 December 2025	919	2,452	3,371
Right of use assets as of 31 December 2024	1,912	340	2,252
Right of use assets as of 31 December 2025	2,483	465	2,948

Maturity analysis of lease payments under the above-mentioned lease contracts as of 31 December 2025 and under lease

contracts as of 31 December 2024 are as follows:

	Group
	As of 31	As of 31
	December 2025	December 2024
Within one year	351	762
From one to five years	2,950	1,803
More than five years	5	5
Total lease obligations	3,306	2,570
Interest	(268)	(198)
Present value of lease obligations	3,038	2,372
Lease obligations are accounted as:
- current	805	678
- non-current	2,233	1,694

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

156

15 Lease (cont’d)

Set out below are IFRS 16 impact to profit (loss):

	2025	2024
Depreciation expense of right-of-use assets	835	800
Interest expense on lease liabilities	78	70
Expense relating to short-term leases or leases of low-value assets	395	356
(included in administrative expenses)
Other expenses relating to right-of-use assets	(14)	(2)
Total amount recognized in profit (loss)	1,294	1,224

Group has no variable lease payments.

The Group had total cash outflows for leases of EUR 911 thousand in 2025 (EUR 856 thousand in 2024). The Group had

EUR 1,477 thousand non-cash additions to right-of-use assets and lease liabilities in 2025 (EUR 907 thousand in 2024).

16 Provision for employee benefits

As of 31 December 2025 and 2024 the Group accounted for employee benefits for employees leaving the Group at the age

of retirement (Note 2.12). Related expenses are included into general and administrative expenses in the Group’s statement

of comprehensive income.

		Group
	As of 31	As of 31
	December 2025	December 2024
As of 31 December of the previous year	321	274
Change during the year	(99)	47
As of 31 December of the financial year	222	321

As of 31 December 2025 EUR 122 thousand (EUR 209 thousand as of 31 December 2024) is accounted under current

provisions for employee benefits, whereas under non-current part is accounted EUR 100 thousand (EUR 112 thousand as

of 31 December 2024). As of 31 December 2025 provisions are lower due to revised calculation.

Main assumptions applied while evaluating the Group’s provision for employee benefits as of 31 December 2025 and 2024

are as follows:

		Group
	As of 31	As of 31
	December 2025	December 2024
Discount rate	3.8%	3.5%
Anticipated annual salary increase	3.0%	3.0%

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

157

17 Trade payables and other payables

		Group
	As of 31	As of 31
	December 2025	December 2024
Trade payables	9,800	8,512
Payables to related parties (Note 26)	625	3,026
Other payables	9,736	9,214
	20,161	20,752

Trade payables consist of current part in amount of EUR 8,994 thousand (EUR 7,513 thousand as of 31 December 2024)

and non-current part in amount of EUR 806 thousand (EUR 999 thousand as of 31 December 2024). Other payables detailed

list is provided below.

		Group
	As of 31	As of 31
Other payables	December 2025	December 2024
Salaries and social security	3,357	3,152
Vacation pay accrual	2,502	2,247
Accrued expenses	287	334
Payable VAT	1,365	1,299
Other current liabilities	2,225	2,182
	9,736	9,214

18 Contract liabilities - advances received

As of 31 December 2025 EUR 13,101 thousand amount represents advances received from the owners of commercial and

residential buildings administrated by the Group for repair and other works and other contract liabilities and EUR 3,285

thousand of it were related to long-term obligations (EUR 10,041 thousand and EUR 2,265 thousand as of 31 December

2024 respectively). During the reporting period, EUR 5,075 thousand was recognized in revenue from contracts with

customers in the consolidated statement of comprehensive income that was included in the contract liability balance at the

beginning of the period (EUR 5,878 thousand during 2024).

19 Cost of sales

	Group
	2025	2024
Services of subcontractors and materials used	56,223	54,465
Wages and salaries and social security	28,246	26,919
Cost of goods sold	57	32
Depreciation	4	3
Other	-	4
Total cost of sales	84,530	81,423

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

158

20 General and administrative expenses

	Group
	2025	2024
Wages and salaries and social security	10,973	10,461
Depreciation and amortization	2,232	2,151
Consulting and similar expenses*	1,385	503
Computer software maintenance	830	753
Commissions for collection of payments	698	323
Rent of premises and other assets	395	356
Advertising	463	397
Insurance	460	327
Representational costs	318	239
Office expenses	300	-
Transportation	286	308
Taxes other than income tax	193	248
Business trips and trainings	157	210
Charity and support	111	60
Communication expenses	106	113
Bank payments	106	98
Other personnel related expenses	85	-
Utilities	69	240
Administrative costs	-	245
Other	1,066	2,958
Total general and administrative expenses	20,233	19,990

* In 2025 includes 295,1 thousand financial statements and CSRD audit expenses (275 thousand as of 31 December 2024) incurred from

audit company Ernst & Young Baltic. In 2025 and 2024 includes also EUR 4.7 thousand of translation services including CSRD

translation

services.

CSRD - Corporate Sustainability Reporting Directive

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

159

21 Income tax

	Group
	2025	2024
Components of the income tax expenses
Current income tax	1,025	906
Deferred income tax (income)	(102)	(332)
Income tax expenses recorded in the statement	923	574
of comprehensive income

		Group
	As of 31	As of 31
	December 2025	December 2024
Deferred income tax asset
Expected credit losses of accounts receivable	752		812
Accruals and similar temporary differences	427		401
Tax loss carried forward	924		751
Tax goodwill	84		110
Allowance for inventories	8		9
Lease liabilities (Buildings)	472		312
Net deferred income tax asset	2,667		2,395
Deferred income tax liability
Property, plant and equipment and intangible assets	(1,708)		(1,453)
Right of use assets (Buildings)	(403)		(306)
Deferred income tax liability	(2,111)		(1,759)
Deferred income tax, net	556		636
Presented in the statement of financial position as follows:
Deferred income tax asset (before correction)*	-		2,395
Deferred income tax asset (after correction)*	1,762		1,609
Deferred income tax liability (before correction)*	-		(1,759)
Deferred income tax liability (after correction)*	(1,203)		(973)

* In the annual financial statements for year ended 31 December 2024, in the statement of financial position and related note

to the financial statements, deferred tax assets and liabilities were incorrectly presented at gross on separate entity level.

The error related solely to the presentation between captions of deferred tax asset and liabilities. In the statement of financial

position for the year 2025, the presentation on comparative figures was revised to correct the error.

Tax loss carried forward can be utilized indefinitely in Lithuania: EUR 5,438 thousand as of 31 December 2025 (EUR 924

thousand recognized as deferred tax), EUR 4,693 thousand as of 31 December 2024 (EUR 751 thousand recognized as

deferred tax).

Deferred income tax asset and liability, related to entities operating in Lithuania, were accounted for at 17% rate as at 31

December 2025 and at 16% as at 31 December 2024.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

160

21 Income tax (cont’d)

The changes of temporary differences before and after tax effect in the Group were as follows:

	Balance as of 31	Recognized in	Acquired	Balance as of 31
	December 2024	profit or loss	subsidiaries	December 2025
Allowance for accounts	5,075	(868)	215	4,422
receivable
Allowance for inventories	55	(6)	-	49
Accruals and similar	2,503	(6)	13	2,510
temporary differences
Right of use assets	(1,913)	(458)	-	(2,371)
Tax loss carried	4,694	745	-	5,439
forward
Tax goodwill	689	(194)	-	495
Property, plant and equipment and intangible assets	(9,080)	510	(1,475)	(10,045)
Lease liabilities	1,951	826	-	2,777
Total temporary	3,974	548	(1,246)	3,276
differences
Deferred income tax, net	636	146*	(225)	556

* Amount differs from deferred income tax in the table above because of the tax loss transferred and used between subsidiaries.

The changes of temporary differences before and after tax effect in the Group were as follows:

	Balance as of 31	Recognized in	Disposed	Balance as of 31
	December 2023	profit or loss	subsidiaries	December 2024
Allowance for accounts	5,120	(45)	-	5,075
receivable
Allowance for inventories	19	36	-	55
Accruals and similar	2,577	21	(95)	2,503
temporary differences
Right of use assets	(1,932)	19	-	(1,913)
Tax loss carried forward	3,286	1,643	(235)	4,694
Tax goodwill	984	(295)	-	689
Property, plant and equipment and intangible assets	(9,596)	516	-	(9,080)
Lease liabilities (RoUA)	1,946	5	-	1,951
Total temporary	2,404	1,900	(330)	3,974
differences
Deferred income tax, net	361	285*	(50)	636

* Amount differs from deferred income tax in the table above because of the tax loss transferred and used between subsidiaries.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

161

21 Income tax (cont’d)

The reported amount of income tax expenses attributable to the year can be reconciled to the amount of income tax expenses

that would result from applying Lithuanian income tax rate (16%), since most of the operations of the Group is conducted in

Lithuania, to pre-tax income as follows:

	Group
	2025	2024
Income tax expenses computed at 16% in 2025 and 15% in 2024	(1,678)	(1,101)
Effect of different tax rates applicable to foreign subsidiaries	(38)	(180)
Change in deferred tax asset tariff	(33)	-
Permanent differences	(65)	392
Adjustments of income tax expenses for the previous years	891	314
Income tax expenses reported in the statement of comprehensive income	(923)	(574)

22 Basic and diluted earnings per share (EUR)

Basic earnings per share are calculated by dividing the net profit attributable to the shareholders by the weighted average

number of ordinary shares issued and paid during the year. The Company has no diluting instruments, therefore basic and

diluted earnings per share are equal. Calculation of basic and diluted earnings per share is presented below:

	Group
	2025	2024
Net profit attributable to the shareholders of the Parent	9,546	6,505
Net profit attributable to the shareholders of the Parent	9,546	6,505
Number of shares (thousand), opening balance	31,610	31,610
Number of shares (thousand), closing balance	31,610	31,610
Weighted average number of shares (thousand)	31,610	31,610
Basic and diluted earnings per share (EUR)	0.30	0.21
From continuing operations	0.30	0.21

23 Dividends per share

	2025	2024
Approved dividends*	5,498	1,674
Number of shares (in thousand)**	31,610	31,610
Approved dividends per share (EUR)	0.17	0.05

* The year when the dividends are approved.

** At the date when dividends are approved.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

162

24 Financial assets and liabilities and risk management

Credit risk

The Group’s procedures are in force to ensure on a permanent basis that sales are made to customers with an appropriate

credit history and do not exceed an acceptable credit exposure limit. There are no individual customers exceeding 10% of

segment sales.

The maximum exposure to credit risk is represented by the carrying amount of each financial assets and contract assets.

Therefore, the management considers that its maximum exposure is reflected by the amount of non-current receivables,

loans granted, trade receivables and other receivables, cash, net of loss allowance for doubtful accounts recognized at the

date of the statement of financial position.

Interest rate risk

The major part of the Group’s borrowings (loans and financial lease obligations) are subject to variable rates, related to

EURIBOR which create an interest rate risk (Notes 14 and 15). There are no financial instruments designated to manage the

exposure to the interest rate risk outstanding as of 31 December 2025 and 2024.

The following table demonstrates the sensitivity of the Group’s profit before tax (through the impact on floating rate

borrowings) to a reasonably possible change in interest rates, with all other variables held constant. There is no impact on

the Group’s comprehensive income, other than that to current year profit.

		Effect on the profit
	Increase/decrease	before the income
2025	in basis points	tax
EUR	+1	(296)
EUR	-1	296
2024
EUR	+1	(275)
EUR	-1	275

Foreign exchange risk

Group in 2025 and 2024 does not have assets or liabilities denominated in other currency than Euro.

Liquidity risk

The Group’s policy is to maintain sufficient cash and cash equivalents or have available funding through an adequate amount

of committed overdraft and loans to meet its commitments at a given date in accordance with its strategic plans. The Group’s

liquidity (current assets / current liabilities) and quick ((current assets – inventory) / current liabilities) ratios as of 31 December

2025 were 0.84 and 0.84 respectively (1.41 and 1.39 as of 31 December 2024 respectively). As described in Note 14, if the

long-term loan from the bank would be reclassified back to long-term, ratios would be 1.16 and 1.15 respectively. The

reclassification did not affect the Company’s cash flows or ability to meet obligations as further explained in Note 14.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

163

24 Financial assets and liabilities and risk management (cont’d)

The table below summarizes the maturity profile of the Group’s financial liabilities as of 31 December 2025 and 2024 based

on contractual undiscounted payments:

		Less than 1		More than 5
	On demand	year	1 to 5 years	years	Total
Non-current interest-bearing		-	709	1,073	1,782
borrowings
Current portion of non-current	15,508*	2,116	-	-	17,624
interest-bearing borrowings
Current loans	7,729	-	-	-	7,729
Lease liabilities	-	351	2,950	5	3,306
Trade payables and other payables	-	19,355	806	-	20,161
Balance as of 31 December	23,237	21,822	4,465	1,078	50,602
2025
Non-current interest-bearing	-	-	18,063	1,290	19,353
borrowings
Current portion of non-current	-	1,967	-	-	1,967
interest-bearing borrowings
Current loans	5,469	-	-	-	5,469
Lease liabilities	-	762	1,803	5	2,570
Trade payables and other payables	-	19,753	999	-	20,752
Balance as of 31 December	5,469	22,482	20,865	1,295	50,111
2024

*Although reported as “due on demand”, settlement is expected within 1–5 years due to bank waiver on incompliance with covenants,

received after 31 December 2025 as disclosed in Note 14.

CONSOLIDATED FINANCIAL STATEMENTS	CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
FOR THE YEAR ENDED 31 December 2025
(all amounts are in EUR thousand unless otherwise stated)

164

24 Financial assets and liabilities and risk management (cont’d)

Fair value of financial instruments

The Group’s principal financial instruments not carried at fair value are loans granted, non-current and current borrowings,

trade and other receivables and payables.

Fair value is defined as the amount at which the instrument could be exchanged between knowledgeable and willing parties

in an arm’s length transaction, other than in forced or liquidation sale. The following methods and assumptions are used to

estimate the fair value of each class of financial instruments:

(a) The carrying amount of current trade and other accounts receivable, current accounts payable and current

borrowings approximates fair value due to short maturity;

(b) The fair value of non-current receivables and borrowings is based on the quoted market price for the same or similar

issues or on the current rates available for borrowings with the same maturity profile. The fair value of non-current

borrowings with variable interest rates approximates their carrying amounts.

The fair values of the Group’s financial assets and financial liabilities approximate their carrying values. Based on fair value

measurement categorization principles described in Note 2.8, the Group categorizes inputs used for borrowings from financial

institutions valuation as level 2.

25 Commitments and contingencies

A civil lawsuit has been filed against UAB Mano Būstas Vilnius and ERGO Insurance SE in the Vilnius Regional Court for

compensation of damages arising from a fire incident at a managed property. The total amount of the claim is EUR 344

thousand.

UAB Mano Būstas Vilnius denies the claim as there is no sufficient legal or factual basis to recognize the liability. In the event

of an adverse outcome, any potential damages would be covered by the Company’s civil liability insurance. Based on

management’s assessment, no provision has been recognized as of the reporting date.

As part of the acquisition agreement with the previous owner of Nia Nami SIA, contingent consideration of EUR 128 thousand

was agreed. Under the terms of the agreement, this amount was payable within nine months of signing the sale and purchase

agreement, subject to there being no significant changes in the acquired useful area and no identified accounting

discrepancies. As of the date of approval of these financial statements, the contingent consideration remains unsettled due

to an ongoing dispute with the seller regarding the fulfillment of the relevant conditions. Based on management’s assessment,

no liability has been recognized in the financial statements, as it is not expected that payment will be required. The contingent

consideration was taken into account in the preparation of the purchase price allocation model.

There was no outstanding amount of commitments and contingencies accounted as of 31 December 2024.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

165

26 Related party transactions

The parties are considered related when one party has the possibility to control the other one or has significant influence

over the other party in making financial and operating decisions. The related parties of the Group and the Company are as

follows:

− UAB Unit invest – the ultimate shareholder and parent of the Company;

− Subsidiaries and associates of UAB Unit Invest (same ultimate controlling shareholder);

− Associates of City Service SE subsidiaries (for the list of the associates, see also Note 1);

− A. Gudelis, V. Turonis (Management of the Group companies).

Transactions with related parties include:

− sales and purchases of goods and services in the ordinary course of business;

− acquisitions and disposals of property, plant and equipment;

− disposals of subsidiaries (disclosed in Note 1).

UAB Mano būstas and SIA City Service have provided surety for City Service SE to AB Swedbank under credit agreement.

Companies are liable to the extent of all its assets to the Bank with respect to the same amount as the City Service SE.

Shares of UAB Mano būstas are pledged to AB Swedbank as well.

Payables and receivables between related parties are non-interest bearing. Receivables and payables payment terms

between the related parties are up to 15-30 days, except for the dividends and loans, which are repaid in accordance with

the legal or contractual requirements, respectively.

2025	Relation	Purchases	Sales	Receivables	Loans	Payables and
				and	granted	advances
Entity				prepayments		received
Medžiagų tiekimo	Subsidiary of
centras	parent	309	29	9	-	55
	company
UAB Verslo	Subsidiary of
finansavimo	parent	-	-	996	-	341
sprendimai	company
ICOR	Subsidiary of
	parent	564	240	24	-	100
	company
UAB Vandens	Subsidiary of
parkas	parent	2	621	56	-	-
	company
Associates and	Subsidiaries of
other related parties	parent	695	1,621	2,484	7,711	129
	company
		1,570	2,511	3,569	7,711	625

Loans granted comprise of loan granted to ultimate controlling parent, the loan is repayable in 2027, interest is charged at

EURIBOR for 6 months plus lenders margin of 1.95%.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

166

26 Related party transactions (cont‘d)

2024	Relation	Purchases	Sales	Receivables	Loans	Payables and
				and	granted	advances
Entity				prepayments		received
Medžiagų tiekimo	Subsidiary of
centras	parent	661	74	16	-	95
	company
UAB Verslo	Subsidiary of
finansavimo	parent	-	-	1,559	-	2,755
sprendimai	company
ICOR	Subsidiary of
	parent	553	227	157	-	31
	company
UAB Vandens	Subsidiary of
parkas	parent	2	587	61	-	-
	company
Associates and	Subsidiaries of
other related parties	parent	546	1,370	650	12,000	145
	company
		1,762	2,258	2,443	12,000	3,026

The ageing analysis of the Group’s receivables from related parties as of 31 December 2025 and 2024 is as follows:

		Less		Trade receivables	Days past due		More
	Trade receivables not	than 30	30 – 60	90 – 360	60 – 90		than 360
	past due	days	days		days	days	days	Total
2024	1,804	101	134	270	108		26	2,443
2025	361	1,943	94	872	77		222	3,569

Remuneration of the management and other payments

The Group’s management comprises 6 members in 2025 (2 in 2024). The Group’s management remuneration amounted to

EUR 759 thousand in 2025 (EUR 281 thousand in 2024). In 2025 and 2024 the management of the Group did not receive

any loans or guarantees; no other payments or property transfers were made or accrued. There was no supervisory board

remuneration in 2025 and 2024.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

167

27 Capital management

The primary objectives of the Group‘s capital management are to ensure that the Group complies with externally imposed

capital requirements and that the Group maintains healthy capital ratios in order to support the business and to maximize

shareholders’ value. For capital management purposes, capital comprises equity attributable to equity holders of the Parent

Company.

The Group manages capital structure and makes adjustments to it in the light of changes in economic conditions and risk

characteristics of the activities. To maintain or adjust the capital structure, the Group may issue new shares, adjust the

dividend payment to shareholders and/or return capital to shareholders. No changes were made in the objectives, policies

or processes of capital management during the years ended 31 December 2025 and 2024.

The Group companies registered in Lithuania, Latvia and Estonia are obliged to upkeep their equity (as per statutory financial

statements) at not less than 50% of their share capital (comprised of share capital), as imposed by the Law on Companies

of the Republic of Lithuania, Commercial Law of Latvia and the Commercial Code of the Republic of Estonia As at 31

December 2025 and 31 December 2024, not all Group companies complied with this statutory capital requirement. It is

expected that the results of the subsidiaries will improve in the future and, accordingly, the required ratio will be achieved.

Therefore, no additional measures to achieve compliance with this requirement are currently planned.

In addition, the Group has committed to its lenders to keep to certain minimum capital requirements which were met as of 31

December 2025 as of 31 December 2024. There were no other externally imposed capital requirements on the Group.

The Group monitors capital using equity to assets ratio. There is no target equity to assets ratio set out by the Group’s

management, however, current ratio presented below is considered as good performance indicator, taking into account the

changes in the Group (Note 1).

		Group
	2025	2024
Equity	32,964	28,898
Assets	99,301	91,331
Equity to assets ratio	33.2	31.6

28 Subsequent events

On 28 January 2026 the Company’s subsidiary “Monto EU” UAB acquired “Santer SP. Z o.o” (acquisition price EUR 309

thousand), from unrelated party. “Santer SP. Z o.o” is engaged in rental properties management activities in Poland. At the

moment of issuance of these financial statements Group’s management was not able to obtain reliable financial information

of the newly acquired company and evaluate fair value of net assets as at the acquisition. After the acquisition “Santer SP.

Z o.o”. is renamed to “MONTO Sp. z o.o”.

On 30 January 2026, the Company signed an amendment to the cash pool loan agreement with Swedbank, AB in connection

with the refinancing of the loan.

On 05 February 2026 as a result of the reorganization, SIA "Multihouse" was merged with SIA "Livonijas nami".

On 26 February 2026 the Group changed Latvian subsidiary company name SIA “Ēku pārvaldīšanas serviss” to SIA “Manas

MĀJAS serviss”. Other contact details did not change.

On 28 February 2026 the geopolitical situation in the Middle East escalated due to the armed conflict. As of the date of

authorization of the financial statements, the conflict continues to evolve in the Middle East as military activity persists. The

Group does not have direct operations or assets in the region and therefore has no direct exposure to these events. Based

on management’s assessment as at the reporting date, no material impact on the Group’s financial position, financial

performance or cash flows has been identified. Management continues to monitor developments related to the geopolitical

environment.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

168

28 Subsequent events (cont’d)

On 7 April 2026, the merger of the Company’s subsidiaries UAB City Service Engineering and UAB Unitechna was

completed. Following the merger, UAB City Service Engineering assumed all rights and obligations of UAB Unitechna as its

legal successor.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

169

29 Parent company’s unconsolidated financial statements

The unconsolidated financial statements of the parent company have been prepared in accordance with the Accounting Act

of the Republic of Estonia and these are not separate financial statements of the parent company in the meaning of IAS 27

“Separate Financial Statements”. The parent’s unconsolidated financial statements have been prepared using the same

accounting policies as for the preparation of the consolidated financial statements, except for the accounting policy of the

investments in subsidiaries and associates which are carried at cost, less impairment (Note 2.4).

	As of 31	As of 31
Statement of financial position	December 2025	December 2024
ASSETS
Non-current assets
Property, plant and equipment	7	4
Investments into subsidiaries	65,921	65,921
Receivables from related parties (including loans granted)	7,711	-
Non-current receivables	8,886	3,667
Deferred income tax asset	1,101	664
Total non-current assets	83,626	70,256
Current assets
Inventories	17	21
Prepayments	167	177
Trade receivables	647	1,446
Receivables from related parties (including loans granted)	3,176	12,128
Other receivables	28	554
Cash	10	995
Total current assets	4,045	15,321
Total assets	87,671	85,577

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

170

29 Parent company’s unconsolidated financial statements (cont’d)

Statement of financial position (cont’d)

		As of 31 December As of 31 December
	2025	2024
EQUITY AND LIABILITIES
Equity
Share capital		9,483	9,483
Share premium		8,490	8,490
Reserves		948	420
Retained earnings		32,005	28,428
Total equity		50,926	46,821
Liabilities
Non-current liabilities
Non-current borrowings		-	17,424
Provisions for employee benefits		1	-
Non-current payables		9,274	-
Total non-current liabilities		9,275	17,424
Current liabilities
Current loans		9,440	5,469
Current portion of non-current borrowings		17,426	1,758
Trade payables and other payables		594	14,095
Contract liabilities		-	10
Other current liabilities		10	-
Total current liabilities		27,470	21,332
Total liabilities		36,745	38,756
Total equity and liabilities		87,671	85,577

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

171

29 Parent company’s unconsolidated financial statements (cont’d)

Statement of comprehensive income	2025	2024
Revenue from contracts with customers	750	768
Cost of sales	(119)	-
Gross profit	631	768
General and administrative expenses	(3,067)	(2,663)
Expected credit losses on financial assets	(9)	146
Other operating income	54	17
Other operating expenses	(95)	-
Profit (loss) from operations	(2,486)	(1,732)
Finance income	12,848	1,299
Finance costs	(1,195)	(1,073)
Profit (loss) before tax	9,167	(1,506)
Income tax (expense) benefit	436	340
Net profit (loss)	9,603	(1,166)
Other comprehensive income	-	-
Total comprehensive income (expense) for the year, net of tax	9,603	(1,166)

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

172

29 Parent company’s unconsolidated financial statements (cont’d)

Statement of changes	Share	Share	Legal	Other	Retained
in equity	capital	premium	reserve	reserves	earnings	Total
Balance as of 1	9,483	8,490	420	-	28,428	46,821
January 2025
Net profit for the year	-	-	-	-	9,603	9,603
Other comprehensive income	-	-	-	-	-	-
Total comprehensive income	-	-	-	-	9,603	9,603
Transfer from reserves	-	-	528	-	(528)	-
Dividends declared	-	-	-	-	(5,498)	(5,498)
Balance as of 31	9,483	8,490	948	-	32,005	50,926
December 2025
Book value of holdings
under control or significant influence						(65,921)
Value of holdings under control of significant						50,689
influence, calculated
under equity method
Adjusted
unconsolidated equity						35,694
as of 31 December
2025*

* Adjusted unconsolidated equity differs from the consolidated equity as of 31 December 2025 because the Company’s share

of losses of certain subsidiaries exceeds its interest in respective subsidiaries, accounted for based on equity method.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

173

29 Parent company’s unconsolidated financial statements (cont’d)

Statement of changes	Share	Share	Legal	Other	Retained
in equity	capital	premium	reserve	reserves	earnings	Total
Balance as of 1	9,483	8,490	-	-	31,688	49,661
January 2024
Net profit for the year	-	-	-	-	(1,166)	(1,166)
Other comprehensive income	-	-	-	-	-	-
Total comprehensive income	-	-	-	-	(1,166)	(1,166)
Transfer from reserves	-	-	420	-	(420)	-
Dividends declared	-	-	-	-	(1,674)	(1,674)
Balance as of 31	9,483	8,490	420	-	28,428	46,821
December 2024
Book value of holdings
under control or significant influence						(65,921)
Value of holdings under control of significant						51,908
influence, calculated
under equity method
Adjusted
unconsolidated equity						32,808
as of 31 December
2024*

* Adjusted unconsolidated equity differs from the consolidated equity as of 31 December 2024 because the Company’s share

of losses of certain subsidiaries exceeds its interest in respective subsidiaries, accounted for based on equity method.

CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 December 2025

(all amounts are in EUR thousand unless otherwise stated)

29 Parent company’s unconsolidated financial statements (cont’d)

Statement of cash flows	2025	2024
Cash flows from (to) operating activities
Net profit from continued operations	9,603	(1,166)
Adjusting items:
Income tax expenses	(436)	(340)
Depreciation and amortization	3	2
Impairment and write-off of accounts receivable	9	(1,125)
Dividend (income)	(12,069)	(1,400)
Interest (income)	(779)	101
Interest expenses	1,195	1,073
Other provisions	1	-
	(2,473)	(2,855)
Changes in working capital:
(Increase) decrease in inventories	4	-
(Increase) decrease in trade receivables, receivables from related	(1,747)	2,579
parties, non-current receivables, other receivables and other current
assets
(Increase) decrease in prepayments	14	(28)
Increase (decrease) in trade payables and payables to related parties	(9,176)	4,096
Increase (decrease) in advances received and other current liabilities	84	(67)
	(13,294)	3,725
Income tax paid	9	(9)
Net cash flows from (to) operating activities	(13,285)	3,716
Cash flows from (to) investing activities
(Acquisition) of non-current assets	(5)	(4)
Dividends received	12,069	1,400
Interests received	778	(101)
Loans (granted)	(496)	(13,200)
Loans repaid	4,431	1,367
Net cash flows (to) from investing activities	16,777	(10,538)
Cash flows (to) financing activities
Dividends paid	(5,498)	(1,674)
Proceeds from loans	3,972	10,660
Loans (repaid)	(1,756)	(4,009)
Interest (paid)	(1,195)	(1,073)
Net cash flows from (to) financing activities	(4,477)	3,904
Net increase in cash and cash equivalents	(985)	(2,918)
Cash and cash equivalents at the beginning of the year	995	3,913
Cash and cash equivalents at the end of the year	10	995

174