CONSOLIDATED
ANNUAL
REPORT
Beginning of the reporting period 1 January 2021
End of the reporting period 31 December 2021
Business name City Service SE
Registration number 12827710
Legal address Narva mnt. 5, 10117 Tallinn ,
the Republic of Estonia
Telephone +370 5 239 49 00
Fax +370 5 239 48 48
E-mail info@cityservice.eu
Website http://www.cityservice.eu
Auditor Ernst & Young Baltic AS
CONSOLIDATED
ANNUAL REPORT
FOR 2021
CONTENTS
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
2.2. Performance improvement
2.3. The most significant Investments and 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
3. Social responsibility report
3.1. Overview
3.2. Market
3.3. Relations with employees
3.4. Social initiatives for communities
3.5. Environmental issues / Energy saving
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6
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7
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9
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24
25
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28
29
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39
40
40
41
42
44
45
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 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 Discontinued operations and assets held for sale
Note 9 Material partly-owned subsidiaries
Note 10 Inventories
Note 11 Prepayments
Note 12 Non-current receivables
Note 13 Trade receivables
Note 14 Cash and cash equivalents
Note 15 Reserves and share premium
Note 16 Borrowings
Note 17 Provisions
Note 18 Lease
Note 19 Provision for employee benefits
Note 20 Trade payables and payables to related parties
Note 21 Contract liabilities - advances received
Note 22 Other current liabilities
Note 23 Cost of sales
Note 24 General and administrative expenses
Note 25 Other operating income and expenses
Note 26 Other finance income and (expenses)
Note 27 Income tax
Note 28 Basic and diluted earnings per share (EUR)
Note 29 Dividends per share
Note 30 Financial assets and liabilities and risk management
Note 31 Commitments and contingencies
Note 32 Related party transactions
Note 33 Capital management
Note 34 Subsequent events
Note 35 Parent company’s unconsolidated financial statements
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51
53
53
67
85
88
91
98
100
102
105
106
106
106
106
107
108
109
111
111
113
113
114
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116
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120
120
120
125
127
128
130
131
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 state-
ments, 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 report gives a correct and fair view
of the development and results of the business activities and financial status 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
2 May 2022
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CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
1.1. CITY SERVICE GROUP
City Service SE is a holding company managing a group of facility maintenance and integrated
service companies in Europe .
The Group companies are engaged in administration of facility management, maintenance and repair of utility systems,
management and renovation of energy resources, technical and energy audit of buildings, territory management and
cleaning of premises, along with the services of IT, provide gas station maintenance and debt administration services.
The Group companies operate in strict accordance with sustainable environmental requirements.
Administration of
apartment buildings
Commercial
facility
management
Territory
cleaning and
maintenance
Other
activities
Main business areas of the Group:
CORPORATE
PROFILE
6
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CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
1.3. MISSION AND VISION
1.2. STRATEGY AND OBJECTIVES
By combining City Service global 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 man-
agement, development of integrated utility services.
20,5 millions m
2
Currently, the Group companies operate in
Lithuania, Poland, Spain, Latvia, St. Petersburg
(Russia) and Czech Republic.
The total area of buildings managed in these
regions is
OUR VISION
is to be a leader in creating
value for residential
property.
OUR MISSION
is to represent the interests of our
customers by increasing the value of
their property and improving their
living environment
7
8
CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
LATVIA LITHUANIA POLAND
ST.
PETERSBURG
SPAIN
100%
SIA BILANCE
76%
UAB
Alytaus
namų valda
100%
UAB CSG
IT
100%
UAB Mano
Būstas
Kaunas
100%
UAB Pastatų
priežiūros
tarnyba
100%
Atrium 21 sp.
z o.o.
100%
Parama Red sp.
z o.o.
100%
OAO Cити Сервис /
ОАО City service
100%
Aresi
administracion de
fincas S. L.
100%
Grupo Aresi de
Inversiones, S.L.
100%
SIA Connecto Pay
100%
UAB Apex
intelligence
100%
UAB
Energijos
taupymo
paslaugos
100%
UAB Mano
Būstas
Klaipėda
100%
UAB Pastatų
valdymas
100%
City Service
Polska sp. z o.o.
100%
Parama White sp.
z o.o.
100%
ЗAO Cити Сервис /
ZAO City service
100%
Concentra
Servicios y
Mantenimiento,
S.A.*
100%
Inmonamas, S.L.
100%
SIA City Service
100%
UAB Baltijos
būsto
priežiūra
100%
UAB Enter
tech
100%
UAB Mano
Būstas
Aukštaitija
100%
UAB
PortalPRO
100%
Certus-Serwis Sp.
z o. o.
100%
PORTALPRO sp.
z o.o.
100%
OOO Специализи-
рованное ремонтно-
наладочное
управление
100%
Eurobroker Advi-
sors Sorreduria
de Seguros, S.L.
100%
PORTALPRO, S.L.
100%
SIA City Service
Engineering
100%
UAB
Baltijos NT
valdymas
100%
UAB EPC
projektai
100%
UAB Mano
Būstas
Radviliškis
100%
UAB Rinkų
vystymas
100%
Concierge -
Zarządzanie
Nieruchomościami
sp. z o.o.
100%
Progresline sp.
z o.o.
100%
ООО МН Групп
100%
Euronamas
Gestion de Fincas
Centro, S.L.
100%
URBAN HUB, S.L.
100%
SIA Ēku
pārvaldīšanas
serviss
100%
UAB Baltijos
transporto
valdymas
100%
UAB Neries
būstas
100%
UAB Mano
Būstas
Sostinė
100%
UAB Skolos
LT
100%
Dom Best sp.
z o.o.
100%
Santer Zarządzanie
Nieruchomościami
sp. z o.o.
80%
ООО Жилкомсервис
№ 3 Фрунзенского
района
100%
EUROHUB, S.L.
100%
Vetell dos iberica,
S.L.*
100%
SIA PortalPRO
100%
UAB Baltijos
turto
valdymas
100%
UAB Mano
aplinka
100%
UAB Mano
Būstas
Šiauliai
100%
UAB Šiaulių
NT valdymas
100%
EnergiaOK sp.
z o.o.
100%
Skydas - Przeglądy
Budowlane sp.
z o.o.
100%
ООО Чистый дом
CZECH REPUBLIC
100%
SIA Latvijas
Namsaimnieks
57.71%
UAB Biržų
butų ūkis
100%
UAB Mano
aplinka plius
100%
UAB Mano
Būstas
Ukmergė
100%
UAB
Unitechna
100%
Famix sp. z o.o.
100%
TED sp. z o.o.
100%
ООО Подъемные
механизмы
100%
STARLIT s.r.o.
100%
SIA Livonijas Nami
100%
UAB
BonoDomo
100%
UAB Mano
bendrabutis
98.84%
UAB Mano
Būstas
Vakarai
100%
Grupa Techniczna
24 sp. z o.o.
100%
Tumieszkamy sp.
z o. o.
100%
OOO ПорталПРО
100%
SIA Namu serviss
APSE
100%
UAB Butų
ūkio valdos
100%
UAB Mano
Būstas
100%
UAB Mano
Būstas
Vilnius
50%
Home Rent sp.
z o.o.
100%
Wolska Aparthotel
sp. z o. o.**
100%
SIA NIRA Fonds
apsaimniekošana
100%
UAB Būsto
aplinka
100%
UAB Mano
Būstas
Alytus
100%
UAB Mano
Būsto
priežiūra
100%
Parama Blue sp.
z o.o.
100%
Zespół Zarządców
Nieruchomości sp.
z o.o.
100%
SIA NIRA Fonds
apsaimniekošana 2
100%
UAB City
Service
100%
UAB Mano
Būstas Baltija
100%
UAB
Medžiagų
tiekimo
centras
100%
Parama Group sp.
z o.o.
100%
ZZN Inwestycje sp.
z o.o.
100%
SIA NIRA Fonds
apsaimniekosana-
Salnas 21
100%
UAB City
Service
Cleaning
100%
UAB Mano
Būstas
Dainava
100%
UAB
Merlangas
100%
Parama Yellow sp.
z o.o.
100%
SIA NIRA Fonds
apsaimniekošana 3
100%
UAB City
Service
Digital
100%
UAB Mano
Būstas Neris
100%
UAB
Nacionalinis
renovacijos
fondas
100%
SIA Ventspils nami
100%
UAB City
Service
Engineering
100%
UAB Mano
Būstas NPC
100%
UAB Pastatų
priežiūra
1.4. STRUCTURE OF THE GROUP
8
*
The Group ceased to consolidate Concentra Servicios
y Mantenimiento, S.A. (including sub-consolidated
subsidiary Vetell dos iberica, S.L.) in its Financial
statements after bankruptcy administrator was
appointed on 10 May 2017, as from that date the
Group has lost its control.
**
The Group ceased to consolidate Wolska Aparthotel
sp. z o. o. in its Financial statements after bankruptcy
administrator was appointed on 3 June 2020, as from
that date the Group has lost its control.
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CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
1.5. EMPLOYEES
In 2021 the Group companies continued to engage employees of all levels in the Company’s
operations, which resulted in organising periodic live or remote meetings with managers in all
countries and presentations of the Company’s strategy, goals and performance results.
LITHUANIA LATVIA
CZECH
REPUBLIC
POLAND SPAIN
ST.
PETERSBURG
Employees were provided with traditional additional ben-
efits, such as birthday gifts, Christmas gifts for employees
and their children, tribute to long-time employees and new
additional benefits that were relevant due to the pandemic
situation, such as flu vaccinations, Meanwhile, in Lithuania,
employees affected by severe Covid-19 disease, received
financial support, additional benefits were granted to em-
ployess working at home, and all employees were given the
opportunity to seek psychological assistance.
In some companies, collective agreements have been ex-
tended and in some new ones have been signed, provid-
ing for additional leave for all workers, depending on the
length of service, and for trade union members one ad-
ditional day of leave.
Additional payments in the case of anniversaries, mar-
riage, birth of children, severance pay of 20% or more in
the case of dismissal.
All Group companies continued to invest in in-service
training and foreign language training, organising the
training sessions both internally and externally, live or re-
motely. Special attention was dedicated to training and
integration of new employees, with Newcomer Days be-
ing organised across all countries, and adaptation plans
being prepared; they improved the pace of adaptation
for new colleagues.
The company periodically participates in payroll research
and adapts its payroll systems in each country to the
market trends and developments.
The Group currently has 2520 employees: In Lithuania
– 1581 employees, in Latvia – 134 employees, in Poland
– 233 employees, in Spain – 16 employees, in St. Pe-
tersburg – 547 employees, in the Czech Republic – 9
employees.
Number of employees
by country:
employees
employees
employees
employees
employees
employees
1581
547
233
16
134
9
9
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CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
2.1. MAIN AREAS OF ACTIVITY
2.1.1. Administration of apartment buildings
The Group companies provide administration of apartment buildings services - they perform all
actions necessary for the preservation and use of the objects of common use as well as perform
their constant maintenance.
The companies take care of the maintenance of mechanical durability of the basic house structures, elimination of
minor defects, prevention, tuning of general engineering equipment, ensuring safe use, elimination of accidents, preven-
tion and adjustment of heating and hot water supply systems, preparation for heating season.
The Group of companies provides apartment building administration and maintenance services in Lithuania, Poland,
Latvia, and St. Petersburg.
MANAGEMENT
AND CORPORATE
GOVERNANCE REPORT
10
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CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
During the year, comprehensive housing
maintenance services were launched in Lithuania
for new multi-apartment buildings with a total
area of more than 113,000 square metres.
At the end of 2021, the Group companies started provid
-
ing services to customers under the new business concept
model. It consists of a customer representative and a main-
tenance engineer assigned to each block of flats. The main tasks of customer
representatives are to make sure that the maintenance of the house is as
smooth and high-quality as possible, and to monitor that contractors carry
out the work in the customer’s home on time, well and at a reasonable price.
Customer representatives also initiate votes and attend resident meetings, and
coordinate the resolution of resident queries within a reasonable timeframe.
The Group companies continue to pay special attention to the development
of digitised services through the Internet platform and the eBŪSTAS mobile
application. The number of digital customers with an active account has in
-
creased more than 15% compared to 2020 – from 102,000 to 118,000 users.
The PortalPRO work-sharing platform is being further enhanced. It employs
only certified professionals with self-employment certificates. In the second
half of the year, the customer part of the platform was launched, where resi
-
dents can call the right technician at the touch of a few buttons. At the end of
the year, 1,179 handymen were registered with the system, of whom 808 are
receiving regular job offers.
In Poland, customer service offices were opened
in 15 cities, while the accounting service centre
remained operating in Lublin. At the request of
customers, all calls are directed not directly to
the Call Center, but directly to managers who
can deal with customer requests faster and more
efficiently.
In the first half of the year, a strong focus was placed on innovative building
maintenance solutions with the launch of Audyt PRO and Audyt PRO Plus
services. They enable the proactive maintenance of multi-apartment buildings
through intelligent technologies such as drones and thermal imaging, and in
-
crease the value of buildings maintained over time.
At the end of the year, PortalPRO, a digital work order platform, was launched
on the market and partnerships with the first contractors began. Currently,
the implementation of the platform is concentrated in Łódź and Lublin, and in
2022 it is planned to expand throughout Poland.
Active cooperation has been initiated with other building management com
-
panies offering a full package of know-how services: data management, ac-
counting, insurance, handyman and other services.
1.6
million m
2
Area of currently
maintained buildings in
Poland amounts to
10.3
million m
2
Area of currently
maintained buildings in
Lithuania amounts to
1179
specialists registered in
the PortalPRO system.
The traffic of
mobile application
visitors grew by
15%
11
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CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
The Group’s Spanish subsidiary has started to
develop in a different direction. In 2021, the
PortalPRO worksharing platform was launched
and used.
It is a transparent platform where customers can order a variety of services.
The platform is based on the principles of the sharing economy, through
which service providers can offer their services related to housing mainte-
nance and repair. The current focus is on attracting partners to the platform,
with the expectation of offering the platform to private customers in 2022.
On November 30, 2021 the Company through its Spanish subsidiaries has
signed business transfer agreement on sale of apartment building adminis-
tration business and partial sale of insurance brokerage business in Spain.
More detail information is disclosed in paragraph 2.3 of this consolidated
annual report.
The Group companies operating in Latvia provides
services in the towns of Riga, Liepaja, Ventspils and
Ogre. In 2021, a modern system of invoicing and
presentation to customers was improved, which
allows for more efficient and faster performance
of works.
The customer self-service system has been upgraded to provide up-to-
date information about the house, financial statements and log messag-
es. In 2021, the Group acquired five apartment maintenance companies
in Riga and Liepaja. Following these transactions, 56 homes have joined
the Group, covering almost 147,000 square metres of serviced area. It is
planned to fully integrate the acquired enterprises into the existing com-
mon systems by the summer of 2022. In 2022, the group is planning to
continue investing in IT systems, and the main goals are to increase opera-
tional efficiency and automation, to improve quality and provide custom-
ers with more convenience in using the company’s digital services. The
Group companies will continue to seek to increase the area of serviced
houses organically and through new acquisitions, and to expand the geog-
raphy of operations in other cities of the country.
At the Group’s ST. Petersburg-based companies,
the main IT project for 2021 remained the imple-
mentation of the Group’s own ERP system and
its alignment with the newly developed customer
service processes.
The system is now operational in all the company’s departments. With the
help of this system, the company’s specialists receive job applications, report
on their performance and use of materials. The company’s customer service
and service delivery parameters are consistently increasing, creating opportu
-
nities for further optimisation solutions. At the same time, the first version of
the APP has been developed and rolled out to customers, and is already being
used by 1000 users.
0.8
million m
2
Area of currently maintained
buildings in Latvia amounts to
3.6
million m
2
Area of currently maintained
buildings in St. Petersburg amounts to
12
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CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
Changes in the area of managed apartment buildings
in the Group companies, million m
2
13
2015 2016 2017 2018
31.6 31.6
30,7
23.3
16.3
29.3
25.3
2019 2020 2021
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CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
2.1.2. Management of commercial building facilities
The Group companies provide commercial building facility management services that ensure
reliable operation of building systems and lower maintenance costs. The companies take care
of the building maintenance ranging from utility equipment, energy resource management and
conservation to premises cleaning.
The Group companies provide commercial building facility management services in Lithuania and
Latvia.
The number of customers has been growing in Lithuania with 49 contracts
were signed: 33 contracts with new customers, 16 contracts with existing
customers.
In 2021
, comprehensive building management services were launched for
one of the largest real estate development and management companies in the
Baltics, UAB SIRIN Development, to manage all of its buildings in Lithuania and
Latvia, as well as the Business Garden, one of the newest and largest business
and service centres in Vilnius. Complex building maintenance services have
been launched for the new business centre Lvovo 37 managed by the real estate
management company Lords LB Asset Management, and the newest business
centre NOVA owned by the international Finnish company Technopolis. The
agreement with the Vilnius City Municipality has been extended by increasing
the volumes for the maintenance of Vilnius educational objects. Contracts
with existing customers have also been attended, by supplementing the
existing scope with new services and buildings.
In 2021
, the Apex Intelligence service was strengthened and developed.
APEX Intelligence, an independent data analytics centre, ensures efficient
collection and use of building data and predictive maintenance remotely.
Technopolis, Eastnine, Palink, City service engineering, Mano Būstas,
Quadrum, Swedbank, and Eastnine are using this innovative service in their
managed buildings.
In Latvia
, new comprehensive building management maintenance contracts
have been signed with Raita Elektronika shopping centres. Maintenance of
the ventilation and air-conditioning systems has started at Origo&LDz, the
central railway station in Riga, as well as at all Latvian railway facilities. In the
towns of Cesis, Rezekne and Cernikavas, maintenance services have been
introduced at facilities owned by the municipality. The contract with Riga
Technical University has been extended, a new contract for maintenance and
cleaning services has been signed with the Girteka company.
49
contracts with customers
were signed in Lithuania.
33
contracts with new customers
were signed in Lithuania.
14
15
CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
Changes in the areas of commercial, public
and industrial buildings in the Group companies, m
2
20212017 2018
4.2
4.2
4.5
4.0
4.2
2019 2020
15
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CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
In ST. Petersburg, the Group companies
provides territory maintenance and
cleaning services for apartment buildings
and district administrations.
16
2.1.3. Maintenance and cleaning of territories
The Group companies provide all territory maintenance and cleaning services: they carry out
interior and exterior cleaning, maintain private areas and public urban spaces, take care of snow,
sand, leaf removal, grass cutting, special cleaning and supplies of hygiene products. Cleaning and
territory maintenance services are provided in Lithuania, Latvia and St. Petersburg.
In Lithuania, the Group of companies provides cleaning and territory maintenance services in Vilnius,
Kaunas, Klaipėda, Šiauliai, Alytus, Šilutė, Radviliškis and Panevėžys. The company supervises the good
order in both apartment buildings and commercial properties, as well as in urban public spaces in the city
of Vilnius. The company is constantly expanding its range of services and investing in the acquisition of
new equipment.
In Latvia, the Group’s companies take care
of the cleanliness of apartment buildings,
shopping centres and offices.
17
CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
17
2.1.4. Other activities
The Group companies in Lithuania, Poland, Latvia, Czech and St. Petersburg provide other
services in addition to their core activities.
In Lithuania, the Group companies carried out the building
renovation projects in 220 houses, provided maintenance
services to 177 petrol stations, and collected debts for
approximately 2.46 million euro in court and out-of-court in
favour of the customers.
The Latvian branch of the Group company continued
the renovation of apartment buildings according to a
new programme. 18 houses underwent renovation and
organization works.
In Poland, Group companies are engaged in the production
and supply of thermal energy, installation of heat substations,
and retail trade of electricity.
In St. Petersburg, the company provides a utility fee
administration service for 400 apartment buildings.
In the Czech Republic, the Group’s company provides multi-
apartment building maintenance companies with a service
of business management systems – through a special IT
platform it helps local companies to manage and systematize
information about customers, to submit invoices and other
information.
the Group companies
provided maintenance
services to
177
petrol stations.
18
CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
18
2.2. PERFORMANCE IMPROVEMENT
The Group of companies continued to implement LEAN methodology for efficient business process
management. Projects were actively carried out across all regions. LEAN culture has become one of
the Group’s key competitive advantages, and as a result, the companies will continue to implement
proactive improvement processes throughout the Group in 2021.
MANAGEMENT
AND CORPORATE
GOVERNANCE REPORT
In Lithuania, the Group’s companies focused on
organising and updating data on clients and facilities
under their management, adapting business processes
to changes in the companies, engaging employees and
improving the performance process. The Idea Bank
initiative was successfully launched in the 4th quarter
and During the year, the Group’s companies carried out
46 gembas, introduced 22 new processes, modified and
updated 249 processes, and automated deed validation
solutions, saving 594 working hours per month. 38
trainings were delivered, including 12 LEAN and 26
process improvement trainings. 636 business process
consultations were provided to staff. New process
automation solutions have enabled an additional 815
working hours per month.
In Poland, optimisation processes are ongoing in
relation to LEAN, and all senior management and the
vast majority of administrative staff are involved in the
relevant continuous improvement activities.
Processes in Latvia are constantly reviewed and
streamlined. The model of the services provided is being
improved, which results in faster and higher quality
services for customers.
In St. Petersburg, a doubling of work orders led to
an increase in the turnover of paid services. The revenue
collection rate has reached 99.58% and has been steadily
increasing for three consecutive years. A more efficient
debt recovery process has brought the long-standing
debt growth rate under control. For the first time since
the company’s inception, the bad debt reserve on the
balance sheet has been reduced.
The focus on developing the competences of managers
and staff continued, with an increase in the number of
training courses and the number of managers and staff
attending them. A methodological framework for devel-
oping and maintaining the competence of both techni-
cal staff and managers is being developed and is already
being tested.
19
CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
2.3. THE MOST SIGNIFICANT
INVESTMENTS AND EVENTS
19
On 5 January 2021 the Group, through its Lithuanian
subsidiary, sold 100% stake in UAB Valymo projektai
Vilnius 4, which provided cleaning services. Value of the
share sale-purchase agreement is EUR 24 thousand.
Net assets of disposed subsidiary at the date of disposal
amounted to EUR 14 thousand.
On 18 January 2021 the Supreme Court of Lithuania
accepted the cassation appeals of the Vilnius City
Municipality Administration and Prosecutor General’s
Office. The appeals were filed against the decision of
the Court of Appeal of Lithuania that was adopted on
October 8, 2020. The Company has already submitted
responses to the appeals of the cassators within the set
deadlines, stating the reasons for disagreement regarding
the arguments submitted by the cassators in their
cassation appeals.
On 29 January 2021 the Group, through its Lithuanian
subsidiary, sold 100% stake in UAB Valymo projektai
Kaunas, UAB Valymo projektai Vilnius 2, UAB Valymo
projektai Vilnius 3, which provided cleaning services.
Value of the share sale-purchase agreements are EUR
12 thousand, EUR 50 thousand and EUR 37 thousand
respectively. Net assets of disposed subsidiaries at the
date of disposal amounted to EUR 68 thousand.
On 2 February 2021 the Group, through its Spanish
subsidiary, voluntary liquidated two dormant companies
Euronamas Gestion de Fincas Meseta Central, S.L.U. and
Euronamas Gestion de Fincas Levante, S.L.U.
On 11 February 2021 OOO Территория комфорта
company title was changed into OОO ПорталПРО.
Other contact details did not change.
On 26 February 2021, the share capital of UAB
Konarskio turgelis reduced to EUR 2,500.09. Share capital
of the company is divided into 8,621 ordinary shares, the
nominal value of which remained at EUR 0.29.
On 26 February 2021 the Group, through its
Lithuanian subsidiary, sold 100% stake in UAB Valymo
projektai Vilnius 1, which intented to provide cleaning
services. Value of the share sale-purchase agreement is
EUR 30 thousand. Net assets of disposed subsidiaries at
the date of disposal amounted to EUR 15 thousand.
On 5 March 2021, the Group, through its Lithuanian
subsidiary, sold 100% stake in UAB Konarskio turgelis,
which carried out market administration services. Value
of the share sale – purchase agreement is EUR 902
thousand. Net assets of disposed subsidiary at the date
of disposal amounted to EUR 382 thousand.
On 25 March 2021 the Group, through its Lithuanian
subsidiary, acquired 100% stake in UAB Butų ūkio valdos
(acquisition price EUR 200 thousand) which provides
administration of dwelling-houses services.
On 09 April 2021 UAB Pietų projektai company title
was changed into UAB Enter Tech. Other contact details
did not change.
On 12 April 2021 UAB Vilniaus turgus company title
was changed into UAB eBūstas. Other contact details did
not change.
On 30 April 2021 the Group established a new
company PORTALPRO sp. z o.o. (share capital of
company is PLN 5 thousand (EUR 1.1 thousand)).
On 06 May 2021 UAB Energinio efektyvumo paslaugos
title was changed into UAB Apex Intelligence. Other
contact details did not change.
On 06 May 2021 reorganization of the companies UAB
City Service Engineering and UAB Citenga was completed.
After the process of reorganization UAB Citenga was
incorporated into UAB City Service Engineering with all
the assets, rights and obligations. UAB Citenga ceased
operations and was deregistered. After reorganization
UAB City Service Engineering management and other
contact details did not change.
On 17 May 2021 Interlift Mantenimiento y Ascensores,
S.L. title was changed into EUROHUB, S.L. Other contact
details did not change.
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CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
On 01 June 2021 Portalpro Gestion Integral, S.L. title
was changed into URBAN HUB, S.L.U. Other contact
details did not change.
On 02 June 2021 the Group established a new
company PORTALPRO, S.L. (share capital of company is
EUR 3 thousand).
On 17 June 2021 the Group, through its Lithuanian
subsidiary, acquired 100% stake in UAB Pastatų priežiūros
tarnyba (acquisition price EUR 40 thousand) which
provides technical maintenance of heating systems.
On 23 June 2021 UAB Nacionalinis renovacijos fondas
title was changed into UAB Mano bendrabutis. Other
contact details did not change.
On 29 June 2021 SIA Laba energija title was changed
into SIA PortalPRO. Other contact details did not
change.
On 30 June 2021 UAB Miesto butų ūkis title was
changed into UAB Nacionalinis renovacijos fondas.
Other contact details did not change.
On 07 July 2021 reorganization of the companies
Aresi Gestion Residencial, SL, Euronamas Gestion de
fincas Madrid, SL, Euronamas Gestion de Fincas Sur,
S.L., administración urbana y Rural Chorro, SL, Afinem
Administracio de Finques, SL, Elche administración de
Fincas, SL and Euronamas Gestion de fincas Centro,
SL was completed. After the process of reorganization
Aresi Gestion Residencial, SL, Euronamas Gestion de
fincas Madrid, SL, Euronamas Gestion de Fincas Sur,
S.L., administración urbana y Rural Chorro, SL, Afinem
Administracio de Finques, SL, Elche administración de
Fincas, SL were incorporated into Euronamas Gestion de
fincas Centro, SL with all the assets, rights and obligations.
Aresi Gestion Residencial, SL, Euronamas Gestion de
fincas Madrid, SL, Euronamas Gestion de Fincas Sur,
S.L., administración urbana y Rural Chorro, SL, Afinem
Administracio de Finques, SL, Elche administración de
Fincas, SL ceased operations and were deregistered. After
reorganization Euronamas Gestion de fincas Centro, SL
management and other contact details did not change.
On 13 July 2021 the Supervisory Board of the Company
adopted resolution to prolong the authorizations of all
Management Board members. Artūras Gudelis (Chairman
of the Management Board), Tomas Kleiva, Vytautas
Turonis and Dalius Šimaitis will all act as Management
Board members with a new 4 (four) year term as of
26 June 2021. Each member of the Management Board
shall act and represent the Company individually within
the same competence, accountability and responsibility
prescribed to him, as it were before above-mentioned
decision of the Supervisory Board.
On 15 July 2021 the Group, through its Lithuanian
subsidiary, established a new company UAB Mano Būstas
Ukmergė (share capital of company is EUR 2.5 thousand).
On August 31, 2021 the Company signed an
ammendment of financing agreement with AB SEB
bankas, which allows the Company to borrow up to EUR
35.2 million. The loan shall be used to finance expansion
of City Service group through acquisitions and other
investments, to finance working capital and to refinance
existing loans.
On 03 September 2021 the Group, through its
Latvian subsidiary, acquired 100% stake in SIA NIRA
Fonds apsaimniekošana-Salnas 21, SIA NIRA Fonds
apsaimniekošana 3, SIA NIRA Fonds apsaimniekošana
2 ir SIA NIRA Fonds apsaimniekošana (acquisition price
EUR 297 thousand) which provides management and
administration services of residential facilities.
On 14 September 2021 UAB eBūstas title was
changed into BonoDomo, UAB. Other contact details
did not change.
On 4 October 2021 the Group, through its Lithuanian
subsidiary, sold 34% stake in UAB Marijampolės butų
ūkis, which carried out administration of dwelling-houses
services. Value of the share sale – purchase agreement
is EUR 400 thousand. Net assets of disposed subsidiary
at the date of disposal amounted to EUR 216 thousand.
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CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
21
On 14 October 2021 the Extraordinary General
Meeting of Shareholders of the Company has been held.
The shareholders extended the agreement for the audit
services with Ernst & Young Baltic AS, for a new period
of 5 (five) years to perform audit of the Company and
the Companies set of consolidated financial statements
for the years 2021-2025 and shall evaluate Company’s
consolidated annual reports for the years 2021-2025.
Shareholders also have set a renumeration for the audit.
On 21 October 2021 the Supreme Court of Lithuania
issued a ruling in a case based on cassation appeals of the
Vilnius City Municipality Administration and the General
Prosecutor’s Office. The Supreme Court of Lithuania
annulled the decision of the Court of Appeal of Lithuania
that was issued on 8 October 2020 and referred the case
back to the Court of Appeal of Lithuania.
On November 30, 2021, the Company through
its Spanish subsidiaries has signed business transfer
agreement on sale of apartment building administration
business and partial sale of insurance brokerage business
in Spain. The buyer of sold businesses was a Spanish
company, acting in apartment building administration and
insurance brokerage sectors. The Company management
is looking forward to develop business in other forms,
namely, PortalPRO, a transparent platform where
customers can order various services. The operation
of the platform is based on the sharing economy. On
the platform, service providers will be able to offer their
services related to housing and its maintenance and
repair. As a result of developing PortalPRO business and
by reason of apartment building administration business
is not complying the profitability criterias requested by
the Company management, Company determined to
withdraw from the apartment building administration
business in Spain.
On 16 December 2021 the Group, through its Latvian
subsidiary, acquired 100% stake in SIA Livonijas Nami
(acquisition price EUR 470 thousand) which provides
management and administration services of residential
facilities.
On 23 December 2021 the Group, through its
Lithuanian subsidiary, acquired 100% stake in STARLIT
s.r.o. (acquisition price CZK 54.625 thousand (EUR 2.165
thousand)) which produces and develops of IT products
for apartment building managers.
On 25 December 2021 the Group, through its
Latvian subsidiary, acquired 100% stake in SIA BILANCE
(acquisition price EUR 125 thousand) which provides
management and administration services of residential
facilities.
On 27 December 2021 the Company received
notifications, prepared pursuant to the Article 69 of
the Act of July 29th, 2005 on public offering and the
conditions for introducing financial instruments to the
organized trading system and on public companies
_Journal of Laws 2005 No. 184 item 1539, regarding
changes in the total number of votes at the Company’s
General Meeting due to acquisition by UAB Lag&d from
UAB ICOR of 26,813,293 shares in the Company, giving
the right to exercise 26,813,293 of votes constituting
84,83% of the total number of votes at the City Service
SE’s General Meeting.
Group continues to observe requirements relating to
the COVID-19 pandemic, a large number of employees
continue to work remotely. In preparing the financial
statements, the estimates and assumptions of the Group’s
management regarding the impact of COVID-19 for the
period ended 31 December 2021 have not changed
compared to the estimates presented in the previous
financial statements. Group’s management, assessed the
potential impact of key COVID-19 factors on the Group’s
strategic goals, cash flows, financial results and assessed
that this matter will not affect the s the Group companies
remained less affectedGroup’s ability to continue as going
concern a by the current economic situation.
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CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
LATEST EVENTS
On 24 January 2022 UAB City Service Digital title
was changed into UAB InHouse Digital. Other contact
details did not change.
On 17 February 2022 Court of Appeal of Lithuania
announced its decision in a case where Vilnius City
municipality administration and General Prosecutor’s
office initially claimed the Company regarding recovery
of EUR 20,6 million losses. The Court of Appeal of
Lithuania adjudged EUR 4,6 million from the Company
to Vilnius City municipality. The Court also stated that
Vilnius City municipality is also liable for the part of the
losses. The Company will get acquainted in detail with
the decision of the appellate court and its reasoning and
will decide on the possibility to file a cassation appeal
after evaluating them.
Notwithstanding the fact that the Company may still
file a cassation appeal, the decision of the Court of
Appeal came into force on the date of its adoption.
As of 31 December 2021 liability was accounted in
other current liabilities in Consolidated statement of
financial position. On 22 March 2022, the Company
and Vilnius City Municipality Administration signed an
agreement regarding the payment of the amount of
EUR 4,6 million according to the instalment plan up to
31 December 2023.
On 24 February 2022 the Company received
notifications, prepared pursuant to the Article 69 of the
Act of July 29th, 2005 on public offering and the conditions
for introducing financial instruments to the organized
trading system and on public companies Journal of Laws
2005 No. 184 item 1539, regarding changes in the total
number of votes at the Company’s General Meeting due
to reorganization of UAB Lag&d from UAB Lag&d to UAB
Unit Invest of 26,813,293 shares in the Company, giving
the right to exercise 26,813,293 of votes constituting
84,83% of the total number of votes at the City Service
SE’s General Meeting since 09 February 2022 when the
reorganization of the UAB Lag&d was completed.
On 24 February 2022, the Russian Federation has
launched an invasion of the Republic of Ukraine. Shortly
after the invasion, the EU and rest of the world, including
global bodies, imposed wide-ranging set of restrictive
measures against Russia, which is updated and expanded
on a regular basis. As disclosed in Note 3 , this non-
adjusting subsequent event was not reflected in the
significant estimates and assumptions as at 31 December
2021. Until the date of authorisation of these financial
statements, the restrictive measures imposed had no
significant impact on the Company’s performance, no
operations had been suspended and no significant direct
losses related to the restrictive measures had been
incurred at the date of the financial statements
On 1 March 2022 the Group, through its Lithuanian
subsidiary, acquired 99,99% stake in Improxy -
Technologias de informacao LDA (acquisition price EUR
3 millions). 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.
On 2 March 2022 the Group, through its Lithuanian
subsidiary, acquired 90% stake in Homefile S.R.L
(acquisition price EUR 620 thousand) and 90% stake
in Homefile Support S.R.L (acquisition price EUR 286
thousand). At the moment of issuance of these financial
statements Group‘s management was not able to obtain
reliable financial information of the newly acquired
companies and evaluate fair value of net assets as at the
acquisition.
On 3 March 2022 the Group, through its Lithuanian
subsidiary, established a new company InHouse Finance
Kft (share capital HUF 3 millions (EUR 8 thousand)).
On 4 March 2022 the Group, through its Lithuanian
subsidiary, acquired 100% stake in UAB Getfiks (acquisition
price EUR 213 thousand). 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.
On 11 March 2022 the Group, through its Spanish
subsidiary, voluntary liquidated three dormant companies
Inmonamas S.L, Urban Hub S.L.U, Eurohub S.LU.
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CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
On 18 March 2022 the Group, through its
Lithuanian subsidiary, acquired 100% stake in INTEGRI
s.r.o (acquisition price CZK 34,7 million (EUR 1.399
thousand)) which is based on Czech Republic. INTEGRI
s.r.o are engaged in the production and development of IT
products for apartment building managers, administrators,
communities, etc. 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.
On 22 March 2022, City Service SE hereinafter - the
Company and Vilnius City Municipality Administration
hereinafter - the Municipality signed an agreement
regarding the payment of the amount of EUR 4,646,753
awarded from the Company in favor of the Municipality
by the decision of the Lithuanian Court of Appeal of 17
February 2022. The specified amount will be paid by 31
December 2023, according to the instalment plan, which
was agreed with the Municipality.
On 05 April 2022 the Group, through its Lithuanian
subsidiary, acquired 100% stake in Invert KFT
(acquisition price EUR 370 thousand) which is based
on Hungary. Invert KFT are engaged in the production
and development of IT products for apartment building
managers, administrators, communities, etc. 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
On 29 April 2022 City Service SE received decision
from the bank to change existing financing contract
conditions regarding the breach of keeping minimum
capital requirements. Currently EUR 34 million of
maximum borrowing facility will be decreased to the
current utilization level of EUR 28 million. Moreover,
payments of EUR 5,100 thousand will be made during
financial year 2022 and additional payments of EUR
5,400 thousand will be made during the financial period
2023 - 2025. Remaining obligation to settle at the end of
the contract at 1 September, 2025 will be EUR 17,500
thousand. Moreover, subsidiaries of the Group will be
obliged to dispose companies operating in digital business
area to City Service SE direct shareholder UAB Unit
Invest which were acquired during the period including
December 2021 – April 2022.
The full impact of the COVID-19 pandemic on economic
activity is still unknown and the situation is still developing.
The Company’s management believes that COVID-19
will not have material impact on the business operations
after the reporting date. However, this assumption is
based on the information available at the time of signing
these financial statements and the impact of future events
on the Company’s ability to continue as a going concern
may differ from the management’s assessment.
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CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
24
The risks remain similar to last year‘s: inflation, customers’
ability to pay, competition-influ- enced stricter demands
from commercial and residential clients, supply of qualified
personnel in the market.
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, and to impose sanctions for failure to comply
with the set requirements.
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 for
additional obligations of 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
build- ing administration and maintenance.
There were no other material changes in the legal
regulation of the area of administration and maintenance
of apartment buildings in 2021, and neither were there any
decisions providing for significant additional obligations for
service providers; supervising institutions did not identify
any major 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 cus- tomers
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 recognised at the
date of the statement of financial position.
INTEREST RATE RISK
The major part of the Group’s and the Company’s
borrowings (loans and financial lease obligations) are
subject to variable rates, related to EUR LIBOR, EURIBOR,
EONIA and WIBOR, which create an interest rate risk
(Notes 17 and 19). There are no financial instruments
designated in the financial statements to manage the
exposure to the interest rate risk outstanding as of 31
December 2021 and 2020.
PANDEMIC THREAT OF COVID-19 VIRUS
In preparing these financial statements, the estimates
and assumptions of the Group’s management regarding
the impact of COVID-19 for the period ended 31
December 2021 have not changed compared to the
estimates presented in the interim financial statements of
the fourth quarter. The Group’s management, assessed
the potential impact of key COVID-19 factors on the
Groups’s strategic goals, cash flows, financial results and
assessed that this matter will not affect the Group’s
ability to continue as going concern as the Group‘s core
bussiness area remains less affected and it should not
have a significant impact on Group‘s activities.
2.4. KEY RISK ACTIVITY TYPES AND UNCERTAINTIES
In 2021 the market was stable, prices and purchasing power did not decline, in comparison with
2020. Due to heavy competition in facility management market the Group had to concentrate
on further efficiency of activities. Building administration tariff have not changed significant in a
course of the year. Improving customer climate and active sales led to rapid increase in additional
services sales volume.
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CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
25
2.5. THE MAIN FINANCIAL RATIOS CONCERNING
THE FINANCIAL YEAR
KEY FINANCIAL INDICATORS* 2017
2018 2019 2020 2021
Revenue from contracts with customers
160,964 162,316 178,020 154,507 135,475
Revenue from contracts with customers in
Lithuania market
76,802 85,341 95,478 83,837 74,878
Revenue from contracts with customers in foreign markets
(Poland, other Baltic States, CIS and Spain)
84,162 76,975 82,542 70,670 60,597
Area under management in Lithuania
(thousand sq. m)
13,896 14,074 14,420 13,634 13,658
Area under management in foreign markets
(Poland, other Baltic States, St. Petersburg and Spain)
21,896 21,748 20,811 13,681 6,867
GROSS PROFIT
EBITDA
12,318 10,428 12,562
**
13,201 (7.348)
EBITDA margin
7.65% 6.42% 7.06% 8.54% (5.42%)
Operating profit (loss) (EBIT)
7,929 5,437 3,560 6,471 (13.455)
EBIT margin
4.93% 3.35% 2.00% 4.19% (9.93%)
Earnings (loss) before tax (EBT)
7,943 4,578 2,467 7,390 (13,316)
EBT margin
4.93% 2.82% 1.39% 4.78% (9.83%)
Net profit (loss)
6,151 3,841 1,455 5,114 (14.978)
Net profit (loss) in foreign markets (Poland, Latvia,
Russia, Spain and Czech Republic)
49 309 (613) (4,817) (13.400)
Net profit (loss) margin
3.82% 2.37% 0.82% 3.31% (11.06%)
Profit (loss) per share (EUR)
0.19 0.12 0.05 0.16 (0.47)
Return on equity (ROE)
11% 8% 3% 11% (75%)
Return on assets (ROA)
5% 3% 1% 4% (16%)
* Key financial data and ratios in
2019, 2020 and 2021 is presented
including subsidiaries that were
disposed in 2020 and 2021 (further
disclosed in Note 9 discontinued
operations). All amounts in key
financial indicators are in EUR
thousand unless otherwise stated.
** There was a positive effect to
EBITDA result for the 2019 from
adoption of IFRS 16 which resulted
in EBITDA increase by EUR 2,745
thousand comparing with the result
for the 2018.
EBITDA = Net profit - Income Tax - Depreciation and Amortization -
finance income (expenses)
EBITDA margin = EBITDA / Revenue from contracts with customers * 100 %
Operating profit (loss) (EBIT) = Net profit - Income Tax - finance income (expenses)
EBIT margin = EBIT / Revenue from contracts with customers * 100 %
Earnings (loss) before tax (EBT) = Net profit - Income Tax
EBT margin = EBT / Revenue from contracts with customers * 100 %
Net profit (loss) = Revenue from contracts with customers - COS - OPEX -
Other activity - Financial activity - Income Tax
= 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%
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CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
Area under
management,
thousand m2
NET profit (loss),
thousand Eur.
NET profit (loss),
margin %
Sales,
thousand Eur.
2017
2017
2017
2017
2018
2018
2018
2018
21.896
6.151
160.964
162.316
178.020
154.507
135.475
13.896
14.074 14.420
13.634
13.658
76.802
85.341
95.478
83.837
74.878
21.748
3.841
Area under management in foreign markets
(Poland, Baltic States, St. Petersburg and Spain)
Area under management in Lithuania
Sales in foreign markets
(Poland, Baltic States, St. Petersburg and Spain)
Sales in Lithuania market
20.811
1.455
13.681
6.867
5.114
-14.978
0.82
3.31
3.82
2.37
-11.06
2019
2019
2019
2019
2020 2021
2020
2020 2021
2020
20212021
HIGHLIGHTS
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CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 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 2021. 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 2021 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
book-entry restarted 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 a view to paying 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 on
conduct of a special audit on matters regarding the
management or financial situation of the Company,
if this is demanded by shareholders whose shares
rep-resent at least one-tenth of the share capital of
the Company;
● other property and non-property rights set out in
the Commercial Code.
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CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
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2.7. THE SHAREHOLDERS OF THE COMPANY
On 31 December 2021 the total number of shareholders of the Company was 60*.
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 2021.
Company’s shares distribution among shareholders who have more than 5 % shares of the Company as of 31 Decem-
ber 2021 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 trhough a nominee
accounts (according to amendments that entered ino 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).
** On 09 February 2022 reorganization of the UAB Lag&d was completed. Due to reorganization of UAB Lag&d changed
the total number of votes at the Company’s General Meeting from UAB Lag&d to UAB Unit Invest of 26,813,293 shares in
the Company, giving the right to exercise 26,813,293 of votes constituting 84,83% of the total number of votes at the City
Service SE’s General Meeting
NUMBER OF
SHARES HELD
OWNED PERCENTAGE
OF THE SHARE
CAPITAL AND VOTES, %
UAB Lag&d, legal entity code
302433366, address:
Ozo str. 12A, 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 Lag&d
84.83%
15.17%
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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 determine the methods used by the Company to
calculate the depreciation of tangible assets and the
amortization of intangible assets;
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CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
● 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 which information will be considered
the Company’s commercial (industrial) secret and
confiinformation;
● 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 determine the methods used by the Company to
calculate the depreciation of tangible assets and the
amortization of intangible assets;
● 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.).
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
● 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 Su-
pervisory 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 date of changes in
the assets;
● quarterly investment plans.
30
The Supervisory Board shall analyze and evaluate
documents submitted by the Management Board of the
company on:
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NAME AND SURNAME POSITION START OF TERM END OF TERM
Andrius Janukonis Chairman of the Supervisory Board June 19, 2019 June 19, 2023
Gintautas Jaugielavičius Member of the Supervisory Board June 19, 2019 June 19, 2023
As of 31 December 2021, the Supervisory Board of
the Company comprises of the following persons:
Andrius Janukonis (born in 1971) is the Chairman of
the Supervisory Board of City Service SE (since 2009 un-
til 2015 the Chairman of the Board). He holds a Master’s
degree in Law. He is a member of the board of UAB Unit
Invest (since 2021).
Gintautas Jaugielavičius (born in 1971) is a Member
of the Supervisory Board of City Service SE (since 2005
until 2015 a Member of the Board). He holds a Bachelor’s
degree in Economics. At present, he works as a consult-
ant for UAB Unit Invest and is a member of the board of
UAB Unit Invest (since 2021).
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The Management Board of the Company comprises of four (4) 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
competence of other Management bodies. The individual members of the Management Board have competence, be
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.
2.9.2. Company’s Management Board
As of 31 December 2021 and as of the date of the
submission of this report, the Management Board
of the Company comprises of the following persons:
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, 2025
Tomas Kleiva Member of the Management Board June 26, 2021 June 26, 2025
Vytautas Turonis Member of the Management Board June 26, 2021 June 26, 2025
Dalius Šimaitis Member of the Management Board June 26, 2021 June 26, 2025
They do not own any shares of the Company.
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33
Tomas Kleiva (born in 1979) is a Member of the Manage-
ment Board of City Service SE (since 2017). Tomas Kleiva was
acting CEO until new management structure of City Service SE
was approved
(23 February 2017 – 26 June 2017).
Prior to that, Tomas Kleiva was the Financial Manager of
City Service SE (2016 - 2017) and Financial Manager and
Executive Manager of the Group‘s subsidiaries operating in
St. Petersburg (2009 – 2016). He started to work in the
Group as a Project Manager (2006 – 2009). Tomas Kleiva
has a Master‘s degree in Environmental Engineering.
Tomas Kleiva is responsible and accountable for any and
all financial matters and operations within the Group in all
the jurisdictions and carries functions of Group’s CFO, ex-
cept for Lithuania, Latvia and Estonia. Tomas Kleiva is also
responsible for the organization and supervision of Group
activities in Russia.
Artūras Gudelis (born in 1977) is a Chairman of the
Management Board of City Service SE (since 2017). Artūras
Gudelis was a Member of the Supervisory Board of City
Service SE (2015 – 2017). He holds Bachelor‘s degree in
Economics and Master‘s degree in Business Management.
Artūras Gudelis is responsible for carrying the formal func-
tions of the chairman of the Management Board as well as
for signing of the consolidated financial statements, rep-
resenting the Company in the stock exchanges, securities
depositories and in relations with the investors, as well as
in all other general matters related to the Company.
Vytautas Turonis (born in 1972) is a Member of the
Management Board of City Service SE (since 2017). Vy-
tautas Turonis works as the General Manager at UAB
Mano Būstas. He holds a Bachelor‘s degree in Interna-
tional Business. Previously he worked as the Marketing
Manager of UAB Specialus Autotransportas (2003 –
2004). He started to work in the Company as the Market
Development Department Manager (2004 – 2008).
Vytautas Turonis is responsible and accountable for the
organization and supervision of Group activities (includ-
ing the financial matters) in Lithuania, Latvia and Estonia.
Dalius Šimaitis (born in 1977) is a Member of the
Management Board of City Service SE (since 2019). Pre-
viously he worked as the maintenance department di-
rector at UAB Mano būstas (2016 - 2019). Mr. Šimaitis
works in City Service SE since year 2016. He holds a
Bachelor‘s degree in Thermal Engineering and a Master‘s
degree in Energy Engineering.
Dalius Šimaitis is responsible and accountable for Group
activities in Poland and Spain, also for technical opera-
tions and supply chain management, standardization pol-
icy within the Group in all jurisdictions.
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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 2021 by the 31st of December 2021 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
amended or terminated following a change of control of the Company during the reporting period.
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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 analyse processing of financial
information, including to observe 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 analyse efficiency of risk
management and internal control;
● monitor and analyse the process of auditing of
annual accounts and consolidated accounts;
● monitor and analyse 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 organisation 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 problem issues
arisen during the audit especially in the event of the
establishing 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.
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36
The principal objective of the Audit Committee is to
generate higher added value to the Company. With a
view to achieving the set objective, the Audit Commit-
tee operates in accordance with the Regulations ap-
proved by the General Meeting of Shareholders 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 War-
saw 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 – financial
controller of the Company.
Audit Committee members do not own shares of
the Company.
Members of the audit committee of the company:
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37
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 2021 (hereinafter also referred to as the “WSE
Corporate Governance Code”).
Especially, 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 com-
ply with the following rules of the WSE Corporate Governance Code:
1.3.1. environmental factors, including measures and risks
relating to climate change and sustainable development. The
Company does not have a formalized business strategy that
takes into account ESG topics, including measures and risks
related to climate change and sustainable development issues.
However, it does not rule out applying thereof in the future;
1.3.2.
social and employee factors, including among others ac-
tions taken and planned to ensure equal treatment of women
and men, decent working conditions, respect for employees’
rights, dialogue with local communities, customer relations.
The Company does not have a formalized business strategy
that takes into account the ESG subject matter, taking into ac
-
count the issues described in rule 1.3.2. However, it does not
rule out applying thereof in the future
1.4. To ensure quality communications with stakeholders, as
a part of the business strategy, companies publish on their
website information concerning the framework of the strat-
egy, measurable goals, including in particular long-term goals,
planned activities and their status, defined by measures, both
financial and non-financial. ESG information concerning the
strategy should among others. The Company does not have
a formalized business strategy that takes into account the
ESG subject matter in the described scope. Currently, the
Management Board of the Company presents information
on the assumptions of its business strategy in the submitted
periodic reports.
1.4.1. explain how the decision-making processes of the
company and its group members integrate climate change,
including the resulting risks. The Company does not have a
formalized business strategy that takes into account the ESG
subject matter, taking into account the issues described in
rule 1.4.1.
1.4.2. present the equal pay index for employees, defined as
the percentage difference between the average monthly pay
(including bonuses, awards and other benefits) of women and
men in the last year, and present information about actions
taken to eliminate any pay gaps, including a presentation of
related risks and the time horizon of the equality target. The
Company has not formally adopted a strategy that would
contain information in the ESG area described in rule 1.4. -
such statistics are not kept. However, the Company ensures
equal remuneration paid to its employees through equal rates
of basic remuneration for the same / similar positions and in
the same departments.
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 organisations,
trade unions, etc. If the company or its group pay 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, expertise,
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 minor
-
ity 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 ef
-
fort to ensure diversity in bodies in all areas, also in terms of
gender. The selection criteria for performing functions in the
Company’s bodies are the competences, experience, educa
-
tion as well as time and organizational capacity of the candi-
date 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 diversity
policy referred to in principle 2.1.As explained in rule 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 se-
lection criteria are the competences of the members of the
Management Board and the Supervisory Board. The Compa-
ny 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.
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38
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 and
no separate units responsible for the scope of tasks described
in principle 3.5.
3.6. The head of internal audit reports organisationally to the
president of the management board and functionally to the
chair of the audit committee or the chair of the supervisory
board if the supervisory board performs the functions of
the audit committee. The Company has no separate and no
separate units responsible for the scope of tasks described in
principle 3.6.
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 a 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 Esto-
nian 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
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CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 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 2021 was granted without derogation. The Group‘s
management remuneration amounted to EUR 1,197 thousand in 2021 (EUR 1,211 thousand in 2020). The fixed remu-
neration part was 76% and variable remuneration – 24% (89% and 11% respectively in 2020).
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40
3.1. OVERVIEW
The City Service Group, which operates in Lithuania, Latvia, Spain, Poland, Czech Republic and St.
Petersburg (Russia), has contributed to various social projects and initiatives that have helped to
improve the lives of both residents and employees. Each Group company has applied appropriate
sustainable business decisions based on the nature of its activities. This is an integral part of the
Group’s mission, which focuses on the well-being of the environment, customers and employees.
SOCIAL RESPONSIBILITY REPORT
Although the Group is considered one of the market lead-
ers, it continues to strive to improve the quality of its ser-
vices and to set an example for its competitors. Without
exception, the aim is to build a trustworthy relationship
with our customers, to promote customer satisfaction, to
improve the quality of our customers’ working and living
environment, and to provide them with comprehensive
information. Customer experiences and evaluations are
regularly published in the Group’s internal communication
channels and in the local media, and targeted strategies are
developed to analyse customer needs and set objectives.
In the area of community relations, the Group makes
every effort to strengthen cooperation and partnerships
with various communities, educational institutions, law en-
forcement and non-governmental agencies. The initiatives
improve the daily life of apartment dwellers, not only sup-
port but also encourage neighbourhoods, a responsible at-
titude towards the common property and build traditions.
In the environmental field, all the Group’s companies are
implementing various solutions to help conserve natural
resources and reduce CO2 emissions. In this way, the
Group’s companies encourage their customers and em-
ployees to keep track of their waste by sorting it, con-
tributing to projects aimed at reducing environmental
pollution and participating in public awareness initiatives.
City Service group has one of the leading market posi
-
tions, therefore it is important for us to be aware of the
There is no separate environmental and so-
cial policy, but each employee is thoroughly
introduced and is presented with key and
essential legislation on national and inter-
national legislation on environment protec-
tion and labor rights. The Company honors
the UN Convention for the Protection of
Human Rights and Fundamental Freedoms
and contributes to ensuring the objectives
of the declaration through complying with
human rights and fundamental freedoms in
all of its activities.
risks involved in breaching honest and ethical business
practices. The Group has established internal procedures
and policies, The Group does not tolerate any conflicts
of interest, corruption, including bribery, and maintains
honest business and transparent cooperation with public
authorities and other stakeholders. The Group ensures
the transparency of its procurement and requires both
potential and existing suppliers to operate in a transpar-
ent and fair manner. In providing its services, the Group
does not engage in any transactions that solicit bribes or
offer non-transparency. We make every effort to ensure
that our entities’ management quality, organizational cul-
ture and internal communications are underpinned by ef-
fective internal cooperation and external communication.
41
CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
3.2. MARKET
In 2021, the Group’s companies paid considerable attention to the strategy regarding customer
growth rates, continuous provision of services during the pandemic period and improvement of
the quality of services and the image of the Group as a whole.
CUSTOMER RELATIONS
Last year, the Group’s companies continued to make eve-
ry effort to meet customer expectations. New processes
were developed and existing processes were improved,
resulting in a higher level of professionalism, which al-
lowed for better customer service and increased trust
in the Group’s services. Customer feedback (periodic
questions on recommendation, service evaluations on
a ten-point scale, monitoring of companie’s weaknesses
and strengths) tracked in all countries has helped gener-
ate key performance indicatorsand the successful use of
LEAN management processes has helped generate cus-
tomer experience.
In Lithuania, Latvia, Spain and St. Petersburg, contact
with customers was maintained through different chan-
nels that were most acceptable to them: by telephone,
e-mail and newsletters, news boards, self-service portals,
social networks, individual meetings, and also a special
application in Lithuania. In 2021, St. Petersburg-based
Group company DomSPB maintained the contact with
customers using 24/7 customer service center and a self-
service website.
The Group has been on the path of sustainability for
many years and encourages its customers to follow it. It
deploys and improves digital solutions that save natural
resources and reduce pollution. It was the first on the
market in its sector to offer customers the option of
moving away from paper bills and using digital alterna-
tives. The Group is delighted that today, together with
its customers, it has brought together a community of
120,000 people who have abandoned paper bills and are
now dealing with the maintenance of their apartment
buildings in a smart way – through the self-service plat-
form eBŪSTAS.
For business customers, the Group offered to use eCSE,
a commercial building management platform on a phone
or any smart device. Thanks to it, together with the
partners, the amount of paper documents, the time
spent driving around objects and, of course, the associ-
ated transport pollution were significantly reduced. With
eCSE, many building maintenance tasks can be carried
out sustainably, quickly and reliably – remotely.
41
42
CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
42
3.3. RELATIONS WITH EMPLOYEES
As every year, the Group’s companies were interested in the personal growth of employees
and promoted cooperation between them. In turn, the employees offered various solutions for
increasing the Group’s operational efficiency and applied them in practice and participated in
various training and seminars. Although the pandemic continued to affect the life of the country,
the Group’s employees were actively involved in strategic plans and general discussions, which
became an integral part of the activities.
Relationships with employees are of the utmost impor-
tance to City Service, which is why the Group con-
stantly encourages employee engagement and open
discussions. There is a strong focus on employee mo-
tivation and participation in the various processes, and
health and safety issues are not forgotten. Being toler-
ant of age, gender, race, religion, origin and beliefs, the
Group is focused on ensuring equal opportunities and
rights for all employees.
A closed Facebook group allows employees to interact
and share their achievements and relevant information.
Every month, the most important news of the Group
is published in a unique publication BŪSTINĖ. It’s not
just about sharing employees’ achievements, but also
the hobbies that inspire others.
In the event of a pandemic situation in the country, the
Group offered employees the opportunity to contin-
ue working remotely, and made every effort to do so.
Technical staff have been provided with all necessary
protective equipment: face masks, respirators, overalls,
gloves etc.
In case of anxiety about life changes during a pandemic
situation, staff could contact the free helpline and, in
the case of complicated COVID-19 illnesses, the sup-
plementary benefits. It is also important to note that
all staff continued to be covered by accident insurance.
Periodic live video conferences of the managers were
also continued, during which the participating managers
told about the Group’s changes and answered anony-
mous questions asked by the employees.
In some enterprises, the collective agreement has been
extended, and in others a new collective agreement has
been signed, which provides for additional leave for all
employees depending on the length of service, and for
trade union members – one additional day of leave, ad-
ditional payments in the case of anniversaries, marriage,
birth of children, severance pay of 20% or more in the
case of dismissal.
The Company has not implemented a diver-
sity policy, which applies to all group com-
panies yet, as we operate in many different
legislative countries. The Company follows
diversity principles in everyday activities to
ensure that there is sufficient diversity in the
governing bodies among the Group entities
to have different opinions and views in the
management positions and freedom to in-
troduce new ideas. This approach will sup-
port effective management’s decisions, the
leadership and supervision of the exercise
by the board and management teams and,
therefore, the results of the companies. Di-
versity increased transparency will contribute
significantly to the promotion of equal treat-
ment and the fight against discrimination in
the relevant decision-making bodies of other
companies. Religion or belief, disability, age
or sexual orientation discrimination as well
as discrimination based on sex, racial and
ethnic origin in the employment and occupa-
tion is not acceptable in the Group.
In all countries where the Group operates, annual in-
terviews are conducted with staff members to set goals
and discuss the arising issues.
In 2021 in Lithuania, the City Service group has become
one of the nominees for the Top Employer 2021 com-
petition published by CVonline. This is the third year in
a row that the Group has received this award.
43
CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
43
TRAINING AND SEMINARS
In 2021, a wide range of development opportunities con-
tinued to be created for employees. Everyone could ac-
cess internal and external training and foreign language
courses on the eCITY e-learning platform.
The electronic training platform for employees distinguishes
compulsory courses, which all employees of the Group are
required to take: Customer service, Remote Work, LEAN
introduction, Document management system, Work and
fire safety for newcomers, Company procedures. Staff are
tested on the clarity and understanding of the information
provided through specific knowledge tests.
Last year, the majority of the Group’s employees had
to work remotely, therefore the topics of change, time,
stress management, and effective communication were
chosen for various trainings and seminars. Language
classes and specialized training for employees of different
departments have been organized.
A Newcomer’s Day was organised for the new employ-
ees who joined the Group, during which they were intro-
duced to the Group’s vision, mission, values, activities and
LEAN methodology. They also received specific training
in information systems, procurement and staff safety.
44
CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
44
3.4. SOCIAL INITIATIVES FOR COMMUNITIES
In 2021, ‘Kalba kaimynai’ remained one of the most important and largest social initiatives in
Lithuania. The information, which is regularly published on online portals and Facebook pages,
covers seven Lithuanian cities. Five of them have 70% of their content in news from their respective
city and 30% in news from the other city. Group companies. In eight years this project has grown
and today it unites more than 111 thousand followers on Facebook.
Over the year, the overall engagement percentage of
Neighbours Speak readers increased to 3.5%. These re-
sults show very good prospects in the future as well, as
the average reader engagement in the Lithuanian market
is a little over 2%. Therefore, it is a pleasure that the
‘Kalba kaimynai’ maintained a higher average engagement
rate than the whole of Lithuania throughout the year.
As usual, City Service continued to cooperate success-
fully with Ataka Football Club. Thanks to her, the club
was able to continue football training for children from
disadvantaged families.
Last year, the City Service Group continued to develop
the project Seniors’ Hive and the initiative Let’s meet,
dear seniors. The group provided financial support for
initiatives for computer literacy training for older people
and various activities that brighten up their daily lives.
A separate video lecture course was also prepared for
seniors, teaching to use the eBŪSTAS mobile application.
PortalPRO, the platform for job offers for handymen, ac-
tively encouraged older people to re-enter the labour
market. Since May last year, the platform, which works
with the ‘Susitikim, mieli senjorai‘ project, has brought
more than 50 elderly people back into the ranks of mas-
ters. They earned on average about 600 euro in addi-
tional income per month.
In August, PortalPRO participated in the conference
‘Increasing Employment Opportunities for the Elderly’,
and in October together with the project ‘Susitikim,
mieli senjorai‘ celebrated the Day of Seniors. It is esti-
mated that the handymen working transparently on the
platform paid over 1 million taxes to the state last year.
PortalPRO has also been evaluated as a top 2021 Lithu-
anian company – it is just 7% of Lithuanian companies
that meet strict criteria: from the size of the reward and
profit to transparent and orderly documentation.
Like every year, on the occasion of the European Neigh-
bour Day, Mano BŪSTAS invited to celebrate and
strengthen the bond of community by watching the
event online. Mindaugas Rainys, the host of the event,
sent his greetings, Mindaugas Genys, the director of Mano
BŪSTAS, wished good relations with the neighbours, and
one of the most famous music bands of the recent years,
Sisters on Wire, performed their well-known songs. In
terms of interest, involvement and accessibility, this cam-
paign has become the most successful initiative imple-
mented by the Group to date.
The festive contest ‘Elections to the Christmas Holiday
HOUSE’, organised by Mano BŪSTAS, also helped to
strengthen the community. During the event, custom-
ers were encouraged to take photos of their home’s fes-
tively decorated windows or balconies and connect to
the smart housing management platform eBŪSTAS. The
photos with the most likes won Akropolis gift vouchers.
This initiative has encouraged people to keep their hands
on the pandemic and enjoy the little things that are just
around the corner.
paid over 1 million taxes
to the state last year
thousand followers
on Facebook
1m 111k
45
CITY SERVICE SE CONSOLIDATED ANNUAL REPORT 2021 Management report
3.5. ENVIRONMENTAL ISSUES / ENERGY SAVING
The City Service Group has continued its sustainability approach in the past year. To set a model
for others and to make the environment cleaner, the company continued to eliminate the use
of plastic water bottles and single-use water products in its offices, collected and recycled coffee
grounds, and collected and recycled used galvanic cells. The Group has also continued to train its
staff to use digital rather than paper-based internal documentation. It is also pleasing that the
Group’s head office is located in an energy-efficient office building.
In 2021, great attention was paid to the renovation of
old and polluting multi-apartment buildings. Thanks to
the involvement of residents and innovative solutions,
we managed to medernise almost 500 multi-apartment
buildings. The renovation projects have made hundreds
of grey blocks of flats more beautiful, cosy and comfort-
able, and reduced their CO2 emissions thanks to the
energy-saving solutions installed.
In non-renovated buildings, the Group actively encour-
aged and assisted residents to implement other energy-
saving solutions, such as upgrading or modernising heat
points, insulating energy inefficient building structures,
replacing old common use windows and doors. Staff also
contributed to educating customers on simple ways to
save heat in both apartments and common areas.
4545
USING ARTIFICIAL INTELLIGENCE
City Service’s practice shows that smart building manage-
ment is a key factor in CO2 emissions. Even a slight mal-
function of the automation can lead to significant energy
waste, regardless of the building’s design efficiency. Arti-
ficial intelligence systems help ensure sustainable energy
use in commercial buildings.
The APEX Intelligence platform, developed by experts
in the field and continuously improved, has been provid-
ing buildings with future sustainability requirements for
two years. APEX Intelligence is the targeted collection,
structuring, analysis and remote management of a build-
ing’s data stream using time-tested algorithms: data from
the smallest sensors to the largest data streams. Knowing
exactly what system performance needs to be achieved
in the buildings under maintenance.
31 December, 2021, thousand euros
CONSOLIDATED
FINANCIAL STATEMENTS
for the twelve months period ended
2021
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
47
Consolidated statement of financial position
Notes
As of 31
December 2021
As of 31
December 2020
ASSETS
Non-current assets
Goodwill
5
Other intangible assets
6
Property, plant and equipment
7
Right of use assets
18
Investment into associate
1
Non-current receivables
13, 14
Deferred income tax asset
27
Total non-current assets
Current assets
Inventories
10
Prepayments
11
Trade receivables
13
Receivables from related parties (including loans granted)
32
Other receivables
14
Prepaid income tax
Contract assets
2.19
Cash and cash equivalents
14
Total current assets
Assets held for sale
8
Total assets
(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 2021
(all amounts are in EUR thousand unless otherwise stated)
48
Consolidated statement of financial position (cont’d)
Notes
As of 31
December 2021
As of 31
December 2020
EQUITY AND LIABILITIES
Equity
Share capital
1
Share premium
15
Reserves
15, 2.2
(2,301 )
(2,553 )
Retained earnings
(8,865 )
Equity attributable to equity holders of the parent
Non-controlling interests
9
Total equity
Liabilities
Non-current liabilities
Non-current borrowings
16
Lease liabilities
18
Deferred income tax liability
27
Provisions for employee benefits
19
Other provisions
17
Other liabilities
21, 22
Total non-current liabilities
Current liabilities
Current loans
16
Current portion of non-current borrowings
16
Current portion of lease liabilities
18
Trade payables and payables to related parties
20, 32
Contract liabilities
21
Income tax payable
27
Provisions for employee benefits
19
Other current provisions
17
Other current liabilities
22
Total current liabilities
Liabilities associated with assets held for sale
8
Total liabilities
Total equity and liabilities
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 2021
(all amounts are in EUR thousand unless otherwise stated)
49
Consolidated statement of comprehensive income
Notes
2021
2020
(restated,
Note 8)
Continuing operations
Revenue from contracts with customers
4
Cost of sales
23
(103,782 )
(108,012 )
Gross profit
General and administrative expenses
24
(32,392 )
(26,127 )
Impairment of goodwill, other intangible and other non-current
assets
(5,293 )
(706 )
Credit loss expenses on financial assets
13, 14
(622 )
(1,985 )
Other operating income
25
Other operating expenses
25
(2,339 )
(1,758 )
(Loss) profit from operations
(8,518 )
Interest income
Other finance income
26
Gain on sale of investments
1
Interest expenses
(699 )
(798 )
(Loss) on sale of investments
1
(50 )
Other finance expenses
26
(165 )
(1,092 )
Share of profit of associates
1
(Loss) profit before tax from continuing operations
(8,382 )
Income tax
27
(1,411 )
(2,024 )
Net (loss) profit from continuing operations
(9,793 )
Discontinued operations
Net (loss) from discontinued operations
8
(5,185 )
(5,257 )
Net (loss) profit
(14,978 )
Other comprehensive income that will be reclassified
subsequently to profit or loss
Exchange differences on translation of foreign operations
(846 )
Total other comprehensive income for the year
(846 )
Total comprehensive income for the year, net of tax
(14,714 )
Net (loss) profit attributable to:
The shareholders of the Company
(15,045 )
Non-controlling interests
(14,978 )
Total comprehensive income attributable to:
The shareholders of the Company
(14,793 )
Non-controlling interests
(31 )
(14,714 )
Basic and diluted earnings per share (EUR)
28
(0.47 )
From continued operations
28
(0.31 )
From discontinued operations
28
(0.16 )
(0.17 )
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
50
The accompanying notes are an integral part of these financial statements.
Consolidated statement of changes in equity
Attributable to equity holders of the parent
Group
Notes
Share
capital
Share
premium
Foreign
currency
translation
reserve
Other
reserves
Retained
earnings
Subtotal
Non-
controlling
interest
Total
Balance as of
1 January 2020
(2,701 )
Net profit for the year
-
-
-
-
Other comprehensive
income
-
-
(800 )
-
-
(800 )
(46 )
(846 )
Total comprehensive
income
-
-
(800 )
-
(31 )
Dividends declared
29
-
-
-
-
(6,984 )
(6,984 )
(4 )
(6,988 )
Balance as of 31
December 2020
(3,501 )
Net profit for the year
-
-
-
-
(15,045 )
(15,045 )
(14,978 )
Other comprehensive
income
-
-
-
-
Total comprehensive
income
-
-
-
(15,045 )
(14,793 )
(14,714 )
Dividends declared
29
-
-
-
-
(13,656 )
(13,656 )
(13,656 )
Balance as of 31
December 2021
(3,249 )
(8,865 )
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 2021
(all amounts are in EUR thousand unless otherwise stated)
51
Consolidated statement of cash flows
Notes
2021*
2020*
Cash flows from (to) operating activities
Net (loss) profit
(9,793 )
Net (loss) from discontinued operations
(5,185 )
(5,257 )
Adjusting items:
Income tax expenses
27
Depreciation and amortization
6, 7, 8, 18
Impairment and write-off of inventory, prepayments and
accounts receivable
(Gain) on disposal of property, plant and equipment
25
(1,847 )
(776 )
(Gain) from sale of investments
1
(735 )
(2,510 )
Impairment of goodwill and other intangible assets
5, 6, 18
Interest (income)
26
(220 )
(283 )
Interest expenses
26
Result on deconsolidation of bankrupt subsidiary
1
(204 )
Changes in provisions
17, 19, 31
(90 )
(321 )
Other financial activity result, net
Share of net (profit) of associate
(37 )
(35 )
(3,557 )
Changes in working capital:
(Increase) decrease in inventories
(241 )
Decrease (increase) in trade receivables, receivables from
related parties, contract assets, non-current receivables,
other receivables and other current assets
(2,218 )
(Increase) decrease in prepayments
(170 )
Increase (decrease) in trade payables and payables to related
parties
(1,019 )
Income tax (paid)
(2,310 )
(1,536 )
Increase in advances received, contract liabilities and other
current liabilities
Net cash flows from operating activities
(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 2021
(all amounts are in EUR thousand unless otherwise stated)
52
Consolidated statement of cash flows (cont‘d)
Notes
2021*
2020*
Cash flows from (to) investing activities
(Acquisition) of non-current assets
6, 7, 8
(4,176 )
(1,940 )
Proceeds from sale of non-current assets
(Acquisition) of investments in subsidiaries (net of cash
acquired in the Group)
1, 5
(2,579 )
(43 )
Disposal of investments in subsidiaries (net of cash disposed)
and associates
1
Deconsolidation of investments in subsidiaries of bankrupt
subsidiary
1
(319 )
Interest received
Loans repaid
Net cash flows from investing activities
Cash flows (to) financing activities
Dividends (paid)
(13,656 )
(6,988 )
Proceeds from loans
16
Loans (repaid)
16
(2,119 )
(6,232 )
Lease (payments)
16
(3,119 )
(2,831 )
Interest (paid)
16
(700 )
(816 )
Net cash flows (to) financing activities
(12,962 )
(14,205 )
Net (decrease) increase in cash and cash equivalents
(8,030 )
Foreign exchange difference
(593 )
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Supplemental information of cash flows:
Non-cash investing activity:
Property, plant and equipment acquisitions financed by leases
*Group cash flows for 2021 and 2020 comprise total consolidated Group, including discontinued operations. Grouped
discontinued operations cash flows are disclosed in Note 8.
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 2021
(all amounts are in EUR thousand unless otherwise stated)
53
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 in
Western, Central and Eastern Europe. The City Service group is the market leader in facility management and integrated
utility services in the Baltic States. It provides services in the whole Lithuania, Poland, Spain, Latvia, St. Petersburg city in
Russian Federation and Czech Republic.
As of 31 December 2021 the number of employees of the Group was 2,520 (as of 31 December 2020 – 3,374).
As of 31 December 2021 and 2020 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 2021 and 2020 the shareholders of the Company were:
2021
2020
Number of
shares held
Owned
percentage of
the share
capital and
votes, %
Number of
shares held
Owned
percentage of
the share
capital and
votes, %
UAB Lag&d*
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 %
* On 09 February 2022 reorganization of the UAB Lag&d was completed. Due to reorganization of UAB Lag&d changed the total number of
votes at the Company's General Meeting from UAB Lag&d to UAB Unit Invest of 26,813,293 shares in the Company, giving the right to
exercise 26,813,293 of votes constituting 84,83% of the total number of votes at the City Service SE's General Meeting.
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 2021 and 2020. 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 2021 and 2020.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
54
1 General information (cont’d)
Structure of the Group
On 31 December 2021 the City Service SE group consists of the parent City Service SE and the following directly and
indirectly controlled subsidiaries (hereinafter – the Group):
Company
Country
Share of the
stock held by
the Group as of
31 December
2021
Share of the
stock held by
the Group as of
31 December
2020
Main activities
UAB Alytaus namų valda
Lithuania
76%
76%
Dormant
UAB Apex Intelligence
Lithuania
100%
100%
IT energy saving solutions for
buildings
UAB Baltijos būsto priežiūra
Lithuania
100%
100%
Dormant
UAB Baltijos NT valdymas
Lithuania
100%
100%
Real estate management
UAB Baltijos transporto valdymas
Lithuania
100%
100%
Asset management
UAB Baltijos turto valdymas
Lithuania
100%
100%
Holding company
UAB Biržų butų ūkis
Lithuania
57.71%
57.71%
Administration of dwelling-houses
UAB BonoDomo
Lithuania
100%
100%
Dormant
UAB Butų ūkio valdos
Lithuania
100%
-
Administration of dwelling-houses
UAB Būsto aplinka
Lithuania
100%
100%
Maintenance and cleaning of dwelling-
houses territories and premises
UAB Citenga
Lithuania
-
100%
Holding company
UAB City Service
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 City Service Digital
Lithuania
100%
100%
IT services
UAB CSG IT
Lithuania
100%
100%
IT services
UAB Energijos taupymo paslaugos
Lithuania
100%
100%
Energy saving solution services
UAB Enter Tech
Lithuania
100%
100%
Dormant
UAB EPC projektai
Lithuania
100%
100%
Dormant
UAB Neries būstas
Lithuania
100%
100%
Dormant
UAB Konarskio turgelis
Lithuania
-
100%
Marketplace administration services
UAB Mano aplinka
Lithuania
100%
100%
Maintenance and cleaning of public
territories and premises
UAB Mano aplinka plius
Lithuania
100%
100%
Maintenance and cleaning of territories
and premises
UAB Mano bendrabutis
Lithuania
100%
100%
Dormant
UAB Mano Būstas
Lithuania
100%
100%
Administration of dwelling-houses
UAB Mano Būstas Alytus
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 Aukštaitija
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%
-
Administration of dwelling-houses
UAB Mano Būstas Vakarai
Lithuania
99.84%
99.84%
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 Medžiagų tiekimo centras
Lithuania
100%
100%
Supply of materials
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 priežiūros tarnyba
Lithuania
100%
-
Technical maintenance of heating
systems
UAB Pastatų valdymas
Lithuania
100%
100%
Administration of dwelling-houses
UAB PortalPRO
Lithuania
100%
100%
Supply chain management
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
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
55
UAB Valymo projektai Vilnius 1
Lithuania
-
100%
Maintenance and cleaning of public
territories and premises
UAB Valymo projektai Vilnius 2
Lithuania
-
100%
Maintenance and cleaning of public
territories and premises
UAB Valymo projektai Vilnius 3
Lithuania
-
100%
Maintenance and cleaning of public
territories and premises
UAB Valymo projektai Vilnius 4
Lithuania
-
100%
Maintenance and cleaning of public
territories and premises
UAB Valymo projektai Kaunas
Lithuania
-
100%
Maintenance and cleaning of public
territories and premises
STARLIT s.r.o.
Czech
100%
-
IT services
Administracion Urbana y Rural Chorro,
S.L.U.
Spain
-
100%
Administration of dwelling-houses
Afinem administración de finques,
S.L.U.
Spain
-
100%
Administration of dwelling-houses
Aresi administracion de fincas S. L.
Spain
100%
100%
Administration of dwelling-houses
Aresi Gestion residencial, S.L.
Spain
-
100%
Administration of dwelling-houses
Concentra Servicios y Mantenimiento,
S.A.*
Spain
100%
100%
Commercial real estate management
and building maintenance
Elche administracion de fincas, S.L.U.
Spain
-
100%
Administration of dwelling-houses
Eurobroker Advisors Sorreduria de
Seguros, S.L.
Spain
100%
100%
Insurance services
Euronamas Gestion de Fincas
Levante, S.L.U.
Spain
-
100%
Dormant
Euronamas Gestion de Fincas Sur,
S.L.
Spain
-
100%
Administration of dwelling-houses
Euronamas Gestion de Fincas Meseta
Central, S.L.U.
Spain
-
100%
Dormant
Euronamas Gestion de Fincas Centro,
S.L.
Spain
100%
100%
Administration of dwelling-houses
Euronamas gestion de fincas Madrid,
S.L.
Spain
-
100%
Administration of dwelling-houses
EUROHUB S.L.
Spain
100%
100%
Dormant
Grupo Aresi de Inversiones, S.L.
Spain
100%
100%
Holding company
Inmonamas
Spain
100%
100%
Dormant
PORTALPRO, S.L.
Spain
100%
-
Dormant
URBAN HUB S.L.
Spain
100%
100%
Supply chain management
Vetell dos iberica, S.L.*
Spain
100%
100%
Administration of dwelling-houses
SIA Bilance
Latvia
100%
-
Administration of dwelling-houses
SIA Connecto Pay
Latvia
100%
100%
Dormant
SIA City Service
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 PortalPRO
Latvia
100%
100%
Dormant
SIA Latvijas Namsaimnieks
Latvia
100%
100%
Administration of dwelling-houses
SIA Livonijas Nami
Latvia
100%
-
Administration of dwelling-houses
SIA Namu serviss APSE
Latvia
100%
100%
Administration of dwelling-houses
SIA NIRA Fonds apsaimniekošana
Latvia
100%
-
Administration of dwelling-houses
SIA NIRA Fonds apsaimniekošana 2
Latvia
100%
-
Administration of dwelling-houses
SIA NIRA Fonds apsaimniekosana-
Salnas 21
Latvia
100%
-
Administration of dwelling-houses
SIA NIRA Fonds apsaimniekošana 3
Latvia
100%
-
Administration of dwelling-houses
SIA Ventspils nami
Latvia
100%
100%
Administration of dwelling-houses
Atrium 21 sp. z o.o.
Poland
100%
100%
Administration of dwelling-houses
City Service Polska sp. z o.o.
Poland
100%
100%
Country holding company
Certus-Serwis Sp. z o. o.
Poland
100%
100%
Administration of dwelling-houses
Concierge - Zarządzanie
Nieruchomościami sp. z o.o.
Poland
100%
100%
Administration of dwelling-houses
Dom Best sp. z o.o.
Poland
100%
100%
Administration of dwelling-houses
EnergiaOK sp. z o.o.
Poland
100%
100%
Sale of electricity
Famix sp. z o.o.
Poland
100%
100%
Administration of dwelling-houses
Grupa Techniczna 24 sp. z o.o.
Poland
100%
100%
Building maintenance
Home Rent sp. z o.o.
Poland
50%
50%
Administration of dwelling-houses
Parama Blue sp. z o.o.
Poland
100%
100%
Dormant
Parama Group sp. z o.o.
Poland
100%
100%
Holding company
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
56
Parama Yellow sp. z o.o.
Poland
100%
100%
Dormant
Parama Red sp. z o.o.
Poland
100%
100%
Dormant
Parama White sp. z o.o.
Poland
100%
100%
Dormant
Progresline sp. z o.o.
Poland
100%
100%
Administration of dwelling-houses
PORTALPRO sp. z o.o.
Poland
100%
-
Dormant
Santer Zarządzanie Nieruchomościami
sp. z o.o.
Poland
100%
100%
Administration of dwelling-houses
Skydas - Przeglądy Budowlane sp. z
o.o.
Poland
100%
100%
Administration of dwelling-houses
TED sp. z o.o.
Poland
100%
100%
Real estate management
Tumieszkamy sp. z o. o.
Poland
100%
100%
Dormant
Wolska Aparthotel sp. z o. o.**
Poland
100%
100%
Accommodation services
Zespół Zarządców Nieruchomości sp.
z o.o.
Poland
100%
100%
Administration of dwelling-houses
ZZN Inwestycje sp. z o.o.
Poland
100%
100%
Dormant
OAO C С / А City service
St. Petersburg
100%
100%
Administration of dwelling-houses
AO C С / ZAO City service
St. Petersburg
100%
100%
Administration of dwelling-houses
OOO Са-а
-аа а
St. Petersburg
100%
100%
Construction and engineering
Г
St. Petersburg
100%
100%
Country holding company
№ 3
Ф аа
St. Petersburg
80%
80%
Administration of dwelling-houses
Ч
St. Petersburg
100%
100%
Maintenance and cleaning of territories
а
St. Petersburg
100%
100%
Elevator installing & tech. support
OOO PortalPRO
St. Petersburg
100%
100%
Dormant
* The Group ceased to consolidate Concentra Servicios y Mantenimiento, S.A. (including sub-consolidated subsidiary Vetell dos iberica,
S.L.) in its Financial statements after bankruptcy administrator was appointed on 10 May 2017, as from that date the Group has lost its
control.
** The Group ceased to consolidate Wolska Aparthotel sp. z o. o. in its Financial statements after bankruptcy administrator was appointed
on 3 June 2020, as from that date the Group has lost its control.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
57
1 General information (cont‘d)
Changes in the Group in 2021
In 2021 the Group, through its Lithuanian subsidiary, acquired:
• 100% stake in UAB Butų ūkio valdos (acquisition price EUR 200 thousand);
• 100% stake in UAB Pastatų priežiūros tarnyba (acquisition price EUR 40 thousand);
• 100% stake in Starlit s.r.o. (acquisition price CZK 54.625 thousand (EUR 2.165 thousand)).
In 2021 the Group, through its Latvian subsidiary, acquired:
• 100% stake in SIA NIRA Fonds apsaimniekošana (acquisition price EUR 96 thousand);
• 100% stake in SIA NIRA Fonds apsaimniekošana 2 (acquisition price EUR 44 thousand);
• 100% stake in SIA NIRA Fonds apsaimniekosana-Salnas 21 (acquisition price EUR 21 thousand);
• 100% stake in SIA NIRA Fonds apsaimniekošana 3 (acquisition price EUR 136 thousand);
• 100% stake in SIA Livonijas Nami (acquisition price EUR 470 thousand);
• 100% stake in SIA Bilance (acquisition price EUR 125 thousand).
Acquisitions in more details are disclosed in Note 5.
In 2021 there were several reorganizations (changes in the legal structure of the Group) performed as outlined below:
• On 6 May 2021 reorganization of the companies UAB Citenga and UAB City Service Engineering was completed.
After the process of reorganization UAB Citenga was incorporated into UAB City Service Engineering with all the
assets, rights and obligations. UAB Citenga ceased operations and was deregistered. After reorganization UAB
City Service Engineering title, management and other contact details did not change.
• On 7 July 2021 reorganization of the companies Aresi Gestion Residencial, SL, Euronamas Gestion de fincas
Madrid, SL, Euronamas Gestion de Fincas Sur, S.L., administración urbana y Rural Chorro, SL, Afinem
Administracio de Finques, SL, Elche administración de Fincas, SL and Euronamas Gestion de fincas Centro, SL
was completed. After the process of reorganization Aresi Gestion Residencial, SL, Euronamas Gestion de fincas
Madrid, SL, Euronamas Gestion de Fincas Sur, S.L., administración urbana y Rural Chorro, SL, Afinem
Administracio de Finques, SL, Elche administración de Fincas, SL was incorporated into Euronamas Gestion de
fincas Centro, SL with all the assets, rights and obligations. Aresi Gestion Residencial, SL, Euronamas Gestion de
fincas Madrid, SL, Euronamas Gestion de Fincas Sur, S.L., administración urbana y Rural Chorro, SL, Afinem
Administracio de Finques, SL, Elche administración de Fincas, SL ceased operations and were deregistered. After
reorganization Afinem Administracio de Finques, SL, Elche administración de Fincas, SL was incorporated into
Euronamas Gestion de fincas Centro, SL title, management and other contact details did not change.
In 2021 the Group established several subsidiaries:
• On 30 April 2021 the holding company established a new company PORTALPRO sp. Z o.o. (share capital PLN 5
thousand (EUR 1 thousand)).
• On 2 June 2021 the holding company established a new company PORTALPRO, S.L. (share capital EUR 3
thousand).
• On 15 July 2021 the Group, through its Lithuanian subsidiary, established a new company UAB Mano Būstas
Ukmergė (share capital EUR 2,5 thousand).
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
58
1 General information (cont‘d)
Group company UAB Valymo projektai Vilnius 4 was sold on 5 January 2021 and after that date ceased to be consolidated
in these financial statements. Total value of the shares sale – purchase agreement is EUR 24 thousand. Information about
the disposed subsidiary is summarised below:
Date of disposal
UAB Valymo projektai
Vilnius 4
5 January, 2021
Non-current assets other than goodwill
4
Current assets other than cash and cash equivalents
52
Cash and cash equivalents
34
Non-current and current liabilities
(77)
Total net assets disposed of
attributable to equity holders of the parent
13
attributable to non-controlling interests
-
Total consideration received, all consisting of cash and cash equivalents
24
The Group recorded the net profit of EUR 11 thousand from the sale of shares of the subsidiary which is accounted in Gain
(loss) on sale of investments in Consolidated statement of comprehensive income.
Group company UAB Valymo projektai Vilnius 2 was sold on 29 January 2021 and after that date ceased to be consolidated
in these financial statements. Total value of the shares sale – purchase agreement is EUR 50 thousand. Information about
the disposed subsidiary is summarised below:
Date of disposal
UAB Valymo projektai
Vilnius 2
29 January, 2021
Non-current assets other than goodwill
18
Current assets other than cash and cash equivalents
57
Cash and cash equivalents
53
Non-current and current liabilities
(97)
Total net assets disposed of
attributable to equity holders of the parent
31
attributable to non-controlling interests
-
Total consideration received, all consisting of cash and cash equivalents
50
The Group recorded the net profit of EUR 19 thousand from the sale of shares of the subsidiary which is accounted in Gain
(loss) on sale of investments in 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 2021
(all amounts are in EUR thousand unless otherwise stated)
59
1 General information (cont‘d)
Group company UAB Valymo projektai Vilnius 3 was sold on 29 January 2021 and after that date ceased to be consolidated
in these financial statements. Total value of the shares sale – purchase agreement is EUR 37 thousand. Information about
the disposed subsidiary is summarised below:
Date of disposal
UAB Valymo projektai
Vilnius 3
29 January, 2021
Non-current assets other than goodwill
9
Current assets other than cash and cash equivalents
74
Cash and cash equivalents
58
Non-current and current liabilities
(124)
Total net assets disposed of
attributable to equity holders of the parent
17
attributable to non-controlling interests
-
Total consideration received, all consisting of cash and cash equivalents
37
The Group recorded the net proft of EUR 20 thousand from the sale of shares of the subsidiary which is accounted in Gain
(loss) on sale of investments in Consolidated statement of comprehensive income.
Group company UAB Valymo projektai Kaunas was sold on 29 January 2021 and after that date ceased to be consolidated
in these financial statements. Total value of the shares sale – purchase agreement is EUR 12 thousand. Information about
the disposed subsidiary is summarised below:
Date of disposal
UAB Valymo projektai
Kaunas
29 January, 2021
Non-current assets other than goodwill
40
Current assets other than cash and cash equivalents
56
Cash and cash equivalents
92
Non-current and current liabilities
(172)
Total net assets disposed of
attributable to equity holders of the parent
16
attributable to non-controlling interests
-
Total consideration received, all consisting of cash and cash equivalents
12
The Group recorded the net (loss) of EUR (4) thousand from the sale of shares of the subsidiary which is accounted in Gain
(loss) on sale of investments in 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 2021
(all amounts are in EUR thousand unless otherwise stated)
60
1 General information (cont‘d)
Group company UAB Valymo projektai Vilnius 1 was sold on 26 February 2021 and after that date ceased to be consolidated
in these financial statements. Total value of the shares sale – purchase agreement is EUR 30 thousand. Information about
the disposed subsidiary is summarised below:
Date of disposal
UAB Valymo projektai 1
26 February, 2021
Non-current assets other than goodwill
10
Current assets other than cash and cash equivalents
92
Cash and cash equivalents
68
Non-current and current liabilities
(155)
Total net assets disposed of
attributable to equity holders of the parent
15
attributable to non-controlling interests
-
Total consideration received, all consisting of cash and cash equivalents
30
The Group recorded the net proft of EUR 15 thousand from the sale of shares of the subsidiary which is accounted in Gain
(loss) on sale of investments in Consolidated statement of comprehensive income.
Group company UAB Konarskio turgelis was sold on 5 March 2021 and after that date ceased to consolidate in these
financial statements. Total value of the shares sale – purchase agreement is EUR 902 thousand. Information about the
disposed subsidiary is summarised below:
Date of disposal
UAB Konarskio turgelis
5 March, 2021
Goodwill
201
Non-current assets other than goodwill
150
Current assets other than cash and cash equivalents
11
Cash and cash equivalents
37
Non-current and current liabilities
(16)
Total net assets disposed of
attributable to equity holders of the parent
383
attributable to non-controlling interests
-
Total consideration received, all consisting of cash and cash equivalents
902
The Group recorded the net profit of EUR 519 thousand from the sale of shares of the subsidiary which is accounted in
Gain (loss) on sale of investments in the Consolidated statement of comprehensive income.
Changes in the Group in 2020
On 1 December 2020 the Group, through its Lithuanian subsidiary, acquired 100% stake in UAB Miesto butų ūkis
(acquisition price EUR 47 thousand) (acquisition in more details is disclosed in Note 5).
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
61
1 General information (cont‘d)
In 2020 the Group established several subsidiaries:
• On 8 September 2020 the Group, through its Lithuanian subsidiary, established a new company UAB Valymo
projektai Vilnius 1 (share capital EUR 2.5 thousand).
• On 9 September 2020 the Group, through its Lithuanian subsidiary, established several new companies: UAB
Valymo projektai Vilnius 2, UAB Valymo projektai Vilnius 3, UAB Valymo projektai Vilnius 4, UAB Valymo projektai
Kaunas, UAB Valymo projektai Klaipėda, UAB Valymo projektai Šiauliai (share capital of each company is EUR
2.5 thousand).
Group company UAB Būsto mokėjimai was sold on 10 March 2020 and after that date ceased to consolidate in these
financial statements. Total value of the shares sale – purchase agreement is EUR 231 thousand. Information about the
disposed subsidiary is summarised below:
Date of disposal
UAB Būsto mokėjimai
10 March, 2020
Current assets other than cash and cash equivalents
1
Cash and cash equivalents
144
Non-current and current liabilities
(1)
Total net assets disposed of
attributable to equity holders of the parent
144
attributable to non-controlling interests
-
Total consideration received, all consisting of cash and cash equivalents
231
The Group recorded the net profit of EUR 87 thousand from the sale of shares of the subsidiary which is accounted in Gain
(loss) on sale of investments in the Consolidated statement of comprehensive income.
At the beginning of 2020 the Group management made a decision that Wolska Aparthotel sp. z o. o., subsidiary of City
Service SE, would file for bankruptcy in Poland and on 30 March 2020 Wolska Aparthotel sp. z o. o. has submitted a petition
for bankruptcy to official institutions in Poland, authorised to initiate the bankruptcy procedure. The court’s decision regarding
assigning bankruptcy administrator was announced to the Company on 3 June 2020. Following the appointment of
bankruptcy administrator, the Group ceased to consolidate this subsidiary in its Financial statements as from this date the
Group lost its effective control to it and accounted it according the IFRS 9 at fair value less costs to sell which is EUR nil.
On 3 June 2020 bankruptcy administrator has submitted a request to the court to initiate the liquidation prcedure of Wolska
Aparthotel. The Company remains shareholder of the subsidiary until the end of bankruptcy process. Only the net result of
period from January 2020 to May 2020 are included in these consolidated financial statements. Information about the
deconsolidated subsidiary is summarized below:
Date of disposal
Wolska Aparthotel sp. z o. o.
3 June, 2020
Non-current assets
30
Current assets other than cash and cash equivalents
104
Cash and cash equivalents
319
Non-current and current liabilities
(1,236)
Total net assets disposed of
attributable to equity holders of the parent
(783)
attributable to non-controlling interests
-
The Group recorded the net gain of EUR 204 thousand from the deconsolidation of the subsidiary which includes impairment
loss for amount of EUR 579 thousand from the Group’s receivables from deconsolidated subsidiary at the date of disposal
and also includes total excess of liabilities over estimated liquidation value of the assets of the subsidiary of EUR (783)
thousand for the year 2020.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
62
1 General information (cont‘d)
Group company UAB Valymo projektai Šiauliai was sold on 30 October 2020 and after that date ceased to be consolidated
in these financial statements. Total value of the shares sale – purchase agreement is EUR 5 thousand. Information about
the disposed subsidiary is summarised below:
Date of disposal
UAB Valymo projektai
Šiauliai
30 October, 2020
Non-current assets other than goodwill
16
Current assets other than cash and cash equivalents
39
Cash and cash equivalents
43
Non-current and current liabilities
(79)
Total net assets disposed of
attributable to equity holders of the parent
19
attributable to non-controlling interests
-
Total consideration received, all consisting of cash and cash equivalents
5
The Group recorded the net (loss) of EUR (14) thousand from the sale of shares of the subsidiary which is accounted in
Gain (loss) on sale of investments in Consolidated statement of comprehensive income.
Group company UAB Valymo projektai Klaipėda was sold on 26 November 2020 and after that date ceased to be
consolidated in these financial statements. Total value of the shares sale – purchase agreement is EUR 12 thousand.
Information about the disposed subsidiary is summarised below:
Date of disposal
UAB Valymo projektai
Klaipėda
26 November, 2020
Non-current assets other than goodwill
41
Current assets other than cash and cash equivalents
150
Cash and cash equivalents
16
Non-current and current liabilities
(173)
Total net assets disposed of
attributable to equity holders of the parent
34
attributable to non-controlling interests
-
Total consideration received, all consisting of cash and cash equivalents
12
The Group recorded the net (loss) of EUR (22) thousand from the sale of shares of the subsidiary which is accounted in
Gain (loss) on sale of investments in 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 2021
(all amounts are in EUR thousand unless otherwise stated)
63
1 General information (cont‘d)
Group company UAB Economus was sold on 1 December 2020 and after that date ceased to be consolidated in these
financial statements. Total value of the shares sale – purchase agreement is EUR 390 thousand. Information about the
disposed subsidiary is summarised below:
Date of disposal
UAB Economus
1 December, 2020
Goodwill
136
Non-current assets other than goodwill
6
Current assets other than cash and cash equivalents
1,054
Cash and cash equivalents
122
Non-current and current liabilities
(1,069)
Total net assets disposed of
attributable to equity holders of the parent
249
attributable to non-controlling interests
-
Total consideration received, all consisting of cash and cash equivalents
390
The Group recorded the net profit of EUR 141 thousand from the sale of shares of the subsidiary which is accounted in
Gain (loss) on sale of investments in Consolidated statement of comprehensive income.
Group company UAB Naujosios Vilnios turgavietė was sold on 22 December 2020 and after that date ceased to be
consolidated in these financial statements. Total value of the shares sale – purchase agreement is EUR 860 thousand.
Information about the disposed subsidiary is summarised below:
Date of disposal
UAB Naujosios Vilnios
turgavietė
22 December, 2020
Goodwill
18
Non-current assets other than goodwill
248
Current assets other than cash and cash equivalents
11
Cash and cash equivalents
41
Non-current and current liabilities
(36)
Total net assets disposed of
attributable to equity holders of the parent
282
attributable to non-controlling interests
-
Total consideration received, all consisting of cash and cash equivalents
860
The Group recorded the net profit of EUR 578 thousand from the sale of shares of the subsidiary which is accounted in
Gain (loss) on sale of investments in 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 2021
(all amounts are in EUR thousand unless otherwise stated)
64
1 General information (cont‘d)
Group company UAB Karoliniškių turgus was sold on 22 December 2020 and after that date ceased to be consolidated in
these financial statements. Total value of the shares sale – purchase agreement is EUR 1,370 thousand. Information about
the disposed subsidiary is summarised below:
Date of disposal
UAB Karoliniškių turgus
22 December, 2020
Goodwill
576
Non-current assets other than goodwill
226
Current assets other than cash and cash equivalents
16
Cash and cash equivalents
22
Non-current and current liabilities
(32)
Total net assets disposed of
attributable to equity holders of the parent
808
attributable to non-controlling interests
-
Total consideration received, all consisting of cash and cash equivalents
1,370
The Group recorded the net profit of EUR 562 thousand from the sale of shares of the subsidiary which is accounted in
Gain (loss) on sale of investments in Consolidated statement of comprehensive income.
Group companies UAB Mano būsto sauga and UAB Mano sauga LT (with UAB Algos saugos tarnyba, UAB Acta iuventus
ir UAB Vaizdo stebėjimo sprendimai) were sold on 23 December 2020 and after that date ceased to be consolidated in
these financial statements. Total value of the shares sale – purchase agreement is EUR 1. Information about the disposed
subsidiaries is summarised below:
Date of disposal
UAB Mano Būsto sauga
23 December, 2020
Goodwill
12
Non-current assets other than goodwill
41
Current assets other than cash and cash equivalents
50
Cash and cash equivalents
9
Non-current and current liabilities
(694)
Total net assets disposed of
attributable to equity holders of the parent
(582)
attributable to non-controlling interests
-
Date of disposal
UAB Mano sauga LT
23 December, 2020
Goodwill
10
Non-current assets other than goodwill
139
Current assets other than cash and cash equivalents
170
Cash and cash equivalents
(647)
Non-current and current liabilities
(228)
Total net assets disposed of
attributable to equity holders of the parent
(556)
attributable to non-controlling interests
-
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
65
1 General information (cont‘d)
Date of disposal
UAB Algos saugos tarnyba
23 December, 2020
Non-current assets other than goodwill
268
Current assets other than cash and cash equivalents
44
Cash and cash equivalents
81
Non-current and current liabilities
(11)
Total net assets disposed of
attributable to equity holders of the parent
382
attributable to non-controlling interests
-
Date of disposal
UAB Acta iuventus
23 December, 2020
Non-current assets other than goodwill
232
Current assets other than cash and cash equivalents
29
Cash and cash equivalents
11
Non-current and current liabilities
(130)
Total net assets disposed of
attributable to equity holders of the parent
142
attributable to non-controlling interests
-
Date of disposal
UAB Vaizdo stebėjimo
sprendimai
23 December, 2020
Non-current assets other than goodwill
3
Cash and cash equivalents
5
Non-current and current liabilities
(785)
Total net assets disposed of
attributable to equity holders of the parent
(777)
attributable to non-controlling interests
-
Total consideration received, all consisting of cash and cash equivalents
EUR 1
The Group recorded the net profit of EUR 1,178 thousand from the sale of shares of the subsidiaries which is accounted in
Gain (loss) on sale of investments in Consolidated statement of comprehensive income.
Investment into associates
The Group’s investments in associates as of 31 December 2020 included an investment in Marijampolės butų ūkis UAB
(34% of the share capital), which was acquired on 16 May 2011 and which activity is administration of dwelling-houses.
Group company UAB Marijampolės butų ūkis was sold on 4 October 2021 and after that date ceased to be consolidated in
these financial statements. Total value of the shares sale – purchase agreement is EUR 400 thousand. The Group recorded
the net profit of EUR 152 thousand from the sale of shares of the subsidiary which is accounted in Gain (loss) on sale of
investments in Consolidated statement of comprehensive income.
The Group accounted for the associate’s results attributable to the Group amounting to respectively EUR 37 thousand and
EUR 35 thousand in the statement of comprehensive income for the year ended 31 December 2021 and 2020. In 2021 and
2020 the Group had not received any dividends from the associate.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
66
1 General information (cont‘d)
Summarised financial information of the associate UAB Marijampolės butų ūkis as of 31 December 2020 (unaudited):
* Group’s carrying amount of the investment before the disposal transaction at 04 October, 2021
2021
2020
Non-current assets
168
104
Current assets
758
675
Non-current liabilities
(14)
(14)
Current liabilities
(576)
(538)
Net assets
336
227
Revenue
901
1,244
Net profit (loss)
108
102
Group’s carrying amount of the investment
253*
216
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
67
2 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 authorised these financial statements on 2 May 2022. 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 IFRS and International Financial Reporting Interpretations Committee (IFRIC)
interpretations
The accounting policies adopted are consistent with those of the previous financial year except for the following amended
IFRSs which have been adopted by the Group as of 1 January 2021:
Interest Rate Benchmark Reform - IFRS 9, IAS 39 and IFRS 7 (Amendments)
In August 2020, the IASB published Interest Rate Benchmark Reform – Phase 2, Amendments to IFRS 9, IAS 39, IFRS 7,
IFRS 4 and IFRS 16, completing its work in response to IBOR reform. The amendments provide temporary reliefs which
address the financial reporting effects when an interbank offered rate (IBOR) is replaced with an alternative nearly risk-
free interest rate (RFR). In particular, the amendments provide for a practical expedient when accounting for changes in
the basis for determining the contractual cash flows of financial assets and liabilities, to require the effective interest rate
to be adjusted, equivalent to a movement in a market rate of interest. Also, the amendments introduce reliefs from
discontinuing hedge relationships including a temporary relief from having to meet the separately identifiable requirement
when an RFR instrument is designated as a hedge of a risk component. There are also amendments to IFRS 7 Financial
Instruments: Disclosures to enable users of financial statements to understand the effect of interest rate benchmark
reform on an entity’s financial instruments and risk management strategy. While application is retrospective, an entity is
not required to restate prior periods. The Group management has assessed the application of the amendment and
concluded that it had no effect for consolidated financial statements.
IFRS 16 Leases-Cοvid 19 Related Rent Concessions (Amendment)
The amendment applies, retrospectively, to annual reporting periods beginning on or after 1 June 2020. Earlier application
is permitted, including in financial statements not yet authorized for issue at 28 May 2020. IASB amended the standard to
provide relief to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions arising as
a direct consequence of the covid-19 pandemic. The amendment provides a practical expedient for the lessee to account
for any change in lease payments resulting from the covid-19 related rent concession the same way it would account for
the change under IFRS 16, if the change was not a lease modification, only if all of the following conditions are met:
➢ The change in lease payments results in revised consideration for the lease that is substantially the same as, or
less than, the consideration for the lease immediately preceding the change.
➢ Any reduction in lease payments affects only payments originally due on or before 30 June 2021.
➢ There is no substantive change to other terms and conditions of the lease.
The Group management has assessed the application of the amendment and concluded that it had no effect for
consolidated financial statements.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
68
2 Accounting policies (cont’d)
2.1. Basis of preparation (cont’d)
Standards issued but not yet effective
The Group has not applied the following IFRS interpretations that have been issued as of the date of authorization of these
financial statements for issue, but which are not yet effective:
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
The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in
dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence
of the amendments is that a full gain or loss is recognized when a transaction involves a business (whether it is housed in
a subsidiary or not). A partial gain or loss is recognized when a transaction involves assets that do not constitute a business,
even if these assets are housed in a subsidiary. 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. The Group management has
preliminary assessed the possible application of the amendment and concluded that it would have no effect for consolidated
financial statements.
IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (Amendments)
The amendments were initially effective for annual reporting periods beginning on or after January 1, 2022 with earlier
application permitted. However, in response to the covid-19 pandemic, the Board has deferred the effective date by one
year, i.e. 1 January 2023, to provide companies with more time to implement any classification changes resulting from the
amendments. The amendments aim to promote consistency in applying the requirements by helping companies determine
whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified
as current or non-current. The amendments affect the presentation of liabilities in the statement of financial position and do
not change existing requirements around measurement or timing of recognition of any asset, liability, income or expenses,
nor the information that entities disclose about those items. Also, the amendments clarify the classification requirements for
debt which may be settled by the company issuing own equity instruments.
In November 2021, the Board issued an exposure draft (ED), which clarifies how to treat liabilities that are subject to
covenants to be complied with, at a date subsequent to the reporting period. In particular, the Board proposes narrow scope
amendments to IAS 1 which effectively reverse the 2020 amendments requiring entities to classify as current, liabilities
subject to covenants that must only be complied with within the next twelve months after the reporting period, if those
covenants are not met at the end of the reporting period. Instead, the proposals would require entities to present separately
all non-current liabilities subject to covenants to be complied with only within twelve months after the reporting period.
Furthermore, if entities do not comply with such future covenants at the end of the reporting period, additional disclosures
will be required. The proposals will become effective for annual reporting periods beginning on or after 1 January 2024 and
will need be applied retrospectively in accordance with IAS 8, while early adoption is permitted. The Board has also proposed
to delay the effective date of the 2020 amendments accordingly, such that entities will not be required to change current
practice before the proposed amendments come into effect. The Group management has preliminary assessed the possible
application of the amendment and concluded that it would have no effect for consolidated financial statements.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
69
2 Accounting policies (cont’d)
2.1. Basis of preparation (cont’d)
IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions, Contingent Liabilities
and Contingent Assets as well as Annual Improvements 2018-2020 (Amendments)
The amendments are effective for annual periods beginning on or after 1 January 2022 with earlier application permitted.
The IASB has issued narrow-scope amendments to the IFRS Standards as follows:
➢ IFRS 3 Business Combinations (Amendments) update a reference in IFRS 3 to the Conceptual Framework for
Financial Reporting without changing the accounting requirements for business combinations.
➢ IAS 16 Property, Plant and Equipment (Amendments) prohibit a company from deducting from the cost of
property, plant and equipment amounts received from selling items produced while the company is preparing the
asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss.
➢ IAS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendments) specify which costs a
company includes in determining the cost of fulfilling a contract for the purpose of assessing whether a contract is
onerous.
➢ Annual Improvements 2018-2020 make minor amendments to IFRS 1 First-time Adoption of International
Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and the Illustrative Examples
accompanying IFRS 16 Leases
Amendments have not yet been endorsed by the EU. The amendment will be relevant to the Group, if the Group has such
transactions in the future.
IFRS 16 Leases-Cοvid 19 Related Rent Concessions beyond 30 June 2021 (Amendment)
The Amendment applies to annual reporting periods beginning on or after 1 April 2021, with earlier application permitted,
including in financial statements not yet authorized for issue at the date the amendment is issued. In March 2021, the Board
amended the conditions of the practical expedient in IFRS 16 that provides relief to lessees from applying the IFRS 16
guidance on lease modifications to rent concessions arising as a direct consequence of the covid-19 pandemic. Following
the amendment, the practical expedient now applies to rent concessions for which any reduction in lease payments affects
only payments originally due on or before 30 June 2022, provided the other conditions for applying the practical expedient
are met. The Group management has preliminary assessed the possible application of the amendment and concluded that
it would have no effect for consolidated financial statements.
IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies
(Amendments):
The Amendments are effective for annual periods beginning on or after January 1, 2023 with earlier application permitted.
The amendments provide guidance on the application of materiality judgements to accounting policy disclosures. In
particular, the amendments to IAS 1 replace the requirement to disclose ‘significant’ accounting policies with a requirement
to disclose ‘material’ accounting policies. Also, guidance and illustrative examples are added in the Practice Statement to
assist in the application of the materiality concept when making judgements about accounting policy disclosures. The Group
management has preliminary assessed the possible application of the amendment and concluded that it would have no
effect for consolidated financial statements.
IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates
(Amendments):
The amendments become effective for annual reporting periods beginning on or after January 1, 2023 with earlier
application permitted and apply to changes in accounting policies and changes in accounting estimates that occur on or
after the start of that period. The amendments introduce a new definition of accounting estimates, defined as monetary
amounts in financial statements that are subject to measurement uncertainty. Also, the amendments clarify what changes
in accounting estimates are and how these differ from changes in accounting policies and corrections of errors. Management
has preliminary assessed the possible application of the amendment and concluded that it would have no effect for
consolidated financial statements.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
70
2 Accounting policies (cont’d)
2.1. Basis of preparation (cont’d)
IAS 12 Income taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments)
The amendments are effective for annual periods beginning on or after January 1, 2023 with earlier application permitted.
In May 2021, the Board issued amendments to IAS 12, which narrow the scope of the initial recognition exception under
IAS 12 and specify how companies should account for deferred tax on transactions such as leases and decommissioning
obligations. Under the amendments, the initial recognition exception does not apply to transactions that, on initial
recognition, give rise to equal taxable and deductible temporary differences. It only applies if the recognition of a lease asset
and lease liability (or decommissioning liability and decommissioning asset component) give rise to taxable and deductible
temporary differences that are not equal. The Amendments have not yet been endorsed by the EU. Management has
preliminary assessed the possible application of the amendment and concluded that it would have no effect for consolidated
financial statements.
The Group will adopt the above described new accounting pronouncement once they become effective, provided they are
endorsed by the EU.
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
statement 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.
The assets and liabilities of foreign subsidiaries are translated into Euro at the reporting date using the rate of exchange as
of the date of the statement of financial position, and their statements of comprehensive income are translated at the average
exchange rates for the year. The exchange differences arising on this translation are recognised in other comprehensive
income. On disposal of a foreign subsidiary, the deferred cumulative amount recognised in other comprehensive income
relating to that foreign operation is recognised in profit or loss.
Non-current receivables from or loans granted to foreign subsidiaries that are neither planned nor likely to be settled in the
future are considered to be a part of the Company’s net investment in the foreign operation. In the Group’s consolidated
financial statements the exchange differences recognised in the individual financial statements of the subsidiary in relation
to these monetary items are reclassified to other comprehensive income. On disposal of a foreign subsidiary, the deferred
cumulative amount recognised in other comprehensive income relating to that foreign operation is recognised in profit or
loss.
2.3. Principles of consolidation
The consolidated financial statements of the Group include City Service SE and its subsidiaries as well as associated
companies. The financial statements of the subsidiaries are prepared for the same reporting year, using consistent
accounting policies.
Subsidiary is an entity directly or indirectly controlled by the Company. The Company controls an entity when it can or has
a right to receive a variable returns from this relation and it can have impact on these returns due to the power to govern
the entity to which the investment is made. Generally, there is a presumption that a majority of voting rights result in control.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
71
2 Accounting policies (cont’d)
2.3. Principles of consolidation (cont’d)
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 financial income 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. All intercompany
transactions, balances and unrealised gains and losses on transactions among the Group companies have been eliminated.
The equity and net income attributable to non-controlling interests are shown separately in the statement of financial position
and the Consolidated Statement of Comprehensive Income.
Acquisitions and disposals of non-controlling interest by the Group are accounted as equity transaction: the difference
between the carrying value of the net assets acquired from/disposed to the non-controlling interests in the Group’s financial
statements and the acquisition price/proceeds from disposal is accounted directly in equity.
Investments in associated companies where significant influence is exercised by City Service SE are accounted for using
the equity method in the Group’s consolidated financial statements. Impairment assessment of investments in associates
is performed when there is an indication that the asset may be impaired or the impairment losses recognized in prior years
no longer exist.
Upon loss of control over subsidiary, the Group measures and recognises any retained investment at its fair value. Any
difference between the carrying amount of subsidiary upon loss of control and the fair value of the retained investment and
proceeds from disposal is recognised in profit or loss.
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. For each business combination, the acquirer measures the non-controlling interest in the acquiree
either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are
expensed and included in administrative expenses.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity
interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss. Any contingent consideration
to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair
value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with IFRS
9 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity,
it should not be remeasured until it is finally settled within equity.
Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the amount
recognised 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 recognised in
profit or loss.
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 Company’s separate financial statements (Note 36) are carried at cost,
less impairment.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
72
2 Accounting policies (cont’d)
2.4. Investments in subsidiaries and associates (the Company) (cont’d)
Financial guarantees provided for the liabilities of the subsidiaries during the initial recognition are accounted at estimated
fair value as the investment into subsidiaries and financial liability in the statement of financial position. Subsequent to initial
recognition this financial liability is amortised and recognised as income depending on the related amortisation / repayment
of the subsidiary‘s financial liability to the bank. If there is a possibility that the subsidiary may fail to fulfil its obligations to
the bank, a financial liability of the Company are measured the higher of 1) expected credit loss under IFRS 9 and 2) the
amount initially recognised (i.e. fair value) less any cumulative amount of income/amortisation recognised.
2.5. Non-current assets held for sale and discontinued operations
The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered
principally through a sale rather than through continuing use. Such non-current assets and disposal groups classified as
held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the
incremental costs directly attributable to the sale, excluding the finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or disposal
group is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is
unlikely that the sale will be withdrawn. Management must be committed to the sale expected within one year from the date
of the classification.
Assets and liabilities classified as held for sale are presented separately as current items in the statement of financial
position.
2.6. 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. Intangible assets are recognised if it is probable that future economic
benefits that are attributable to the asset will flow to the enterprise and the cost of asset can be measured reliably.
The useful lives of intangible assets are assessed to be either finite or indefinite.
After initial recognition, intangible assets with finite lives are measured at cost less accumulated amortisation and any
accumulated impairment losses. Intangible assets are amortised on a straight-line basis over their useful lives:
Customer relationships 5 – 40 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 amortisation 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 infinite useful life other than goodwill.
2.7. Property, plant and equipment and investment property
Property, plant and equipment, including investment property, are stated at cost less accumulated depreciation and
impairment losses.
The initial cost of property, plant and equipment and investment property comprises its purchase price, including non-
refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for
its intended use. Expenditures incurred after the property, plant and equipment is ready for its intended use, such as repair
and maintenance costs, are normally charged to the statement of comprehensive income in the period the costs are
incurred.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
73
2 Accounting policies (cont’d)
2.7. Property, plant and equipment and investment property (cont’d)
Depreciation is computed on a straight-line basis over the following estimated useful lives:
Buildings (including investment property) 15 – 62.5 years
Vehicles 4 – 10 years
Other property, plant and equipment 3 – 6 years
The useful lives, residual values and depreciation method are reviewed annually to ensure that they are consistent with the
expected pattern of economic benefits from items in property, plant and equipment and investment property.
An item of property, plant and equipment and investment property is derecognised upon disposal or when no future
economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated
as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of
comprehensive income in the year the asset is derecognised.
Construction in progress is stated at cost. This includes the cost of construction, plant and equipment and other directly
attributable costs. Construction in progress is not depreciated until the relevant assets are ready for intended use.
Maintenance expenses of investment property are charged to profit and loss during the financial period in which they are
incurred.
A transfer to/from investment property is performed when there is clear indication of changes in property use.
2.8. 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.
• Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other
comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow
characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not
contain a significant financing component or for which the Group has applied the practical expedient, the Group initially
measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss,
transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied
the practical expedient are measured at the transaction price determined under IFRS 15.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise
to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This
assessment is referred to as the SPPI test and is performed at an instrument level.
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.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
74
2 Accounting policies (cont’d)
2.8. Financial assets (cont’d)
Reverse factoring application
Reverse factoring model is being used by offering third party financing to Group clients. Receivables from such services are
being accounted in trade receivables in consolidated statement of financial position as Group is taking the risk of collection
of the payments. Payables to financing company are being accounted in trade payables and payables to related parties in
consolidated statement of financial position as the financing model meets the requirements of decision of IFRS
Interpretations Committee published in June 2020, where reverse factoring arrangements were described.
Subsequent measurement
After initial recognition, the Group measures a financial asset at:
• Amortised cost (debt instruments);
• Fair value through OCI with recycling of cumulative gains and losses (debt instruments). The Group did not have
such items as at 31 December 2021 and 2020;
• Fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments).
The Group did not have such items as at 31 December 2021 and 2020;
• Fair value through profit or loss. The Group did not have such items as at 31 December 2021 and 2020.
Financial assets at amortised cost (debt instruments)
The Group measures financial assets at amortised cost if both of the following conditions are met:
• The financial asset is held within a business model with the objective to hold financial assets in order to collect
contractual cash flows; and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to
impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
The Group’s financial assets at amortised 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.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon
initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value.
Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near
term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are
designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of principal and
interest are classified and measured at fair value through profit or loss, irrespective of the business model. Notwithstanding
the criteria for debt instruments to be classified at amortised cost or at fair value through OCI, as described above, debt
instruments may be designated at fair value through profit or loss on initial recognition if doing so eliminates, or significantly
reduces, an accounting mismatch. Financial assets at fair value through profit or loss are carried in the statement of financial
position at fair value with net changes in fair value recognised in the statement of comprehensive income. The Group did
not have such items as at 31 December 2021 and 2020.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
75
2 Accounting policies (cont’d)
2.8. Financial assets (cont’d)
Impairment of financial assets
Following IFRS 9, in common case scenario, the Group recognises an allowance for expected credit losses (ECLs) for all
debt instruments 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 recognised 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).
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 recognises a loss allowance based on lifetime ECLs at each
reporting date. The Group has established the provision matrixes for each separate market, where the Group operates.
Such matrixes are 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 has been structured
based on homogeneous customers’ groups. Impairment of non-current receivables are calculated in the same way as not
overdue accounts receivable, because no non-current receivables are overdue as at 31 December 2021 and 31 December
2020.
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.
Impairment of loans granted on a Company level (including intercompany)
Following IFRS 9, in common case scenario, the Company recognises an allowance for expected credit losses (ECLs) for
all debt instruments 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 Company expects to receive, discounted at
an approximation of the original effective interest rate. ECLs are recognised 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 Company
summarizes debt instruments into stages 1, 2 and 3:
• Stage 1: on initial recognition the Company 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 Company 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. Company considers that significant increase in credit risk when debt is overdue more than 60 days for
intercompany loans and 30 days for external loans granted or when it is visible from financial information that debtor is
experiencing financial difficulties.
• Stage 3: For loans considered credit-impaired, the Company recognises the lifetime expected credit losses for these loans.
The method is similar to that for Stage 2 assets, with the probability of default set at 100%.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
76
2 Accounting policies (cont’d)
2.8. Financial assets (cont’d)
• Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans,
borrowings and payables. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings
and payables, net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables,
loans and borrowings including bank overdrafts and lease liabilities.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Loans, borrowings and other payables
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR
method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR
amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees
or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of
comprehensive income.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial
position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on
a net basis, to realise the assets and settle the liabilities simultaneously.
2.9. Derecognition of financial assets and liabilities
Financial assets
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised
when:
- the rights to receive cash flows from the asset have expired;
- the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full
without material delay to a third party under a ‘pass through’ arrangement; or
- the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all
the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of
the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained
substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent
of the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the
transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of
consideration that the Group could be required to repay.
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an
existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original
liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the
statement of comprehensive income.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
77
2 Accounting policies (cont’d)
2.10. Fair value measurements
Available-for-sale financial assets are those non-derivative financial assets that are designated as available-for-sale or are
not classified in any of the three preceding categories. After initial recognition available-for-sale financial assets are
measured at fair value with unrealised gains or losses (except impairment and gain or losses from foreign currencies
exchange) being recognised in other comprehensive income until the investment is derecognised or until the investment is
determined to be impaired at which time the cumulative gain or loss previously reported in other comprehensive income is
included in profit or loss. Interest earned whilst holding available-for-sale financial assets is reported as interest incoming
using effective interest rate method.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value measurement is based on the presumption that the transaction
to sell the asset or transfer the liability takes place either:
• In the principal market for the asset or liability, or
• In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible to the Group.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset
in its highest and best use.
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 categorised 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 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly
or indirectly observable;
• Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
Assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether
transfers have occurred between Levels in the hierarchy by re-assessing categorization (based on the lowest level input
that is significant to the fair value measurement as a whole) at the end of each reporting period.
2.11. Inventories
Inventories are valued at the lower of cost or net realisable value, after impairment evaluation for obsolete and slow moving
items. Net realisable value is the selling price in the ordinary course of business, less the costs of completion, marketing
and distribution. Cost of raw materials that are not ordinarily interchangeable and are segregated for specific projects is
determined using specific identification method; cost of other inventory is determined by the first-in, first-out (FIFO) method.
Unrealisable inventory is fully written-off.
2.12. Cash and cash equivalents
Cash includes cash on hand and cash in banks. Cash equivalents are short-term, highly liquid investments that are readily
convertible to known amounts of cash with original maturities of three months or less and that are subject to an insignificant
risk of change in value.
For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand and in current bank
accounts as well as deposits in bank with original term equal to or less than 3 months.
Restricted cash balances comprise balances of cash and cash equivalents which are restricted as to withdrawal under the
terms of certain borrowings, long-term agreements, court orders and other. 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 2021 and 2020 and disclosed in Note 14.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
78
2 Accounting policies (cont’d)
2.13. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets.
All other borrowing costs are expensed in the period they occur.
There were no borrowing costs matching the capitalisation criteria in 2021 and 2020.
2.14. 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.
Initial measurement of right-of-use assets
At the commencement date, the Group measures the right-of-use asset at cost. The cost of the right-of-use asset comprises:
the amount equal to the lease liability at its initial recognition, lease payments made at or before the commencement of the
lease (less any lease incentives received), any initial direct costs incurred by the Group, and an estimate of costs to be
incurred by the Group in dismantling and removing the underlying asset, restoring the site on which it is located or restoring
the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to
produce inventories. The Group incurs obligation for these costs either at the commencement date or as a consequence of
having used the underlying asset during a particular period The Group recognizes these costs as part of the cost of right-
of-use asset when the Group incurs an obligation for these costs.
i) Right-of-use assets
Subsequent measurement of right-of-use assets
Subsequent to initial recognition, the Group measures the right-of-use asset at cost. Under the cost model, the Group
measures a right-of-use asset at cost: less any depreciation and any accumulated impairment losses adjusted for any
remeasurement of the lease liability. The right-of-use assets depreciated by the Group under the depreciation requirements
of IAS 16, Property, Plant and Equipment. If the lease transfers ownership of the underlying asset to the Group by the end
of the lease term or if the cost of the right-of-use asset reflects that the lessee will exercise a purchase option, the Group
depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset.
Otherwise, the lessee shall depreciate the right-of-use asset from the commencement date to the earlier of the end of the
useful life of the right-of-use asset or the end of the lease term.
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 intangible and tangible assets 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 2021
(all amounts are in EUR thousand unless otherwise stated)
79
2 Accounting policies (cont’d)
2.14. Right of use assets and lease liabilities (cont’d)
ii) Lease liabilities
Initial measurement of lease liability
At the commencement date, the Group measures lease liability at the present value of the lease payments that are not paid
at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily
determined. If the interest rate implicit in the lease cannot be readily determined, the Group applies incremental borrowing
rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the
following payments for the right to use the underlying asset during the lease term that are not paid at the commencement
date: fixed payments, less any lease incentives receivable; variable lease payments that depend on an index or a rate,
initially measured using the index or rate as at the commencement date; amounts expected to be payable by the lessee
under residual value guarantees; the exercise price of a purchase option if the Group is reasonably certain to exercise that
option; payments of penalties for terminating the lease, if the lease term reflects the Group exercising an option to terminate
the lease. Variable lease payments that depend on an index or a rate include, for example, payments linked to a consumer
price index, payments linked to a benchmark interest rate (such as LIBOR) or payments that vary to reflect changes in
market rental rates.
Subsequent measurement of lease liability
After the commencement date, a lessee shall measure the lease liability by: increasing the carrying amount to reflect interest
on the lease liability; reducing the carrying amount to reflect the lease payments made; and remeasuring the carrying
amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments.
Interest on the lease liability in each period during the lease term shall be the amount that produces a constant periodic rate
of interest on the remaining balance of the lease liability. The periodic rate of interest is the discount rate or if applicable the
revised discount rate.
After the commencement date, the Group shall recognise in profit or loss, unless the costs are included in the carrying
amount of another asset under the other applicable Standards, both: interest on the lease liability; and variable lease
payments not included in the measurement of the lease liability in the period in which the event or condition that triggered
those payments occurred.
Remeasurement of lease liability
After the commencement date, the lease liability is remeasured to reflect changes to the lease payments. The Group
recognises the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. However, if
the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the
lease liability, a lessee shall recognise any remaining amount of the remeasurement in profit or loss.
Revised discount rate
The Group remeasures the lease liability by discounting the revised lease payments using a revised discount rate, if there
is a change in the lease term. The Group determines the revised lease payments on the basis of the revised lease term or
when there is a change in the assessment of an option to purchase the underlying asset, assessed considering the events
and circumstances. The Group determines the revised lease payments to reflect the change in amounts payable under the
purchase option.
If there is a change in the lease term or in the assessment of an option to purchase, the Group shall determine the revised
discount rate as the interest rate implicit in the lease for the of 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.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
80
2 Accounting policies (cont’d)
2.14. Right of use assets and lease liabilities (cont’d)
Unchanged discount rate
The Group remeasures the lease liability by discounting the revised lease payments, if either:
- there is a change in the amounts expected to be payable under a residual value guarantee. The Group determines the
revised lease payments to reflect the change in amounts expected to be payable under the residual value guarantee.
- there is a change in future lease payments resulting from a change in an index or a rate used to determine those payments,
including for example a change to reflect changes in market rental rates following a market rent review. The Group
remeasures the lease liability to reflect those revised lease payments only when there is a change in the cash flows (i.e.
when the adjustment to the lease payments takes effect). The Group determines the revised lease payments for the
remainder of the lease term based on the revised contractual payments.
The Group uses an unchanged discount rate, unless the change in lease payments results from a change in floating interest
rates. In that case, the lessee shall use a revised discount rate that reflects changes in the interest rate.
Lease modifications
A lessee shall account for a lease modification as a separate lease if both:
- the modification increases the scope of the lease by adding the right to use one or more underlying assets; and
- the consideration for the lease increases by an amount commensurate with the standalone price for the increase in scope
and any appropriate adjustments to that standalone price to reflect the circumstances of the particular contract.
For a lease modification that is not accounted for as a separate lease, at the effective date of the lease modification the
Group:
- allocates the consideration in the modified contract;
- determines the lease term of the modified lease; and
- remeasure the lease liability by discounting the revised lease payments using a revised discount rate.
For a lease modification that is not accounted for as a separate lease, the Group accounts for the remeasurement of the
lease liability by:
- decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease for lease
modifications that decrease the scope of the lease. The Group recognises in profit or loss any gain or loss relating to the
partial or full termination of the lease.
- making a corresponding adjustment to the right-of-use asset for all other lease modifications.
The Group presents lease liabilities in the statement of financial position separately from other liabilities. Interest expense
on the lease liability are presented separately from the depreciation charge for the right-of-use asset. Interest expense on
the lease liability is a component of finance costs, which is presented in the statement of comprehensive income.
iii) Short-term leases and leases of low-value assets
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. Lease payments on short-term leases and leases of low value assets are recognised as expense on a
straight-line basis over the lease term.
2.15. Provision for employee benefits
According to the requirements of Lithuanian Labour Code, each employee leaving company at the age of retirement is
entitled to a one-off payment in the amount of 2 month salary. According to the requirements of Polish law, each employee
leaving the Group at the age of retirement is entitled to a one-off payment in the amount of 1 month salary.
Current year cost of employee benefits is recognised as incurred in the statement of comprehensive income. The past
service costs are recognised as an expense as incurred in profit or loss. Any gains or losses appearing as a result of
curtailment and/or settlement are recognised in the statement of comprehensive income as incurred.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
81
2 Accounting policies (cont’d)
2.15. Provision for employee benefits (cont’d)
The above mentioned employee benefit obligation is calculated based on actuarial assumptions, using the projected unit
credit method. Obligation is recognised 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 which reflects the interest rate of the
Government bonds of the same currency and similar maturity as the employment benefits. Actuarial gains and losses are
recognised in statement of other comprehensive income as incurred.
2.16. Provision for emission allowances used
Based on the European Union (hereinafter EU) Directive 2003/07/EC, the greenhouse gas emissions trading scheme was
developed which came into force on 1 January 2005. The first period of operation of this scheme covered 3 years from 2005
to 2007; the second period covered 5 years from 2008 to 2012, and the third period covers 7 years from 2013 to 2020. From
2021 the fourth phase has started, which will last until 2030. The Scheme’s operation period is in line with the period
established under the Kyoto Agreement. The system functions on ‘Cap’ and ‘Trade’ basis.
The governments of the EU Member States are required to set caps for each emission unit in the scheme and for the period
of implementation. These caps are specified in the National Allocation Plan (hereinafter “NPP”) to be developed by a
responsible authority of each Member State. NPP determines the annual emission amount (measured as tons of carbon
dioxide equivalent) for each emission unit and each period and allocates annual emission allowances.
A Member State has an obligation to allocate emission allowances by 28 February of each year in accordance with the
National Allocation Plan (part of the allowances is set aside for new entrants).
A Member State is to assure that an operator of each emission unit will submit data on the unit’s actual amount of
greenhouse gas emissions during the current calendar year not later than by 30 April of the next year.
When the Group emits pollutants into the environment, it is obliged to pay for the pollution using the state permits, the
nominal value of which would correspond to the amount of emitted pollutants. The Group determined an accounting method
of emission allowances based on the general principles of IFRS. It is using net liability approach according to which emission
allowances granted are recorded at their nominal amount and the Group only recognizes a liability once actual emissions
exceed the emission allowances granted and still held. If the Group has acquired emission allowances, the value of the
provision is equal to their carrying amount. If the actual amount of pollutants exceed the number of emission allowances
available, an obligation to purchase additional emission allowances equal to the market value is accounted for.
Changes in the value of a liability related to insufficient emission allowances are recognized in the profit or loss in the
Consolidated Statement of Comprehensive Income.
2.17. Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. The Group re-evaluates provisions at each date of the statement of
financial position and adjusts them in order to present the most reasonable current estimate. If the effect of the time value
of money is material, the amount of provision is equal to the present value of the expenses, which are expected to be
incurred to settle the liability. Where discounting is used, the increase in the provision due to the passage of time is
recognised as a borrowing cost.
2.18. 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, the Republic of Latvia, Russian Federation, the Republic of Poland and Kingdom of Spain.
The standard income tax rate in Lithuania was 15% in 2021 and 2020. Income tax rate in 2021 in Russia, Latvia, Poland,
Spain and Czech Republic was 20%, 20%, 19%, 25% and 19% respectively (same income tax rates in 2020 ). Standard
income tax rate in 2021 in Estonia was 20% and reduced rate of 14% for certain regular dividends (in 2020 – 20% and
reduced rate of 14% for certain regular dividends).
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
82
2 Accounting policies (cont’d)
2.18. Income tax (cont’d)
In accordance with Latvian Income Tax Act, income tax is not levied on companies’ profits but on dividends distributed
(policy changed in 2018). The tax rate in 2021 was 20/80 of the amount distributed as the net dividend (20/80 in 2020). 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 recognised 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. The tax rate in 2021 was 20/80 of the amount distributed as the net dividend (20/80 in 2020). The reduced rate
of 14/86 is applied on regular net dividend, calculated as an average of taxable dividend paid during the previous three
calendar years (2018 is the first year included in the calculation). 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 recognised 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.
As at 31 December 2021, the Group’s retained earnings amounted to EUR (8,865 thousand. Income tax upon the
payment of dividends is 20/80 or 14/86 on the net dividends paid out, except from certain dividends received from foreign
subsidiaries and permanent establishments that can be distributed to the shareholders tax free. As a result of such
distribution, no additional material income tax liability would arise upon the payment of all the retained earnings as net
dividends.
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 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 the 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%.
Comparatively, tax losses in Russia can be carried forward for unlimited time and in Poland for five years, but value of the
deduction may not exceed 50% of the taxable income earned during the reporting year. In Spain tax losses can be carried
forward for indefinite period, but value of the deduction may not exceed 70% of the taxable income earned during the
reporting year.
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 recognised in the
statement of financial position to the extent the management believes it will be realised in the foreseeable future, based
ontaxable profit forecasts. If it is believed that part of the deferred tax is not going to be realised, this part of the deferred
tax asset is not recognised in the financial statements.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
83
2 Accounting policies (cont’d)
2.19. Revenue recognition
Revenue from contracts with customers
Revenue from contracts with customers is recognised when control of the goods or 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 goods or
services. 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 territory cleaning and maintenance services and other on demand services to its customers.
Revenue from contracts with customers is recognised 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 assets 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 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.
Group provides sale of heating services for the clients in Poland. Revenue from contracts with customers is recognised
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.
Revenue from other than described above services or sales of inventory is recognised 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 recognised in the Company’s unconsolidated financial statements (Note 36) 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 finance income or expenses in the statement of comprehensive income.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
84
2 Accounting policies (cont’d)
2.19. Revenue recognition (cont’d)
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 recognised 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 recognised when the payment is made or the payment is
due (whichever is earlier). Contract liabilities are recognised as revenue when the Group satisfied performance obligation
under the contract.
2.20. Impairment of non-financial assets
Non-financial assets (excluding goodwill)
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 recognised in profit or loss. Reversal of impairment losses recognised in prior years is recorded when
there is an indication that the impairment losses recognised 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.
2.21. Contingencies
Contingent liabilities are not recognised in the financial statements, except for contingent liabilities associated with business
acquisitions. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote.
A contingent asset is not recognised in the financial statements but disclosed when an inflow or economic benefits are
probable.
2.22. Subsequent events
Subsequent events that provide additional information about the Group’s position at the date of statement of financial
position (adjusting events) are reflected in the financial statements. Subsequent events that are not adjusting events are
disclosed in the notes when material.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
85
3 Use of judgements and estimates in preparation of financial statements
The preparation of financial statements in conformity with IFRS as adopted by EU requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities, income and expenses and disclosure of
contingencies. The significant 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), provision for employee benefits (Note 2.15 and
Note 19), impairment evaluation of goodwill, other intangible assets and property, plant and equipment, including allocation
of Group assets to cash generating units (Note 2.3 and Note 5), trade receivables allowance and trade receivable
classification to current and non-current (Note 2.19, Note 13), other assets impairment (Note 2.19, Note 6, Note 11, Note
12 and Note 13), recognition and realization of deferred tax asset (Note 27), contingencies related to the Group’s
subsidiaries (Note 17, Note 31), valuation and presentation of discontinued operations of administration of dwelling houses
in Spain (Note 8), application of purchase price allocation in business combinations (Note 5), going concern assessment
and assessment of the impact of the Russian military invasion of the Republic of Ukraine. 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, except for the items described below.
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 29,427 thousand as of 31 December 2021 and EUR 29,368 thousand as of 31
December 2020. The management amortizes these customer relationship intangible assets over the estimated validity
period of existing contracts, which is 5-40 years. During 2020 the management made a detail analysis of the factual validity
term of customer relationships based on current development of the operations, i.e. already concluded contracts as well as
current rate of terminated contracts, and concluded that amortization in Poland and Spain were decreased to 8 years
(amortization rates in Poland and Spain were 32 and 10 years respectively). This estimation was used prospectively starting
from 1 January 2021. The change in amortization rates had effect of EUR 541 thousand to the yearly amortization expenses
in 2020.
Impairment to customer relationships intangible in Poland
During 2021 the management recognized impairment to full value of customer relationships intangible in Poland which
amounted to EUR 4,694 thousand. The net book value of these intangible assets in Poland amount to EUR 5,707 thousand
as of 31 December 2020 (see Note 6).
Impairment, disposal of customer relationships intangible in Spain and discontinued operations
During 2021 Group management made judgement and represented administration of dwelling houses activity in Spain as
discontinued operations and presented as such in Consolidated Statement of Comprehensive Income as subsidiaries
operating in Spain disposed all remaining customer relationships intangible assets. Possible changes in value of long-term
assets, financial assets, provisions and additional liabilities were taken into consideration. Impairment to the customer
relationship intangible assets amount EUR 857 thousand were accounted before the transaction as Group management
estimated the decrease of value of the assets after the decrease of the number of the clients. No gain or loss were accounted
during the sale transaction, as net book value of the assets were equal to amount of the sale transaction EUR 804 thousand.
CGU’s in Poland
During 2021 the Group entities operating in Poland faced a significant loss in client number in administration of dwelling
houses and Group management reconsidered its activities and CGU and concluded that Administration of dwelling houses
and Heating activity should be disclosed as separate CGUs in Group Consolidated Financial Statements. Moreover, 2021
Heating activity in Poland were separated from segment of building administration in Poland and disclosed in other
segments group.
Purchase price allocation
During 2021 Group acquired 9 companies operating in different geographical regions and different activities. Group
management used purchase price allocation model and identified any unaccounted assets and liabilities in the companies.
At the moment of issuance of these consolidated financial statements, Group management made judgement and
provisionally accounted EUR 714 thousand of subsidiary Starlit s.r.o. as other intangible assets and EUR 1,284 thousand
as goodwill in Consolidated Statement of Financial Position as Group management still has no full amount of information
required to make appropriate recognition of unidentified assets. At the date of acquisition in total EUR 1,542 thousand
Goodwill, EUR 1,571 thousand customer related intangible assets and EUR 176 thousand deferred tax liabilities were
accounted during 2021 (during 2020 EUR 46 thousand goodwill were accounted).
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
86
3 Use of judgements and estimates in preparation of financial statements (cont’d)
Going concern
The Group has committed to its lenders to keep to certain minimum capital requirements which was in breach as of 31
December 2021 (see Note 16) as the Group had EUR 14,978 thousand net loss during the current financial year.
Consequently it accounted EUR 15,952 thousand of long-term liabilities as short-term liabilities because of the minimum
capital requirements breach. The described situation made significant impact to Group’s consolidated working capital as it
became EUR (15,449) thousand as of 31 December 2021 and the Group consolidated liquidity ratio was 0,75 as of 31
December 2021.
On 29 April 2022 City Service SE received decision from the bank to change existing financing contract conditions regarding
the breach of keeping minimum capital requirements. Currently EUR 34 million of maximum borrowing facility will be
decreased to the current utilization level of EUR 28 million. Moreover, payments of EUR 5,100 thousand will be made during
financial year 2022 and additional payments of EUR 5,400 thousand will be made during the financial period 2023 - 2025.
Remaining obligation to settle at the end of the contract at 1 September, 2025 will be EUR 17,500 thousand. Moreover,
subsidiaries of the Group will be obliged to dispose companies operating in digital business area to City Service SE direct
shareholder UAB Unit Invest which were acquired during the period including December 2021 – April 2022.
Also, as described in Note 34, the Company and the Vilnius City municipality signed the agreement regarding the payment
of the amount of EUR 4,647 thousand by implementing the instalment plan by which EUR 2,601 thousand will be paid by
31 December 2022 and remaining amount will be paid by 31 December 2023. Additionally, Group estimates that EBITDA
of 2022 will be positive and it will make positive impact to consolidated working capital. EBITDA will increase due to various
acquisitions of new profitable subsidiaries were made as well as core business in Baltic states will be more stable. The main
reasons of negative EBITDA (EUR 7,348 thousand) during the financial year 2021 was impairment expenses of goodwill,
other intangible and other non-current assets (EUR 6,150 thousand, mainly related to house administration business in
Poland and Spain), expenses related to case with Vilnius City municipality (EUR 4,647 thousand) (Note 34). Such expenses
are not expected to repeatedly occur during 2022. Additionally, Group heating business result was lower comparing to 2020
as the increase in energy prices made significant impact to cost of sales and the new higher heating tariffs were approved
during 2022 which will make positive impact to revenue from contracts with customers in Poland. Also, Group accounted
net loss of EUR 5,185 thousand from discontinued operations in Spain administration of dwelling houses which will not
repeatedly occur during the 2022.
Considering mentioned above, negative Group‘s working capital as of 31 December 2021 becomes positive in 2022.
Group management evaluated the possible outcome of the matters described above to Group‘s consolidated working
capital and concluded that there is no material uncertainty in regard to Group‘s ability to continue as a going concern due
respective explained measures taken, and therefore, Group management believes that these consolidated financial
statements are presented fairly in accordance with going concern accounting principle.
Deferred tax recognized from tax loss carry forward
In addition, deferred tax asset recognised from tax loss carry forward - significant judgment exists that forecasted results
will be achieved and tax losses will be utilised in the foreseeable future. The management estimated what part of the
deferred tax asset will be utilised based on the best knowledge of the operations and results of the Group companies as at
31 December 2020 and 2021 (see Note 27).
Receivables which are overdue
As disclosed in Note 12 as of 31 December 2021 the Group has EUR 3,327 thousand (EUR 3,517 thousand as of 31
December 2020) overdue more than a year current receivables from trade customers (public and private) which, based on
the assessment of the management, were not impaired. This 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.
Tax risks
The Group’s management has applied probability-weighted expected value measurement for estimating provisions to be
accounted for probable tax and legal risks as well as contingencies associated with subsidiaries operating in the City of St.
Petersburg in Russia and in Lithuania (Note 17 and 31).
Goodwill and other intangible assets
As disclosed in Note 5 and Note 6, as of 31 December 2021 the Group has goodwill and other intangible assets (contracts
with the clients) in amount of EUR 26,816 thousand (EUR 30,195 thousand – as of 31 December 2020). Significant
management estimates were required in the cash generating units impairment testing performed as of 31 December 2021
and 31 December 2020, such as forecasting of future EBITDA levels, determining annua growth rate, determining weighted
average cost of capital (Note 5, 6).
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
87
3 Use of judgements and estimates in preparation of financial statements (cont’d)
Presentation of planned to sell buildings
As of 31 December 2021 the Group decided not to reclassify buildings with a net book value of EUR 522 thousand, which
are posted publicly on sale to assets held for sale, as they are still in use (own use) and management estimates that there
is an uncertainty that the realization of such assets could be completed within 12 months.
Presentation of contract liabilities
In order to present more accurate consolidated financial statements presentation, Group management used estimate and
as of 31 December 2021 reclassified EUR 4,832 thousand of the short term contract liabilities to long term based on the
historical yearly usage of such liabilities (as of 31 December 2020 EUR 4,342 thousand) (Note 21).
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 or not 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 IBR is the rate of interest that the Group would have to pay to borrow over a similar
term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a
similar economic environment. The IBR therefore reflects what the Group ‘would have to pay’, which requires estimation
when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when they
need to be adjusted to reflect the terms and conditions of the lease. The Group estimates the IBR using observable inputs
(such as market interest rates).
COVID-19
Group management evaluated the impact of COVID-19 pandemic situation to the use of judgements and estimates in the
preparation of financial statements, including going concern, tangible and intangible assets amortization rates, expected
credit loss, impairment of goodwill and intangible assets and therefore concluded that current economic situation had no
material effect to the estimates. Therefore, it had an impact to some revenue streams, but to the whole Group it had
immaterial effect. The Group’s management assessed that this matter will not affect the Group’s ability to continue as going
concern as the Group companies remained less affected by the current economic situation.
Assessment of the impact of the Russian military invasion of the Republic of Ukraine
As mentioned in Subsequent events (Note 34), the EU and rest of the world, including global bodies, are taking measures
to respond to the military aggression of the Russian Federation against the Republic of Ukraine. Group companies operating
in Russia encounters no direct impact of certain restrictive measures except it has no ability to distribute dividends to its
parent companies in Lithuania and Estonia due to bank restrictions. The management of the Group has assessed that these
restrictive measures will not have a significant impact on the Group’s ability to continue as a going concern, since the
restrictive measures imposed are currently not having an adverse effect on the Group.
In addition, the management has concluded that these events are non-adjusting subsequent events and therefore their
potential impact was not considered when making estimates and assumptions about the recoverable amount of Russia
cash generating unit. However, this matter might have a significant impact on these estimates in the next financial period.
At the date of authorisation of these financial statements, the management is not yet able to reasonably quantify the extent
of potential changes in accounting estimates in 2022 due to the rapidly changing situation, great level of uncertainty and
the possible overall negative economic effect.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
88
4 Segment information
For management purposes, the Group is organized into business units based on services provided and have one main
reportable segment as follows:
• 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 segment information is presented as analyzed by chief operating decision
maker of the Group (the Board), i.e. allocated to Baltic states, St. Petersburg, Poland, Spain.
No operating segments have been aggregated to form the above reportable operating segments, except for Baltics, which
actually represents 2 separate cash generating units, but for internal management purposes are analyzed as one. All other
segments consist of Heating activity in Poland and IT services in Czech Republic.
As of 2021 Heating activity in Poland were separated from segment of building administration in Poland, as it faced a
significant loss of clients and Group management started to analyze it as two different core activities.
Segment performance is evaluated based on operating profit or loss and is measured consistently with operating profit or
loss in the consolidated financial statements. However, 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
The following tables present revenue, profit and certain asset and liability information regarding the Group's reportable
operating segments:
Year ended
31 December 2021
Buildings’ administration
All other
segments
Total
Baltic
states
St.
Petersburg
Poland
Spain
Revenue from contracts with
customers
79,497
42,999
3,903
178
6,544
133,121
Total revenue from contracts
with customers
133,121
Segment results
(228)
3,192
(10,302)
14
(682)
(8,006)
Unallocated expenses
(512)
1
Profit from operations
(8,518)
Net financial income
136
2
Profit / (loss) before income tax
(8,382)
Income tax expenses
(1,411)
2
Net profit (loss) for the year
(9,793)
Other segment information
Capital expenditure
4,066
132
12
36
4
4,250
1
Unallocated expenses include general and administrative expenses (EUR 512 thousand) identifiable as costs managed on a group basis.
2
Financing of the Group and income taxes are managed on a group basis and are not allocated to operating segments.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
89
4 Segment information (cont’d)
Year ended
31 December 2020
Buildings’ administration
All other
segments
Baltic states
St.
Petersburg
Poland
Spain
Total
Revenue from contracts with
customers
86,861
42,504
12,001
175
6,224
147,765
Total revenue from contracts
with customers
147,765
Segment results
11,175
3,079
(2,048)
88
588
12,882
Unallocated expenses
(1,430)
1
Profit from operations
11,452
Net financial income (expenses)
943
2
Profit / (loss) before income tax
12,395
Income tax expenses
(2,024)
2
Net profit for the year
10,371
Other segment information
Capital expenditure
1,426
111
249
103
1,889
1
Unallocated expenses include general and administrative expenses (EUR 1,430 thousand) identifiable as costs managed on a group
basis.
2
Financing of the Group and income taxes are managed on a group basis and are not allocated to operating segments.
Operating segments information
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 Group’s operating segments information on revenue based on the location of the customers
and non-current assets information based on the location of the Group’s assets:
2021
Spain
Poland
Baltic states
St. Petersburg
All other
segments
Total
Revenue
Sales to external customers
178
3,903
79,497
42,999
6,544
133,121
Segment revenue
178
3,903
79,497
42,999
6,544
133,121
2020
Spain
Poland
Baltic states
St. Petersburg
All other
segments
Total
Revenue
Sales to external customers
175
12,001
86,861
42,504
6,224
147,765
Segment revenue
175
12,001
86,861
42,504
6,224
147,765
The major part of sales in the Baltic States comprises sales in Lithuania.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
90
4 Segment information (cont’d)
As of 31 December 2021
Spain
Poland
Baltic states
St. Petersburg
All other
segments
Total
Non-current assets
Segment assets
69
1,532
40,958
3,195
4,780
50,534
Total non-current assets
69
1,532
40,958
3,195
4,780
50,534
As of 31 December 2020
Spain
Poland
Baltic states
St. Petersburg
All other
segments
Total
Non-current assets
Segment assets
3,347
8,981
43,519
3,196
3,149
62,192
Total non-current assets
3,347
8,981
43,519
3,196
3,149
62,192
Non-current assets for this purpose consist of property, plant and equipment, investment property, intangible assets, non-
current financial assets and deferred income tax asset.
There are no individual customers exceeding 10% of segment sales as of 31 December 2021 and 2020.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
91
5 Goodwill
Group
Cost:
Balance as of 1 January 2020
11,624
Additions
47
Disposals of subsidiaries
(106)
Exchange differences
(174)
Discontinued operations and assets held for sale
(816)
Balance as of 31 December 2020
10,575
Additions
1,542
Exchange differences
27
Balance as of 31 December 2021
12,144
Impairment:
Balance as of 1 January 2020
940
Exchange differences
(54)
Impairment recognized
436
Balance as of 31 December 2020
1,322
Exchange differences
(8)
Impairment recognized
250
Balance as of 31 December 2021
1,564
Net book value as of 31 December 2021
10,580
Net book value as of 31 December 2020
9,253
Acquisitions during 2021
As described in Note 1, during 2021 the Group acquired the following entities:
Name of entity acquired
Acquisition cost
Notes
UAB Butų ūkio valdos
EUR 200 thousand
All paid in cash
UAB Pastatų priežiūros tarnyba
EUR 40 thousand
All paid in cash
SIA NIRA Fonds apsaimniekošana
EUR 96 thousand
All paid in cash
SIA NIRA Fonds apsaimniekošana 2
EUR 44 thousand
All paid in cash
SIA NIRA Fonds apsaimniekosana-Salnas 21
EUR 21 thousand
All paid in cash
SIA NIRA Fonds apsaimniekošana 3
EUR 136 thousand
All paid in cash
SIA Livonijas Nami
EUR 470 thousand
All paid in cash
SIA Bilance
EUR 125 thousand
All paid in cash
Starlit s.r.o.
CZK 54,625 thousand
(EUR 2,165 thousand)
All paid in cash
At the acquisition of these subsidiaries a total goodwill of EUR 1,410 thousand has been accounted for. 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 2021
(all amounts are in EUR thousand unless otherwise stated)
92
5 Goodwill (cont’d)
The fair values of the assets acquired, liabilities and contingent liabilities assumed at the date of acquisitions made during
2021 were as follows:
Fair value of assets,
liabilities and contingent
liabilities
Butų ūkio
valdos
Pastatų
priežiūros
tarnyba
SIA NIRA Fonds
apsaimniekošana
SIA NIRA Fonds
apsaimniekošana 2
Date of acquisition
25 March
17 June
02 September
02 September
Goodwill
-
-
-
-
Intangible assets
190
84
108
41
Property, plant and
equipment
8
-
-
-
Trade receivables
33
117
35
7
Other current assets
17
107
201
2
Total assets
248
308
344
50
Deferred tax liability
29
13
-
-
Trade payables
5
243
24
2
Other current liabilities
14
12
224
4
Total liabilities
48
268
248
6
Fair value of
assets,
liabilities and
contingent
liabilities
SIA NIRA Fonds
apsaimniekosana-
Salnas 21
SIA NIRA Fonds
apsaimniekošana 3
SIA Livonijas
Nami
Starlit s.r.o.
SIA Bilance
Date of
acquisition
02 September
02 September
14 December
23 December
25 December
Goodwill
-
-
276
1,266
-
Intangible assets
18
136
167
703
124
Property, plant
and equipment
-
-
38
108
-
Trade
receivables
6
-
26
20
-
Other current
assets
36
34
183
367
4
Total assets
60
170
690
2,464
128
Deferred tax
liability
-
-
-
134
-
Trade payables
27
7
107
-
-
Other current
liabilities
12
27
113
165
3
Total liabilities
39
34
220
299
3
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
93
5 Goodwill (cont’d)
The carrying values of the acquired assets and liabilities assumed were as follows:
Book value
UAB Butų
ūkio valdos
Pastatų
priežiūros
tarnyba
SIA NIRA Fonds
apsaimniekošana
SIA NIRA Fonds
apsaimniekošana 2
Date of acquisition
25 March
17 June
02 September
02 September
Property, plant and
equipment
8
-
-
-
Trade receivables
33
117
35
7
Other current assets
17
107
201
2
Total assets
58
224
236
9
Trade payables
5
243
24
2
Other current liabilities
14
12
220
3
Total liabilities
19
255
244
5
Total identifiable net
assets at book value
39
(31)
(8)
4
attributable to equity holders
of the parent
39
(31)
(8)
4
attributable to non-
controlling interests
-
-
-
-
Book value
SIA NIRA Fonds
apsaimniekosana-
Salnas 21
SIA NIRA Fonds
apsaimniekošana
3
SIA Livonijas
Nami
Starlit s.r.o.
SIA Bilance
Date of
acquisition
02 September
02 September
14 December
23 December
25 December
Property, plant
and equipment
-
-
38
108
-
Trade receivables
6
-
26
20
-
Other current
assets
36
34
183
367
4
Total assets
42
34
247
495
4
Trade payables
27
7
107
-
-
Other current
liabilities
13
27
113
166
3
Total liabilities
40
34
220
166
3
Total identifiable
net assets at
book value
2
-
27
329
1
attributable to
equity holders of
the parent
2
-
27
329
1
attributable to
non-controlling
interests
-
-
-
-
-
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
94
5 Goodwill (cont’d)
The differences between the amounts paid and the fair values of assets acquired, liabilities and contingent liabilities
assumed on the acquisitions of 2021 were as follows:
UAB Butų
ūkio valdos
Pastatų
priežiūros
tarnyba
SIA NIRA Fonds
apsaimniekošana
SIA NIRA Fonds
apsaimniekošana 2
Date of acquisition
25 March
17 June
02 September
02 September
Fair value of acquired
assets, liabilities and
contingent liabilities
attributable to the Group
200
40
96
44
Goodwill
-
-
-
-
Total purchase
consideration
200
40
96
44
Fair value of non-
controling interest
acquired
-
-
-
-
Cash acquired
16
38
174
2
Total purchase
consideration, net of cash
acquired
184
2
(78)
42
SIA NIRA Fonds
apsaimniekosana-
Salnas 21
SIA NIRA Fonds
apsaimniekošana
3
SIA Livonijas
Nami
Starlit s.r.o.
SIA
Bilance
Date of
acquisition
02 September
02 September
14 December
23 December
25
December
Fair value of
acquired assets,
liabilities and
contingent liabilities
attributable to the
Group
21
136
194
899
125
Goodwill
-
-
276
1,266
-
Total purchase
consideration
21
136
470
2,165
125
Fair value of non-
controling
interest acquired
-
-
-
-
-
Cash acquired
16
9
97
362
4
Total purchase
consideration, net
of cash
acquired
5
127
373
1,803
121
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
95
5 Goodwill (cont’d)
UAB Butų ūkio
valdos
Pastatų
priežiūros
tarnyba
SIA NIRA Fonds
apsaimniekošana
SIA NIRA Fonds
apsaimniekošana 2
Date of acquisition
25 March
17 June
02 September
02 September
Profit (loss) incurred
since acquisition date
to 31 December 2021
(65)
(2)
(1)
1
Total revenue since
acquisition date to 31
December 2021
173
129
59
13
Total revenue for the
year 2021 (unaudited)
222
369
176
39
Total net result for the
year 2021 (unaudited)
(63)
17
(7)
2
SIA NIRA Fonds
apsaimniekosana-
Salnas 21
SIA NIRA Fonds
apsaimniekošana 3
SIA Livonijas
Nami
Starlit s.r.o.
SIA Bilance
Date of acquisition
02 September
02 September
14 December
23 December
25 December
Profit (loss) incurred
since acquisition date
to 31 December 2021
11
1
11
-
-
Total revenue since
acquisition date to 31
December 2021
50
10
11
-
2
Total revenue for the
year 2021 (unaudited)
151
30
166
388
23
Total net result for the
year 2021 (unaudited)
12
3
13
73
(1)
Acquisitions during 2020
As described in Note 1, during 2020 the Group acquired the following entity:
At the acquisition of this subsidiary a total goodwill of EUR 47 thousand has been accounted for. The goodwill appears due
to expected synergies, which are expected to be derived from horizontal expansion of business.
The fair values (calculated in 2020, remained the same and no adjustments were required in 2021) of the asset acquired,
liabilities and contingent liabilities assumed at the date of acquisitions made during 2020 were as follows:
Fair value of assets, liabilities and contingent
liabilities
UAB Miesto butų
ūkis
Date of acquisition
1 December
Goodwill
47
Other current assets
4
Total assets
51
Trade payables
4
Total liabilities
4
Name of entity acquired
Acquisition cost
Notes
UAB Miesto butų ūkis
EUR 47 thousand
All paid in cash
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
96
5 Goodwill (cont’d)
The carrying values of the acquired assets and liabilities assumed were as follows:
Book value
UAB Miesto butų
ūkis
Date of acquisition
1 December
Other current assets
4
Total assets
4
Trade payables
4
Total liabilities
4
The differences between the amounts paid and the fair values of assets acquired, liabilities and contingent liabilities
assumed on the acquisitions of 2020 were as follows:
UAB Miesto butų ūkis
Date of acquisition
1 December
Goodwill
47
Total purchase consideration
47
Fair value of non-controling interest acquired
-
Cash acquired
4
Total purchase consideration, net of cash
acquired
43
For the purpose of impairment evaluation, the goodwill as of 31 December 2021 and 2020 was allocated to the following
CGU:
Cash generating unit
Carrying value
of allocated
goodwill as of
31 December
2021
Carrying value
of allocated
goodwill as of
31 December
2020
Subsidiaries operating in Lithuania
8,012
8,011
Subsidiaries operating in Latvia
918
892
Subsidiaries operating in St. Petersburg, Russia
367
350
Subsidiary operating in Czech Republic
1,283
-
10,580
9,253
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
97
5 Goodwill (cont’d)
The recoverable amount of Lithuania, Latvia, Russia and Czech Republic cash generating units as of 31 December 2021
and 2020 was 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 and customer relationships intangible assets for each CGU unit were
included in the carrying value tested. Significant assumptions used for the assessment of the value in use in 2021 and 2020
are described further. As of 31 December 2021 amount of EUR 250 thousand were accounted as impairment of goodwill in
Latvia. Expenses were included in impairment of goodwill, other intangible assets and other non-current assets line in
Consolidated statement of comprehensive income.
The forecasted revenues for CGU involved in administration of dwelling houses in Lithuania, Latvia and Russia were
estimated based on the area of the dwelling-houses administered as of 31 December 2021 and 2020 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 (2% in 2020) 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
1
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 10.47% for cash generating units located in Lithuania
(10.47% in 2020), 11.86% for cash generating unit located in Latvia (11.86% in 2020), 22.38% for cash generating unit in
St. Petersburg (22.38% was used in 2020).
The forecasted revenue for CGU involved in Czech Republic were estimated based on the growth of clients assuming that
number of clients will increase and because of it revenue will grow from 8% in 2022 to 15% in 2026. In the meantime costs
were projected to increase from 2% in 2022 to 6% in 2026. Cash flows beyond the five-year period were extrapolated using
2% growth rate 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 as a weighted average cost of capital and is equal to 13.89% for
cash generating units located in Czech Republic.
In the opinion of the Group’s management, the most important and most change-like assumptions are the forecasted level
of EBITDA and discount rate. Based on management’s estimations, a reasonable change in these assumptions in
Lithuanian, Russian and Czech Republic cash generating units would not result in any impairment as of 31 December 2021.
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 2021:
- A decrease in annual EBITDA margin by 0.5 p.p. would result in EUR 60 thousand additional impairment loss to
customer related intangibles reported under intangible assets;
- An increase in pre-tax WACC (discount rate) by 0.5 p.p. would not result an additional impairment loss to
customer contracts reported under intangible assets.
In Czech Republic 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 2021:
- A decrease in annual EBITDA margin by 0.5 p.p. would not result an additional impairment loss to customer related
intangibles reported under intangible assets;
- An increase in pre-tax WACC (discount rate) by 0.5 p.p. would not result an additional impairment loss to customer
contracts reported under intangible assets.
1
EBITDA – Net profit (loss) 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 2021
(all amounts are in EUR thousand unless otherwise stated)
98
6 Other intangible assets
Movement of other intangible assets in 2021 and 2020 is presented below:
Notes
Other intangible assets
Cost:
Balance as of 1 January 2020
42,041
Additions
1,192
Disposals of subsidiaries
1
(24)
Disposals
(211)
Disposals related to discontinued operations
8
(944)
Exchange differences
(1,044)
Balance as of 31 December 2020
41,010
Additions arising from acquisitions of subsidiaries
5
1,571
Additions
3,872
Disposals
(4,768)
Disposals related to discontinued operations
8
(4,011)
Exchange differences
38
Balance as of 31 December 2021
37,712
Accumulated amortisation and impairment:
Balance as of 1 January 2020
10,919
Charge for the year
2,394
Impairment recognized
3,743
Disposals
(6)
Disposals of subsidiaries
(22)
Disposals related to discontinued operations
8
(471)
Exchange differences
(296)
Balance as of 31 December 2020
16,261
Charge for the year
2,381
Impairment recognized
5,062
Disposals
(4,735)
Disposals related to discontinued operations
8
(2,306)
Exchange differences
(40)
Balance as of 31 December 2021
16,623
Net book value as of 31 December 2021
21,089
Net book value as of 31 December 2020
24,749
As of 31 December 2021 amount of EUR 4,217 thousand was capitalized internally generated intangible assets, EUR
3,240 thousand during the financial year (EUR 977 thousand and EUR 977 thousand respectively). Capitalized internally
generated intangible assets are related to software planned to use in administration of dwelling houses and facility
management activities.
The main part of other intangible assets consists of customer relationship intangible assets, which are amortised during the
period of 5-40 years. As of 31 December 2021 net book value of such intangible assets constituted EUR 16,236 thousand
(EUR 20,942 thousand as of 31 December 2020). Other part of intangible assets consists of licenses, software and other
intangible assets.
Part of the other intangible assets of the Group with the acquisition value of EUR 10,979 thousand as of 31 December 2021
were fully amortised but still in use (EUR 2,540 thousand of the Group as of 31 December 2020).
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
99
6 Other intangible assets (cont’d)
Until the end of year 2020 Group management considered all business in Poland as one CGU as major part of all separate
businesses were integrated in one legal entity „Zespół Zarządców Nieruchomości sp. z o.o“ and all its businesses were
treated as one. The business data and revenue streams were also analyzed as one. During 2022 the Group entities
operating in Poland faced a significant loss in client number in administration of dwelling houses and Group management
reconsidered its activities and CGU and disclosed Administration of dwelling houses and Heating activity as separate CGUs
in Group Consolidated Financial Statements.
The recoverable amount of Administration of Dwelling Houses in Poland and Heating Activity in Poland cash generating
units as of 31 December 2021 and 2020 were determined based on the value in use calculation using cash flow projections
based on the five-year financial forecasts prepared by the management. Customer relationships intangible assets for each
CGU unit were included in the carrying value test. Significant assumptions used for the assessment of the value in use in
2021 and 2020 are described further. As of 31 December 2021 the whole amount customer relationships intangible assets
which were EUR 4.694 thousand were accounted as impairment in Poland and whole amount customer relationships
intangible assets of EUR 857 thousand were accounted as impairment in Spain. Expenses included in impairment of
goodwill, other intangible assets and other non-current assets line in Consolidated statement of comprehensive income.
The forecasted revenues for CGU involved in Administration of Dwelling Houses in Poland and Heating Activity in Poland
were estimated based on the area and the revenues of the Dwelling Houses Administered and Heating Activity as of 31
December 2021 and 2020 assuming that the growth in revenue will be derived from a service fee increase and heat tariff
increase, which was forecasted to be in line with the estimated inflation rate. The recoverable amounts were determined by
the average market EBITDA level taking into account estimated inflation. Cash flows beyond the five-year period were
extrapolated using 2% growth rate (2% in 2020) that reflects the best estimate of the management based on the current
situation in the respective industries. 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 14.84% for cash
generating unit of Administration of Dwelling Houses in Poland (14.84% in 2020) and 14.84% for cash generating unit of
Heating Activity in Poland (14.84% in 2020).
A change of the EBITDA margin and pre-tax WACC assumptions used in the model has no impact to the carrying value of
Administration of Dwelling Houses as it consists only of non-cash working capital as of 31 December 2021.
In the opinion of the Group’s management, the most important and most change-like assumptions in Heating activity in
Poland are the forecasted level of EBITDA and discount rate. Based on management’s estimations, a reasonable change
in these assumptions would not result in any impairment as of 31 December 2021 and 2020. At the moment of preparing
these financial statements the management of the Group did not expect any significant changes in the assumptions used.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
100
7 Property, plant and equipment
Movement of property, plant and equipment in 2021 and 2020 is presented below:
Buildings
Vehicles
Other
property,
plant and
equipment
Construct-
ion in
progress
Total
Cost:
Balance as of 1 January 2020
7,045
5,909
14,125
22
27,101
Additions
-
91
602
4
697
Disposals of subsidiaries
(62)
(5)
(116)
-
(183)
Disposals and retirements
(2,678)
(1,346)
(1,047)
-
(5,071)
Disposals related to discontinued operations
(1,674)
(47)
(854)
-
(2,575)
Exchange differences
(125)
(262)
(757)
(1)
(1,145)
Reclassification to assets held for sale
(890)
-
-
-
(890)
Balance as of 31 December 2020
1,616
4,340
11,953
25
17,934
Additions arising from acquisitions of subsidiaries
107
8
39
-
154
Additions
-
32
346
-
378
Disposals of subsidiaries
-
(22)
(34)
-
(56)
Disposals
(645)
(1,241)
(2,097)
-
(3,983)
Exchange differences
8
45
(34)
(4)
15
Balance as of 31 December 2021
1,086
3,162
10,173
21
14,442
Accumulated depreciation and impairment:
Balance as of 1 January 2020
2,153
5,050
7,213
-
14,416
Charge for the year
232
301
1,453
-
1,986
Disposals
(353)
(1,192)
(870)
-
(2,415)
Disposals of subsidiaries
(3)
(23)
(79)
-
(105)
Disposals related to discontinued operations
(1,066)
(40)
(706)
-
(1,812)
Exchange differences
(17)
(188)
(421)
-
(626)
Reclassification to assets held for sale
(94)
-
-
-
(94)
Balance as of 31 December 2020
852
3,908
6,590
-
11,350
Charge for the year
230
151
1,418
-
1,799
Disposals
(641)
(1,119)
(1,633)
-
(3,393)
Disposals of subsidiaries
-
-
(4)
-
(4)
Impairment
11
26
112
-
149
Exchange differences
-
19
2
-
21
Balance as of 31 December 2021
452
2,985
6,485
-
9,922
Net book value as of 31 December 2021
634
177
3,688
21
4,520
Net book value as of 31 December 2020
764
432
5,363
25
6,584
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
101
7 Property, plant and equipment (cont‘d)
The depreciation charge of the Group’s property, plant and equipment for the year 2021 amounts to EUR 1,799 thousand
(EUR 1,986 thousand in the year 2020). Amount of EUR 678 thousand for the year 2021 (EUR 1,106 thousand for the year
2020) have been included into general and administrative expenses in the Group’s statement of comprehensive and
discontinued operations Note 8.
Property, plant and equipment with an acquisition cost of EUR 7,147 thousand was fully depreciated as of 31 December
2021 (EUR 7,877 thousand as of 31 December 2020), but were still in active use.
As of 31 December 2021 and December 2020 no buildings of the Group were pledged to banks as collateral for the loans
(Note 16).
As of 31 December 2021 buildings of the Group with a net book value of EUR 522 thousand are posted publicly on sale.
However, Group management decided not to reclassify those assets to held for sale, as they are in use (own use) and
management estimates that there is an uncertainty that the realisation of such assets could be completed within 12 months.
As of 31 December 2021 amount of EUR 348 thousand were accounted as impairment of property, plant and equipment in
Poland (none as of 31 December 2020). Expenses were included in impairment of goodwill, other intangible assets and
other non-current assets line in 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 2021
(all amounts are in EUR thousand unless otherwise stated)
102
8 Discontinued operations and assets held for sale
On November 30, 2021 Company through its Spanish subsidiaries sold apartment building administration business and
partly sold insurance brokerage business in Spain. After evaluation of IFRS 5 Discontinued operations criteria, Inmonamas,
S.L., ARESI ADMINISTRACION DE FINCAS S.L., EURO HUB, S.L., EURONAMAS GESTION DE FINCAS CENTRO, S.L.,
Urban HUB, S.L. and GRUPO ARESI DE INVERSIONES S.L. were concluded to represent discontinued operations and
presented as such in Consolidated Statement of Comprehensive Income.
The result of discontinued operations is as follows:
2021
2020
Sales
2,354
4,269
Cost of sales
(99)
(9)
Gross profit
2,255
4,260
General and administrative expenses
(5,331)
(5,686)
Impairment of goodwill, other intangibles and other non-current assets
(857)
(3,469)
Credit loss expenses on financial assets
(529)
(206)
Other operating income
471
1
Other operating expense
(946)
(1)
Profit from operations
(4,937)
(5,101)
Interest income
4
-
Loss on sale of investments
(3)
-
Finance expenses
2
(13)
Profit before taxes
(4,934)
(5,114)
Income tax
(251)
(264)
Net profit (loss)
(5,185)
(5,378)
All income tax expenses presented in the disclosure are attributable to discontinued operations. Gain on sale of discontinued
operation is non- taxable item. Result of the sale transaction described in Note 3.
The net cash flows incurred from (to) discontinued operations are as follows:
2021
2020
Net cash flows (to) operating activities
(1,647)
(172)
Net cash flows from (to) investing activities
1,558
(3,820)
Net cash flows (to) from financing activities
(22)
4,185
Net (decrease) increase in cash flows
(111)
193
As of 31 December 2021 subsidiaries operating in Spain still operate in two businesses (insurance business and
PortalPRO business). At the date of issuance of these financial statements, remaining businesses are not meeting the
criterias as held for sale and as a result of that – as discontinued operations since Group management has no intentions
to dispose these.
On 23 December 2020 the Group disposed UAB Mano būsto sauga and UAB Mano sauga LT (with its subsidiaries UAB
Algos saugos tarnyba, UAB Acta iuventus ir UAB Vaizdo stebėjimo sprendimai). These companies represented the entirety
of the Group’s security services and after evaluation of IFRS 5 Discontinued operations criteria, these companies were
concluded to represent discontinued operations and presented as such in Consolidated Statement of Comprehensive
Income.
On 22 December 2020 the Group disposed UAB Naujosios Vilnios turgavietė and UAB Karoliniškių turgus and on 5 March
2021 the Group disposed UAB Konarskio turgelis. At 31 December 2020, UAB Konarskio turgelis was classified as a
disposal group held for sale and all of the mentioned companies classified as a discontinued operation. These companies
represented the entirety of the Group‘s market administration services until 5 March 2021.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
103
8 Discontinued operations and assets held for sale (cont’d)
The major classes of assets, equity and liabilities attributable to discontinued operations as of 31 December 2020 are the
following:
As of 2020
December 31
ASSETS
Non-current assets
Goodwill
201
Property, plant and equipment
159
Deferred income tax asset
7
Total non-current assets
367
Current assets
Trade receivables
10
Other receivables
2
Cash and cash equivalents*
35
Total current assets
47
Total assets
414
EQUITY AND LIABILITIES
Equity*
376
Current liabilities
Advances received
2
Income tax payable
31
Other current liabilities
5
Total current liabilities
38
Total equity and liabilities
414
* The amount of Cash and cash equivalents and Retained earnings were reduced since on 26 February 2021 the share capital of UAB
Konarskio turgelis was reduced and dividends were paid to its direct shareholder (Group company) EUR 2,482 thousand.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
104
8 Discontinued operations and assets held for sale (cont’d)
The result of discontinued operations is as following:
2020
Sales
2,473
Cost of sales
(1,629)
Gross profit
844
General and administrative expenses
(680)
Credit loss expenses on financial assets
(66)
Other operating income
22
Profit from operations
120
Finance expenses
(11)
Profit before taxes
109
Income tax
12
Net profit (loss)
121
All income tax expenses presented in the disclosure are attributable to discontinued operations. Gain on sale of discontinued
operation is non-taxable item.
The net cash flows incurred from (to) discontinued operations are as follows:
2020
Net cash flows from operating activities
2,033
Net cash flows from investing activities
1,264
Net cash flows (to) financing activities
(179)
Net increase in cash flows
3,118
In 2020, the Group publicly announced the decision to sell part of its real estate buildings. The estimated future disposals
of these assets are meeting the IFRS 5 criteria of assets held for sale, therefore at 31 December 2020, real estate buildings
with a carrying value of EUR 796 thousand were classified as assets held for sale.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
105
9 Material partly-owned subsidiaries
Financial information of subsidiaries that have material non-controlling interests is provided below:
Name
Region of incorporation and
operation
2021
2020
№ 3
Ф аа
St. Petersburg
80%
80%
As of 2021
December 31
As of 2020
December 31
Summarised statement of financial position
Inventories, trade receivables and cash
3,265
3,288
Property, plant and equipment and other non-current assets
2,201
2,173
Deferred income tax, net
(282)
(302)
Liabilities
(3,143)
(3,351)
Total equity
2,041
1,808
Attributable to:
Equity holders of parent
1,633
1,446
Non-controlling interest
408
362
2021
2020
Summarised statement of profit or loss
Sales
17,428
17,165
Cost of sales
(16,415)
(15,588)
General and administrative expenses
(1,345)
(1,135)
Other activity (net)
308
(105)
Financial activity (net)
1
7
Profit (loss) before tax
(23)
344
Income tax
5
(20)
Profit (loss) for the year
(18)
324
Attributable to non-controlling interests
(4)
65
Summarised cash flow information
2021
2020
Net cash flows (to) from operating activities
(451)
390
Net cash flows (to) investing activities
(1)
(4)
Net cash flows from financing activities
-
-
Net (decrease) increase in cash flows
(452)
386
In order to present more accurate exposure in summarised cash flow information of № 3
Ф аа, Group management made the correction in 2020 by reclassifying EUR 536 thousand from net cash
flows (to) investing activities to net cash flows (to) from operating activities.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
106
10 Inventories
Group
As of 31
December 2021
As of 31
December 2020
Raw and auxiliary materials
956
878
Goods for resale
66
46
Other
519
342
1,541
1,266
Less: net realizable value allowance
(111)
(66)
1,430
1,200
Change in allowance for inventories for the year 2021 and 2020 has been included into general and administrative
expenses.
11 Prepayments
Prepayments of the Group amount to EUR 1,716 thousand (net of EUR 383 thousand allowance) as of 31 December 2021
(EUR 1,482 thousand (net of EUR 416 thousand allowance) as of 31 December 2020) and mainly include prepayments to
suppliers and subcontractors.
12 Non-current receivables
Non-current receivables mainly comprise of long-term part of receivables for residential buildings repair works performed
amounting to EUR 2,493 thousand (net of EUR 28 thousand allowance) as of 31 December 2021 (EUR 3,660 thousand
(net of EUR 45 thousand allowance) as of 31 December 2020). Long-term part projects related to ESCO (Energy saving
projects) performed amounting to EUR 3,140 thousand as of 31 December 2021 (EUR 3,445 thousand as of 31 December
2020). Long-term part of restricted cash amounting to EUR 188 thousand as of 31 December 2021 (EUR 1,529 thousand
as of 31 December 2020) – see further information in Note 15.
13 Trade receivables
Group
As of 31
December 2021
As of 31
December 2020
Trade receivables, gross
43,571
44,447
Less: allowance for doubtful trade receivables
(14,849)
(12,954)
28,722
31,493
Change in allowance for doubtful trade receivables for the year 2021 and 2020 has been included into Credit loss expenses
on financial assets in the statement of comprehensive income.
Both trade receivables and other receivables are generally non-interest bearing and are usually collectible on 30 - 90 days
terms.
UAB City Service, UAB Mano Būstas Baltija, UAB Mano Būstas Neris, UAB Mano Būstas NPC, UAB Mano Būstas Sostinė,
UAB Mano Būstas Vilnius, UAB Mano Būstas Aukštaitija, UAB Mano Būstas Dainava, UAB Mano Būstas Radviliškis, UAB
Mano Būstas Šiauliai, UAB Mano Būstas Vakarai, UAB Mano Būstas Kaunas have pledged claim rights up to EUR 9.5
million to receivables under concluded agreements, except for receivables under factoring agreement.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
107
13 Trade receivables (cont’d)
Movements in the allowance for impairment of the Group’s receivables were as follows:
Individually
impaired
Collectively
impaired
Total
Balance as of 1 January 2020
890
11,297
12,187
Charge for the year
56
1,792
1,848
Exchange differences
(124)
(1,594)
(1,718)
Reversed during the year
118
(282)
(164)
Written-off during the year
7
1,013
1,020
Disposals of subsidiaries
-
(20)
(20)
Disposals related to discontinued operations
-
(165)
(165)
Disposals and deconsolidation of subsidiaries
-
(29)
(29)
Transfer to assets held for sale
-
(5)
(5)
Balance as of 31 December 2020
947
12,007
12,954
Charge for the year
69
553
622
Disposals related to discontinued operations
-
646
646
Exchange differences
21
383
404
Reversed during the year
(48)
(751)
(799)
Written-off during the year
7
1,015
1,022
Balance as of 31 December 2021
996
13,853
14,849
As of 31 December 2021 the average percentages used for allowance formation are as follow: 2.29% for not past due,
11.5% for past due less than 30 days, 12.05% for past due 30-60 days, 13.56% for past due 60-90 days, 30.49% for past
due 90-180 days, 46.88% for past due 180-360 days, 72.02% for past due 1-3 years, 90.43% for past due more than 3
years. The ageing analysis of the Group’s trade receivables (presented net of allowance for impaired receivables) as of
31 December is as follows:
Trade receivables
neither past due nor
impaired
Trade receivables past due but not impaired
Less
than 30
days
30 – 60
days
60 – 90
days
90 – 360
days
More
than 360
days
Total
2020
21,404
1,887
955
682
3,048
3,517
31,493
2021
19,334
1,800
962
956
2,343
3,327
28,722
14 Cash and cash equivalents
Group
As of 31
December 2021
As of 31
December 2020
Cash at bank
5,721
14,117
Cash on hand
6
2
Short-term deposits
445
-
6,172
14,119
The fair value of cash as of 31 December 2021 of the Group was EUR 6,172 thousand (EUR 14,119 thousand as of 31
December 2020) (1st level).
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
108
14 Cash and cash equivalents (cont’d)
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for period
overnight, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term
deposit rates.
As of 31 December 2021 the Group had restricted cash of EUR 1,694 thousand (EUR 3,137 thousand as of 31 December
2020) held in the bank as guarantee provided to customers: EUR 188 thousand is accounted in non-current receivables
caption (EUR 1,529 thousand as of 31 December 2020) while EUR 1,506 thousand – in other receivables caption in the
statement of financial position as of 31 December 2021 (EUR 1,608 thousand as of 31 December 2020).
As of 31 December 2021 and 2020 part of bank accounts of the Company and its subsidiaries are pledged to banks for
loans (Note 17).
Management of the Company considered potential impairment losses on cash held in banks as per IFRS 9 requirements.
Assessment is based on official Standard & Poor’s long–term credit ratings of the banks parent entities available online.
Group management concluded that no impairment of cash accounts exists.
15 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 2021 the reserve was fully composed and reached the
required amount – EUR 948 thousand (as of 31 December 2020 the reserve was fully composed and amounted to EUR
948 thousand).
Foreign currency translation reserve
The Group accounts for foreign currency translation reserve (Note 2.2). The assets and liabilities of foreign subsidiaries are
translated into Euro at the reporting date using the rate of exchange as of the date of the statement of financial position,
and their statements of comprehensive income are translated at the average exchange rates for the year. The exchange
differences arising on this translation are recognised in foreign currency translation reserve. As of 31 December 2021 it
amounted to EUR (3,249) thousand (as of 31 December 2020 EUR (3,501) thousand).
Share premium
Share premium represents the excess of the share issue price over nominal value of the shares issued and amounts to
EUR 21,067 thousand as of 31 December 2021 (EUR 21,067 thousand as of 31 December 2020).
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
109
16 Borrowings
The list of borrowings of the Group as of 31 December 2021 and 2020 are as follows:
Group
Currency of the loan
As of 31
December 2021
As of 31
December 2020
Current loans
Bank loans
EUR
5,901
-
Bank loans
PLN
-
113
Current loan balance
5,901
113
Non-current loans
Bank loans
EUR
18,947
20,724
Less: current portion of long term loans
(16,232)*
(3,419)
Non-current loan balance
2,715
17,305
*EUR 15,952 thousand was reclassified from the long-term to the short-term part of the loan due to the company's non-
compliance with bank covenants. For more detail disclosure refer to Note 3.
For the loans of the Group variable interest rates apply. Actual interest rates are close to effective interest rates. As of 31
December 2021 the weighted average annual interest rate of borrowings outstanding was 1.56% (1.36% as of 31 December
2020). In 2021 and 2020 the period of re-pricing of floating interest rates on borrowings was 3 months. Interest is paid
monthly.
The total unutilised borrowing facilities of the Group as of 31 December 2021 amounted to EUR 12,099 thousand (EUR
9,957 thousand as of 31 December 2020).
For the loans and overdraft the Company and its subsidiaries have pledged to the bank bank accounts of the Company and
its subsidiaries in Lithuania. Shares of UAB City Service are pledged to AB SEB bankas as well.
Terms of repayment of non-current debt are as follows:
Group
Term
As of 31
December 2021
As of 31
December 2020
Within one year
16,232
3,419
From one to five years
912
16,255
More than five years
1,803
1,050
18,947
20,724
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
110
16 Borrowings (cont’d)
The following tables presents financial liabilities movement during the financial year:
1 January 2021
Cash flows from
proceeds from
loans
Cash flows to
loans repaid
Non cash
movement
Foreign exchange
effect
31 December 2021
Current interest-bearing
loans and borrowing
(excluding items listed
below)
113
5,902
(114)
-
-
5,901
Non-current interest-
bearing loans and
borrowings (excluding
items listed below)
20,724
730
(2,005)
(500)
(2)
18,947
Obligations under lease
contracts
9,261
-
(3,119)
-
63
6,205
Total liabilities from
financing activities
30,098
6,632
(5,238)
(500)
61
31,053
1
January
2020
Cash flows
from
proceeds
from loans
Cash flows
to loans
repaid
New
leases
Borrowings
of disposal
companies
Deconsolidat
ion of
subsidiaries
Non cash
lease
movement
Foreign
exchange
effect
31
December
2020
Current interest-bearing
loans and borrowing
(excluding items listed
below)
3,628
-
(3,515)
-
-
-
-
-
113
Non-current interest-
bearing loans and
borrowings (excluding
items listed below)
21,240
2,662
(2,717)
-
(450)
-
-
(11)
20,724
Non-current obligations
under lease contracts
11,379
-
(2,831)
1,740
(23)*
(174)
(391)
(439)
9,261
Total liabilities from
financing activities
36,247
2,662
(9,063)
1,740
(473)
(174)
(391)
(450)
30,098
* Discontinued operations
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
111
17 Provisions
As 31 December 2021 the Group’s subsidiaries UAB Mano Būsto priežiūra, UAB Būsto aplinka and UAB City Service
Engineering have outstanding provisions for amount of EUR 591 thousand for probable unfavorable court decisions related
to the investigations carried out by The Competition Council of the Republic of Lithuania (EUR 728 thousand as of 31
December 2020) as further described in Note 32.
As 31 December 2021 the Group’s subsidiaries operating in the region of St. Petersburg, namely ZAO City Service, OAO
City Service and № 3 Ф аа have outstanding provisions for probable tax risks
related to contradictory court practice and disputed legal interpretations for the amount of EUR 84 thousand (EUR 421 as
of 31 December 2020) as further described in Note 32. The amount of EUR 30 thousand were additionally accounted during
the year due to change in estimate.
As of 31 December 2021 the Group’s subsidiary UAB Mano būsto priežiūra have outstanding provisions for the amount of
EUR 221 thousand for probable unfavourable court decision related to the legal case (none as of 31 December 2021).
As 31 December 2021 the Group’s subsidiaries operating in the region of Spain have outstanding provisions for the amount
of EUR 130 thousand for probable unfavourable court decisions related to the acquisitions of the client portfolios (none as
of 31 December 2021).
As of 31 December 2021 the City Service SE have no outstanding guarantees provided to former subsidiary Concentra
Servicios y Mantenimiento S.A. customers and other possible claims arising from bankruptcy process (EUR 61 thousand
as of 31 December 2020).
As of 31 December 2021 the Group‘s subsidiary operating in Poland have outstanding provision for CO2 emmision
allowances for amount of EUR 930 thousand (EUR 323 thousand as of 31 December 2020). During 2020 the amount was
not material and it was accounted in Other current liabilities in Consolidated statement of financial position. During 2021, it
was accounted in Other current provisions in Consilidated statement of financial position as it became more material and
Group management decided that it would better represent the actual liabilities to the users of consolidated financial
statements.
18 Lease
As of 31 December 2021 the interest rate on the lease liabilities obligations is 6 month EURIBOR + 1.6-1.7%, 3 Month
EURIBOR + 1.7-1.9%, 1 month WIBOR + 1.56% (as of 31 December 2020 – is 6 month EURIBOR + 1.6-1.7%, 3 Month
EURIBOR + 1.7-2%, 1 month WIBOR + 1.56-1.66%). Interest is paid monthly. The terms of the lease agreements are from
1 to 10 years. The currencies of the lease agreements are EUR, PLN and RUB.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
112
18 Lease (cont’d)
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:
Right of use asset
Buildings
Vehicles
Total
Acquisition cost
Balance as of 1 January 2020
9,131
5,249
14,380
Additions
1,772
-
1,772
Disposals
(1,721)
(600)
(2,321)
Exchange differences
(490)
-
(490)
Write-off due to loss of control of subsidiary
(187)
-
(187)
Balance as of 31 December 2020
8,505
4,649
13,154
Disposals
(1,383)
(707)
(2,090)
Exchange differences
63
-
63
Balance as of 31 December 2021
7,185
3,942
11,127
Accumulated depreciation and impairment
Balance as of 1 January 2020
1,542
2,518
4,060
Charge for the year
1,637
714
2,351
Disposals
(1,330)
(349)
(1,679)
Exchange differences
(72)
-
(72)
Write-off due to loss of control of subsidiary
(187)
-
(187)
Balance as of 31 December 2020
1,590
2,883
4,473
Charge for the year
1,379
537
1,916
Disposals
(536)
(551)
(1,087)
Balance as of 31 December 2021
2,433
2,869
5,302
Right of use assets as of 31 December 2020
6,915
1,766
8,681
Right of use assets as of 31 December 2021
4,752
1,073
5,825
Maturity analysis of lease payments under the above-mentioned lease contracts as of 31 December 2021 and under lease
contracts as of 31 December 2020 are as follows:
Group
As of 31
December 2021
As of 31
December 2020
Within one year
1,981
2,203
From one to five years
4,101
6,427
More than five years
148
673
Total lease obligations
6,230
9,303
Interest
(25)
(42)
Present value of lease obligations
6,205
9,261
Lease obligations are accounted as:
- current
1,963
2,165
- non-current
4,242
7,096
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
113
18 Lease (cont’d)
Set out below are IFRS 16 impact to profit (loss) statement
2021
2020
Depreciation expense of right-of-use assets
1,916
1,636
Interest expense on lease liabilities
116
86
Expense relating to leases of low-value assets (included in
administrative expenses)
512
1,001
Profit from operations
2,544
2,723
Group has no variable lease payments.
The Group had total cash outflows for leases of EUR 3,235 thousand in 2021 (EUR 2,917 thousand in 2020). The Group
had no non-cash additions to right-of-use assets and lease liabilities in 2021 (EUR 1,772 thousand in 2020).
19 Provision for employee benefits
As of 31 December 2021 and 2020 the Group accounted for employee benefits for employees leaving the Group at the age
of retirement (Note 2.15). Related expenses are included into general and administrative expenses in the Group’s statement
of comprehensive income.
Group
As of 31
December 2021
As of 31
December 2020
As of 31 December of the previous year
301
427
Change during the year
(38)
(122)
Currency exchange effect
-
(4)
As of 31 December of the financial year
263
301
Main assumptions applied while evaluating the Group’s provision for employee benefits as of 31 December 2021 and 2020
are as follows:
Group
As of 31
December 2021
As of 31
December 2020
Discount rate
0.6%
0.4%
Anticipated annual salary increase
3.0%
3.0%
20 Trade payables and payables to related parties
Group
As of 31
December 2021
As of 31
December 2020
Trade payables
12,050
10,831
Payables to related parties (Note 33)
979
202
13,029
11,033
Trade payables are non-interest bearing and are normally settled on 30-day terms.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
114
21 Contract liabilities - advances received
As of 31 December 2021 EUR 10,065 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 4,525
thousand of it were related to long-term obligations (EUR 8,994 thousand and EUR 4,832 thousand as of 31 December
2020 respectively). During the reporting period, EUR 4,832 thousand was recognised in revenue from contracts with
customers in consolidated statement of comprehensive income that was included in the contract liability balance at the
beginning of the period (EUR 4,342 thousand during 2020).
In order to present more accurate exposure in Group consolidated financial statements, Group management made the
correction in 2020 by reclassifying EUR 4,342 thousand from contract liabilities in current liabilites of consolidated statement
of financial position to other liabilities in non-current liabilities of consolidated statement of financial position.
22 Other current liabilities
Group
As of 31
December 2021
As of 31
December 2020
Salaries and social security
3,232
3,460
Vacation pay accrual
2,551
2,446
Accrued expenses
2,336
1,949
Other current liabilities*
9,156
6,487
17,275
14,342
* Other current liabilities increased since the Court of Appeal of Lithuania adjudged EUR 4,6 million from the Company to Vilnius City
municipality as on 17 February 2022 Court of Appeal of Lithuania announced its decision in a case (Note 34). On 22 March 2022 Company
and Vilnius City municipality agreed an instalment plan according to which the specified amount will be paid by 31 December 2023 (Note
34).
Moreover, other current liabilities increased since Group subsidiaries operating in Lithuania signed the agreements with
responsible institutions by which the tax payments were deferred due to COVID-19. Short term part of such deferred tax
payments is EUR 1,101 thousand accounted in other current liabilities in Consolidated Statement of Financial Position.
Such liabilities will be settled up to October 2022.
Other payables are non-interest bearing and have an average term of one to six months.
23 Cost of sales
Group
2021
2020
Services of subcontractors and materials used
67,946
67,196
Wages and salaries and social security
29,518
35,473
Cost of goods sold
2,035
1,414
Depreciation
1,122
754
Other
3,161
3,175
Total cost of sales
103,782
108,012
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
115
24 General and administrative expenses
Group
2021
2020
Wages and salaries and social security
12,790
13,463
Depreciation and amortisation
4,504
4,611
Taxes other than income tax
1,970
809
Consulting and similar expenses*
1,352
1,475
Computer software maintenance
1,000
822
Commissions for collection of payments
589
593
Rent of premises and other assets
512
895
Advertising
558
251
Transportation and fuel expenses
439
374
Communication expenses
359
253
Representational costs
239
210
Insurance
233
335
Business trips and training
190
145
Bank payments
163
166
Charity and support
148
103
Utilities
117
102
Net result of deconsolidated subsidiary due to loss of control
-
(204)
Other
7,229
1,724
Total general and administrative expenses
32,392
26,127
* Includes EUR 1.5 thousand of translation services and EUR 420 of news portal subscription expenses incurred during the audit period of
2021 from audit company Ernst & Young Baltic AS (EUR 1.5 thousand of translation services and EUR 420 of news portal subscription
expenses incurred during the audit period of 2020 from audit company Ernst & Young Baltic AS).
25 Other operating income and expenses
Group
2021
2020
Gain on disposal of property, plant and equipment
1,983
1,143
Fines and penalties
302
192
Income from rent
44
48
Other income
460
892
Total other operating income
2,789
2,275
Loss on disposal of property, plant and equipment
136
369
Legal claims
110
288
Fines and penalties
910
192
State duties
96
76
Rent expenses
3
5
Other expenses
1,084
828
Total other operating expenses
2,339
1,758
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
116
26 Other finance income and (expenses)
Group
2021
2020
Foreign currency exchange gain
4
5
Total finance income
4
5
Foreign currency exchange (loss)
(165)
(1,075)
Other financial (expense)
-
(17)
Total finance (expenses)
(165)
(1,092)
Financial activity, net
(161)
(1,087)
27 Income tax
Group
2021
2020
Components of the income tax expenses
Current income tax
1,971
2,904
Deferred income tax (income)
(560)
(880)
Income tax expenses recorded in the statement of comprehensive
income
1,411
2,024
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
117
27 Income tax (cont’d)
Group
As of 31
December 2021
As of 31
December 2020
Deferred income tax asset
Allowance for accounts receivable
1,562
1,642
Tax loss carried forward
1,074
2,186
Accruals and similar temporary differences
960
884
Tax goodwill
88
380
Allowance for inventories
94
65
Deferred income
5
-
Deferred income tax asset before valuation allowance
3,783
5,157
Less: valuation allowance
(1,319)
(1,365)
Deferred income tax asset, net of valuation allowance
2,464
3,792
Deferred income tax liability
Property, plant and equipment and intangible assets
(1,736)
(2,882)
Accrued income
(12)
-
Deferred income tax liability
(1,748)
(2,882)
Deferred income tax, net
716
910
Presented in the statement of financial position as follows:
Deferred income tax asset
Continued operations
2,464
3,785
Discontinued operations (Note 8)
-
7
Deferred income tax liability
Continued operations
(1,748)
(2,882)
Discontinued operations (Note 8)
-
-
Tax loss carried forward can be utilised as follows:
• in Lithuania EUR 2,340 thousand as of 31 December 2021 (EUR 351 thousand recognized as deferred tax), EUR
3,852 thousand as of 31 December 2020 (EUR 578 thousand recognized as deferred tax) – indefinitely,
• in Poland EUR 4,986 thousand as of 31 December 2021 (EUR 723 thousand recognized as deferred tax (none
net of allowance)), EUR 1,736 thousand as of 31 December 2020 (EUR 191 thousand recognized as deferred tax)
– mainly until the year 2024 and
• in Spain EUR 5,669 thousand as of 31 December 2021 (none recognized as deferred tax), EUR 5,669 thousand
as of 31 December 2020 ((EUR 1,417 thousand recognized as deferred tax) – indefinitely.
Deferred income tax asset and liability, related to entities operating in Lithuania, were accounted at 15% rate in 2021 and
2020. The deferred tax of companies operating in Russia, Poland, Spain and Czech Republic was calculated using 20%,
9-19%, 25% and 19% tax rates, respectively in 2021 (same as in 2020).
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
118
27 Income tax (cont’d)
The changes of temporary differences before and after tax effect in the Group were as follows:
Balance
as of 31
December
2020
Recognised
in profit or
loss
Exchange
differences
Disposed
subsidiaries
Acquired
subsidiaries
Balance as
of 31
December
2021
Allowance for
accounts receivable
10,006
(1,056)
222
-
68
9,240
Allowance for
inventories
323
123
26
-
-
472
Accruals and similar
temporary differences
5,146
856
69
(221)
7
5,857
Deferred income
24
-
-
-
24
Tax loss carried
forward
11,257
(4,343)
(34)
-
-
6,880
Tax goodwill
2,531
(1,944)
-
-
-
587
Property, plant and
equipment and
intangible assets
(16,820)
7,620
(58)
-
(1,100)
(10,358)
Accrued income
6
(87)
-
-
-
(81)
Total temporary
differences before
valuation allowance
12,449
1,193
225
(221)
(1,025)
12,621
Valuation allowance
(6,775)
(1,346)
(119)
-
-
(8,240)
Total temporary
differences
5,674
(153)
106
(221)
(1,025)
4,381
Deferred income tax,
net
910
(21)*
23
(33)
(163)
716
* 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 2021
(all amounts are in EUR thousand unless otherwise stated)
119
27 Income tax (cont’d)
The changes of temporary differences before and after tax effect in the Group were as follows:
Balance
as of 31
December
2019
Recognised
in profit or
loss
Exchange
differences
Disposed
subsidiaries
Acquired
subsidiaries
Balance as
of 31
December
2020
Allowance for
accounts receivable
8,938
2,281
(1,028)
(185)
-
10,006
Allowance for
inventories
361
51
(89)
-
-
323
Accruals and similar
temporary differences
5,159
763
(607)
(169)
-
5,146
Tax loss carried
forward
9,636
2,005
(133)
(251)
-
11,257
Tax goodwill
3,761
(1,230)
-
-
-
2,531
Property, plant and
equipment and
intangible assets
(19,293)
1,303
578
592
-
(16,820)
Accrued income
-
6
-
-
-
6
Total temporary
differences before
valuation allowance
8,562
5,179
(1,279)
(13)
-
12,449
Valuation allowance
(3,105)
(4,392)
722
-
-
(6,775)
Total temporary
differences
5,457
787
(557)
(13)
-
5,674
Deferred income tax,
net
991
4*
(90)
(2)
-
903
*amount differs from Deferred income tax in the table above because of the tax loss transferred and used between subsidiaries.
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 (15%), since most of the operations of the group is
conducted in Lithuania, to pre-tax income as follows:
Group
2021
2020
Income tax expenses computed at 15% in 2021 and 2020
1,257
(1,092)
Effect of different tax rates applicable to foreign subsidiaries
(448)
(378)
Change in deferred tax asset valuation allowance and write-off of
deferred tax asset
46
(782)
Current year’s temporary differences related to intangible assets
impairment and provisions which are not expected to be utilized in the
future and from which deferred tax asset has not been recognized
(2,073)
897
Permanent differences
(193)
(921)
Income tax expenses reported in the statement of comprehensive
income
(1,411)
(2,276)
Income tax attributable to a discontinued operations
(251)
252
(1,662)
(2,024)
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
120
28 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
2021
2020
Net (loss) profit attributable to the shareholders of the Parent
(9,860)
10,356
Net (loss) from discontinued operations attributable to the
shareholders
(5,185)
(5,257)
Net (loss) profit attributable to the shareholders of the Parent
(15,045)
5,099
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)
(0.48)
0.16
From continued operations
(0.32)
0.33
From discontinued operations
(0.16)
(0.17)
29 Dividends per share
2021
2020
Approved dividends*
13,656
6,988
Number of shares (in thousand)**
31,610
31,610
Approved dividends per share (EUR)
0.43
0.22
* The year when the dividends are approved.
** At the date when dividends are approved.
30 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,
trade receivables and other receivables, cash, net of allowance for doubtful accounts recognised 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, EONIA, WIBOR which create an interest rate risk (Notes 17 and 19). There are no financial instruments
designated to manage the exposure to the interest rate risk outstanding as of 31 December 2021 and 2020.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
121
30 Financial assets and liabilities and risk management (cont’d)
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.
2021
Increase/decrease
in basis points
Effect on the profit
before the income
tax
EUR
+100
(120)
PLN
+100
-
2020
EUR
+100
(233)
PLN
+100
(1)
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 2021 were 0.75 and 0.73 respectively (1.39 and 1.36 as of 31 December 2020 respectively).
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
122
30 Financial assets and liabilities and risk management (cont’d)
The table below summarises the maturity profile of the Group’s financial liabilities as of 31 December 2021 and 2020 based
on contractual undiscounted payments:
On demand
Less than 1
year
1 to 5 years
More than 5
years
Total
Non-current interest-bearing
borrowings
-
-
1,297
1,803
3,100
Current portion of non-current
interest-bearing borrowings
15,952
579
-
-
16,531
Current loans
5,901
-
-
-
5,901
Lease liabilities
-
1,981
4,101
148
6,230
Trade payables and payables
to related parties
-
13,029
-
-
13,029
Other current liabilities
-
11,492
-
-
11,492
Balance as of 31 December
2021
21,853
27,081
5,398
1,951
56,283
Non-current interest-bearing
borrowings
-
-
16,508
1,050
17,558
Current portion of non-current
interest-bearing borrowings
-
3,425
-
-
3,425
Current loans
-
113
-
-
113
Lease liabilities
-
2,203
6,427
673
9,303
Trade payables and payables
to related parties
-
11,033
-
-
11,033
Other current liabilities
-
8,436
-
-
8,436
Balance as of 31 December
2020
-
25,210
22,935
1,723
49,868
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
123
30 Financial assets and liabilities and risk management (cont’d)
Foreign exchange risk
Monetary assets and liabilities of the Group denominated in various currencies as of 31 December 2021 and 2020 were as
follows:
2021
2020
Assets
Liabilities
Assets
Liabilities
RUB
9,345
9,230
8,593
9,187
PLN
3,620
4,439
3,995
4,579
CZK
377
181
-
-
EUR
38,055
57,311
54,173
49,078
51,397
71,161
66,761
62,844
The following tables demonstrates the sensitivity of the Group’s profit before tax (due to change in the fair value of monetary
assets and liabilities) to a reasonably possible change in respect of currency exchange rate with all other variables held
constant.
PLN held by the Parent:
Increase/
decrease in
exchange rate
Effect on the
profit before the
income tax
2021
EUR
+ 15.00 %
788
EUR
- 15.00 %
(788)
2020
EUR
+ 15.00 %
795
EUR
- 15.00 %
(795)
EUR held by Polish subsidiaries:
Increase/
decrease in
exchange rate
Effect on the
profit before the
income tax
2021
EUR
+ 15.00 %
(1,706)
EUR
- 15.00 %
1,706
2020
EUR
+ 15.00 %
(982)
EUR
- 15.00 %
982
As stated in Note 34, the Russian Federation has launched an invasion of the Republic of Ukraine. Due to restrictive
measures against Russia and possible economical outcome, uncertainty on future currency rate of Russian ruble may have
effect to the assets and liabilities of the subsidiaries. The following tables demonstrates the sensitivity effect to the Group’s
assets and liabilities to a reasonably possible change in respect of currency exchange rate with all other variables held
constant.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
124
30 Financial assets and liabilities and risk management (cont’d)
Assets and liabilities in RUB held by the Group:
Increase/
decrease in
exchange rate
Effect on the
assets and
liabilities
2021
Assets
+ 15.00 %
(1,654)
Liabilities
+ 15.00 %
(1,228)
Assets
- 15.00 %
2,238
Liabilities
- 15.00 %
1,661
2020
Assets
+ 15.00 %
(1,523)
Liabilities
+ 15.00 %
(1,238)
Assets
- 15.00 %
2,061
Liabilities
- 15.00 %
1,674
Fair value of financial instruments
The Group’s principal financial instruments not carried at fair value are trade and other receivables, non-current receivables,
trade and other payables, non-current and current borrowings.
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 and fixed 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 2.9, the Group categorizes inputs used for borrowings from financial
institutions valuation as level 3. Inputs for other financial assets and liabilities valuation are categorised as Level 3.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
125
31 Commitments and contingencies
Lawsuit to City Service SE from Vilnius City municipality’s administration
On 21 April 2017 the Company received a notice from Vilnius County Court that Vilnius City municipality’s administration
and General Procurator‘s office submitted a lawsuit against the Company on recovery of losses. The lawsuit brings, in the
management’s opinion, unfounded allegations that Vilnius City municipality might have suffered losses arising from public
procurement agreements concluded in years 2002 to 2010 between Vilnius City municipality and the Company. The
quantum of the lawsuit is EUR 20.6 million.
Since 2002, the Company under above mentioned public procurement agreements has been providing heating facilities
management and technical maintenance services under ESCO model to education institutions established by Vilnius City
municipality. ESCO model allowed to enhance energy efficiency and provided for substantial savings from energy expenses
in public establishments. According to these agreements, City Service SE committed to maintain temperature levels in
public establishments above occupational exposure standards, to reduce costs of system maintenance, and to make
investments on behalf of the Company to achieve above-mentioned commitments.
In 2014 Vilnius city municipality announced that thanks to ESCO model, implemented in cooperation with City Service SE,
Vilnius city benefited significant savings through the period of 2002-2013, as high as EUR 36.2 million.
During the 2018 pre-trial investigation was initiated by the Financial Crime Investigation Service under the Ministry of the
Interior and it was terminated. During the 2019 Vilnius County Court adopted decision which City Service SE convinced to
be unfounded and illegal. During 2020 Court of Appeal of Lithuania decided to annul the decision of Vilnius County Court.
During 2021 the Supreme Court of Lithuania accepted the cassation appeals of the Vilnius City Municipality Administration
and Prosecutor General’s Office. The Company submitted responses to the appeals of the cassators stating the reasons
for disagreement regarding the arguments submitted by the cassators in their cassation appeals. And Supreme Court
annulled the decision of the Court of Appeal of Lithuania that was issued on 8 October 2020 and referred the case back to
the Court of Appeal of Lithuania.
On 17 February 2022 Court of Appeal of Lithuania announced its decision in this case. The Court of Appeal of Lithuania
adjudged EUR 4,6 million from the Company to Vilnius City municipality. The Court also stated that Vilnius City municipality
is also liable for the part of the losses. The Company will get acquainted in detail with the decision of the appellate court
and its reasoning and will decide on the possibility to file a cassation appeal after evaluating them. Notwithstanding the fact
that the Company may still file a cassation appeal, the decision of the Court of Appeal came into force on the date of its
adoption. As of 31 December 2021 liability was accounted in other current liabilities in Consolidated statement of financial
position.
On 22 March 2022, the Company and Vilnius City Municipality Administration signed an agreement regarding the payment
of the amount of EUR 4,6 million according to the instalment plan up to 31 December 2023.
UAB Mano Būsto priežiūra case
On 21 December 2017 UAB Mano Būsto priežiūra together with 9 other non-related defendants received a lawsuit from
UAB BM būstas for solidarity compensation of EUR 1.6 million. UAB Mano Būsto priežiūra is convinced that claim on
compensation of damages from the company has no grounds.
UAB Mano Būsto priežiūra is confident that it has properly fulfilled its contractual obligations. The expert examination carried
out by the claimant revealed that defects of the building are the result of bad design and construction works which was not
performed by UAB Mano Būsto priežiūra. Moreover, the Company started to provide its services only after the technical
design and construction works of the building were completed. UAB Mano Būsto priežiūra provided services in the building
until 14 April 2016 and after that day, new service provider UAB Inservis also did not record any defects in the building.
During the services providing period, UAB Mano Būsto priežiūra did not receive any claims from the customer regarding
the performance of the contract.
On 22 June 2021 first instance court adopted decision to adjudge EUR 1.3 million sum in solidarity from the UAB Mano
Būsto priežiūra and 6 other non-related defendants. UAB Mano Būsto priežiūra disagrees with the decision of the first
instance court and is convinced that the decision is unfounded and illegal. In the Company’s opinion, none of civil liability
conditions have been proved. The decision has not come into force and was appealed to the Court of Appeal of Lithuania.
Considering the above circumstances the management believes that UAB Mano Būsto priežiūra is not responsible for
improperly performed design and construction works, and expects favorable outcome of this uncertainty. However, provision
of EUR 221 thousand related to this claim is accounted in the financial statements.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
126
31 Commitments and contingencies (cont’d)
Cases vs. the Competition Council
There are two ongoing court cases against the Competition Council. Regarding Case 1, the Competition Council of the
Republic of Lithuania imposed a fine on the Group subsidiaries UAB Mano Būsto priežiūra and UAB Būsto aplinka for the
violation of the competition law. The amount of the fine is EUR 1,074 thousand. On 14 February 2020 Vilnius Regional
Administrative Court adopted a decision in which the court stated that the Competition Council had unjustifiably imposed a
maximum fine for the infringements committed and, therefore, the issue of the imposition of fine and whole resolution was
referred back to the Competition Council. The Group has made a provision for an unfavorable court decision of EUR 208
thousand (Note 18) based on the management’s assessment of the probable outcomes of this case. At the moment of
issuance of these financial statements, Case 1 was finished (Note 34). Regarding Case 2, the Competition Council of the
Republic of Lithuania imposed a fine on the Company City Service SE and the Group’s subsidiaries UAB Mano Būsto
priežiūra, UAB City Service Engineering and UAB Būsto aplinka for the alleged violation of the competition law. The amount
of the fine is EUR 381 thousand.
The Company and its subsidiaries did not agree with the imposed fine and had appealed the decision of the Competition
Council in accordance with the law. On 3 June 2020, the court of first instance satisfied the complaints of City Service SE
and UAB City Service Engineering and annulled the ruling against them, and with regard to UAB Būsto aplinka and UAB
Mano Būsto priežiūra the ruling was returned to the Competition Council to solve the question of fine’s individualization, as
in the opinion of the court of first instance, the Competition Council of the Republic of Lithuania did not properly motivate
the amount of the fine imposed and unreasonably applied the maximum deterrence coefficient. This ruling has been
appealed by all parties involved in the case and is currently pending before the Supreme Administrative Court of Lithuania.
On 2 February 2022 Supreme Administrative Court of Lithuania changed the decision of Vilnius Regional Administrative
Court and satisfied the complaints of City Service SE and UAB Mano Būsto priežiūra, stating that these companies did not
commit an infringement. At the same time, the decision of the court of first instance in the part concerning the liability of City
Service Engineering was also changed. The court found UAB City Service Engineering to have committed the violation.
The court also annulled the part of the decision of the Competition Council imposing a joint and several fine and returned
the issue regarding the individualization of fines to UAB Būsto aplinka and UAB City Service Engineering to the Competition
Council. The Group has made a provision for an unfavorable court decision of EUR 381 thousand (Note 18). There is no
decision in this case yet.
Claim against subsidiary operating in Poland
In September 2017 the Company’s subsidiary operating in Poland, Zespół Zarządców Nieruchomości sp. z o.o., (herein
after – ZZN) received a claim from Zarząd Komunalnych Zasobów Lokalowych sp. z o.o. (hereinafter – ZKZL). ZKZL claims
that ZZN has breached an agreement and requires to compensate PLN 6 million (EUR 1.5 million) in damages. ZZN is
convinced that claim on compensation of damages has no grounds as outlined below and thus expects favorable resolution
and no provisions have been recorded in these financial statements.
The above-mentioned claim did not contain any source of documentation or substantiated written evidence according to the
contractual damages that have been calculated. ZZN is convinced that contractual damages are not supported because
ZKZL did not deliver documentation confirming or explaining the legitimacy of the claim. Furthermore, in July 2015 ZKZL
certified in writing that ZZN properly performed its contractual obligations. In addition, ZKZL provided a system which was
necessary to for the fulfillment of the contractual obligations and which has not worked properly. So, ZZN initiated a civil
action and has filed a lawsuit against ZKZL to the District Court in Poznań for payment PLN 0.8 million (EUR 0.2 million)
with interest due to unpaid invoices and disagrees with the applied contractual fine. 100% allowance for the entire amount
is made. The case has not yet been finally settled by the court, ZZN and ZKZL had a mediation proceeding, but no
consensus was reached. There were also several court hearings, during which witnesses were questioned. There is a
significant probability that the case will be completed peacefully. Regardless of the outcome of the case, filling a lawsuit
against ZKZL does not give rise to ZKZL claims against ZZN.
ZZN had provided PLN 1.7 million (EUR 0.4 million) guarantee to ZKZL under the services agreement. ZKZL has addressed
to Interrisk, which had issued insurance guarantee, to pay the guarantee amount, despite questioning the existence of
claims by ZZN. InterRisk, in the light of the formal fulfillment of the conditions set out in paragraphs 4 and 5 of the Guarantee,
paid the entire amount requested. Next, InterRisk has addressed to ZZN to return the abovementioned amount and filed an
application for issuing a payment order to the District Court in Warsaw. District Court in Warsaw issued a payment order on
28 March 2018. ZZN has filed charges against the order and filed for dismissal of the claim.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
127
31 Commitments and contingencies (cont’d)
On 7 February, 2020 a court hearing was held regarding the case, during which no settlement was reached, thus no
accounting estimates were changed.
On December 2021 the settlement with ZKZL was signed according to which ZKZL will pay PLN 768 thousand (EUR 168
thousand) to ZZN during 2022 (amount was already received at the date of the issuance of these financial statements).
No provisions have been recorded in these financial statements.
Contingencies related to foreign subsidiaries
Group subsidiaries, carrying out business operations in the region of St. Petersburg, namely ZAO City Service, OAO City
Service and № 3 Ф аа, due to contradictory court practice and uncertain legal
interpretations may be exposed to additional income tax and VAT risk. The Group’s management estimates that the
maximum exposure of such risk, including penalties, may amount to EUR 3,181 thousand as of 31 December 2021 (EUR
4,177 as of 31 December 2020). The management of the Group estimate most of these risks to be not probable considering
known court practices and other relevant information. The Group has made a provision for amount of EUR 84 thousand as
of 31 December 2021 related to the above-mentioned risks, which were assessed as probable (EUR 421 thousand as of
31 December 2020) (Note 18).
32 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;
− UAB Lag&d – the shareholder of the Company (until 09 February 2022);
− 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, T. Kleiva, V. Turonis, D. Šimaitis (Management of the Group companies).
Transactions with related parties include sales and purchases of goods and services in the ordinary course of business,
and acquisitions and disposals of property, plant and equipment.
UAB City Service, SIA City Service and City Service Polska sp. z o.o. have provided surety for City Service SE to AB SEB
bankas 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 City Service are pledged to AB SEB bankas as well. Also UAB City Service,
UAB Mano Būstas Baltija, UAB Mano Būstas Neris, UAB Mano Būstas NPC, UAB Mano Būstas Sostinė, UAB Mano Būstas
Vilnius, UAB Mano Būstas Radviliškis, UAB Mano Būstas Aukštatija, UAB Mano Būstas Dainava, UAB Mano Būstas
Kaunas, UAB UAB Mano Būstas Šiauliai, UAB Mano Būstas Vakarai have pledged to AB SEB bankas current and future
claim rights to receivables arising from all agreements concluded by the companies with other natural and legal persons
(with all existing and future amendments and additions thereto) up to EUR 9.5 million, except for receivables under
concluded factoring agreements.
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.
2021
Group
Purchases
Sales
Receivables and
prepayments
Payables and
advances
received
UAB ICOR
404
96
13
40
Subsidiaries of UAB ICOR
-
-
-
-
AB Axis Industries
-
6
1
-
Other subsidiaries of UAB Lag&d
252
528
531
939
656
630
545
979
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
128
32 Related party transactions (cont’d)
2020
Group
Purchases
Sales
Receivables and
prepayments
Payables and
advances
received
UAB ICOR
398
100
10
123
Subsidiaries of UAB ICOR
-
-
-
-
AB Axis Industries
2
9
1
-
Other subsidiaries of UAB Lag&d
306
832
412
79
706
941
423
202
The ageing analysis of the Group’s receivables from related parties as of 31 December is as follows:
Trade receivables
neither past due nor
impaired
Trade receivables past due but not impaired
Less
than 30
days
30 – 60
days
60 – 90
days
90 – 360
days
More
than 360
days
Total
2020
227
22
30
35
107
2
423
2021
155
70
63
23
157
77
545
Remuneration of the management and other payments
The Group’s management remuneration amounted to EUR 1,197 thousand in 2021 (EUR 1,211 thousand in 2020). In 2021
and 2020 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 2021 and 2020.
33 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 manage 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 2021 and 2020.
The Group companies registered in Lithuania, Estonia and Spain 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, the Commercial Code of the Republic of Estonia and Corporate Enterprises Act. The Group
companies registered in Russia and Poland are obliged to upkeep their net assets at not less than the minimum amount of
share capital, as imposed by the Law on Joint Stock Companies of the Russian Federation and Code of Commercial
Companies. As of 31 December 2021 and as of 31 December 2020 all Group companies met these requirements.
In addition, the Group has committed to its lenders to keep to certain minimum capital requirements which was in breach
as of 31 December 2021 (as of 31 December 2020 the Group was not in breach of the above-mentioned requirements).
For more detail explanations see Note 16. There were no other externally imposed capital requirements on the Group.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
129
33 Capital management (cont’d)
The Group monitors capital using debt to equity ratio. There is no target debt to equity 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
2021
2020
Non-current liabilities (including deferred tax)
15,209
30,187
Current liabilities
61,488
41,666
Liabilities
76,697
71,853
Equity
19,876
48,246
Debt to equity ratio
386%
149%
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
130
34 Subsequent events
On 24 January 2022 UAB City Service Digital title was changed into UAB InHouse Digital. Other contact details did not
change.
On 17 February 2022 Court of Appeal of Lithuania announced its decision in a case where Vilnius City municipality
administration and General Prosecutor's office initially claimed the Company regarding recovery of EUR 20,6 million losses.
The Court of Appeal of Lithuania adjudged EUR 4,6 million from the Company to Vilnius City municipality. The Court also
stated that Vilnius City municipality is also liable for the part of the losses. The Company will get acquainted in detail with
the decision of the appellate court and its reasoning and will decide on the possibility to file a cassation appeal after
evaluating them.
On 24 February 2022 the Company received notifications, prepared pursuant to the Article 69 of the Act of July 29th, 2005
on public offering and the conditions for introducing financial instruments to the organized trading system and on public
companies Journal of Laws 2005 No. 184 item 1539, regarding changes in the total number of votes at the Company's
General Meeting due to reorganization of UAB Lag&d from UAB Lag&d to UAB Unit Invest of 26,813,293 shares in the
Company, giving the right to exercise 26,813,293 of votes constituting 84,83% of the total number of votes at the City
Service SE's General Meeting since 09 February 2022 when the reorganization of the UAB Lag&d was completed.
On 24 February 2022, the Russian Federation has launched an invasion of the Republic of Ukraine. Shortly after the
invasion, the EU and rest of the world, including global bodies, imposed wide-ranging set of restrictive measures against
Russia, which is updated and expanded on a regular basis. As disclosed in Note 3 this non-adjusting subsequent event was
not reflected in the significant estimates and assumptions as at 31 December 2021. Until the date of authorisation of these
financial statements, the restrictive measures imposed had no significant impact on the Group’s performance in the Russian
Federation, no operations had been suspended and no significant direct losses related to the restrictive measures had been
incurred at the date of the financial statements.
On 01 March, 2022, the Group, through its Lithuanian subsidiary acquired 99.99% of the shares of IMPROXY -
TECNOLOGIAS DE INFORMAÇÃO LDA (acquisition price EUR 3 million) which is based in Portugal. IMPROXY -
TECNOLOGIAS DE INFORMAÇÃO LDA is engaged in the production and development of IT products for apartment
building managers, administrators, communities, etc. 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
On 02 March, 2022, the Group, through its Lithuanian subsidiary acquired 90% of the shares of Homefile S.R.L. and
Homefile Suport Solutions S.R.L. (acquisition price EUR 620 thousand and EUR 286 thousand respectively) which are
based in Romania. Homefile S.R.L. and Homefile Suport Solutions S.R.L. are engaged in the production and development
of IT products for apartment building managers, administrators, communities, etc. 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
On 03 March 2022, the Group, through its Lithuanian subsidiary established a new company InHouse Finance KFT (share
capital HUF 3 million (EUR 8 thousand)).
On 04 March 2022, the Group, through its Lithuanian subsidiary acquired 100% of the shares of UAB Getfiks (acquisition
price EUR 213 thousand) which is based in Lithuania. UAB Getfiks is engaged in supply chain management services. 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.
On 11 March 2022 the Group, through its Spanish subsidiary, voluntary liquidated three dormant companies Inmonamas
S.L, Urban Hub S.L.U, Eurohub S.LU.
On 18 March 2022 the Group, through its Lithuanian subsidiary, acquired 100% stake in INTEGRI s.r.o (acquisition price
CZK 34.7 million (EUR 1.399 thousand)) which is based on Czech Republic. INTEGRI s.r.o are engaged in the production
and development of IT products for apartment building managers, administrators, communities, etc. 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.
On 22 March 2022, City Service SE hereinafter - the Company and Vilnius City Municipality Administration hereinafter - the
Municipality signed an agreement regarding the payment of the amount of EUR 4,646,753 awarded from the Company in
favor of the Municipality by the decision of the Lithuanian Court of Appeal of 17 February 2022. The specified amount will
be paid by 31 December 2023, according to the instalment plan, which was agreed with the Municipality.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
131
34 Subsequent events (cont’d)
On 05 April 2022 the Group, through its Lithuanian subsidiary, acquired 100% stake in Invert KFT (acquisition price EUR
370 thousand) which is based on Hungary. Invert KFT are engaged in the production and development of IT products for
apartment building managers, administrators, communities, etc. 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
On 29 April 2022 City Service SE received decision from the bank to change existing financing contract conditions regarding
the breach of keeping minimum capital requirements. Currently EUR 34 million of maximum borrowing facility will be
decreased to the current utilization level of EUR 28 million. Moreover, payments of EUR 5,100 thousand will be made during
financial year 2022 and additional payments of EUR 5,400 thousand will be made during the financial period 2023 - 2025.
Remaining obligation to settle at the end of the contract at 1 September, 2025 will be EUR 17,500 thousand. Moreover,
subsidiaries of the Group will be obliged to dispose companies operating in digital business area to City Service SE direct
shareholder UAB Unit Invest which were acquired during the period including December 2021 – April 2022.
The full impact of the COVID-19 pandemic on economic activity is still unknown and the situation is still developing. The
Company’s management believes that COVID-19 will not have material impact on the business operations after the
reporting date. However, this assumption is based on the information available at the time of signing these financial
statements and the impact of future events on the Company’s ability to continue as a going concern may differ from the
management’s assessment.
35 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).
Statement of financial position
As of 31
December 2021
As of 31
December 2020
ASSETS
Non-current assets
Other intangible assets
-
9
Property, plant and equipment
3
10
Investments into subsidiaries
58,718
58,812
Non-current receivables
12,132
19,860
Deferred income tax asset
203
227
Total non-current assets
71,056
78,918
Current assets
Prepayments
19
9
Trade receivables
1,439
18,730
Receivables from related parties (including loans granted)
1
1
Other receivables
597
1,081
Cash and cash equivalents
84
59
Total current assets
2,140
19,880
Total assets
73,196
98,798
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
132
35 Parent company’s unconsolidated financial statements (cont’d)
Statement of financial position (cont’d)
As of 31 December
2021
As of 31 December
2020
EQUITY AND LIABILITIES
Equity
Share capital
9,483
9,483
Share premium
21,067
21,067
Reserves
948
948
Retained earnings
4,602
38,268
Total equity
36,100
69,766
Liabilities
Non-current liabilities
Non-current borrowings*
-
14,391
Provisions for employee benefits, Non current
1
-
Non-current payables
-
61
Total non-current liabilities
1
14,452
Current liabilities
Current loans
5,901
-
Current portion of non-current borrowings*
15,952
3,133
Trade payables and payables to related parties
10,324
11,103
Contract liabilities
95
97
Income Tax
61
52
Other current liabilities
4,762
195
Total current liabilities
37,095
14,580
Total liabilities
37,096
29,032
Total equity and liabilities
73,196
98,798
*EUR 15,952 thousand was reclassified from the long-term to the short-term part of the loan due to the company's non-
compliance with bank covenants.
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
133
35 Parent company’s unconsolidated financial statements (cont’d)
Statement of comprehensive income
2021
2020
Revenue from contracts with customers
204
202
Cost of sales
-
-
Gross profit
204
202
General and administrative expenses
(5,561)
(1,209)
Credit loss expenses on financial assets
(17,858)
(10,536)
Other operating income
-
10
Profit from operations
(23,215)
(11,533)
Interest income
1,605
1,682
Interest expenses
(725)
(1,298)
Other finance expenses
2,358
(380)
Profit (loss) before tax
(19,977)
(11,529)
Income tax (expense) benefit
(33)
150
Net profit (loss)
(20,010)
(11,379)
Other comprehensive income
-
-
Total comprehensive income (loss) for the year, net of tax
(20,010)
(11,379)
CITY SERVICE SE, company code 12827710, Narva mnt. 5, Tallinn, Estonia
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2021
(all amounts are in EUR thousand unless otherwise stated)
134
35 Parent company’s unconsolidated financial statements (cont’d)
Statement of
changes in equity
Share
capital
Share
premium
Legal
reserve
Other
reserves
Retained
earnings
Total
Balance as of 1
January 2020
9,483
21,067
948
-
56,633
88,131
Net profit for the
year
-
-
-
-
(11,379)
(11,379)
Other
comprehensive
income
-
-
-
-
-
-
Total
comprehensive
income
-
-
-
-
(11,379)
(11,379)
Dividends declared
-
-
-
-
(6,986)
(6,986)
Balance as of 31
December 2020
9,483
21,067
948
-
38,268
69,766
Book value of
holdings under
control or
significant
influence
(58,812)
Value of holdings
under control of
significant
influence,
calculated under
equity method
52,258
Adjusted
unconsolidated
equity as of 31
December 2020*
63,212
* Adjusted unconsolidated equity differs from the consolidated equity as of 31 December 2020 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 2021
(all amounts are in EUR thousand unless otherwise stated)
135
35 Parent company’s unconsolidated financial statements (cont’d)
Statement of
changes in equity
Share
capital
Share
premium
Legal
reserve
Other
reserves
Retained
earnings
Total
Balance as of 1
January 2021
9,483
21,067
948
-
38,268
69,766
Net profit for the
year
-
-
-
-
(20,010)
(20,010)
Other
comprehensive
income
-
-
-
-
-
-
Total
comprehensive
income
-
-
-
-
(20,010)
(20,010)
Dividends declared
-
-
-
-
(13,656)
(13,656)
Balance as of 31
December 2021
9,483
21,067
948
-
4,602
36,100
Book value of
holdings under
control or
significant
influence
(58,718)
Value of holdings
under control of
significant
influence,
calculated under
equity method
68,122
Adjusted
unconsolidated
equity as of 31
December 2021*
45,504
* Adjusted unconsolidated equity differs from the consolidated equity as of 31 December 2021 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 2021
(all amounts are in EUR thousand unless otherwise stated)
136
35 Parent company’s unconsolidated financial statements (cont’d)
Statement of cash flows
2021
2020
Cash flows from (to) operating activities
Net profit
(20,010)
(11,379)
Adjusting items:
Income tax expenses
33
(150)
Depreciation and amortisation
17
55
Impairment and write-off of accounts receivable
17,257
10,430
(Gain) from sale of investments
-
(10)
Dividend (income)
(2,400)
-
Impairment of investments and contributions granted
601
-
Interest (income)
(1,605)
(1,682)
Interest expenses
725
1,298
Changes in provisions
(60)
-
Other financial activity result, net
42
379
(5,400)
(1,059)
Changes in working capital:
Decrease in trade receivables, receivables from related parties, non-
current receivables, other receivables and other current assets
21,389
10,845*
(Increase) in prepayments
(10)
(6)
(Decrease) increase in trade payables and payables to related parties
(11,056)
4,546
Increase (decrease) in advances received and other current liabilities
4,525
(385)
Net cash flows from operating activities
9,448
13,941
Cash flows from (to) investing activities
(Acquisition) of non-current assets
(5)
(3)
Proceeds from sale of non-current assets
1
29
(Acquisition) of investments in subsidiaries and associates
(4)
-
Dividends and interest received
4,005
1,682
Loans (granted)
(7,553)
(3,217)
Loans repaid
1,647
1,662
Net cash flows (to) from investing activities
(1,909)
153
Cash flows (to) financing activities
Dividends (paid)
(13,653)
(6,985)
Proceeds from loans
9,147
1,206
Lease (payments)
-
(28)
Loans (repaid)
(2,283)
(6,943)
Interest (paid)
(725)
(1,298)
Net cash flows (to) financing activities
(7,514)
(14,048)
Net increase in cash and cash equivalents
25
46
Cash and cash equivalents at the beginning of the year
59
13
Cash and cash equivalents at the end of the year
84
59
*Non-cash settling of Non-current receivable related to increase of subsidiaries share capital is excluded.