City Service SE — Annual Report 2013

Aug 11, 2015

AB CITY SERVICE

CONSOLIDATED AND PARENT COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 December 2013, prepared in accordance with International Financial Reporting Standards, as adopted by the European Union, presented together with Independent Auditor's Report

Statements of financial position

		Group		Company
	Notes	As of 31 December 2013	As of 31 December 2012	As of 31 December 2013	As of 31 December 2012
ASSETS
Non-current assets
Goodwill	4	33,306	45,282	-	-
Other intangible assets	5	54,456	76,580	490	3
Property, plant and equipment	6	63,163	87,069	812	419
Investment property		280	370	-	-
Investments into subsidiaries	8	-	-	121,754	162,045
Investment into associate	1	652	588	-	-
Non-current receivables	12, 32	7,267	2,018	50,731	395
Deferred income tax asset	27	15,702	10,149	421	452
Total non-current assets		174,826	222,056	174,208	163,314
Current assets
Inventories	9	5,692	5,119	-	1
Prepayments	10	10,034	12,269	183	174
Trade receivables	11	180,147	118,015	47,278	29,158
Receivables from related parties
(including loans granted)	32	152	950	6,037	55,084
Other receivables	12	5,876	6,797	435	331
Prepaid income tax		3,283	2,513	1,183	1,922
Other current assets		628	814	-	-
Cash and cash equivalents	12	38,528	32,914	936	129
Total current assets		244,340	179,391	56,052	86,799
Assets held for sale (Ecoservice UAB waste management and eco-business, Note 7)		63,256	-	55,091	-
Total assets		482,422	401,447	285,351	250,113

The accompanying notes are an integral part of these financial statements.

(cont'd on the next page)

Statements of financial position (cont'd)

		Group		Company
	Notes	As of 31 December 2013	As of 31 December 2012	As of 31 December 2013	As of 31 December 2012
EQUITY AND LIABILITIES
Equity
Share capital	1	31,610	31,610	31,610	31,610
Share premium	13	73,830	73,830	73,830	73,830
Reserves	13, 2.2	6,984	6,993	9,161	9,161
Retained earnings		105,100	70,304	53,285	32,949
Reserves of a disposal group classified as held for sale (Ecoservice UAB waste management and eco business, Note 7)		(8,763)	-	-	-
Equity attributable to equity holders of the parent		208,761	182,737	167,886	147,550
Non-controlling interests		2,488	2,307	-	-
Total equity		211,249	185,044	167,886	147,550
Liabilities
Non-current liabilities
Non-current borrowings	14	51,179	29,716	50,705	29,716
Financial lease obligations	16	4,127	6,255	337	253
Deferred income tax liability	27	8,129	13,217	-	-
Provisions for employee benefits	18	697	512	15	28
Non-current payables	15	2,463	4,085	390	362
Total non-current liabilities		66,595	53,785	51,447	30,359
Current liabilities
Current loans	14	10,147	18,913	19,747	34,950
Current portion of non-current borrowings	14	6,258	9,498	6,041	9,418
Current portion of financial lease obligations	16	1,623	2,749	93	62
Trade payables and payables to related parties	19, 32	108,182	86,160	37,072	25,117
Advances received	20	15,713	18,097	1,917	1,691
Income tax payable		3,270	2,082	-	-
Provisions for employee benefits	18	443	896	-	-
Other current liabilities	21	42,014	24,223	1,148	966
Total current liabilities		187,650	162,618	66,018	72,204
Liabilities associated with assets held for sale (Ecoservice UAB waste management and eco-business, Note 7)		16,928	-	-	-
		482,422	401,477	285,351	250,113

General Manager	Jonas Janukėnas	8 April 2014
Financial Controller	Domas Paulikas	8 April 2014

Statements of comprehensive income

		Group		Company
			2012		2012
	Notes	2013	(Restated)	2013	(Restated)
Continuing operations
Sales	3, 22	548,182	493,917	45,013	53,068
Cost of sales	23	(444,769)	(396,908)*	(35,834)	(42,046)*
Gross profit		103,413	97,009	9,179	11,022
General and administrative expenses	24	(77,834)	(75,562)*	(8,193)	(11,171)*
Other operating income	25	9,612	28,088	900	4,258
Other operating expenses	25	(3,575)	(4,595)	(603)	(2,429)
Profit from operations		31,616	44,940	1,283	1,680
Finance income	26	788	1,530	22,461	19,609
Finance expenses	26	(6,707)	(8,989)	(3,391)	(13,720)
Share of profit of associates		63	10	-	-
Profit before tax		25,760	37,491	20,353	7,569
Income tax	27	(5,344)	(5,509)	(17)	(437)
Net profit from continued operations
		20,416	31,982	20,336	7,132
Discontinued operations
Net profit (loss) from discontinued
operations (Ecoservice UAB waste management and eco-business, Note 7)		5,798	(16,689)	-	-
Net profit		26,214	15,293	20,336	7,132

The accompanying notes are an integral part of these financial statements.

(cont'd on the next page)

* Costs of sales and operating expenses amounts shown here do not correspond to the 2012 financial statements and reflect adjustments (Note 2.22).

Statements of comprehensive income (cont'd)

		Group		Company
		2013	2012	2013	2012
Other comprehensive income that will be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations		(9)	(355)	-	-
Total comprehensive income for the year, net of tax		26,205	14,938	20,336	7,132
Net profit attributable to:
The shareholders of the Company		26,033	14,123	20,336	7,132
Non-controlling interests		181	1,170	-	-
		26,214	15,293	20,336	7,132
Total comprehensive income attributable to:
The shareholders of the Company		26,024	13,768	20,336	7,132
Non-controlling interests		181	1,170	-	-
		26,205	14,938	20,336	7,132
Basic and diluted earnings per share (LTL)	28	0.82	0.45
From continued operations		0.64	0.97
From discontinued operations		0.18	(0.53)

General Manager	Jonas Janukėnas	8 April 2014
Financial Controller	Domas Paulikas	8 April 2014

Statements of changes in equity

		Equity attributable to equity holders of the parent
Group	Notes	Share capital	Share premium	Foreign currency translation reserve	Other reserves	Retained earnings	Discontinued operations	Subtotal	Non controlling interest	Total
Balance as of 1 January 2012		31,610	73,830	(1,824)	9,172	63,451	-	176,239	2,231	178,470
Net profit for the year		-	-	-	-	14,123	-	14,123	1,170	15,293
Other comprehensive income		-	-	(355)	-	-	-	(355)	-	(355)
Total comprehensive income		-	-	(355)	-	14,123	-	13,768	1,170	14,938
Acquisition of subsidiary	4	-	-	-	-	-	-	-	(22)	(22)
Disposal of subsidiary	4	-	-	-	-	-	-	-	(1,072)	(1,072)
Dividends declared	29	-	-	-	-	(7,270)	-	(7,270)	-	(7,270)
Balance as of 31 December 2012		31,610	73,830	(2,179)	9,172	70,304	-	182,737	2,307	185,044
Net profit for the year		-	-	-	-	26,033	-	26,033	181	26,214
Other comprehensive income		-	-	(9)	-	-	-	(9)	-	(9)
Total comprehensive income Reserves of a disposal		-	-	(9)	-	26,033	-	26,024	181	26,205
group classified as held for sale (Ecoservice UAB waste management and eco-business, Note 7)	7	-	-	-	-	8,763	(8,763)	-	-	-
Balance as of 31 December 2013		31,610	73,830	(2,188)	9,172	105,100	(8,763)	208,761	2,488	211,249

(cont'd on the next page)

Statements of changes in equity (cont'd)

Company	Notes	Share capital	Share premium	Legal reserve	Other reserves	Retained earnings	Total
Balance as of 1 January 2012		31,610	73,830	3,161	6,000	33,087	147,688
Net profit for the year		-	-	-	-	7,132	7,132
Total comprehensive income		-	-	-	-	7,132	7,132
Dividends declared	29	-	-	-	-	(7,270)	(7,270)
Balance as of 31 December 2012		31,610	73,830	3,161	6,000	32,949	147,550
Net profit for the year		-	-	-	-	20,336	20,336
Total comprehensive income		-	-	-	-	20,336	20,336
Balance as of 31 December 2013		31,610	73,830	3,161	6,000	53,285	167,886

General Manager	Jonas Janukėnas	8 April 2014
Financial Controller	Domas Paulikas	8 April 2014

Statements of cash flows

	Notes Group			Company
		2013	2012	2013	2012
Cash flows from (to) operating activities
Net profit from continued operations		20,416	31,982	20,336	7,132
Net profit from discontinued operations		5,798	(16,689)	-	-
Adjusting items:
Income tax expenses	27	6,120	5,991	17	437
Depreciation and amortisation	5, 6	17,529	13,121	156	265
Impairment and write-off of accounts receivable	24	3,738	11,472	(92)	(841)
Gain from bargain purchase	25	(4,955)	(22,010)	-	-
Loss (gain) on disposal of property, plant and equipment	25	96	(358)	-	(13)
Dividend (income)	26	-	-	(9,400)	(18,578)
Loss from sale of investments	1	214	6,906	-	-
Impairment of goodwill	4	2,538	19,139	-	-
Impairment of intangible assets	5	2,262	-	-	-
Impairment of investments into subsidiaries	8	-	-	(10,948)	11,940
Interest (income)	26	(585)	(337)	(2,089)	(936)
Interest expenses	26	2,774	1,415	2,660	1,646
Reversal of discounting effect on long-term trade payables		-	686	-	-
Other financial activity result, net		2,438	(821)	-	-
Share of net profit of associate		(63)	(10)	-	-
		58,320	50,487	640	1,052
Changes in working capital:
(Increase) decrease in inventories		(1,105)	221	1	700
(Increase) decrease in trade receivables, receivables from related parties, other receivables and other current assets		(26,832)	(46,681)	877	(17,131)
Decrease (increase) in prepayments		3,635	(4,834)	50	78
Increase in trade payables and payables to related parties		1,906	18,727	13,355	7,111
Income tax (paid)		(6,251)	(6,061)	(206)	(599)
Increase (decrease) in advances received and other current liabilities		5,254	6,383	1,353	(4,206)
Net cash flows from (to) operating activities		34,927	18,242	16,070	(12,995)

The accompanying notes are an integral part of these financial statements.

(cont'd on the next page)

Statements of cash flows (cont'd)

	Notes	Group		Company
		2013	2012	2013	2012
Cash flows from (to) investing activities
(Acquisition) of non-current assets	5, 6	(8,070)	(4,540)	(1,035)	(197)
Proceeds from sale of non-current assets		4,829	1,398	-	2
(Acquisition) of investments in subsidiaries (net of cash acquired in the Group)	1, 4, 8	(16,940)	(23,890)	(3,852)	(21)
Disposal of investments in subsidiaries	1	2	4,187	-	-
Interest received		-	55	45	78
Prepayments for investments		-	(4,237)	-	-
Dividends received		-	-	8,000	18,578
Loans (granted)	32	-	-	(21,514)	(42,144)
Loans repaid		-	-	1,930	-
Net cash flows (to) investing activities		(20,179)	(27,027)	(16,426)	(23,704)
Cash flows from (to) financing activities
Dividends (paid)		-	(7,270)	-	(7,270)
Proceeds from loans		65,909	38,489	63,162
Financial lease (payments)		(3,503)	(5,148)	115	54,125
Loans (repaid)					(1,850)
Interest (paid)		(64,770)	(8,103)	(60,752)	(7,116)
		(1,694)	(1,319)	(1,362)	(1,277)
Net cash flows from financing activities		(4,058)	16,649	1,163	36,612
Net increase (decrease) in cash and cash equivalents		10,690	7,864	807	(87)
Cash and cash equivalents at the beginning of the year		32,914	25,050	129	216
Cash and cash equivalents at the end of the year		43,604	32,914	936	129
Supplemental information of cash flows:
Non-cash investing activity:
Property, plant and equipment acquisitions financed by finance leases		3,110	5,527	207	55
Non-cash increase in share capital of subsidiaries	1	-	-	-	3,100

General Manager	Jonas Janukėnas	8 April 2014
Financial Controller	Domas Paulikas	8 April 2014

Notes to the financial statements

1 General information

AB City Service (hereinafter the Company) is a public limited liability company registered in the Republic of Lithuania on 28 January 1997.

Konstitucijos Ave. 7, Smolensko Str. 12, Vilnius, Lithuania. Vilnius, Lithuania.

The Company's registered office: The Company's address of residence:

The Group companies engage in facility management process administration, engineering systems maintenance and repairs, energy resources management and renovation, buildings' technical and energetic auditing, elevators installation and maintenance, territory cleaning and provision of security services. The Board of the Company in its meeting of 29 December 2011 adopted the decision that the Company activity shall be a holding enterprise – public company, which controls facility management, maintenance, waste management (discontinued operations) companies in Lithuania and in other countries.

As of 31 December 2013 the number of employees of the Group was 5,189 (as of 31 December 2012 – 3,524). As of 31 December 2013 the number of employees of the Company was 73 (as of 31 December 2012 – 71).

The shares of AB City Service are traded in the main list of NASDAQ OMX stock exchange since 8 June 2007.

As of 31 December 2013 and 2012 the shareholders of the Company were:

		2013	2012
	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 ICOR	20,205,595	63.92 %	20,205,595	63.92 %
AB East Capital Asset Management	3,167,722	10.02 %	3,167,722	10.02 %
Genesis Asset Managers LLP	1,644,183	5.20 %	1,644,183	5.20 %
Other private and institutional shareholders	6,592,500	20.86 %	6,592,500	20.86 %
Total	31,610,000	100 %	31,610,000	100 %

The ultimate parent of the Company is Global energy consulting OU, a holding company registered in Estonia.

The parent of AB City Service, UAB ICOR, has pledged part of the Company's shares, i.e. 6,916,275 units, which constitutes 21.88% of the authorised 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 ICOR, as the shareholder, are free from any encumbrances or restrictions.

Share capital of the Company

The share capital of the Company was LTL 31,610 thousand as of 31 December 2013 and 2012. It is divided into 31,610,000 ordinary registered book-entry shares with the nominal value of LTL 1 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 2013 and 2012.

Structure of the Group

On 31 December the AB City Service group consists of AB City Service 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 2013	Share of the stock held by the Group as of 31 December 2012.	Main activities
UAB Antakalnio būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Aukštaitijos būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Baltijos būsto priežiūra	Lithuania	100%	100%	Dormant
UAB Baltijos liftai	Lithuania	100%	100%	Elevator installing & tech. support
UAB Baltijos NT valdymas	Lithuania	100%	100%	Real estate management
UAB Baltijos pastatų valdymas	Lithuania	100%	100%	Dormant
UAB Dainavos būstas	Lithuania	100%	100%	Dormant
UAB Danės būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Economus	Lithuania	100%	100%	Administration of construction-buildings
UAB Justiniškių būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Jūros būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Kauno centro būstas	Lithuania	100%	100%	Dormant
UAB Karoliniškių būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Karoliniškių turgus	Lithuania	100%	-	Marketplace administration services
UAB Konarskio turgelis	Lithuania	100%	-	Marketplace administration services
UAB Lazdynų butų ūkis	Lithuania	100%	100%	Administration of dwelling-houses
UAB Lazdynų būstas	Lithuania	100%	100%	Dormant
UAB Mano aplinka (formerly UAB Sinsta)	Lithuania	100%	100% 100 %	Maintenance and cleaning of territories and premises
UAB Mano būstas LT	Lithuania	100%	100%	Commercial real estate management and building maintenance
UAB Mano sauga	Lithuania	99,27%	51%	Security services
UAB Namų priežiūros centras	Lithuania	100%	100%	Administration of dwelling-houses
UAB Naujamiesčio būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Nemuno būstas (formerly UAB Būsto administravimo agentūra)	Lithuania	100%	100%	Administration of dwelling-houses
UAB Nemuno būsto priežiūra	Lithuania	100%	100%	Dormant
UAB Pašilaičių būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Pempininkų būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Radviliškio būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Saulėtos dienos	Lithuania	100%	-	Administration of dwelling-houses
UAB Skolos LT	Lithuania	100%	100%	Debt collection services
UAB Šiaulių būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Šiaulių liftas	Lithuania	100%	100%	Elevator installing & tech. support
UAB Šilutės būstas	Lithuania	99.84%	99.84%	Administration of dwelling-houses
UAB Vėtrungės būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Vilkpėdės būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Vilniaus turgus	Lithuania	100%	-	Dormant
UAB Vingio būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Viršuliškių būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Žaidas	Lithuania	99.33%	99.33%	Administration of dwelling-houses
UAB Žardės būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Žirmūnų būstas	Lithuania	100%	100%	Administration of dwelling-houses

AB CITY SERVICE CONSOLIDATED AND PARENT COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 December 2013 (all amounts are in LTL thousand unless otherwise stated)

Concentra Servicios y Mantenimiento, S.A.	Spain, Madrid	100%	-	Commercial real estate management and building
SIA Riga City Service	Latvia	100%	100%	Commercial real estate management and building
City Service Poland Sp .z.o.o	Poland, Warsaw	100%	100%	Dormant
City Service Polska Sp .z.o.o	Poland, Warsaw	100%	-	Dormant
INTERBUD MAX Sp. z.o.o	Poland, Warsaw	100%	100%	Dormant
Zespół Zarządców Nieruchomości Sp. z o.o.	PPoland, Warsaw	100%	100%	Administration of dwelling-houses
ТOB Київ Сіті Сервіс	Ukraine	100%	100%	Administration of dwelling-houses
OAO Cити cервис / OAO City Service	Russia, St Petersburg	100%	100%	Administration of dwelling-houses
ЗAO Cити cервис / ZAO City Service	Russia, St Petersburg	100%	100%	Administration of dwelling-houses
OAO Специализированное ремонтно наладочное управление	Russia, St Petersburg	100%	100%	Construction and engineering
ООО Жилкомсервис № 3 Фрунзенского района	Russia, St Petersburg	80%	80%	Administration of dwelling-houses
ООО «Чистый дом»	Russia, St Petersburg	100%	100%	Maintenance and cleaning of territories
ООО «Подъемные механизмы»	Russia, St Petersburg	99%	-	Elevator installing & tech. support
OOO «Управляющая компания -1»	Russia, Stavropol	76%	76%	Administration of dwelling-houses
OOO «ПРОМИНТЕР - управление проектами»	Russia, Stavropol	100%	100%	Administration of dwelling-houses
OOO «Управляющая компания -2»	Russia, Stavropol	76%	76%	Administration of dwelling-houses
OOO «Управляющая компания -3»	Russia, Stavropol	76%	76%	Administration of dwelling-houses
OOO «Управляющая компания -4»	Russia, Stavropol	76%	76%	Administration of dwelling-houses
OOO «Управляющая компания -5»	Russia, Stavropol	76%	76%	Administration of dwelling-houses
OOO «УК -5»	Russia, Stavropol	100%	100%	Administration of dwelling-houses
OOO «Управляющая компания -6» (juridinio asmens kodas 2635085674)	Russia, Stavropol	76%	76%	Administration of dwelling-houses
OOO «Управляющая компания -6» (juridinio asmens kodas 2635105070)	Russia, Stavropol	100%	100%	Administration of dwelling-houses
OOO «Жилищная Управляющая компания № 6»	Russia, Stavropol	100%	100%	Administration of dwelling-houses
OOO «Управляющая компания – 8»	Russia, Stavropol	100%	100%	Administration of dwelling-houses
OOO «Управляющая компания – 10»	Russia, Stavropol	100%	100%	Administration of dwelling-houses

Discontinued operations	Country	Share of the stock held by the Group as of 31 December 2013	Share of the stock held by the Group as of 31 December 2012.	Main activities
UAB Ecoservice UAB Komunalinių įmonių kombinatas	Lithuania Lithuania	100% 99.71%	100% 99.71%	Collection and removal of waste Collection and removal of waste
UAB Pagėgių savivaldybės komunalinis ūkis	Lithuania	66%	66%	Dormant
UAB Specialus autotransportas	Lithuania	100%	100%	Collection and removal of waste

Changes in the Group in 2013

In 2013 the Group acquired several new subsidiaries (acquisitions in more details disclosed in Note 4) and sold two:

• On 14 March 2013 the Company through a subsidiary acquired 100% shares of UAB Vilniaus turgus, code 303005920. The value of the acquisition – LTL 68 thousand.
• On 31 July 2013 the Company acquired 100% shares of UAB Saulėtos dienos, legal entity code 302473916. The value of the contract is LTL 120 thousand. UAB Saulėtos dienos is engaged in the administration of dwelling houses in Vilnius district, Lithuania.
• On 25 September 2013 the Company acquired 100% shares of Aldesa Servicios y Mantenimiento, S.A., (subsequently, the name was changed to "Concentra Servicios y Mantemiento, S.A.") legal entity code A-84659614. The value of the contract is EUR 7,345 thousand (LTL 25.361 million). The acquired company provides commercial facility management and related services. The company holds offices throughout Spain, with over 4.8 million sq. meters of facilities under its management, with 1600 employees.
• On 31 October 2013 the Company acquired 100% shares of City Service Polska Sp. z.o.o, legal entity code KRS 483372. The value of the contract is PLN 5 thousand (LTL 4 thousand). At the moment City Service Polska Sp. z.o.o. is dormant. The acquisition is related with possible expansion of the Group in Poland.
• On 19 December 2013 the Company sold OOO «Объединенная управляющая компания 7» (selling price RUB 10.5 thousand or LTL 1 thousand equivalent) and OOO «Обслуживающая управляющая компания-7» (selling price – RUB 10 thousand or LTL 1 thousand equivalent), operating in Stavropol (Russia). Information about the disposed subsidiaries is summarized in the tables below:

Date of disposal	ООО Объединенная управляющая компания – 7 OOO Обслуживающая управляющая компания-7 19 December, 2013
Goodwill	716
Non-current assets other than goodwill	393
Current assets other than cash and cash equivalents	302
Cash and cash equivalents	20
Non-current and current liabilities	(1,215)
Total net assets disposed of
attributable to equity holders of the parent	216
Total consideration received, all consisting of cash and cash equivalents	2

The Group recorded the net loss of LTL 214 thousand from the sale of shares of the subsidiaries.

Changes in the Group in 2013 (cont'd)

In addition, in 2013 there were several reorganizations (changes in the legal structure of the Group) performed as outlined below:

• On 22 February 2013 UAB SKT Environmental Services Klaipėda, code 110734883, after the reorganization was incorporated into UAB Specialusis Autotransportas.
• On 17 May 2013 the share capital of Mano sauga UAB, legal entity code 302628213, was increased by additional contributions from the shareholders. At the date of issue of these financial statements the share capital of Mano sauga UAB amounts to LTL 667.9 thousand and the Group controls 99.27% shares of the company. Mano sauga UAB provides security services in Lithuania.
• On 13 June 2013 UAB Sinsta name has been changed into UAB Mano aplinka. Continuing the process of the unbundling, the activity of maintenance and cleaning of territories from UAB Naujamiesčio būstas has been transferred to UAB Mano aplinka. This process is related to the further development of the cleaning services provided by the Group.
• On 28 June 2013 UAB Tvar.com, code 300730461, after the process of reorganization has been incorporated to its sole shareholder company.
• On 16 August 2013 continuing the process of unbundling the activities, the market activity from UAB Karoliniškių būstas and UAB Naujamiesčio būstas have been transferred to separate newly established legal entities. Market activity from UAB Karoliniškių būstas was transferred to UAB Karoliniškių turgus and from UAB Naujamiesčio būstas to UAB Konarskio turgelis.

More information on the subsidiaries acquired and disposed in 2013 is presented in Note 4 and Note 8.

Changes in the Group in 2012

In 2012 the Group acquired several new subsidiaries and sold two:

• On 26 September 2012 the Group acquired 100% shares of Žirmūnų būstas UAB, legal entity code 121483222. The acquired company maintains services of administration of dwelling-houses in Vilnius city (Lithuania).
• On 1st of October 51 % of Mano sauga UAB, legal entity code 302628213, shares have been acquired. Mano sauga UAB provides security services in Lithuania.
• On 17 December 2012 the Group acquired 100% shares of Zespół Zarządców Nieruchomości Sp. z o.o. Zespół Zarządców Nieruchomości Sp. z o.o. provides residential apartment building management services, also acts as producer and supplier of heat in Poland.
• On 20 December 2012 the Company's subsidiary Specialus autotransportas UAB acquired 100% shares of SKT Environmental Services Klaipėda UAB, legal entity code 110734883. SKT Environmental Services Klaipėda UAB provides services of collection and removal of waste in Klaipeda region (Lithuania).
• On 31 August 2012 the Company's subsidiary ОАО Сити Сервис sold the shares of the company operating in Nevskij district of St. Petersburg ООО Жилкомсервис № 2 Невского района. Information about the disposed subsidiary is summarized in the next page:

Date of disposal	ООО Жилкомсервис № 2 Невского района 31 August, 2012
Goodwill	8,924
Non-current assets other than goodwill	11,683
Current assets other than cash and cash equivalents	19,907
Cash and cash equivalents	538
Non-current and current liabilities	(28,909)
Total net assets disposed of
attributable to equity holders of the parent	11,071
attributable to non-controlling interests	1,072
Currency translation reserve realized on sales	(735)
Total consideration received, all consisting of cash and cash equivalents	4,720

The Group recorded the net loss of LTL 6,675 thousand from the sale of shares of the subsidiary.

On 20 November 2012 the Company's subsidiary ОАО Сити Сервис sold the shares of the company operating in the city of Stavropol ООО Управляющая компания-8. Information about the disposed subsidiary is summarized in the table below:

Date of disposal	ООО Управляющая компания-8 20 November, 2012
Goodwill	324
Non-current assets other than goodwill	602
Current assets other than cash and cash equivalents	30
Cash and cash equivalents	3
Non-current and current liabilities	(727)
Total net assets disposed of
attributable to equity holders of the parent	232

Total consideration received, all consisting of cash and cash equivalents 9

The Group recorded the net loss of LTL 231 thousand from the sale of shares of the subsidiary.

Changes in the Group in 2012 (cont'd)

In addition, in 2012 there were several reorganizations (changes in the legal structure of the Group) performed as outlined below:

• On 10-12 January 2012 the Company established three new subsidiaries Nemuno būsto priežiūra UAB, Baltijos NT valdymas UAB and Neries būstas UAB (now Dainavos būstas UAB). Establishment of the companies is related to planned expansion in Lithuania.
• On 27 March 2012 share capital of Saulės valda UAB (now Šiaulių būstas UAB) was increased by LTL 3.1 million by additional ordinary share issue of 3,100 thousand shares. The share capital was increased by netting off with the receivable from the subsidiary. At the date of issue of these financial statements the share capital of Šiaulių būstas UAB amounts to LTL 3,761,214.
• In May 2012 the Company continued the process of brand unification in secondary companies. The names of the companies operating in Šiauliai and Radviliškis were changed. Saulės valda UAB and Radviliškio Komunalinės Paslaugos UAB were changed to Šiaulių būstas UAB and Radviliškio būstas UAB respectively.
• During the first half of the year 2012 the Company has transferred the commercial real estate management, maintenance activities and all the subsidiaries which manage residential facility in Lithuania and perform other activities related with the residential facility management, except for Lazdynų būstas UAB which shares are the object of the litigation, to the subsidiary of the Company City Service LT UAB (legal entity code 300883806 now – Mano būstas LT UAB) direct control. The transfer has been made by implementing the decision of the Board of the Company, adopted on 29 December 2011. The above mentioned internal transfer had no impact towards financial position of the Group.
• On 3 July 2012 two newly established companies ANVO Baltic UAB (now Kauno centro būstas UAB) and ANV Capital UAB (now Sinsta UAB) have been acquired.
• On 22 November 2012 the new subsidiary "City Service Poland" Sp. z.o.o. was established. This decision is related to the expansion of Group's business activities in Poland.
• Following the provisions of Heat Sector law related to building heating and hot water systems supervision, from 1 July 2012 the Company's subsidiaries do not render the above mentioned services in the multi-apartment buildings in the territories (Vilnius, Kaunas and Klaipeda cities) where the law forbids the mentioned activity. Agreements with the subjects who satisfy law requirements where concluded and at the moment the activity do not violate the law.

Investment into associate

The Group's and the Company's investment in an associate as of 31 December 2013 included an investment in Marijampolės butų ūkis UAB (34% of the share capital), which was acquired on 16 May 2011. The value of the contract is LTL 563 thousand.

The Group accounted for the associate's results attributable to the Group amounting to respectively LTL 63 thousand and LTL 10 thousand in the statement of comprehensive income for the year ended 31 December 2013 and 2012.

Summarized financial information of associate as of 31 December (unaudited):

	UAB Marijampolės butų ūkis	UAB Marijampolės butų ūkis
	2012	2013
Assets	1,497	1,838
Liabilities	(819)	(953)
Net assets	678	885
Revenue	2,360	2,588
Net profit	28	186

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 Company's management authorised these financial statements on 8 April 2014. 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.

Financial statements of the Group and the Company have been prepared on a historical cost basis.

Adoption of new and/or changed IFRS and International Financial Reporting Interpretations Committee (IFRIC) interpretations

During the year the Group has adopted the following IFRS amendments:

• Amendment to IAS 1 Financial Statement Presentation - Presentation of Items of Other Comprehensive Income (OCI). This amendment changes the grouping of items presented in OCI. Items that could be reclassified (or 'recycled') to profit or loss at a future point in time (for example, upon derecognition or settlement) would be presented separately from items that will never be reclassified. The amendment affects presentation only and has no impact on the Group's financial position or performance. Since the Group has just one OCI item, the change to its presentation is minimal.
• Amendments to IAS 19 Employee Benefits. These amendments range from fundamental changes such as removing the corridor mechanism and the concept of expected returns on plan assets to simple clarifications and re-wording. This amendment did not impact the financial statements of the Group, because the Group does not have material defined benefit obligations.
• Amendment to IFRS 7 Financial Instruments: Disclosures Offsetting Financial Assets and Financial Liabilities. The amendment introduces common disclosure requirements. These disclosures would provide users with information that is useful in evaluating the effect or potential effect of netting arrangements on an entity's financial position. This amendment did not impact the financial statements of the Group, because the Group does not have netting arrangements.
• IFRS 13 Fair Value Measurement. The main reason of issuance of IFRS 13 is to reduce complexity and improve consistency in application when measuring fair value. It does not change when an entity is required to use fair value but, rather, provides guidance on how to measure fair value under IFRS when fair value is required or permitted by IFRS. The implemantation of this standard did not have a material impact on the amounts recognised in these financial statements and did not result in additional disclosures.
• IFRIC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine. This interpretation applies to stripping costs incurred in surface mining activity during the production phase of the mine ('production stripping costs'). This interpretation had no impact on the Group's financial statements, as the Group is not involved in mining activity.

Standards issued but not yet effective

The Group has not applied the following IFRS and IFRIC interpretations that have been issued as of the date of authorisation of these financial statements for issue, but which are not yet effective:

Amendments to IAS 19 Employee Benefits (effective for financial years beginning on or after 1 July 2014, once endorsed by the EU)

The amendments address accounting for the employee contributions to a defined benefit plan. Since the Group's employees do not make such contributions, the implementation of this amendment will not have any impact on the financial statements of the Group.

Amendment to IAS 27 Separate Financial Statements (effective for financial years beginning on or after 1 January 2014)

As a result of the new standards IFRS 10, IFRS 11 and IFRS 12 this standard was amended to contain accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates when an entity prepares separate financial statements. IAS 27 Separate Financial Statements requires an entity preparing separate financial statements to account for those investments at cost or in accordance with IFRS 9 Financial Instruments. The implementation of this amendment will not have any impact on the financial statements of the Group.

2.1. Basis of preparation (cont'd)

Amendment to IAS 28 Investments in Associates and Joint Ventures (effective for financial years beginning on or after 1 January 2014)

As a result of the new standards IFRS 10, IFRS 11 and IFRS 12 this standard was renamed and addresses the application of the equity method to investments in joint ventures in addition to associates. The implementation of this amendment will not have any impact on the financial statements of the Group.

Amendment to IAS 32 Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities (effective for financial years beginning on or after 1 January 2014)

This amendment clarifies the meaning of "currently has a legally enforceable right to set-off" and also clarifies the application of the IAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. The implementation of this amendment will not have any impact on the financial statements of the Group.

Amendment to IAS 36 Impairment of Assets (effective for financial years beginning on or after 1 January 2014)

This amendment adds a few additional disclosure requirements about the fair value measurement when the recoverable amount is based on fair value less costs of disposal and removes an unintended consequence of IFRS 13 to IAS 36 disclosures. The amendment will not have any impact on the financial position or performance of the Group, however may result in additional disclosures.

Amendment to IAS 39 Financial Instruments: Recognition and Measurement (effective for financial years beginning on or after 1 January 2014)

The amendment provides relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria. The amendment will not have any impact on the financial position or performance of the Group, since it does not apply hedge accounting.

IFRS 9 Financial Instruments (currently no effective date, the standard is not yet endorsed by the EU)

IFRS 9 will eventually replace IAS 39. The IASB has issued the first three parts of the standard, establishing a new classification and measurement framework for financial assets, requirements on the accounting for financial liabilities and hedge accounting. The Group has not yet evaluated the impact of the implementation of this standard.

IFRS 10 Consolidated Financial Statements (effective for financial years beginning on or after 1 January 2014)

IFRS 10 establishes a single control model that applies to all entities, including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgment to determine which entities are controlled and, therefore, are required to be consolidated by a parent. Examples of areas of significant judgment include evaluating de facto control, potential voting rights or whether a decision maker is acting as a principal or agent. IFRS 10 replaces the part of IAS 27 Consolidated and Separate Financial Statements related to consolidated financial statements and replaces SIC 12 Consolidation — Special Purpose Entities. The implementation of this amendment will not have any impact on the financial statements of the Group.

IFRS 11 Joint Arrangements (effective for financial years beginning on or after 1 January 2014)

IFRS 11 eliminates proportionate consolidation of jointly controlled entities. Under IFRS 11, jointly controlled entities, if classified as joint ventures (a newly defined term), must be accounted for using the equity method. Additionally, jointly controlled assets and operations are joint operations under IFRS 11, and the accounting for those arrangements will generally be consistent with today's accounting. That is, the entity will continue to recognize its relative share of assets, liabilities, revenues and expenses. The implementation of this standard will not have any impact on the Group.

IFRS 12 Disclosures of Interests in Other Entities (effective for financial years beginning on or after 1 January 2014)

IFRS 12 combines the disclosure requirements for an entity's interests in subsidiaries, joint arrangements, investments in associates and structured entities into one comprehensive disclosure standard. A number of new disclosures also will be required such as disclosing the judgments made to determine control over another entity. The amendment will not have any impact on the financial position or performance of the Group, however may result in additional disclosures.

2.1. Basis of preparation (cont'd)

IFRS 14 Regulatory Deferral Accounts (effective for financial years beginning on or after 1 January 2016, once endorsed by the EU)

It is an interim standard that provides first-time adopters of IFRS with relief from derecognizing rate-regulated assets and liabilities until a comprehensive project on accounting for such assets and liabilities is completed by the IASB. The implementation of this standard will not have any impact on the Group.

Amendments to IFRS 10, IFRS 12 and IAS 27 - Investment Entities (effective for financial years beginning on or after 1 January 2014)

The amendments apply to entities that qualify as investment entities. The amendments provide an exception to the consolidation requirements of IFRS 10 by requiring investment entities to measure their subsidiaries at fair value through profit or loss, rather than consolidate them. The implementation of this amendment will not have any impact on the financial statements of the Group, as the parent of the Group is not an investment entity.

Improvements to IFRSs (effective for financial years beginning on or after 1 July 2014, once endorsed by the EU)

In December 2013 IASB issued omnibus of necessary, but non-urgent amendments to the following standards:

• IFRS 1 First-time adoption of IFRS;
• IFRS 2 Share-based Payment;
• IFRS 3 Business Combinations;
• IFRS 8 Operating Segments;
• IFRS 13 Fair value Measurement;
• IAS 16 Property, Plant and Equipment;
• IAS 24 Related Party Disclosures;
• IAS 38 Intangible Assets;
• IAS 40 Investment property.

The adoption of these amendments may result in changes to accounting policies or disclosures but will not have any impact on the financial position or performance of the Group.

IFRIC Interpretation 21 Levies (effective for financial years beginning on or after 1 January 2014, once endorsed by the EU)

This interpretation addresses the accounting for levies imposed by governments. Liability to pay a levy is recognized in the financial statements when the activity that triggers the payment of the levy occurs. The Group has not yet evaluated the impact of the implementation of this interpretation.

The Group plans to adopt the above mentioned standards and interpretations on their effectiveness date 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 Lithuania, Litas (LTL), rounded to LTL thousand, unless otherwise stated.

The functional currency of the Company and its subsidiaries operating in Lithuania is Litas. 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 Litas 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 recognized in the separate 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.

Starting from 2 February 2002, Lithuanian Litas is pegged to Euro at the rate of 3.4528 Litas for 1 Euro, and the exchange rates in relation to other currencies are set daily by the Bank of Lithuania.

2.3. Principles of consolidation

The consolidated financial statements of the Group include AB City Service 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.

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. 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 statement of comprehensive income.

From 1 January 2010 losses of a subsidiary are attributed to the non-controlling interest even if that results in a deficit balance. Prior to 1 January 2010 losses incurred by the Group were attributed to the non-controlling interest until the balance was reduced to nil. Any further excess losses were attributed to the parent, unless the non-controlling interest had a binding obligation to cover these losses. Losses prior to 1 January 2010 were not reallocated between noncontrolling interests and the parent shareholders.

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 AB City Service 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 recognised in prior years no longer exist.

2.3. Principles of consolidation (cont'd)

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 IAS 39 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 stand-alone financial statements are carried at cost, less impairment.

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 is accounted for at the higher of amortised value and the value estimated according to IAS 37 Provisions, Contingent Liabilities and Contingent Assets.

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 with 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:

Contractual investments	6 years
Customer relationships	10-40 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 and the Company do 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 nonrefundable 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.

Depreciation is computed on a straight-line basis over the following estimated useful lives:

Buildings (including investment property)	20 – 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 completed and put into operation.

2.8. Financial assets

According to IAS 39 "Financial Instruments: Recognition and Measurement" the Group's and the Company's financial assets are classified as either financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables and available-for-sale financial assets, as appropriate. All purchases and sales of financial assets are recognised on the trade date. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

Financial assets at fair value through profit or loss

The category financial assets at fair value through profit or loss includes financial assets classified as held for trading. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Gains or losses on investments held for trading are recognised in profit or loss.

The Group and the Company does not have any financial instruments at fair value through profit or loss.

Held-to-maturity investments

Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group / the Company has the positive intention and ability to hold to maturity. Investments that are intended to be held-to-maturity are subsequently measured at amortised cost. Gains and losses are recognised in profit or loss when the investments are derecognised or impaired, as well as through the amortisation process.

The Group and the Company does not have any held-to-maturity investments as of 31 December 2013 and 2012.

2.8. Financial assets (cont'd)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Receivables are initially recorded at the fair value of the consideration given. Loans and receivables are subsequently carried at amortised cost using the effective interest method less any allowance for impairment. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

Allowance for doubtful receivables is evaluated when the indications leading to the impairment of accounts receivable are noticed and the carrying amount of the receivable is reduced through use of an allowance account. Impaired debts are derecognised (written off) when they are assessed as uncollectible.

Available-for-sale financial assets

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 unrealized 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.

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 / the Company 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 / the Company 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 / the Company 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 / the Company 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.

2.10. 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.

2.11. Cash and cash equivalents

Cash includes cash on hand and cash with 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.

2.12. Borrowings

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.

The Group and the Company capitalise borrowing costs for all qualifying assets where construction was commenced on or after 1 January 2009. However, there were no borrowing costs matching the capitalisation criteria in 2013 and 2012.

Borrowings are initially recognised at fair value of proceeds received, less the costs of transaction. They are subsequently carried at amortised cost, the difference between net proceeds and redemption value being recognised in the net profit or loss over the period of the borrowings (except for the capitalised part). The borrowings are classified as non-current if the completion of a refinancing agreement before the date of the statement of financial position provides evidence that the substance of the liability at the date of the statement of financial position was long-term.

2.13. Financial and operating leases

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.

Financial lease

The Group and the Company recognise financial leases as assets and liabilities in the statement of financial position at amounts equal at the inception of the lease to the fair value of the leased property or, if lower, to the present value of the minimum lease payments. The rate of discount used when calculating the present value of minimum payments of financial lease is the interest rate of financial lease payment, when it is possible to determine it, in other cases, Company's incremental interest rate on borrowings applies. Directly attributable initial costs are included into the asset value. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability.

The depreciation is accounted for financial lease assets. The depreciation policy for leased assets is consistent with that for depreciable assets that are owned. The leased assets cannot be depreciated over the period longer than lease term, unless the Group or the Company, according to the lease contract, gets transferred their ownership after the lease term is over.

Operating lease

Leases where the lessor retains all the risk and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognised as an expense in the statement of comprehensive income on a straight-line basis over the lease term.

2.14. Provision for employee benefits

According to the requirements of Lithuanian Labour Code, each employee leaving the 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.

The above mentioned employee benefit obligation is calculated based on actuarial assumptions, using the projected unit credit method. Obligation is recognized in the statement of financial position and reflects the present value of these benefits on the preparation date of the statement of financial position. Present value of the non-current obligation to employees is determined by discounting estimated future cash flows using the discount rate 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 recognized in statement of other comprehensive income as incurred.

2.15. Provisions

Provisions are recognised when the Group and the Company 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 / the Company 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.

2.16. 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 Lithuania, the Republic of Latvia, the Republic of Ukraine, Russian Federation Republic of Poland and Kingdom of Spain.

The standard income tax rate in Lithuania was 15 % in 2013 and 2012. Income tax rate in 2013 and 2012 in Ukraine, Russia, Latvia, Poland and Spain was 25 %, 20 %, 15 %, 19% and 30%, respectively.

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.

Starting from 1 January 2014 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 ten years and in Poland – for five years, but value of the deduction may not exceed 50% of the loss incurred in the year in which it was reported.

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 on taxable 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.

2.17. Revenue recognition

Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of the revenue can be measured reliably. Sales are recognised net of VAT and discounts.

The Group and the Company recognises revenue from projects on renovation of thermal systems and installation of thermal components (i.e. customer specific contracts) based on the method of percentage of completion: completion percentage is estimated by the proportion of actual costs incurred to the total estimated costs of the project. Changes in profit rates are reflected in current earnings as identified. Contracts are reviewed regularly and in case of probable losses, provisions are recorded.

Revenue from sales of goods is recognised when delivery has taken place and transfer of risks and rewards has been completed.

Revenue from services is recognised when services are rendered.

Dividend income from subsidiaries is recognised in the Company's stand-alone financial statements 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.

2.18. Impairment of assets

Financial assets

Financial assets are reviewed for impairment at each date of the statement of financial position.

For financial assets carried at amortised cost, whenever it is probable that the Company will not collect all amounts due according to the contractual terms of loans or receivables, an impairment or bad debt loss is recognised in profit or loss. The reversal of impairment losses previously recognised is recorded when the decrease in impairment loss can be justified by an event occurring after the write-down. Such reversal is recorded in profit or loss. However, the increased carrying amount is only recognised to the extent it does not exceed the amortised cost that would have been had the impairment not been recognised.

Other assets (excluding goodwill)

Other 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.

2.19. Use of estimates in the preparation of financial statements

The preparation of financial statements in conformity with International Financial Reporting Standards 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 6), amortization (Note 2.6 and Note 5), percentage of completion evaluation for customer specific contracts (Note 2.17 and Note 22), provision for employee benefits (Note 2.14 and Note 18), impairment evaluation of goodwill, including allocation of Group assets to cash generating units (Note 2.3 and Note 4), other assets (Note 2.18, Note 5, Note 8, Note 9, Note 10 (for the Group) and Note 11) and contingencies related to foreign and local subsidiaries (Note 31). 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 estimated useful life of customer relationships intangible assets, which are accounted for under other intangible assets and their acquisition value amounts to LTL 61,312 thousand as of 31 December 2013 and LTL 85,070 thousand as of 31 December 2012 (Note 5). The management amortises these customer relationship intangible assets over the estimated validity period of existing contracts, which is 10-40 years. The management estimated the expected validity term of customer relationships based on the current development of the operations, i.e. already concluded contracts as well as current rate of terminated contracts, which is insignificant. Should the circumstances change in the future, the estimate may need to be revised and the size of such revision cannot be reasonably estimated at the date of these financial statements. The net book value of these intangible assets of the Group amount to LTL 52,219 thousand as of 31 December 2013 and LTL 75,033 thousand as of 31 December 2012.

2.20. 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.

2.21. Subsequent events

Subsequent events that provide additional information about the Group's / the Company'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.

2.22. Comparable financial information

Where necessary, comparative figures have been adjusted to correspond to the presentation of the current year. In 2013 the Group and the Company have performed reallocation of remuneration and other costs to operating expenses, which previously were classified as costs of sales. In order to present accurate comparable information, restate was made for the year 2012 – LTL 2,662 thousand and LTL 306 thousand were reclassified from cost of sales (Note 23) to operating expenses (Note 24) by the Group and by the Company respectively.

3 Segment information

For management purposes, the Group is organized into business units based on services provided and have two reportable segments as follows:

• Buildings' administration
• Waste management (discontinued operations)

Segment of Buildings' administration includes services of administration and maintenance of commercial and residential buildings. The segment also includes services of maintenance of heat and water systems and supply of heating energy and water to educational institutions. The segment information is presented as analysed by chief operating decision maker of the Group (the Board), i.e. allocated to Baltic states, St. Petersburg, Stavropol, Poland and Spain.

Segment of Waste management (discontinued operations) included services of collecting and processing of waste.

No operating segments have been aggregated to form the above reportable operating segments.

3 Segment information (cont'd)

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 2013	Buildings' administration				Discontinued	Total
	Baltic states	St. Petersburg	Stavropol	Poland	Spain	operations
Revenue	236,975	160,420	31,425	75,844	42,514	45,392	592,570
Unallocated income							1.0041
Total revenue							593,574
Segment results Gain from bargain purchase	25,110	6,049	76	2,060	962	6,349	40,606 1554
and intangibles impairment charges, net							2
Unallocated expenses							(3,305)
Profit from operations Net financial income							37,456 3 (5,122)
Profit / (loss) before income tax							32,334
Income tax expenses							3 (6,120)
Net profit for the year							26,214
Other segment information
Capital expenditure	6,292	1,078	23	1,484	27	2,301	11,205

¹ Unallocated income includes other income not attributable to either of the listed segments, namely IT services and other. ²Unallocated expenses include general and administrative expenses (LTL 3,305 thousand) identifiable as costs managed on a group basis.

3 Financing of the Group and income taxes are managed on a group basis and are not allocated to operating segments. ⁴The amount comprises LTL 2,538 thousand of goodwill and LTL 2,262 thousand intangible assets impairment (allocated to Stavropol segment) and a gain of LTL 4,955 thousand from a bargain purchase in Spain (Note 4, 5).

3 Segment information (cont'd)

Year ended 31 December 2012	Buildings' administration
	Baltic states	St. Petersburg	Stavropol	Discontinued operations	Total
Revenue Unallocated income Total revenue	200,545	258,315	35,330	39,455	533,645 9091 534,554
Segment results Negative goodwill and goodwill impairment charges, net Unallocated expenses Profit from operations Net financial income Profit / (loss) before income tax Income tax expenses Net profit for the year	17,301	10,643	(2,323)	3,709	29,330 2,8714 2 (3,251) 28,950 3 (7,666) 21,284 (5,991)3 15,293
Other segment information Capital expenditure	5,005	848	15	2,213	8,081

¹ Unallocated income includes other income not attributable to either of the listed segments, namely IT services and other. ²Unallocated expenses include general and administrative expenses (LTL 3,251 thousand) identifiable as costs managed on a group basis.

3 Financing of the Group and income taxes are managed on a group basis and are not allocated to operating segments. ⁴The amount comprises LTL 19,139 thousand of goodwill impairment (allocated to waste management segment) and gain of LTL 22,010 thousand from a bargain purchase in Poland (Note 4).

3 Segment information (cont'd)

Geographical information

The following tables present Group's geographical information on revenue based on the location of the customers and non-current assets information based on the location of the Group's assets:

2013	Spain	Poland	Baltic states	St. Petersburg	Stavropol	Total
Revenue
Sales to external customers	42,514	75,844	237,979	160,420	31,425	548,182
Segment revenue	42,514	75,844	237,979	160,420	31,425	548,182

2012	Poland	Baltic states	St. Petersburg	Stavropol	Total
Revenue
Sales to external customers	-	201,454	258,315	35,330	495,099
Segment revenue	-	201,454	258,315	35,330	495,099

The major part of sales in the Baltic States comprises of sales in Lithuania.

2013	Spain	Poland	Baltic states	St. Petersburg	Stavropol	Total
Non-current assets
Segment assets	9,513	40,402	106,190	11,978	6,743	174,826
Total assets	9,513	40,402	106,190	11,978	6,743	174,826
2012		Poland	Baltic states	St. Petersburg Stavropol		Total

Non-current assets
Segment assets	45,318	137,488	30,652	8,598	222,056
Total assets	45,318	137,488	30,652	8,598	222,056

Non-current assets for this purpose consist of property, plant and equipment, investment property, intangible assets, noncurrent financial assets and deferred income tax asset.

All the Company's revenues are derived in Lithuania as well as its assets are located in Lithuania.

Revenue from the largest customer amounted to LTL 36,929 thousand in 2013 (LTL 40,024 thousand in 2012), arising from sales to Vilnius Municipality and is accounted in the buildings' administration segment. Sales to this customer exceed 10% of sales of the Company, but compose only approximately 7% in the Group. There are no other individual customers exceeding 10% of segment sales.

4 Goodwill

	Group
Cost:
Balance as of 1 January 2012	69,362
Additions	4,597
Disposals	(9,248)
Balance as of 31 December 2012	64,711
Additions	154
Exchange differences	(871)
Disposals	(716)
Discontinued operations	(27,144)
Balance as of 31 December 2013	36,134
Impairment:
Balance as of 1 January 2012	290
Impairment for the year	19,139
Balance as of 31 December 2012	19,429
Impairment for the year	2,538
Discontinued operations	(19,139)
Balance as of 31 December 2013	2,828
Net book value as of 31 December 2013	33,306
Net book value as of 31 December 2012	45,282

Acquisitions during 2013

As described in Note 1, during 2013 the Group acquired the following entities:

Name of entity acquired	Acquisition cost	Notes
Vilniaus turgus UAB	LTL 68 thousand	All paid in cash and included in the cost of investment
Saulėtos dienos UAB	LTL 120 thousand	All paid in cash and included in the cost of investment
Concentra Servicios y Mantemiento, S.A.	EUR 1.1 million*	All paid in cash and included in the cost of investment
City Service Polska Sp. z.o.o	PLN 5 thousand	All paid in cash and included in the cost of investment

* The value of the contract is EUR 7,345 thousand (LTL 25,361 thousand) which was paid in cash: EUR 1,114 thousand (LTL 3,846 thousand) for shares of the subsidiary and additionally EUR 6,231 thousand (LTL 21,514 thousand) for loans of former shareholders.

At the acquisition of these subsidiaries a provisional goodwill of LTL 154 thousand has been accounted for. The goodwill appears due to expected synergies, which are expected to be derived from vertical expansion of business.

Also a provisional gain of LTL 4,955 thousand from a bargain purchase as well as goodwill impairment of LTL 2,538 thousand was recognised in the Group's statement of comprehensive income in 2013.

The provisional (due to not finalised valuations of certain items – the management in 2014 plans to revaluate not recognised intangible assets, recoverability of deferred tax assets and other items) fair values of the assets acquired, liabilities and contingent liabilities assumed at the date of acquisitions made during 2013 were as follows:

Fair value of assets, liabilities and contingent liabilities	Vilniaus turgus UAB	Saulėtos dienos UAB	Concentra Servicios y Mantemiento, S.A.	City Service Polska Sp. z.o.o
Date of acquisition	14 March	31 July	25 September	31 October
Intangible assets	-	-	46	-
Property, plant and equipment	-	-	479	-
Other non-current assets	-	-	185	-
Deferred tax asset	-	-	9,000	-
Trade receivables	-	3	57,463	-
Other current assets	10	26	12,513	4
Total assets	10	29	79,686	4
Long-term liabilities to the shareholder	-	-	21,514	-
Trade payables	-	5	22,896	-
Other current liabilities	-	-	26,473	-
Total liabilities	-	-	70,883	-
Total identifiable net assets at fair value	10	24	8,803	4
attributable to equity holders of the parent	10	24	8,803	4
attributable to non-controlling interests	-	-	-	-

The carrying values of the acquired assets and liabilities assumed were as follows:

Book value	Vilniaus turgus UAB	Saulėtos dienos UAB	Concentra Servicios y Mantemiento, S.A.	City Service Polska Sp. z.o.o
Date of acquisition	14 March	31 July	25 September	31 October
Intangible assets	-	-	21,968	-
Property, plant and equipment	-	-	525	-
Other non-current assets	-	-	185	-
Trade receivables	-	3	57,463	-
Other current assets	10	26	12,513	4
Total assets	10	29	92,654	4
Long-term liabilities to the	-	-	21,514	-
shareholder Trade payables	-	5	22,896	-
Other current liabilities	-	-	26,473	-
Total liabilities	-	5	70,883	-

The differences between the amounts paid and the provisional fair values of assets acquired, liabilities and contingent liabilities assumed on the acquisitions of 2013 were as follows:

	Vilniaus turgus UAB	Saulėtos dienos UAB	Concentra Servicios y Mantemiento, S.A.	City Service Polska Sp. z.o.o
Date of acquisition	14 March	31 July	25 September	31 October
Fair value of acquired assets, liabilities and
contingent liabilities attributable to the Group	10	24	8,803	4
Non-controlling interests	-	-	-	-
Goodwill (Note 25)	58	96	(4,955)	-
Total purchase consideration	68	120	3,848
Cash acquired	10	26	8,575	4
Total purchase consideration, net of cash acquired	58	94	(4,727)	-

All the purchase consideration has been settled in cash, with no contingent payments.

	Vilniaus turgus UAB	Saulėtos dienos UAB	Concentra Servicios y Mantemiento, S.A.	City Service Polska Sp. z.o.o
Date of acquisition	14 March	31 July	25 September	31 October
Profit (loss) incurred since acquisition date to 31 December 2013	(1)	5	172	-
Total revenue since acquisition date to 31 December 2013	-	24	42,514	-
Total revenue for the year 2013	-	32	158,052	-
Total net result for the year 2013	-	7	(352)	-

As it is disclosed further in the financial statements, in 2013 the Group's management finalized the purchase price allocation of Zespół Zarządców Nieruchomości Sp. z.o.o. acquired on 17 December 2012. As a result of finalization of purchase price allocation the following corrections in fair value of assets and liabilities assumed were recorded:

Zespół Zarządców Nieruchomości Sp. z.o.o.	Provisional fair value recognized on acquisition	Effect of finalization of purchase price allocation	Final fair value recognized on acquisition
Property, plant and equipment
Intangible assets	36,630	(955)	35,675
	9,824	-	9,824
Other assets	27,639	-	27,639
Total assets	74,093	(955)	73,138
Non-current and current liabilities	(13,335)	-	(13,335)
Total identifiable net assets at fair value:	60,758	(955)	59,803
attributable to equity holders of the parent	60,758	(955)	59,803
attributable to non-controlling interests	-	-	-

The differences between the amounts paid and the fair values of assets acquired and liabilities and contingent liabilities assumed for Zespół Zarządców Nieruchomości Sp. z.o.o. according to finalized purchase price allocation are as follows:

Zespół Zarządców Nieruchomości Sp. z.o.o.	Provisional fair value recognized on acquisition	Effect of finalization of purchase price allocation	Final fair value recognized on acquisition
Fair value of acquired assets, liabilities and contingent liabilities
attributable to the Group	60,758	(955)	59,803
Non-controlling interests	-	-	-
Goodwill	(22,965)	955	(22,010)
Total purchase consideration	37,793	-	37,793
Cash acquired	15,544	-	15,544
Total purchase consideration, net of cash acquired	22,249	-	22,249

In these financial statements comparative figures for 2012 have been amended as outlined above due to finalization of the purchase price allocation of Zespół Zarządców Nieruchomości Sp. z.o.o.

As it is disclosed further in the financial statements, in 2013 the Group's management finalized the purchase price allocation of Žirmūnų būstas UAB acquired on 26 September 2012. As a result of finalization of purchase price allocation the following corrections in fair value of assets and liabilities assumed were recorded:

Žirmūnų būstas UAB	Provisional fair value recognized on acquisition	Effect of finalization of purchase price allocation	Final fair value recognized on acquisition
Property, plant and equipment	2,193	-	2,193
Intangible assets	2,077	-	2,077
Other assets	5,328	-	5,328
Total assets	9,598	-	9,598
Non-current and current liabilities	(3,904)	(161)	(4,065)
Total identifiable net assets at fair value:	5,694	(161)	5,533
attributable to equity holders of the parent	5,694	(161)	5,533
attributable to non-controlling interests	-	-	-

The differences between the amounts paid and the fair values of assets acquired and liabilities and contingent liabilities assumed for Žirmūnų būstas UAB according to finalized purchase price allocation are as follows:

Žirmūnų būstas UAB	Provisional fair value recognized on acquisition	Effect of finalization of purchase price allocation	Final fair value recognized on acquisition
Fair value of acquired assets, liabilities and contingent liabilities
attributable to the Group	5,694	(161)	5,533
Non-controlling interests	-	-	-
Goodwill	4,236	161	4,397
Total purchase consideration	9,930	-	9,930
Cash acquired	3,232	-	3,232
Total purchase consideration, net of cash acquired	6,698	-	6,698

In these financial statements comparative figures for 2012 have been amended as outlined above due to finalization of the purchase price allocation of Žirmūnų būstas UAB.

Disposals in 2013

As described in Note 1, during 2013 the Group disposed the company operating in Stavropol ООО Объединенная управляющая компания – 7 and the company operating in the city of Stavropol ООО Объединенная управляющая компания – 7. The sales value of the contracts is RUB 10.5 thousand (LTL 1 thousand equivalent) and RUB 10 thousand (LTL 1 thousand equivalent) respectively, all paid in cash.

Acquisitions during 2012

As described in Note 1, during 2012 the Group acquired the following entities:

Name of entity acquired	Acquisition cost	Notes
Žirmūnų būstas UAB	LTL 9.9 million	All paid in cash and included in the cost of investment
Mano sauga UAB	LTL 1	All paid in cash and included in the cost of investment
SKT Environmental Services Klaipėda UAB	LTL 3.4 million	All paid in cash and included in the cost of investment
Zespol Zarzadcow Nieruchomosci Sp. z.o.o.	PLN 45 million	All paid in cash and included in the cost of investment

All the costs related to acquisitions above have been expensed, in total amount of LTL 1,768 thousand. At the acquisition of these subsidiaries a goodwill of LTL 4,575 thousand has been accounted for. The goodwill appears due to expected synergies, which are expected to be derived from vertical expansion of business.

Also a gain of LTL 22,010 thousand from a bargain purchase as well as goodwill impairment of LTL 19,139 thousand was recognised in the Group's statement of comprehensive income in 2012. Gain from a bargain purchase appeared because of low competition in a public privatisation tender for Zespół Zarządców Nieruchomości Sp. z.o.o. resulting from mix of different activities within the company. Goodwill impairment was recognised because of decreasing operating margins in the waste management business resulting from increase in landfill gate fees not being adequately compensated within waste management tariff structure.

The Group has elected to measure the non-controlling interest in the acquiree at the proportionate share of the acquiree's identifiable net assets. The fair values of the assets acquired, liabilities and contingent liabilities assumed at the date of acquisitions made during 2012 were as follows:

Fair value of assets, liabilities and contingent liabilities	Žirmūnų būstas UAB	Mano sauga UAB	Zespół Zarządców Nieruchomości Sp. z.o.o.	SKT Environmental Services Klaipėda UAB
Date of acquisition	26 September	1 October	17 December	20 December
Intangible assets
	2,077	287	9,824	358
Property, plant and equipment	2,032	7	33,668	1,764
Other non-current assets	161	9	2,007	557
Trade receivables	2,023	10	6,982	751
Other current assets	3,305	8	20,657	719
Total assets	9,598	321	73,138	4,149
Interest bearing financial liabilities	-	-	-	42
Deferred tax liability	576	-	-	54
Trade payables	455	320	7,385	422
Other current liabilities	3,034	46	5,950	404
Total liabilities	4,065	366	13,335	922
Total identifiable net assets at fair value	5,533	(45)	59,803	3,227
attributable to equity holders of the parent	5,533	(23)	59,803	3,227
attributable to non-controlling interests	-	(22)	-	-

The carrying values of the acquired assets and liabilities assumed were as follows:

Book value	Žirmūnų būstas UAB	Mano sauga UAB	Zespół Zarządców Nieruchomości Sp. z.o.o.	SKT Environmental Services Klaipėda UAB
Date of acquisition	26 September	1 October	17 December	20 December
Intangible assets	6	287	79	-
Property, plant and equipment	263	13	50,619	1,764
Other non-current assets	161	-	448	557
Trade receivables, gross	2,945	10	7,134	973
Valuation allowance for trade receivables	(922)	-	(152)	(222)
Other current assets	3,305	61	20,362	719
Total assets	5,758	371	78,490	3,791
Interest bearing financial liabilities	-	-	-	42
Deferred tax liability	-	-	-	-
Trade payables	455	320	7,385	422
Other current liabilities	1,876	45	5,567	404
Total liabilities	2,331	365	12,952	868

The differences between the amounts paid and the fair values of assets acquired, liabilities and contingent liabilities assumed on the acquisitions of 2012 were as follows:

	Žirmūnų būstas UAB	Mano sauga UAB	Zespół Zarządców Nieruchomości Sp. z.o.o.	SKT Environmental Services Klaipėda UAB
Date of acquisition	26 September	1 October	17 December	20 December
Fair value of acquired assets, liabilities and contingent liabilities attributable to the Group	5,533	(45)	59,803	3,227
Non-controlling interests	-	22	-	-
Goodwill (Note 25)	4,397	23	(22,010)	155
Total purchase consideration	9,930	-	37,793	3,382
Cash acquired	3,232	4	15,544	88
Total purchase consideration, net of cash acquired	6,698	(4)	22,249	3,294

All the purchase consideration has been settled in cash (except for 8.3 million, which was netted with accounts receivable), with no contingent payments.

	Žirmūnų būstas UAB	Mano sauga UAB	Zespół Zarządców Nieruchomości Sp. z.o.o.	SKT Environmental Services Klaipėda UAB
Date of acquisition	26 September	1 October	17 December	20 December
Profit (loss) incurred since acquisition date to 31 December 2012	80	85	-	-
Total revenue since acquisition date to 31 December 2012	2,966	475	-	-
Total revenue for the year 2012 Total net result for the year 2012	9,581 183	475 85	32,242 7,771	4,478 184

Disposals in 2012

As described in Note 1, during 2012 the Group disposed the company operating in Nevskij town of St. Petersburg district ООО Жилкомсервис № 2 Невского района and the company operating in the city of Stavropol ООО Управляющая компания-8. The sales value of the contracts is RUB 54 million (LTL 4.7 million equivalent) and RUB 100 thousand (LTL 9 thousand equivalent) respectively, all paid in cash.

Goodwill allocation

Due to increase in political and economic risks associated with Stavropol, Group's management decided to split Russia's CGU into St. Petersburg and Stavropol CGUs in 2013.

For the purpose of impairment evaluation, the goodwill as of 31 December 2013 and 2012 was allocated to the following cash generating units (CGU):

Cash generating unit	Carrying value of allocated goodwill as of 31 December 2013	Carrying value of allocated goodwill as of 31 December 2012
Subsidiaries operating in Klaipėda (administration of dwelling-houses in Klaipėda)	4,894	4,894
Subsidiaries operating in Kaunas (administration of dwelling-houses in Kaunas)	3,169	3,169
Subsidiaries operating in Vilnius (administration of dwelling-houses in Vilnius)	21,019	20,865
Subsidiaries operating in Šiauliai (administration of dwelling-houses in Šiauliai)	1,022	1,022
Subsidiaries operating in Stavropol (administration of dwelling-houses in city of Stavropol)	-	3,643
Subsidiaries operating in St. Petersburg (administration of dwelling-houses in city of St. Petersburg)	3,202	3,793
Discontinued operations related with waste management activities (Ecoservice subgroup)	8,005	7,896
	41,311	45,282

The recoverable amount of each cash generating unit as of 31 December 2013 and 2012 was determined based on the value in use calculation using cash flow projections based on the five-year financial forecasts prepared by the management. Significant assumptions used for the assessment of the value in use in 2013 and 2012 are described further.

The forecasted revenues for CGU involved in administration of dwelling houses were estimated based on the area of the dwelling-houses administered as of 31 December 2013 and 2012 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. Waste management CGU was not considered in 2013 as it is classified as discontinued operations as of 31 December 2013. 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 (same in 2012) that reflects the best estimate of the management based on the current situation in the respective industry. The pretax 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% for cash generating units located in Lithuania (14% in 2012), and 19% for cash generating units in St. Petersburg and 20% for cash generating units in Stavropol (in 2012 impairment test was performed for Russian cash generated unit as a whole with 19% pre-tax discount rate).

Due to increase in political and economic uncertainty in Stavropol, the Group's management decided to monitor operations, including goodwill, separately for related activities, therefore it was decided by the management to perform separate goodwill impairment test for the group of companies, located in Stavropol. Financial results for the year 2013 were extrapolated over the five years period with 2% decline rate applying pre-tax weighted average cost of capital equal to 20%. Cash flows beyond the five-year period were extrapolated using 1% growth rate that reflects the best estimate of the management based on the current situation in the respective industry. After the goodwill impairment test, due to the negative financial results of Stavropol located business, the total goodwill and intangible assets impairment of LTL 4,800 thousand was accounted in 2013 (Note 24).

For the year ended as of 31 December 2012, UAB Ecoservice goodwill impairment was tested based on 2012 forecasted results extrapolated over the five years period with zero growth rate applying weighted average cost of capital equal to 11%. Cash flows beyond the five-year period were extrapolated using 1.5% growth rate that reflects the best estimate of the management based on the current situation in the respective industry. After the goodwill impairment test, due to the decreasing operating margins in the waste management business resulting from increase in landfill gate fees not being adequately compensated within waste management tariff structure, the goodwill impairment of LTL 19,139 thousand was accounted in 2012.

In the opinion of the Group's management, the most important and most change-like assumptions are the level of reinvestments and discount rate. Based on management's estimations, a reasonable change in these assumptions may result in impairment of goodwill, i.e. 1% change in discount rate used would result in impairment consisting of 0.2 % from total goodwill net balance sheet value as of 31 December 2013 (4 % as of 31 December 2012). At the moment of preparing these financial statements the management of the Group did not expect any significant changes in the assumptions used.

5 Other intangible assets

Movement of other intangible assets in 2013 and 2012 is presented below:

	Group	Company
Cost:
Balance as of 1 January 2012	86,810	1,671
Additions arising from acquisitions of subsidiaries	12,562	-
Additions	311	45
Disposals of subsidiaries	(12,472)	-
Disposals	(8)	(2)
Retirements	(189)	-
Reorganisation effect (Note 1)	-	(1,699)
Balance as of 31 December 2012	87,014	15
Additions arising from acquisitions of subsidiaries	17	-
Additions	919	493
Disposals	(419)	(1)
Discontinued operations (Note 7)	(22,280)	-
Exchange differences	(192)	-
Retirements	(237)	-
Reclassifications	55	-
Balance as of 31 December 2013	64,877	507
Accumulated amortisation:
Balance as of 1 January 2012	8,118	485
Charge for the year	3,402	18
Disposals	-	(1)
Disposals of subsidiaries	(987)	-
Retirements	(99)	-
Reorganisation effect (Note 1)	-	(490)
Balance as of 31 December 2012	10,434	12
Charge for the year	4,464	6
Disposals	(31)	(1)
Impairment (Note 24)	2,262	-
Discontinued operations (Note 7)	(6,484)	-
Exchange differences	(4)	-
Retirements	(220)	-
Balance as of 31 December 2013	10,421	17
Net book value as of 31 December 2013	54,456	490
Net book value as of 31 December 2012	76,580	3

The main part of other intangible assets consists of customer relationship intangible assets, which are amortised during the period of 10-40 years. As of 31 December 2013 net book value of such intangible assets constituted LTL 52,219 thousand (LTL 75,033 thousand as of 31 December 2012). As of 31 December 2013 impairment for intangibles assets of Stavropol in amount of LTL 2,262 thousand was recorded (Note 4).

The Group and the Company have not capitalised any internally generated intangible assets. Amortisation expenses of intangible assets are included within general and administrative expenses in the statement of comprehensive income.

Part of the other intangible assets of the Group and the Company with the acquisition value of LTL 1,182 thousand and LTL 11 thousand, respectively, as of 31 December 2013 was fully amortised but still in use (LTL 502 thousand and LTL 8 thousand, respectively, of the Group and the Company as of 31 December 2012).

6 Property, plant and equipment

Movement of property, plant and equipment in 2013 and 2012 is presented below:

Group			Other
			property, plant and	Construc tion in
	Buildings	Vehicles	equipment	progress	Total
Cost:
Balance as of 1 January 2012	24,705	28,329	15,459	48	68,541
Additions arising from acquisitions of subsidiaries	14,949	1,530	20,896	96	37,471
Additions	281	3,347	4,142	-	7,770
Disposals	-	(1,944)	(1,069)	-	(3,013)
Exchange differences	-	119	34	2	155
Retirements	-	(1,530)	(3,028)	(1)	(4,559)
Balance as of 31 December 2012	39,935	29,851	36,434	145	106,365
Additions arising from acquisitions of subsidiaries	-	712	1,146	-	1,858
Additions	917	5,032	3,503	834	10,286
Disposals	(4,124)	(519)	(233)	(24)	(4,900)
Discontinued operations (Note 7)	(2,338)	(17,082)	(8,103)	-	(27,523)
Exchange differences	(267)	(391)	(720)	(1)	(1,379)
Retirements	(129)	(998)	(3,961)	(54)	(5,142)
Reclassifications	368	-	57	(480)	(55)
Balance as of 31 December 2013	34,362	16,605	28,123	420	79,510
Accumulated depreciation:
Balance as of 1 January 2012	3,514	8,296	3,980	-	15,790
Charge for the year	1,120	4,249	4,338	-	9,707
Disposals	-	(1,645)	(890)	-	(2,535)
Exchange differences	-	43	17	-	60
Retirements	-	(1,124)	(2,602)	-	(3,726)
Balance as of 31 December 2012	4,634	9,819	4,843	-	19,296
Charge for the year	1,442	5,491	6,132	-	13,065
Disposals	(361)	(448)	(169)	-	(978)
Discontinued operations (Note 7)	(375)	(7,073)	(2,575)	-	(10,023)
Exchange differences	(9)	(173)	(116)	-	(298)
Retirements	(56)	(799)	(3,860)	-	(4,715)
Balance as of 31 December 2013	5,275	6,817	4,255	-	16,347
Net book value as of 31 December 2013	29,087	9,788	23,868	420	63,163
Net book value as of 31 December 2012	35,301	20,032	31,591	145	87,069

6 Property, plant and equipment (cont'd)

	Company

		Other property, plant and	Construction in
	Vehicles	equipment	progress	Total
Cost:
Balance as of 1 January 2012	5,851	3,239	-	9,090
Additions	55	116	-	171
Disposals	(62)	(16)	-	(78)
Reorganisation effect (Note 1)	(5,230)	(3,034)	-	(8,264)
Balance as of 31 December 2012	614	305	-	919
Additions	418	124	-	542
Disposals	(53)	(2)	-	(55)
Balance as of 31 December 2013	979	427	-	1,406
Accumulated depreciation:
Balance as of 1 January 2012	2,970	2,076	-	5,046
Charge for the year	142	105	-	247
Disposals	(12)	(11)	-	(23)
Reorganisation effect (Note 1)	(2,816)	(1,954)	-	(4,770)
Balance as of 31 December 2012	284	216	-	500
Charge for the year	104	45	-	149
Disposals	(53)	(2)	-	(55)
Balance as of 31 December 2013	335	259	-	594
Net book value as of 31 December 2013	644	168	-	812
Net book value as of 31 December 2012	330	89	-	419

The depreciation charge of the Group's and the Company's property, plant and equipment for the year 2013 amounts to LTL 13,065 thousand and LTL 149 thousand, respectively (LTL 9,707 thousand and LTL 247 thousand in the year 2012, respectively). Amounts of LTL 5,272 thousand and LTL 149 thousand for the year 2013 (LTL 3,928 thousand and LTL 247 thousand for the year 2012) have been included into general and administrative expenses in the Group's and the Company's statement of comprehensive income, respectively. The remaining depreciation expenses of property, plant and equipment have been included into the cost of sales.

Property, plant and equipment of the Group and the Company with an acquisition cost of LTL 18,263 thousand and LTL 239 thousand, respectively, were fully depreciated as of 31 December 2013 (LTL 12,345 thousand and LTL 279 thousand as of 31 December 2012, respectively), but were still in active use.

As of 31 December 2013 buildings of the Group with a net book value of LTL 14,111 thousand (LTL 17,136 thousand as of 31 December 2012) were pledged to banks as collateral for the loans (Note 14).

7 Discontinued operations

On 21 February 2014 agreement for Ecoservice UAB shares sale was signed. Value of the transaction – LTL 56.6 million. Shares of Ecoservice UAB were sold to AWT Holding UAB, which control the controlling interest in the company – 75% would be held by BaltCap managed fund BaltCap Private Equity Fund II. Remaining 25% of shares would be owned by the Company. On 31 March 2014 Ecoservice UAB share transfer transaction was closed.

The major classes of assets and equity attributable to discontinued operations as of 31 December 2013 are the following:

	As of 2013 December 31	As of 2012 December 31
ASSETS
Non-current assets
Goodwill	8,005	-
Other intangible assets	15,800	-
Property, plant and equipment	17,515	-
Non-current receivables	9	-
Deferred income tax asset	2,979	-
Total non-current assets	44,308	-
Current assets
Accrued revenue	242	-
Inventories	749	-
Prepayments	406	-
Trade receivables	11,642	-
Other receivables	833	-
Cash and cash equivalents	5,076	-
Total current assets	18,948	-
Total assets	63,256	-
EQUITY AND LIABILITIES
Equity
Equity related with discontinued operations	(8,763)	-
Total equity related with discontinued operations	(8,763)	-

7 Discontinued operations (cont'd)

The major classes of liabilities attributable to discontinued operations as of 31 December 2013 are the following:

	As of 2013 December 31	As of 2012 December 31
Liabilities
Non-current liabilities
Non-current borrowings	1,600	-
Financial lease obligations	1,789	-
Deferred income tax liability	2,845	-
Total non-current liabilities	6,234	-
Current liabilities
Current portion of non-current borrowings	457	-
Current portion of financial lease obligations	1,449	-
Trade payables	4,545	-
Advances received	325	-
Income tax payable	296	-
Provisions for employee benefits	1,855	-
Other current liabilities	1,767	-
Total current liabilities	10,694	-
Total liabilities	16,928	-

The difference between assets, liabilities and equity, attributable to discontinued operations, is equal to cost of investment.

The result is as following:

	2013	2012
Sales	45,392	40,637
Cost of sales	(26,502)	(25,354)
Gross profit	18,890	15,283
General and administrative expenses	(12,618)	(31,700)
Other operating income	303	476
Other operating expenses	(226)	(49)
Profit from operations	6,349	(15,990)
Finance income	428	14
Finance expenses	(203)	(231)
Profit before taxes	6,574	(16,207)
Income tax	(776)	(482)
Net profit (loss)	5,798	(16,689)

The net cash flows incurred are as follows:

	2013	2012
Net cash flows from operating activities	10,809	8,077
Net cash flows from investing activities	(3,757)	(5,857)
Net cash flows from financing activities	(5,081)	(235)
Net increase (decrease) in cash flows	1,971	1,985

8 Investments into subsidiaries

The Company's investments into subsidiaries as of 31 December 2013 and 31 December 2012 are as follows:

	2013	2012
Cost of investments at the beginning of the year	162,045	127,913
Acquisition of Concentra Servicios y Mantemiento, S.A.	3,848	-
Acquisition of City Service Polska Sp. z.o.o.	4	-
Establishment and increase of authorised share capital of UAB Baltijos NT
valdymas	-	1,637
Establishment of City Service Poland Sp. z o.o	-	4
Transfer of Company's activities to UAB Mano būstas LT	-	44,431
Investment impairment of UAB Ecoservice (Note 26)	10,948	(10,948)
Investment impairment of SIA Riga City Service	-	(992)
Discontinued operations (Note 1)	(55,091)	-
Cost of investments at the period end	121,754	162,045

Impairment testing of investments has been performed by the management of the Group using valuation methods and based on assumptions described in Note 4.

9 Inventories

	Group		Company
	As of 31 December 2013	As of 31 December 2012	As of 31 December 2013	As of 31 December 2012
Raw and auxiliary materials	5,533	4,386	-	1
Goods for resale	229	495	-	-
Other	16	331	-	-
	5,778	5,212	-	1
Less: net realisable value allowance	(86)	(93)	-	-
	5,692	5,119	-	1

Change in allowance for inventories for the year 2013 and 2012 has been included into general and administrative expenses.

10 Prepayments

Prepayments of the Group amount to LTL 10,034 thousand as of 31 December 2013 (LTL 12,269 thousand as of 31 December 2012) and mainly include prepayments to subcontractors for residential renovation projects in Russia amounting to LTL 2,286 thousand (LTL 7,186 thousand as of 31 December 2012) and prepayment of LTL 4,161 thousand ( LTL 4,161 thousand as of 31 December 2012) attributable to acquisition of Cleaning Partner Sp. z.o.o. (Note 34).

11 Trade receivables

	Group		Company
	As of 31 December 2013	As of 31 December 2012	As of 31 December 2013	As of 31 December 2012
Trade receivables, gross	208,373	146,297	47,916	29,936
Less: allowance for doubtful trade receivables	(28,226)	(28,282)	(638)	(778)
	180,147	118,015	47,278	29,158

Change in allowance for doubtful trade receivables for the year 2013 and 2012 has been included into general and administrative expenses.

The Group's and the Company's accounts receivable from Vilnius City Municipality amounts to LTL 45,696 thousand as of 31 December 2013 (LTL 27,927 thousand as of 31 December 2012).

Both trade receivables and other receivables are non-interest bearing and are generally collectible on 30 - 90 days terms.

Movements in the allowance for impairment of the Group's receivables were as follows:

	Individually impaired	Collectively impaired	Total
Balance as of 1 January 2012	1,990	24,612	26,602
Charge for the year	2,420	7,154	9,574
Exchange differences	75	1,666	1,741
Reversed during the year	-	(877)	(877)
Written off during the year*	(193)	(8,565)	(8,758)
Balance as of 31 December 2012	4,292	23,990	28,282
Charge for the year	1,426	4,773	6,199
Exchange differences	(370)	(2,380)	(2,750)
Reversed during the year	(11)	(1,074)	(1,085)
Written off during the year	(4)	(1,042)	(1,046)
Discontinued operations (Note 1)	(309)	(1,065)	(1,374)
Balance as of 31 December 2013	5,024	23,202	28,226

* The major part of written off receivables during 2012 is related to disposal of subsidiaries (Note 1).

11 Trade receivables (cont'd)

Movements in the allowance for impairment of the Company's receivables were as follows:

	Individually impaired	Collectively impaired	Total
Balance as of 1 January 2011	-	1,619	1,619
Reversed during the year	-	(841)	(841)
Balance as of 31 December 2012	-	778	778
Reversed during the year	-	(140)	(140)
Balance as of 31 December 2013	-	638	638

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 past due but not impaired
	Trade receivables neither past due nor impaired	Less than 30 days	30 – 60 days	60 – 90 days	90 – 360 days	More than 360 days	Total
2012	63,707	12,669	7,057	6,764	16,828	10,990	118,015
2013	89,266	19,902	10,196	9,145	27,988	23,650	180,147

The ageing analysis of the Company's trade receivables (presented net of allowance for impaired receivables) as of 31 December is as follows:

		Trade receivables past due but not impaired
	Trade receivables neither past due nor impaired	Less than 30 days	30 – 60 days	60 – 90 days	90 – 360 days	More than 360 days	Total
2012	7,947	3,886	3,902	3,923	7,087	2,413	29,158
2013	14,480	3,463	3,577	3,560	17,830	4,368	47,278

Trade receivables of the Company overdue for more than 90 days consist mainly of receivables from municipal entities, which, in the view of the management, do not bear the risk of non-repayment.

12 Cash and cash equivalents

		Group		Company
	As of 31 December 2013	As of 31 December 2012		As of 31 December 2013						As of 31 December 2012
Cash at bank	27,900	19,060	910	127
Cash on hand	155	109	26	2
Short-term deposits	10,473	13,745	-	-
	38,528	32,914	936	129

The original term of all deposits is less than three months, the weighted average annual interest rate of the Group as of 31 December 2013 was 2,64% (5,36% as of 31 December 2012).

The fair value of cash and short-term deposits as of 31 December 2012 of the Group and the Company was LTL 38,528 thousand and LTL 936 thousand, respectively (LTL 32,914 thousand and LTL 129 thousand as of 31 December 2012, respectively).

As of 31 December 2013 the Group had restricted cash of LTL 4,698 thousand (LTL 730 thousand as of 31 December 2012) held in the bank as guarantee provided to customers. LTL 3,125 amount is accounted in non-current receivables caption while LTL 1,537 – in current receivables caption in the statement of financial position as of 31 December 2013.

As of 31 December 2013 and 2012 part of bank accounts of the Company and its subsidiaries are pledged to banks for loans (Note 14). As of 31 December 2013 cash balance in these accounts was equal to zero.

13 Reserves and share premium

Legal reserve

A legal reserve is a compulsory reserve under Lithuanian legislation. Annual transfers of not less than 5% of net profit, calculated for statutory reporting purposes are required until the reserve reaches 10 % of the share capital. As of 31 December 2013 and 2012 the reserve was fully composed.

Other reserves

Based on the shareholders' decision other reserves of LTL 6,000 thousand were formed from the retained earnings during the year 2009 for acquisition of its own shares.

Share premium

Share premium represents the excess of the share issue price over nominal value of the shares issued.

According to the laws of the Republic of Lithuania share surplus cannot be distributed, it can only be converted to the share capital or used to cover accumulated losses.

14 Borrowings

The list of borrowings of the Group and the Company as of 31 December 2013 and 2012 are as follows:

				Group		Company
		Amount of		Balance as	Balance as	Balance as	Balance as
		the loan (in	Final	of 31	of 31	of 31	of 31
Creditor	Currency of the loan	currency of the loan)	repayment date	December 2013 (in LTL)	December 2012 (in LTL)	December 2013 (in LTL)	December 2012 (in LTL)
Current loans
Swedbank, AB (overdraft)	EUR	3,000	17.08.2013	-	5,000	-	5,000
Swedbank, AB (overdraft)	LTL	2,426	17.08.2013	-	83	-	83
Swedbank, AB	EUR	3,700	10.06.2013	-	12,775	-	12,775
Nordea Bank (overdraft)	EUR	3,000	09.09.2014	1,649	-	1,649	-
Nordea Bank (overdraft)	LTL	10,358	09.09.2014	3,672	-	3,672	-
DnB bankas AB (Ecoservice UAB)	EUR	435	29.11.2013	-	928	-	-
AS UniCredit Bank (Tvar.com UAB)	LTL	350	15.02.2013	-	127	-	-
Banco Bilbao Vizcaya Argentaria, S.A. (factoring)	EUR	462	-	1.588	-	-	-
Bankia S.A. (factoring)	EUR	1,500	-	2,190	-	-	-
Banco Popular Español S.A	EUR	300	10.11.2014	1,036	-	-	-
Bankia S.A. (credit line)	EUR	500	28.02.2014	12	-	-	-
Group account (eliminated in the consolidated group accounts)*	Unspe cified	Unspe cified	Unspe cified	-	-	14,426	17,092
Current loan balance				10,147	18,913	19,747	34,950
Non-current loans
Swedbank, AB	EUR	10,486	09.08.2015	-	18,417	-	18,417
Swedbank, AB	EUR	6,000	10.12.2017	-	20,717	-	20,717
Nordea Bank	EUR	6,611	09.09.2018	22,825	-	22,825	-
Nordea Bank	EUR	10,141	09.09.2018	33,921	-	33,921	-
AS UniCredit Bank (Tvar.com UAB)	EUR	309	15.01.2013	-	80	-	-
Banco Popular Español S.A.	EUR	200	12.10.2016	691	-	-	-
Less: current portion of non current borrowings				(6,258)	(9,498)	(6,041)	(9,418)
Non-current loan balance				51,179	29,716	50,705	29,716

* Based on overdraft facility agreement signed on 9 September 2013 among the Company, its subsidiaries operating in Lithuania and Nordea Bank, the Company and its subsidiaries operating in Lithuania can utilise net cash balances by borrowing to each other.

For all the loans of the Group and the Company variable interest rates apply. Actual interest rates are close to effective interest rates. As of 31 December 2013 the weighted average annual interest rate of borrowings outstanding was 2.56% (2.35% as of 31 December 2012). In 2013 and 2012 the period of re-pricing of floating interest rates on borrowings was 6 months. Interest is paid quarterly.

The total unutilized borrowing facilities of the Group and the Company as of 31 December 2013 amounted to LTL 17,110 thousand and LTL 15,395 thousand respectively (LTL 5,714 thousand and LTL 4,917 thousand as of 31 December 2012).

As of 31 December 2013 and 2012 the subsidiary's UAB Mano būstas shares, part of property, plant and equipment (Note 6) and part of bank accounts (Note 12) of the Group and the Company were pledged to banks as collateral for the loans received.

14 Borrowings (cont'd)

Terms of repayment of non-current debt are as follows:

	Group		Company
Term	As of 31 December 2013	As of 31 December 2012	As of 31 December 2013	As of 31 December 2012
Within one year	6,258	9,498	6,041	9,418
From one to five years	51,179	29,716	50,705	29,716
	57,437	39,214	56,746	39,134

15 Non-current payables

In 2010 OAO City Service, ZAO City Service and ООО Жилкомсервис № 3 Фрунзенского района started court litigation against TGK-1 (the provider of heating). The companies challenged the amounts invoiced by TGK-1, because the companies believe the invoices should be calculated not based on volumes of heating dispatched by TGK-1, but based on the estimated volumes of heating consumed by the inhabitants (based on the norms set for consumption).

In October 2011 the companies decided not to continue litigations with TGK-1 and an amicable settlement agreement was signed regarding the outstanding debt due from the companies. According to this agreement:

• The debt was decreased by RUR 22,541 thousand (equivalent of LTL 1,878 thousand)
• The remaining amount RUR 120,190 thousand (equivalent of LTL 10,016 thousand) has to be repaid on a monthly basis until August 2014.
• No interest is charged to the companies.

Non-current payables to TGK-1 were discounted using the effective interest rate method on the date of recognition. A gain on initial recognition (LTL1,396 thousand) was recognised in the cost of sales caption of the statement of comprehensive income for 2011. The expenses amounted to LTL 401 thousand for 2013 (LTL 686 thousand for 2012), which were included in financial expenses.

As of 31 December 2013 and 2012 the amortised cost of non-current payables was respectively LTL 556 thousand and LTL 2,594 thousand. Current payable is accounted under trade payables.

As of 31 December 2013 Concentra Servicios y Mantemiento, S.A. had non-current accruals associated with legal claims for amount of EUR 342 thousand (LTL 1,181 thousand).

16 Financial lease

The assets leased by the Group and the Company under financial lease contracts mainly consist of vehicles. Apart from the lease payments, other obligations under lease contracts are maintenance and insurance. The net book value of the vehicles acquired under financial lease amounted to LTL 5,805 thousand as of 31 December 2013 in the Group and LTL 458 thousand in the Company (LTL 14,638 thousand in the Group and LTL 330 thousand in the Company as of 31 December 2012). The terms of the financial lease agreements are from 2 to 5 years. The currencies of the financial lease agreements are EUR and LTL.

As of 31 December 2013 the interest rate on the financial lease obligations is 6 month EUR LIBOR + 1.4% - 1.84%, 6 month EURIBOR + 1.4% - 2.25%, 3 month EURIBOR + 0.19% - 2% or 6 month VILIBOR + 1.4% - 3.34% (as of 31 December 2012 – 6 month EUR LIBOR + 1.2% - 3%, or 6 month VILIBOR + 1.5% - 3.31%). Interest is paid monthly.

Future minimal lease payments under the above mentioned financial lease contracts as of 31 December 2013 are as follows:

	Group	Company
Within one year	1,728	99
From one to five years	4,281	355
Total financial lease obligations	6,009	454
Interest	(259)	(24)
Present value of financial lease obligations	5,750	430
Financial lease obligations are accounted as:
- current	1,623	93
- non-current	4,127	337

Future minimal lease payments under the above mentioned financial lease contracts as of 31 December 2012 are as follows:

	Group	Company
Within one year	2,904	69
From one to five years	6,478	264
Total financial lease obligations	9,382	333
Interest	(378)	(18)
Present value of financial lease obligations	9,004	315
Financial lease obligations are accounted as:
- current	2,749	62
- non-current	6,255	253

17 Operating lease

As of 31 December 2013 and 2012 the Group had several contracts of operating lease for vehicles outstanding. The remaining part of the operating lease comprises of rent of offices in Vilnius. The terms of lease do not include restrictions of the activities of the Group and the Company in connection with the dividends, additional borrowings or additional lease agreements.

Minimal future lease payments according to the signed non-cancellable operating lease contracts are as follows:

		Group		Company
	As of 31 December 2013	As of 31 December 2012	As of 31 December 2013	As of 31 December 2012
Within one year	111	139	-	12
From one to five years	126	22	-	-
	237	161	-	12

Operating lease contracts are denominated in Lithuanian Litas and Euros.

The Company has also entered into several vehicle operating lease agreements with employees. However, the agreements are cancellable; therefore, minimum lease payments are not disclosed.

18 Provision for employee benefits

As of 31 December 2013 and 2012 the Group and Company accounted for employee benefits for employees leaving the Group or the Company at the age of retirement (Note 2.14). Related expenses are included into general and administrative expenses in the Group's and the Company's statements of comprehensive income.

	Group		Company
	2013	2012	2013	2012
As of 31 December of the previous year	1,408	750	28	327
Additions arising from acquisitions of new subsidiaries	-	579	-	-
Change during the year	(268)	79	(13)	(299)
As of 31 December of the financial year	1,140	1,408	15	28

Main assumptions applied while evaluating the Group's and the Company's provision for employee benefits as of 31 December 2013 are as follows:

	Group	Company
Discount rate	5.4%	7.2%
Anticipated annual salary increase	3.0%	3.0%

Main assumptions applied while evaluating the Group's and the Company's provision for employee benefits as of 31 December 2012 are as follows:

	Group	Company
Discount rate	4.4%	6.0%
Anticipated annual salary increase	3.2%	3.0%

19 Trade payables and payables to related parties

	Group			Company
	As of 31 December 2013	As of 31 December 2012	As of 31 December 2013	As of 31 December 2012
Trade payables	95,299	73,687	16,782	13,189
Payables to related parties (Note 32)	12,882	12,473	20,290	11,928
	108,182	86,160	37,072	25,117

Trade payables are non-interest bearing and are normally settled on 60-day terms.

20 Advances received

As of 31 December 2013 and 2012 amount represents advances received from the owners of commercial and residential buildings administrated by the Group and the Company for repair and other works.

21 Other current liabilities

	Group		Company
	As of 31 December 2013	As of 31 December 2012	As of 31 December 2013	As of 31 December 2012
Salaries and social security	17,945	6,024	104	87
Vacation pay accrual	5,771	6,222	322	374
Accrued expenses and deferred income	4,188	5,028	407	186
Other current liabilities	14,110	6,949	315	319
	42,014	24,223	1,148	966

Other payables are non-interest bearing and have an average term of six months.

22 Sales

	Group		Company
	2013	2012	2013	2012
Buildings' administration and related services	547,178	493,008	44,009	52,159
Other services and goods	1,004	909	1,004	909
	548,182	493,917	45,013	53,068

The Group has a relatively significant concentration of trading counterparties. The main customer of the Group – Vilnius City Municipality – in 2013 and 2012 accounted for 7% and 8%, of total Group's sales, respectively.

23 Cost of sales

	Group		Company
	2013	2012 (Restated)	2013	2012 (Restated)
Services of subcontractors and materials used	310,172	332,421*	35,381	39,812*
Wages and salaries and social security	115,729	58,564*	452	2,233*
Cost of goods sold	3,427	4,197	1	1
Depreciation	3,391	1,416	-	-
Other	12,050	310	-	-
Total cost of sales	444,769	396,908	35,834	42,046

* Certain amounts shown here do not correspond to the 2012 financial statements and reflect adjustments (Note 2.22).

24 General and administrative expenses

	Group		Company
		2012		2012
	2013	(Restated)	2013	(Restated)
Wages and salaries and social security	39,370	34,329*	3,344	3,183*
Depreciation and amortisation	6,964	5,108	156	265
Allowance for and write-off of receivables	3,738	9,144	(92)	(841)
Commissions for collection of payments	2,852	3,068	46	279
Goodwill impairment (Note 4)	2,538	-	-	-
Rent of premises and other assets	2,437	2,338	262	440
Intangible assets impairment (Note 5)	2,262	-	-	-
Consulting and similar expenses	2,223	2,207	1,227	1,382
Fuel expenses	1,626	1,278*	128	121*
Computer software maintenance	1,239	835	24	25
Consulting and tax expenses related with acquisitions and disposals	1,235	1,768	1,235	1,768
Business trips and training	1,153	800	406	269
Advertising	1,150	962	247	348
Insurance	1,081	720	43	43
Communication expenses	978	938	96	126
Utilities	953	1,019	476	404
Representational costs	828	655	203	224
Taxes other than income tax	739	860	23	17
Transportation	633	911	61	48
Bank payments	500	590	8	142
Charity and support	101	316	58	198
Bonus	-	2,420	-	2,420
Allowance for long term receivables**	-	2,335	-	-
Other	3,234	2,961	242	310
Total general and administrative expenses	77,834	75,562	8,193	11,171

* Certain amounts shown here do not correspond to the 2012 financial statements and reflect adjustments (Note 2.22).

** Allowance relates to long term accounts receivable of Group companies operating in St. Petersburg.

25 Other operating income and expenses

	Group		Company
	2013	2012	2013	2012
Income from rent	796	179	894	860
Gain on disposal of property, plant and equipment	-	-	6	13
Result of technical services resale	340	-	-	-
Gain from bargain purchase (Note 4)	4,955	22,010	-	-
Fines and penalties	1,769	2,651	-	-
Other income	1,752	3,248	-	3,385
Total other operating income	9,612	28,088	900	4,258
Depreciation of rented assets	111	32	-	18
Loss on disposal of property, plant and equipment	96	6	-	-
Fines and penalties	647	263	-	-
Legal claims	1,862	1,164	-	-
State duties	157	181	-	-
Other expenses	702	2,949	603	2,411
Total other operating expenses	3,575	4,595	603	2,429

26 Finance income and (expenses), net

	Group		Company
	2013	2012	2013	2012
Interest income	567	325	2,089	936
Dividend income	-	-	9,400	18,578
Reversal of impairment of investments into subsidiaries (Note 8)	-	-	10,948	-
Foreign currency exchange gain	39	984	24	82
Other financial income	182	221	-	13
Total finance income	788	1,530	22,461	19,609
Interest (expenses)	(2,575)	(1,184)	(2,660)	(1,646)
Impairment of investments into subsidiaries (Note 8)	-	-	-	(11,940)
Foreign currency exchange loss	(2,522)	(163)	(321)	(104)
Loss on sale of investments (Note 1)	(214)	(6,906)	-	-
Other financial (expenses)	(1,396)	(736)	(410)	(30)
Total finance (expenses)	(6,707)	(8,989)	(3,391)	(13,720)
Financial activity, net	(5,919)	(7,459)	19,070	5,889

27 Income tax

Group		Company
2013	2012	2013	2012
7,986	4,563	(14)	152
(2,642)	946	31	285
5,344	5,509	17	437

27 Income tax (cont'd)

	Group		Company
	As of 31 December 2013	As of 31 December 2012	As of 31 December 2013	As of 31 December 2012
Deferred income tax asset
Allowance for accounts receivable	3,579	3,235	96	117
Allowance for inventories	17	17	-	-
Accruals and similar temporary differences	2,162	2,485	115	125
Deferred income	112	-	-	-
Impairment of investments	-	-	210	210
Tax loss carry forward	1,158	1,088	-	-
Tax goodwill	13,303	4,573	-	-
Deferred income tax asset before valuation allowance	20,331	11,398	452	452
Less: valuation allowance	(1,650)	(2,193)	-	-
Deferred income tax asset, net of valuation allowance	18,681	9,205	421	452
Deferred income tax liability
Property, plant and equipment and intangible assets	(10,905)	(11,952)	-	-
Accrued income	(69)	(502)	-	-
Deferred income tax liability	(10,974)	(12,454)	-	-
Deferred income tax, net	7,707	(3,249)	421	452
Presented in the statement of financial position as follows:
Deferred income tax asset
Continued operations	15,702	10,149	421	452
Discontinued operations (Note 7)	2,979	-	-	-
Deferred income tax liability
Continued operations	(8,129)	(13,217)	-	-
Discontinued operations (Note 7)	(2,845)	-	-	-

Tax loss carry forward can be utilised as follows: in Lithuania (LTL 545 thousand as of 31 December 2013) – indefinitely, in Russia (LTL 45 thousand as of 31 December 2013) – mainly until the year 2023 and in Poland (LTL 2,921 thousand as of 31 December 2013) – mainly until the year 2018.

Deferred income tax asset and liability, related to entities operating in Lithuania, were accounted at 15 % rate in 2013 and 2012. The deferred tax of companies operating in Russia, Ukraine, Latvia, Poland and Spain was calculated using 20%, 25%, 15%, 19% and 30% tax rates, respectively in 2013 (same as in 2012).

Due to group reorganisations (mergers) in 2013 and 2012 and prior periods as discussed in Notes 1 and 4, tax goodwill was created as of the merger date. Consequently, a deferred tax asset was recorded on these transactions to the extent tax goodwill exceeds a respective financial goodwill amounts.

27 Income tax (cont'd)

The changes of temporary differences before and after tax effect in the Group were as follows (discontinued operations included):

	Balance as of 31 December 2012	Recognised in profit or loss	Exchange differences	Disposed subsidiaries	Acquired subsidiaries	Balance as of 31 December 2013
Allowance for accounts receivable	19,791	2,945	(652)	-	-	22,084
Allowance for inventories	113	-	-	-	-	113
Accruals and similar temporary differences	13,865	(889)	(637)	-	-	12,339
Deferred income	-	599	(37)	-	-	562
Tax loss carry forward	6,755	224	(55)	-	-	6,924
Tax goodwill Property, plant and equipment	30,484	(1,623)	-	-	29,913	58,774
and intangible assets	(76,549)	5,266	(42)	420	-	(70,905)
Accrued income	(1,792)	1,207	221	-	-	(364)
Total temporary differences before valuation allowance	(7,333)	7,729	(1,202)	420	29,913	29,527
Valuation allowance	(10,555)	1,239	1,066	-	-	(8,250)
Total temporary differences	(17,888)	8,968	(136)	420	29,913	21,277
Deferred income tax, net	(3,249)	1,915	(17)	84	8,974	7,707
	Balance as of 31 December 2011	Recognised in profit or loss	Exchange differences	Disposed subsidiaries	Acquired subsidiaries	Balance as of 31 December 2012
Allowance for accounts	38,628	(3,695)	67	(16,620)	1,411	19,791
receivable
Allowance for inventories Accruals and similar temporary differences	113 8,247	- 4,510	- 7	- (1,065)	- 2,166	113 13,865
	-	-	-	-	-	-
Deferred income
Tax loss carry forward	16,127 33,531	(9,384) (3,047)	12 -	- -	- -	6,755 30,484
Tax goodwill Property, plant and equipment	(97,214)	7,466	3	11,451	1,745	(76,549)
and intangible assets	(22,250)	1,474	57	18,927	-	(1,792)
Accrued income Total temporary differences before valuation allowance	(22,818)	(2,676)	146	12,693	5,322	(7,333)
	(10,853)				-	(10,555)
Valuation allowance Total temporary differences	(33,671)	303 (2,373)	(5) 141	12,693	5,322	(17,888)

27 Income tax (cont'd)

The changes of temporary differences before and after tax effect in the Company were as follows:

	Balance as of 31 December 2012	Recognised in profit or loss	Balance as of 31 December 2013
Allowance for accounts receivable	778	(140)	638
Accruals and similar temporary differences	832	(65)	767
Deferred income	-	-	-
Impairment of investments	1.400	-	1.400
Total temporary differences	3.010	(205)	2.805
Valuation allowance	-	-	-
Total temporary differences	3.010	(205)	2.805
Deferred income tax, net	452	(31)	421
	Balance as of 31 December 2011	Recognised in profit or loss	Balance as of 31 December 2012

Allowance for accounts receivable	2,085	(1,307)	778
Accruals and similar temporary differences	2,872	(2,040)	832
Deferred income (percentage of completion method)	-	-	-
Impairment of investments	1,206	194	1,400
Total temporary differences	6,163	(3,153)	3,010
Valuation allowance	(1,255)	1,255	-
Total temporary differences	4,908	(1,898)	3,010
Deferred income tax, net	736	(284)	452

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 statutory income tax rate to pre-tax income as follows:

Group		Company
2013	2012	2013	2012
(3,864)	(5,624)	(1,411)	(1,135)
(381)	(476)	-	-
(543)	2,661	-	188
(556)	(2,070)	1,394	510
(5,344)	(5,509)	(17)	(437)

28 Basic and diluted earnings per share (LTL)

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
		2013	2012
	Net profit from continuing operations attributable to the shareholders	20,235	30,812
	Net profit from discontinued operations attributable to the shareholders	5,798	(16,689)
	Net profit attributable to the shareholders	26,033	14,123
	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 (LTL)	0.82	0.45
	From continued operations	0.64	0.97
	From discontinued operations	0.18	(0.53)
29	Dividends per share
		2013	2012
	Approved dividends*	-	7,270
	Number of shares (in thousand)**	-	31,610
	Approved dividends per share (LTL)	-	0.23

* 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 and the Company'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. Furthermore, the credit risk of the main customer of the Company, regarding which there is a trading and credit risk concentration (Note 22), however Vilnius City Municipality is considered as low risk customer in this respect. Receivables from Vilnius City Municipality as of 31 December 2013 amounted to 25% and 97% of the Group's and the Company's trade accounts receivable, respectively (23% and 95% as of 31 December 2012, respectively).

The maximum exposure to credit risk is represented by the carrying amount of each financial asset. Therefore, the Company's 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 VILIBOR, which create an interest rate risk (Notes 14 and 16). There are no financial instruments designated to manage the exposure to the interest rate risk outstanding as of 31 December 2013 and 2012.

Interest rate risk (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 equity, other than that to current year profit.

2013	Increase/decrease in basis points	Effect on the profit before the income tax
EUR	+100	(675)
LTL	+100	(40)
PLN	+100	(1)
2012
EUR	+100	(664)
LTL	+100	(3)

The following table demonstrates the sensitivity of the Company'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 Company's equity, other than that to current year profit.

2013	Increase/decrease in basis points	Effect on the profit before the income tax
EUR	+100	(390)
LTL	+100	(37)
2012
EUR	+100	(572)
LTL	+100	(1)

Liquidity risk

The Group's and the Company'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 2013 were 1.50 and 1.48 respectively (1.10 and 1.07 as of 31 December 2012 respectively). The Company's liquidity and quick ratios as of 31 December 2013 were 1.68 and 1.68 respectively (1.20 and 1.20 as of 31 December 2012, respectively).

The table below summarises the maturity profile of the Group's financial liabilities as of 31 December 2013 and 2012 based on contractual undiscounted payments:

	On demand	Less than 3 months	3 to 12 months	1 to 5 years	More than 5 years	Total
Non-current interest bearing borrowings	-	-	-	54,608	-	54,608
Current portion of non-current interest bearing borrowings	-	1,434	6,186	-	-	7,620
Current loans	-	-	10,389	-	-	10,389
Financial lease obligations	-	432	1,296	4,281	-	6,009
Trade payables and payables to related parties	-	101,932	6,562	-	-	108,494
Other current liabilities	-	1,493	-	-	-	1,493
Balance as of 31 December 2013	-	105,291	24,433	58,889	-	188,613
Non-current interest bearing borrowings	-	-	-	31,294	-	31,294
Current portion of non-current interest bearing borrowings	-	2,661	7,742	-	-	10,403
Current loans	-	231	18,988	-	-	19,219
Financial lease obligations	-	712	2,135	6,284	-	9,131
Trade payables and payables to related parties	-	80,510	5,650	-	-	86,160
Other current liabilities	-	285	-	-	-	285
Balance as of 31 December 2012	-	84,399	34,515	37,578	-	156,492

Liquidity risk (cont'd)

The table below summarises the maturity profile of the Company's financial liabilities as of 31 December 2013 and 2012 based on contractual undiscounted payments:

	On demand	Less than 3 months	3 to 12 months	1 to 5 years	More than 5 years	Total
Non-current interest bearing borrowings	-	-	-	54,103	-	54,103
Current portion of non-current interest bearing borrowings	-	1,434	5,934	-	-	7,368
Current loans	14,426	-	5,430	-	-	19,856
Financial lease obligations	-	25	74	355	-	454
Trade payables and payables to related parties	-	30,822	6,563	-	-	37,385
Other current liabilities	-	407	-	-	-	407
Balance as of 31 December 2013	14,426	32,688	18,001	54,458	-	119,573
Non-current interest bearing borrowings	-	-	-	31,294	-	31,294
Current portion of non-current interest bearing borrowings	-	2,581	7,742	-	-	10,323
Current loans	-	17,337	18,048	-	-	35,385
Financial lease obligations	-	17	52	264	-	333
Trade payables and payables to related parties	-	19,467	5,650	-	-	25,117
Other current liabilities	-	70	-	-	-	70
Balance as of 31 December 2012	-	39,472	31,492	31,558	-	102,522

Foreign exchange risk

Majority of The Company's monetary assets and liabilities as of 31 December 2013 and 2012 are denominated in LTL or EUR, to which LTL is pegged except for loan issued in PLN which amounts for LTL 4,174 thousand as of 31 December 2013 (LTL 4,223 thousand as of 31 December 2013). Therefore, the management of the Company believes that foreign exchange risk is insignificant.

Monetary assets and liabilities of the Group denominated in various currencies as of 31 December 2013 and 2012 were as follows:

	2013		2012
	Assets	Liabilities	Assets	Liabilities
LTL	82,097	75,401	95,091	59,395
RUB	36,011	36,838	38,077	45,027
LVL	1,733	989	1,215	867
PLN	12,680	10,771	26,289	13,319
EUR	80,213	114,664	-	66,480
	212,734	238,663	160,672	185,088

Foreign exchange risk (cont'd)

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.

EUR held by Russian subsidiaries:

	Increase/ decrease in exchange rate	Effect on the profit before the income tax
2013
EUR	+ 15.00 %	(954)
EUR	- 15.00 %	954
2012
EUR	+ 15.00 %	(1,078)
EUR	- 15.00 %	1,078

EUR held by Polish subsidiaries:

	Increase/ decrease in exchange rate	Effect on the profit before the income tax
2013
EUR	+ 15.00 %	(2,799)
EUR	- 15.00 %	2,799
2012
EUR	+ 15.00 %	(5,723)
EUR	- 15.00 %	5,723

Fair value of financial instruments

The Group's and the Company's principal financial instruments not carried at fair value are trade and other 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;
• (b) The fair value of non-current borrowings is based on the quoted market price for the same or similar issues or on the current rates available for borrowings with the same maturity profile. The fair value of non-current borrowings with variable interest rates approximates their carrying amounts.

The fair values of the Group's and the Company's financial assets and financial liabilities approximate their carrying values.

31 Commitments and contingencies

Acquisition of UAB Žirmūnų būstas

On 26 September 2012, UAB Nemuno būsto priežiūra acquired 100% of UAB Žirmūnų būstas shares. The permission of the Competition Council of the Republic of Lithuania (hereinafter referred to as the Council) to implement concentration was not necessary for this acquisition, since the income of UAB Nemuno būsto priežiūra and UAB Žirmūnų būstas did not complied with the requirements established in Article 8 paragraph 1, Article 10 of the Law on Competition of the Republic of Lithuania.

On 29 August 2013, the enterprise of the group AB City Service, i.e. UAB Nemuno būsto priežiūra, obtained the Resolution of the Competition Council of the Republic of Lithuania (hereinafter referred to as the Council) of 21 August 2013 "On Application of the Concentration Control Procedure with regard to acquisition of 100 per cent of UAB Žirmūnų būstas by UAB Nemuno būsto priežiūra. On the basis of the Resolution and in accordance with Article 13 paragraph 1 of the Law on Competition, it is claimed to submit the notification on concentration. UAB Nemuno būsto priežiūra has appealed against the Resolution of the Council to Vilnius Regional Administrative Court since it believes that the Resolution is unreasonable (the conclusions have been drawn carelessly (the Council has not performed even the elementary/necessary actions regarding preliminary definition of the relevant market and possibility to exert a unilateral decisive influence); the Council applied Article 13 of the Law on Competition exclusively due to its omission by ignoring the obvious evidence disapproving its conclusions). By now, the court hearing has not been appointed with regard to this case. Presently, the Council is considering the notification on concentration.

In opinion of the Management of the Company, the position of the Council regarding the volumes of the market is unfair and unreasonable by taking into consideration that the market of the group of enterprises Mano būstas is only administration of residential apartment houses by eliminating the administration of the buildings of other purpose (also by ignoring partnerships, persons concluding joint activity contract who performs their activities in both residential and nonresidential buildings).

Peaceful settlement agreement in UAB Lazdynų butų ūkis (previous name UAB Lazdynų būstas) privatization case.

The Company participated as defendant in UAB Lazdynų butų ūkis privatization. Vilnius district prosecutor claimed to dissolve all privatization procedures of UAB Lazdynų butų ūkis and apply restitution. Vilnius district prosecutor raised the case on the ground of public interest that Vilnius municipality, while preparing UAB Lazdynų butų ūkis for privatization, did not acquire from UAB Lazdynų butų ūkis real estate, situated on the state land which should be returned to the private citizens.

On 31 January 2014, the Parties of the case reached peaceful settlement agreement, and Vilnius district prosecutor refused lawsuit. On 14 February 2014 Lithuanian Court of Appeal decided to cease the case of UAB Lazdynų butų ūkis privatization and eliminated the decision of Vilnius district court, according to which it was decided to satisfy all the claims of the prosecutor. The Court of Appeal also confirmed the peaceful settlement agreement and eliminated the seizure of UAB Lazdynų butų ūkis shares. The conditions of peaceful settlement agreement are: Vilnius municipality till 19 May, 2014 are obliged to pay LTL 1,415 thousand to UAB Lazdynų butų ūkis and UAB Lazdynų butų ūkis after money receival form Vilnius municipality, will return to Vilnius municipality the real estate in Parodų str. 2, Vilnius

Embezzlement of assets in former UAB Būsto investicijų valdymas (currently UAB Mano Būstas LT)

Currently the Company is in the first instance trial process, which started in 2009 after a subsidiary of the Company UAB Fervėja (at the moment the name is changed into UAB Mano Būstas LT) applied to the Lithuanian Financial Crime Investigation Service for initiating the investigation for a compensation of LTL 2.3 million of damages described below.

The application was made because a former director of UAB Būsto investicijų valdymas (the company acquired by UAB Mano Būstas LT and currently merged with UAB Naujamiesčio būstas) had signed an agreement with OOO BAS, a company registered in Kaliningrad district, according to which the latter company was paid LTL 2.3 million for market research works that actually had not been carried out. Currently, the Group cannot assess the outcome of the case. The outcome of the litigation process cannot be reliably determined, thus no assets were recorded in the financial statements in respect of this matter.

31 Commitments and contingencies (cont'd)

Contingencies related to foreign subsidiaries

In 2009 OAO City Service and ZAO City Service started to participate in residential renovation projects, whose funding is largely covered by the state by signing financing agreements with local government bodies, called Housing Committees. The implementation costs of these residential renovation projects are covered by the state funds. Group companies have committed to implement projects until letters of credit in bank accounts under the contracts for these projects expire. As of 31 December 2013 the letters of credit were extended since the contractors had not completed renovation projects on time. For extension of those letters of credit written authorization of the Housing Committee was not obtained before the year end, however, before the release date of these financial statements the majority of the funds under the contract has already been used for paying the contractors' work. Therefore, the Management of the Group does not think that the extension of letters of credit without the written permission of the Housing Committee is a significant breach of the contract and that any sanctions against the Group are probable.

Due to lack of taxation practices and clear legislative requirements in 2013 and 2012 Group subsidiaries, carrying out business operations in the region of St. Petersburg, namely ZAO City Service, OAO City Service, ООО Жилкомсервис № 3 Фрунзенского района and group of companies in Stavropol city were dealing with some uncertainties related to tax treatment of certain transactions. The management accounted for taxes related to such transactions based on the management's interpretation of tax rules. In case the local tax authorities challenge the management's view on treatment and accounting of taxes, the Group could be charged with additional taxes. The maximum exposure of additional VAT and income tax risk has been estimated by the management to amount to approximately LTL 11.6 million. However, based on the fact, that tax inspections have already been performed in 2011 in several subsidiaries and did not challenge the management's treatment of taxes in the companies and also due to the fact that the management considers such tax risks to be not probable, no accruals in respect of these tax contingencies have been accounted for in these financial statements.

No contingencies or provisions were recognised in these financial statements that relate to the uncertainties regarding changes in Russian legislation and regulations.

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 are as follows:

• Global energy consulting OU the ultimate shareholder of the company from 2013;
• UAB Lag&d parent company;
• UAB ICOR the shareholder of the Company;
• Subsidiaries and associates of UAB ICOR (same ultimate controlling shareholder);
• Subsidiaries of AB City Service (for the list of the subsidiaries, see also Note 1);
• Associates of AB City Service (for the list of the associates, see also Note 1);
• Mr. Ž. Lapinskas, J. Janukėnas, V.Turonis (Management of the Company);

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. Property, plant and equipment to related parties in 2013 and 2012 were sold for the net book value.

Prices for the intercompany purchase and sale transactions are established by the management and shareholders of the UAB ICOR and/or UAB Lag&d and AB City Service considering the results of independent valuations, if any, undertaken for the purposes of the transfer pricing regulations – which may not always be at their fair value.

There are no guarantees or pledges given or received in respect of the related party payables and receivables. Related party receivables and payables are expected to be settled in cash or netted-off with payables / receivables to / from a respective related party.

2013*			Receivables		Payables and
Group	Purchases	Sales	and prepayments	Loans granted	advances received 10,191
UAB ICOR	2,769	25	-	-
Subsidiaries of UAB ICOR:
AB Axis Industries	2,947	1,822	5	-	2,798
Other subsidiaries of UAB ICOR	1,482	2,066	138	-	327
Management of the Company	-	5	-	-	-
Other shareholders of the Company	-	-	25	-	-
	7,198	3,918	168	-	13,316

2013*			Receivables and	Loans	Payables and advances
Company	Purchases	Sales	prepayments	granted	received
UAB ICOR	1,736	19	-	-	9,694
Subsidiaries of UAB ICOR:
AB Axis industries	1,318	658	-	-	922
Other subsidiaries of UAB ICOR Group	-	310	42	-	-
Subsidiaries of the Company	9,883	3,557	5,970	50,599	9,674
Management of the Company	-	5	-	-	-
Other shareholders of the Company	-	-	25	-	-
	12,937	4,549	6,037	50,599	20,290

*Related party balances and transactions for the year 2013 include discontinued operations.

32 Related party transactions (cont'd)

Loans granted to subsidiaries of the Company as of 31 December 2013 and 2012 carry fixed interest rates of 4-6% and variable 3 month EURIBOR + 3% margin (accounted under non-current receivables caption in the statement of financial position as of 31 December 2013 and 2012). Loans granted to the management of the Company are payable in 1-3 years and carry fixed interest rates of 3-6% (accounted under non-current receivables and current receivables from related parties captions in the statement of financial position).

2012

Group	Purchases	Sales	Receivables and prepayments	Loans granted	Payables and advances received
UAB ICOR	2,540	24	7	-	11,458
Subsidiaries of UAB ICOR:
AB Axis Industries	2,329	886	2	-	812
Other subsidiaries of UAB ICOR	1,392	2,737	916	-	252
Management of the Company	-	-	-	204	-
Other shareholders of the Company	-	-	25	-	-
	6,261	3,647	950	204	12,522

2012			Receivables and	Loans	Payables and advances
Company	Purchases	Sales	prepayments	granted	received
UAB ICOR	1,440	19	-	-	7,015
Subsidiaries of UAB ICOR:
AB Axis industries	906	677	-	-	239
Other subsidiaries of UAB ICOR Group	8	281	55	-	-
Subsidiaries of the Company	9,203	78,670	3,821	51,183	4,674
Management of the Company	-	11	-	204	-
Other shareholders of the Company	-	-	25	-	-
	11,557	79,658	3,901	51,387	11,928

The ageing analysis of the Group's receivables from related parties as of 31 December is as follows:

			Trade receivables past due but not impaired
	Trade receivables neither past due nor impaired	Less than 30 days	30 – 60 days	60 – 90 days	90 – 360 days	More than 360 days	Total
2013	139	14	2	2	7	4	168
2012	703	198	8	7	12	22	950

32 Related party transactions (cont'd)

The ageing analysis of the Company's receivables from related parties as of 31 December is as follows:

			Trade receivables past due but not impaired
	Trade receivables neither past due nor impaired	Less than 30 days	30 – 60 days	60 – 90 days	90 – 360 days	More than 360 days	Total
2013	416	156	182	390	1,207	3,686	6,037
2012	336	62	69	88	675	2,671	3,901

Payables to related parties are non-interest bearing and are normally settled on 60-day terms. Trade receivables from related parties are non-interest bearing and are generally collectible on 30 - 90 days terms. Valuation allowance amounting LTL 466 thousand is accounted for the receivables from related parties as of 31 December 2013 (LTL 466 thousand as of 31 December 2012).

Remuneration of the management and other payments

The Group's and the Company's management remuneration amounted to LTL 11,314 thousand and LTL 1,190 thousand in 2013, respectively (to LTL 6,861 thousand and LTL 967 thousand in 2012, respectively). The outstanding balance of the loans granted by the Company to the management is disclosed in the tables above under Management of the Company heading. Provision for employee benefit for the management of the Group and the Company amounted to LTL 1 thousand both as of 31 December 2013 (LTL 1 thousand both as of 31 December 2012). In 2013 and 2012 the management of the Company did not receive any guarantees; no other payments or property transfers were made or accrued. No impairment of loans granted to the management of the Company has been recorded as of 31 December 2013 and 2012. There was no board remuneration in 2013 (LTL 2,420 thousand in 2012).

33 Capital management

The primary objectives of the Group's and the Company's capital management are to ensure that the Group and the Company comply with externally imposed capital requirements and that the Group and the Company maintain healthy capital ratios in order to support the business and to maximise shareholders' value . For capital management purposes, capital comprises equity attributable to equity holders of the Parent Company.

The Group and the Company 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 and the Company 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 2013 and 2012.

The Group companies registered in Lithuania and the Company are obliged to upkeep its equity at not less than 50% of its share capital (comprised of share capital and share surplus), as imposed by the Law on Companies of the Republic of Lithuania. The Group companies registered in Russia 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. As of 31 December 2013 some Group companies did not meet these requirements (UAB Vilkpėdės būstas, UAB Nemuno būstas and OAO City Service).

A company, which does not comply with these legal requirements, may become a subject for liquidation. If the Company does not decide on its liquidation, creditors may claim early termination or the execution of the company's liabilities and compensation of losses, if any. In practice, such actions of the creditors are not usual and the management of the Group considers such risk as remote.

In addition the Company has committed to its lenders to keep to certain minimum capital requirements. There were no other externally imposed capital requirements on the Group and the Company. As of 31 December 2013 and 2012 the Company were not in breach of the above mentioned requirements.

33 Capital management (cont'd)

The Group and the Company monitor capital using debt to equity ratio. There is no target debt to equity ratio set out by the Group's and the Company's management, however, current ratios presented below are treated as good performance indicators, taking into account the changes in the Group and the Company (Note 1).

	Group		Company
	2013	2012	2013	2012
Non-current liabilities (including deferred tax)	66,595	53,785	51,447	30,359
Current liabilities	204,578	162,618	66,018	72,204
Liabilities	271,173	216,403	117,465	102,563
Equity	211,249	185,044	167,886	147,550
Debt to equity ratio	128%	117%	70%	70%

34 Subsequent events

On the 3 January 2014 100% shares of Cleaning Partner Sp. z.o.o was acquired. Transaction value amounted to PLN 5,000 thuosand (LTL 4,151 thousand).

On 31 March 2014 Ecoservice UAB, registration no. 123044722, share transfer transaction was closed. The share purchase agreement was concluded on 21 February 2014. The final amount of transaction was LTL 56.6 million, including dividends amounting to LTL 5.2 million paid to City Service AB. City Service AB and its subsidiaries shall not be involved in waste management activities after closing and thus shall fulfil requirements of Civil code of Republic of Lithuania, according to which companies acting as residential facility managers cannot be related to waste management companies. The shares of Ecoservice UAB are transferred to AWT Holding UAB, whose control and controlling interest, i.e. 75%, shall be owned by the BaltCap Private Equity Fund II and the remaining 25% interest shall be owned by the Company. Accordingly, the Company's investment into the authorized capital of AWT Holding UAB shall be LTL 5.1 million (EUR 1.48 million), and final amount received by the Company shall be LTL 51.5 million. After the transaction the Company shall not have priority rights to purchase AWT Holding UAB shares, as granted by the Law of Companies of the Republic of Lithuania.

2013 AB CITY SERVICE Consolidated annual report for

(Reviewed by Auditors)

Contents

1.	About the Company	3
	1.1. City Service group	3
	1.2. Strategy and objectives	3
	1.3. Mission and vision	3
	1.4. Structure of the Group	4
	1.5. Key indicators of the Group	5
	1.6. Key events	7
	1.7. A word from the General Director	8
2.	Activities in Lithuania	10
	2.1. Apartment building maintenance	10
	2.2. Maintenance and cleaning of territories	10
	2.3. Commercial, industrial and public facility management	10
	2.4. Maintenance and renovation of lifts	11
	2.5. Security services	11
3.	Activities in Poland	13
4.	Activities in Spain	13
5.	Activities in Russia	14
6.	Activities in Latvia	14
7.	Increasing of performance effectiveness	15
8.	Employees	16
9.	Board and management	17
	9.1. The Board of the Company	17
	9.2. Management of the Company	18
10.	Key risk activity types and uncertainties	21
11.	Trading information	22
12.	Data about agreements with intermediaries of public trading in securities	23
13.	Data about issuer's securities traded on regulated markets	23
14.	The structure of the Company's share capital	24
15.	Shareholders of the Company	25
16.	Shareholders with special control rights and agreements between the shareholders	26
	16.1. Shareholders with special control rights	26
	16.2. Agreements between the shareholders	26
17.	Restrictions on the transfer of securities and restrictions on voting rights	26
18.	Procedure for amendment of the Articles of Association of the Company	26
19.	Bodies of the Company and its competence	27
	19.1. Board of the Company	27
	19.2. General Manager of the Company	28
20.	Material agreements concluded by the Company which may be important after change of control of	29
	the Company	29
21.	Major related party transactions	29
22.	Information on transactions that would be harmful may have had or will have a negative impact on	29
	the Company's operations and (or) performance
23.	Information on trancations made under a conflict of interests between the Company's managers,	29
	controlling shareholders or other related parties obligations to the Company and their private
	interestsand (or) other duties
24.	Information on compliance with the Corporate Governance Code	30
25.	Data on publicly disclosed information	30
26.	General information on AB City Service and City Service group	32
	26.1. Issuer AB City Service, data and contacts	48

1. A bou t t h e Compa n y

1.1. City Service grou p

City Service controls corporate group, engaged in provision of facility manage ment and integrated utility services in Western, Central and Eastern Europe.

The Group companies engage in facility management process administration, engineering systems maintenance and repairs, energy resources management and renovation, buildings' technical and energetic auditing, elevators installation and maintenance, territory cleaning and provision of security services. The activities are performed in strict obser vance of the applicable environment protection requirements.

At present the Group companies perform their activities in Lithuania, Poland, Russia, Spain, Latvia and Ukraine. The total area of facilities, administered in the said regions, is larger than 31.6 sq. m.

The total area of facilities, administered in the said regions, is larger than 31.6 sq. m.

1.2. Strategy a n d o bjectives

The long-term objective of the City Service Group is development on European markets focusing on integrated utility services. The Corporate Group implements its development by acquiring promising private and state-owned companies. The acquired companies are reorganized and adjusted to the Group activity model and standards, thus gradually improving the service quality and enhancing profitability.

The long-term objective of the City Service Group is development on European markets

1.3. Mission a n d vision

Our vision is to be leaders in the markets that we participate, by providing facility management services of highest value, held as service quality standard by our clients.

Our mission is to create a balanced living and working environment by providing integrated and innovative services.

Our vision is to be leaders in the markets that we participate, by providing facility management services of highest value, held as service quality standard by our clients.

1.4. Structure of the Group

	AB CITY SERVICE
Latvia		Lithuania		Russia	Ukraine	Poland	Spain
100% SIA Riga City Service	99,33% UAB Žaidas	100% UAB Vilkpėdės būstas	100% UAB Vėtrungės būstas	100% OAO City Service	100% TOB Kiev City Service	100% ZZN Sp.z.o.o	100% Concentra Servicios Mantenimiento,
	100% UAB Nemuno būstas	100% UAB Namų priežiūros centras	100% UAB Jūros būstas	90% Stavropol group of companies (12 companies)			S.A
	100% UAB Naujamiesčio būstas	100% UAB Lazdynų būtų ūkis	100% UAB Vingio būstas	100% OAO Spec RNU
	100% UAB Economus	100% UAB Auštaitijos būstas	100% UAB Danės būstas	100% OOO Чистый дом
	100% UAB Baltijos liftai	100% UAB Skolos LT	100% UAB Žardės būstas	100% ZAO City Service
	100% UAB Šiaulių liftas	100% UAB Justiniškių būstas	100% UAB Pempininkų būstas	99% ООО Подъемные механизмы
	100% UAB Pašilaičių būstas	100% UAB Antakalnio būstas	100% UAB Šiaulių būstas	80% OAO Жылкомсервис No3 Фрунзенсково
	100% UAB Žirmūnų būstas	100% UAB Viršuliškių būstas	99,84% UAB Šilutės būstas	района
	100% UAB Mano būstas LT	100% UAB Karoliniškių būstas	99,27% UAB Mano sauga
	100% UAB Radviliškio būstas	100% UAB Konarskio turgelis	100% UAB Karoliniškių turgus
	100% UAB Saulėtos dienos	100% UAB Mano aplinka
	100% UAB Ecoservice	100% UAB Komunalinių įmonių kombinatas	100% UAB Specialus autotransportas		Group structure is presented as of 31 December 2013. The Group's and the Company's investment in an associate as of 31 December 2013 included an investment in Marijampolės butų ūkis UAB (34% of the share capital).
	66% UAB Pagėgių savivaldybės komunalinis ūkis				Company's UAB "Ecoservice", UAB "Specialusis autotransportas", UAB "Komunalinių įmonių kombinatas" and UAB "Pagėgių savivaldybės komunalinis ūkis" after the reporting period has been sold.

1.5. Key indicators of the Group

Key financial indicators*	2007	2008	2009	2010	2011	2012	2013
Sales	199.346	263.850	374.495	504.529	500,306	493.917	548.182
Sales in the Lithuanian market	160.532	179.210	182.496	162.042	162.911	199.636	237.979
Sales in foreign markets (Spain, Poland, Baltic States and CIS)	38.814	84.640	191.999	342.487	337.395	293.645	310.203
Area under management in Lithuania (thousand sq. m)	7.520	8.945	10.986	11.934	12.146	11.386	11.351
Area under management in foreign markets (Spain, Poland, Baltic States and CIS)	2.580	2.476	7.163	6.573	6.664	12.505	20.262
EBITDA (continued operations)	11.896	14.464	25.168	25.781	36.621	29.456**	41.463
EBITDA margin	5,97%	5,48%	6,70%	5,11%	7,32%	5,96%	7,56%
Operating profit (EBIT)	10.472	12.440	20.588	20.289	30.319	22.931	31.616
EBIT margins	5,25%	4,71%	5,50%	4,02%	6,06%	4,64%	5,77%
Earnings before tax (EBT)	10.813	11.034	17.025	21.193	29.073	15.482	25,760
EBIT margin	5,42%	4,18%	4,55%	4,20%	5,78%	3,13%	4,70%
Net profit	9.361	8.686	15.293	22.067	22.740	9,973	20,416
Net profit in foreign markets (Spain, Poland, Baltic States and CIS)	(223)	(1.866)	4.534	922	8.508	6.032	3.800
Net profit margin	4,70%	3,29%	4,08%	4,37%	4,55%	2,02%	3,72%
Profit per share (LTL)	0,52	0,45	0,80	0,80	0,91	0,48	0,82
Return on equity (ROE)	17%	15%	21%	16%	17%	5%	10%
Return on assets (ROA)	8%	6%	6%	7%	9%	2%	4%

* Key financial data is presented excluding Ecoservice UAB group.

** Before gain from bargain purchase and goodwill impairment.

*** Excluding gain on disposed subsidiaries and gain from acquired subsidiaries' bargain purhase.

Area under management,

Sales,

1.5. KEY INDICATORS OF THE GROUP

Net profit margin,

per cent

Net profit,

6 Consolidated Annual Report for 2013 (Reviewed by Auditors)

1.6. Key events

April

On 10 April City Service undersigned the agreement with financial advisory firm Porta Finance for provision of consultancy services and searching for potential buyers of the stock of Ecoservice UAB.

May

The Group's subsidiary Riga City Service commenced providing complex facility management services to 52 Iki stores.

July

A Group company commenced maintaining 10 solar power plants in Kaunas, Vilnius, Klaipėda and Utena districts.

August

On 21 August, a City Service Group company ZZN undersigned the agreement with Poznan's Apartment Facility Board for administering the apartments, territories and other premises, belonging to Poznan city municipality. The total area of apartments, territories and other premises, transferred to ZZN for maintenance, is 1.35 million sq. m.

September

By decision of the City Service Board, Jonas Janukėnas was appointed the CEO of the company, replacing the long-standing head of the company Žilvinas Lapinskas. Previously Mr. Janukėnas held the posts of the company's finance and administration director and Chairman of the Board of Mano Būstas LT.

City Service purchased the company Aldesa Servicios y Mantenimiento S.A, operating in Spain under the Concentra brand. The acquired company provides commercial buildings maintenance and other relating services. The company has subsidiaries throughout the country; the total area of maintained facilities is more than 5.8 million sq. m.

November

The Group company Concentra, operating in Spain, undersigned agreements on maintenance of apartments, belonging to municipalities of Malaga and Asturia. The agreements are the first for maintaining residential objects. Concentra will provide technical maintenance and administration services to approximately 7000 apartments.

Events After the Reporting Period

March

On 31 March 2014, the transaction of transfer of stock package of Ecoservice UAB was completed. The stock transfer agreement was concluded on 21 February 2014. The final amount of the transaction – LTL 56.6 million (EUR 16.4 million), including the dividends, paid to the Company – LTL 5.2 million (EUR 1.5 million).

1.7. A word from the General Director

Jonas Janukėnas, AB City Service General Director

In 2013 the City Service Group saw the beginning of a new development cycle. This change manifested itself most prominently in the geography of the Group's activities – till the last year we focused our attention towards Central and Eastern Europe. After the development in the especially viable Poland, a step westward, unexpected to some, was taken – we entered Spain's market.

It should be stressed that this step signified not only the geographical growth of City Service and the increase of serviced areas. This development had a very strong quality foundation, i. e. long-time experience, acquired by our co-workers in different countries and activity segments. Internal growth is the dimension, which gave us the possibility to take a brave step to the western countries, full of experienced companies. We feel that we are able to operate there and become a serious rival to strong competitors and we intend to prove it.

Among last year's achievements I would distinguish our good start on Poland's market. During the last year the promising company, which we acquired, already commenced its organic growth and increased the serviced facilities area by 7 per cent. In Poland we are already the largest market player, although we occupy only 2 per cent of the market. As it has been mentioned, the market provides splendid opportunities to grow by consolidation, which is among our most important goals for this year.

During the last year the process efficiency methodology (LEAN) projects gained momentum both in Lithuania and in our other geographical markets, i. e. in Poland, Latvia and Russia. This year we are going to start implementing process efficiency projects in Spain. In the last year LEAN became our main exclusivity on the market as well as the indicator of our competitive advantage.

We strive for efficiency not only within the Group, but also for our customers. Aiming at reduction of our customers' expenses and increase of the property value, we invest into innovations and solutions, ensuring efficient consumption of energy resources. This area of activities gives us the possibility to successfully expand the range of our commercial customers in Lithuania and take an optimistic look towards the prospects of this market segment in other countries.

Last year, as the area of facilities, maintained by the City Service Group exceeded 30 million square meters, we fully implemented the promises, which we gave our investors during the public stock offering in 2007. Today we promise that we will not stop – we will stick to our strategy and search for development opportunities on foreign markets – both in Central and Western Europe.

In the last year LEAN became our main exclusivity on the market as well as the indicator of our competitive advantage.

Last year, as the area of facilities, maintained by the City Service Group exceeded 30 million square meters, we fully implemented the promises, which we gave our investors during the public stock offering in 2007.

2. Activities in Lithuania

2.1. Apartment building maintenance

Maintenance of apartment buildings remains the most important area of the Group companies' activities on the Lithuanian market. This year the quality of the provided services and customer care was further improved and developed.

In 2013 a Group company introduced the Mano Būstas facility maintenance standard, consisting of 7 elements, supplementing each other. The elements' totality ensures that the dweller feels comfortable, convenient, safe and warm at home. All the apartment buildings, administered by the company, are maintained in line with the standard.

In order to reduce the heat loss in the maintained apartment buildings, the Group companies continued to implement the "5 steps heat saving programme", according to which heat saving tools were implemented in buildings. The residents were provided specific proposals on the ways of reduction the heat loss both inside apartments and in the premises of common use. Compared to 2011-2012, during the 2012-2013 heating season, the heat consumption rate in the buildings, connected to the "5 steps heat saving programme" reduced by 9.3 per cent.

In 2013 all of the Company's customers in Lithuania were provided access to the new self-servicing portals, at which one can conveniently pay for utility services, view payment notices, find comprehensive information on the works, planned in the building and contact the manager, servicing the building. The portals are visited by approximately 25 thousand unique users per month.

A Group company Mano Būstas continued implementing apartment building renovation projects according to the JESSICA programme – renovation of already a second apartment building in Vilnius was completed. In 2013 about 120 more apartment buildings expressed their wish to participate in the modernization programme, compared to 20 in 2012.

The residents' survey, performed each year, showed that apartment building owners value the services, provided by the Company even better. The latest customer opinion survey showed that during the year the number of the Company's supporters grew by 66 per cent.

At present the area of apartment buildings, maintained by Mano Būstas in Lithuania exceeds 8.4 million sq. m.

During the year the investments into equipment reached LTL 1.3 million.

2.2. Maintenance and cleaning of territories

In the first half of 2013 the Group was extended by a new enterprise, i. e. Mano Aplinka, a company, engaged in cleaning and territory maintenance activities. At present the company provides its services in Vilnius, Kaunas, Klaipėda, Šiauliai and Biržai. In the future the company will also perform its activities in other cities and towns of the country.

The Group company dedicated significant attention to upgrading the cleaning and territory maintenance equipment. During the year the investments into equipment reached LTL 1.3 million.

In 2014 the Group will continue dedicating attention to expansion by increasing the areas of outside and inside territories served and by purchasing new equipment.

In 2013 the area of commercial, industrial and public facilities, maintained by the Group companies, grew by 9 per cent, i. e. from 2.74 million sq. m. to 2.98 million sq. m.

2.3. Commercial, industrial and public facility management

The Group companies continued to strengthen their positions in the area of management of commercial and public facilities. The range of customers was extended – 80 new contracts were signed. A good deal of the contracts is of exceptional significance, dealing with the objects, requiring specific and especially highly qualified maintenance. Among such objects are the solar power plant farms in Kaunas, Vilnius, Klaipėda and Utena districts.

In 2013 the area of commercial, industrial and public facilities, maintained by the Group companies, grew by 9 per cent, i. e. from 2.74 million sq. m. to 2.98 million sq. m.

The successful development in the commercial segment was determined by the innovative measures of sparing energy resources, offered to the customers.

The Group companies commenced providing complex facility management services to the Achemos Grupė company, Impuls LTU company, owning the largest sports clubs' network in Lithuania, Swedish real estate consultancy firm Newsec, aluminium systems and facades manufacturer KG constructions, Finnish company Technopolis, etc.

New contacts for maintaining Orlen petrol stations were signed.

In 2014 the Group companies are going to continue expanding their customer base and provide complex facility management services to large shopping and business centres, industrial objects and to smaller customers, who have a lot of divisions throughout Lithuania. In addition, there are plans to expand the range of services by providing non-typical and non-standard services, such as warehousing and storage management, etc.

2. Activities in Lithuania

2.4. Maintenance and renovation of lifts

In 2013 the volumes of elevators maintenance and renovation activities were extended – the Group companies Baltijos Liftai and Šiaulių Liftas increased the number of maintained elevators from 1260 to 1354.

The segment of services, relating to elevators modernization was also developed – Baltijos Liftai replaced 14 old elevators by new ones and fully modernized 2 equipment units.

Šiaulių Liftas installed hoists at public and commercial objects, including 48, manufactured by the company itself and 8 imported ones. In addition, the company implemented 7 elevators in public and commercial buildings.

In 2014 the Group companies are going to continue to extend the range of services in the commercial facility segment, while modernization and replacement of old elevators in apartment buildings will remain the main task. No less than 20 elevators more are planned to be replaced or renovated during the year. In addition, there are plans to commence exporting products to foreign markets.

Modernization and replacement of old elevators in apartment buildings will remain the main task.

2.5 Security services

The Group company Mano Sauga increased the number of supervised objects and extended its customer base. In 2013 the company supervised 2800 objects.

The Group company provides security services to natural persons and legal entities and services residential, commercial and public facilities. The security services package includes video surveillance, patrolling and technical maintenance. In addition, individual security solutions are offered.

In 2014 the company plans to increase the number of customers and guarded objects and offer new innovative security solutions.

In 2013 the company supervised 2800 objects.

In 2014 the Group will continue dedicating attention to expansion by increasing the areas 2,98 of outside and inside territories served and by purchasing new equipment.

3. AcTIVITIES IN Poland

In 2013 the Group company performed active organic development. The main area of activities of the Group company in Poland is apartment buildings administration and heat production and supply.

In June the Group company ZZN won the tender for administering the apartments, territories and other premises, belonging to Poznan city municipality. The total area of the objects, transferred to ZZN, amounts to 1.35 million sq. m. The contract is signed for the period of four years, the contract value is 24.7 million PLN.

Upon involving other associations ZZN increased the maintained area by more than 235 thousand sq. m. and the organic growth reached 7 per cent.

City Service also won other tenders in Poland. The Group company helped to maintain 12 thousand sq. m. premises of the Financial Supervision Authority in Warsaw as well as the municipal dwellings in Siechnice and Olecko municipalities with the total area about 32 thousand sq. m.

Reaching for more rapid development, the company's organizational structure was modified. 22 divisions were attached to 3 regions, regions' directors were appointed from the existing employees.

The Group company commenced providing emergency services in Poznan.

At present the total area of the facilities, maintained by the Group company, amounts to more than 9 million sq. m.

In 2014 the Group company is going to commence providing facilities maintenance services, participate in tenders and expand its customer base.4.

4. ACTIVITIES IN SPAIN

In 2013 the group continued its active expansion and on 25 September purchased the company aldesa servicios y Mantenimiento S.A, operating in Spain under the Concentra brand. The acquired company provides commercial facilities maintenance and other relating services. The company has subsidiaries throughout the country. Concentra is among the 30 largest Spanish companies, operating in the area, with 1600 employees.

Spain's facility maintenance market exceeds 17 billion euro and is the fifth largest in Europe.

In the same year the group company Concentra undersigned agreements on maintenance of apartments, belonging to municipalities of Malaga and Asturia. The agreements are the first for maintaining residential objects.

In 2014 the group company plans to perform active expansion in the area of residential buildings maintenance and purchase other companies.

After entering Spain's market, the group company commenced providing maintenance and administration services for commercial, public and industrial purpose objects. At present the total area of maintained facilities amounts to almost 5.8

million sq. m. the served companies operate in telecommunications, office facilities provision, energy and logistics sectors.

After becoming a part of the City Service group, a very important direction was added to the strategy of Concentra, I. E. Expansion into Spain's apartment buildings maintenance market. According to the concluded agreements, Concentra commenced provision of maintenance and administration services to about 7000 apartments. The total area of residential buildings, maintained by the group company, reaches almost 460 thousand sq. m.

The market is very fragmented, providing splendid opportunities for consolidation by using the group's experience in other countries.

The Spanish group company provides cleaning and territories maintenance services to commercial, public and industrial objects. The total area of cleaned objects and maintained territories reaches more than 1.1 million sq. m.

5. ACTIVITIES IN Russia

In 2013, a newly incorporated company Podyomnye Mechanizmy (ООО «Подъемные механизмы») joined the City Service Group in Russia. The company provides elevators maintenance services in Saint Petersburg. Totally the company serves more than 600 elevators in apartment buildings, administered by the City Service Group and in apartment building owners' communities, with which engineering systems maintenance agreements have been signed.

A Group company, operating in Saint Petersburg, was accredited by the selfregulatory association of energy audit 3E. The accreditation allows the company to perform energy audit of different buildings. According to the legal acts, applicable in the Russian Federation, a part of buildings must undergo the mandatory energy audit one time per five years.

A Group company, for the first time, concluded an administration agreement with the builder of a newly constructed apartment building – the company Petra-8 («Петра-8»), which is owned by Mirland Development Corporation PLC, one of the leading apartment buildings and commercial facilities development companies.

The total area of facilities, maintained by the Group companies, amounts to 4.2 million sq. m., the maintained territory – to 3.4 sq. m.

In 2014 the Group plans to retain the existing market share in the area of apartment buildings maintenance, extend the range of territories cleaning services, increase the number of maintained elevators, provide services to commercial facilities and constructors of apartment buildings and continue developing the energy audit and certification services.

6. ACTIVITIES IN Latvia

The Group company Riga City Service continued to successfully increase the area of maintained commercial facilities. According to the concluded agreement, the company commenced providing complex facility management service to all the Iki stores, managed by the Palink company, operated in Latvia.

At present Riga City Service maintains 52 Iki stores with the total area larger than 58 thousand sq. m.

In the first half of 2013 several especially important agreements were signed. The Group company commenced maintaining the SMI Bergi logistics centre, located in Berģi settlement, close to Riga. The company provides the full service package and takes care of both buildings' engineering systems and cleaning of inside and surrounding territories.

The company also strengthened the state sector facilities maintenance segment. The fixed-term agreement with Latvian state energy company Latvenergo for maintaining the objects of its subsidiary Latvijas Elektriskie was concluded.

In 2014 the Group company is planning to commence administering apartment buildings and perform maintenance of engineering systems, as well as procure strategic companies and extend the range of customers in the commercial segment.

At present the area of facilities, maintained by Riga City Service reaches 791 thousand sq. m., the managed territory amounts to 1.7 million sq. m. Compared to the previous year, the organic growth of the area of serviced facilities reached 37 per cent.

7. Increasing of performance effectiveness

The LEAN processes were continued to be successfully developed throughout the Group. Projects were implemented in all regions, where the Group executes its activities, first and foremost - in Lithuania and Russia.

More than 20 per cent of employees from all of the Group's companies were involved into the continuous improvement process in Lithuania, which had positive effect on the Group companies' activities. The sales of additional works in the apartment buildings segment grew by 50 per cent, i. e. to LTL 9.5 million. The activities' profitability in the commercial facilities segment increased by 20 per cent – the EBITDA grew by about LTL 0.8 million during the year.

In 2013 the activity processes optimization was especially active in the Group companies, operating in Russia. After the rearrangement of pilot operational divisions of Saint Petersburg, their efficiency grew by 50 per cent – the volume of repair works, performed in apartment buildings was two times larger by using the same resources.

Thanks to the LEAN, successful organic development was performed in Stavropol. All the medium level managers took participation in the process of attracting new customers.

In the end of 2013 the LEAN processes were also commenced to be implemented in the Group companies, operating in Poland and Spain, where significant potential is observed therefore especially great attention is going to be dedicated to improvement of efficiency of activities in the said regions in 2014.

The LEAN culture became one of the key competitive advantages for the Group therefore in 2014 the activity improvement processes will further be implemented in all of the Group companies.

The activities' profitability in the commercial facilities segment increased by 20 per cent – the EBITDA grew by about LTL 0.8 million during the year.

8. Employees

In 2013 the Group dedicated significant attention to training the medium level employees. About 50 medium level managers were trained on how to communicate information properly, provide feedback to employees, ask open questions and involve employees into improvement of processes.

As in each year, the Group participated in the "Best Employers 2013" survey, performed by consultancy company Aon Hewitt. The "Best Employers Study" methodology, developed by Aon Hewitt is an instrument, providing the possibility to evaluate a company's attractiveness to the employees, analyze different aspects of companies' activities, affecting the employees' motivation and provide companies a solid foundation for planning and implementation of employees involvement motivation programmes.

The survey helped to identify the company's strengths and weaknesses and provided the possibility to plan and implement efficient measures and increase the employees' involvement.

In 2013 the company's values were reviewed, the values communication plan was developed and the "Values dialogue" tool, which takes the form of a table game, was continuously developed and played by the employees.

The game not only helps the employees to remember the company's values and observe them, but also contributes to development of closer relations and allows the managers to understand their subordinates better and vice versa.

In 2014 attention will further be dedicated to development of both the Group's specialists and managers' competences. The successful facilities administration managers training programme motivated to develop other programmes, i. e. specific training programmes for cleaning managers, division managers and works superintendants.

Distribution of employees by positions (continuous activities):

Group of the employees	Company	Average monthly wage (salary) (before taxes, in LTL)	Group**	Average monthly wage (salary) (before taxes, in LTL)
Managerial personnel*	8	12.391	98	9.789
Specialists and technical personnel	56	2.485	5. 091	2.875

* In 2013 remuneration to the General Manager and to the Finance and Administrative Director amounted to LTL 509.550

Distribution of employees by educational degrees held (continuous activities):

Education	Company	Group
Graduate academic	60	780
Graduate non-academic	10	728
Higher education	1	535
Secondary education	2	3142
Comprehensive	0	69
Primary	0	2
Total	73	5189

Distribution of the number of employees by countries (Continuous activities):

Country	Company	Group
Lithuania	73	2.016
Latvia	-	39
Russia and Ukraine	-	631
Spain		1718
Poland	-	785
Total	73	5189

9. Board and management

9.1. The Board of the Company

Members of the Board of the Company as of 31 December 2013:

Name and surname	Position within the Board	Kadencijos pradžia	Kadencijos pabaiga
Andrius Janukonis	Board Chairman	April 30, 2013	April 30, 2017
Gintautas Jaugielavičius	Board Member	April 30, 2013	April 30, 2017
Darius Leščinskas	Board Member	April 30, 2013	April 30, 2017

All members of the Company's Board work in the Company under the employment contracts and receive remuneration. None of the members of the Company's Board does not control any shares of the Company. The information about the remuneration of the Company's Board members can be found under the note 32 of financial statements.

Andrius Janukonis

Andrius Janukonis (born in 1971) is the Chairman of the Board of AB City Service (since 2009). He holds a Master's degree in Law. He works as a consultant for UAB ICOR and is the chairman of the board of the company (since 2004).

Darius Leščinskas

Darius Leščinskas (born in 1968) is a Member of the Board of AB City Service (since 2009). He holds a Master's degree in Law. At present, he works as a consultant for UAB ICOR and is a member of the board of the company (since 2004).

Gintautas Jaugielavičius

Gintautas Jaugielavičius (born in 1971) is a Member of the Board of AB City Service (since 2005). He holds a Bachelor's degree in Economics. At present, he works as a consultant for UAB ICOR and is a member of the board of the company (since 2004).

9.2. Management of the Company

As of 31 December 2013 and as of date of submission of this report, the key managers of the Company and of the Group are as follows:

Name and surname	Position within the Company	Start of employment
Jonas Janukėnas	General Director, the Board Member of AB City Service	2007 m.
Vytautas Turonis	Executive Manager for Lithuania	2004 m.
Edvinas Paulauskas	Executive Manager	2005 m.
Tomas Augutavičius	Chairman of the Board of City Service group in Russia	2006 m.
Jonas Šimkevičius	Member of the Board of the Group Company, op erating in Latvia	2005 m.
Vytautas Jastremskas	Member of the Supervisory Council of the Group Company, operating in Poland	2013 m.
Anna Górecka – Kolasa	Head of the Group Company, operating in Poland	2004 m.
Fernando López Abril	General Manager of the Group Company, operating in Spain	2010 m.

They do not hold any shares of the Company.

Jonas Janukėnas

Jonas Janukėnas (born in 1976) is the General Manager of AB City Service (since September, 2013,). Since 2007 Mr Janukėnas was Financial and Administrative Manager of AB City Service. Mr Janukėnas is also the Chairman of the Board at Mano būstas LT UAB (since July, 2012). He holds a Master's degree in Business Administration. Prior to coming to work at the Company, he worked as the Financial Manager of UAB Litesko (2001 – 2007) and Senior Auditor and Risk Management Consultant at the Vilnius division of Andersen (1998 – 2001).

At present, the main task of the General Manager is to head the Group and take charge of planning and coordination of important development projects in Russia, Poland, Spain, as well as other markets in Eastern and Western Europe.

Vytautas Turonis

Vytautas Turonis (born in 1972) is the General Director at UAB Mano būstas LT. He holds a Bachelor's degree in International Business. Previously he worked as the Marketing Manager of UAB Specialus Autotransportas (2003 – 2004). He started to work in City Service as the Market Development Department Manager (2004 – 2008).

Vytautas Turonis is responsible for the Group's activities throughout Lithuania.

Edvinas Paulauskas

Edvinas Paulauskas (born in 1976) is the Executive Manager at City Service AB and Mano būstas LT, UAB. Previously he worked as the Commercial director (since 2008). Edvinas Paulauskas started working in the Company as the Project Manager (2005-2006). He holds a Bachelor's degree in Environment Engineering.

Edvinas Paulauskas is responsible for the Group's activities in the commercial and exploitation departments as well as in the innovation and energy efficiency chapter throughout Lithuania and foreign markets.

2.2. BENDROVĖS VADOVYBĖ

Tomas Augutavičius

Tomas Augutavičius (born 1973) is the Chairman of the Board of City Service group in Russia (since 2009). He holds a Bachelor degree in technology. He started working in the Company as Head of Kaunas Department (2006 – 2009).

Tomas Augutavičius is responsible for activities of companies operating in Russia.

Jonas Šimkevičius

Jonas Šimkevičius (b. 1980) is a member of the Board of the company Riga City Service, operating in Latvia. Previously J. Šimkevičius worked for the company as a project manager (2005-2007) and before that he held different positions in the companies Limatika (2004- 2005) and Ranga IV (2002-2004). J. Šimkevičius has the Bachelor's degree in constructions engineering.

J. Šimkevičius is responsible for the Group's activities in Latvia.

Vytautas Jastremskas

Vytautas Jastremskas (b. 1970) is a member of the Supervisory Council of the company ZZN, operating in Poland. In addition, he holds position of the Head of City Service Polska and works as a project manager of City Service AB in Poland. V. Jastremskas has been working for the company since January 2013, prior to that he provided services as an external consultant. V. Jastremskas holds the Master of Sciences degree in law and has experience in legal and organizational activities, as well as in business development on foreign markets.

At present V. Jastremskas is responsible for implementation of development projects and control of activities of the Group companies in Poland.

Anna Górecka – Kolasa

Anna Górecka - Kolasa (b. 1975) is the head of the company ZZN, operating in Poland. A. Górecka – Kolasa has been working for the company since 2004, prior to that she held positions of Management and Control Director, Chief Analysis Specialist and Deputy Accountant General (2004–2013).

A. Górecka-Kolasa has higher education in the area of management and marketing.

A. Górecka-Kolasa is responsible for the activities of ZZN throughout Poland.

Fernando López Abril

Fernando López Abril (b. 1969) is Director General of the company Concentra Servicios y Mantenimiento. Previously (in 2010-2012) he held the position of the company's Business Development Director. Before joining the Group company, F. López Abril was employed as Commercial Director of the company AMS-ALDESA (2007-2010), worked as a regional manager for the company CESPA-FERROVIAL (2004-2007) and held position of Director of Technological Systems and Nuclear Services Department at the company BORG Service (1999-2004).

F. López Abril holds the Master of Sciences degree in agricultural engineering.

F. López Abril is responsible for the Group's activities in Spain.

Overview of the Audit Committee of the Company

The Company has the Audit Committee in place. The composition and Regulations of the Audit Committee were approved in the General Meeting of Shareholders on 30 April 2009. The Audit Committee consists of three members, elected for the term of office of four years. The composition of the Audit Committee which is currently working was approved on the 30 of April 2013 in the ordinary General Meeting of Shareholders

Members of the Audit Committee of the Company as of 31 December 2013:

Mr. Saulius Leonavičius – independent member, does not work at the Company, does not control any shares of the Company;

Mr. Jonas Mačiuitis, deputy Manager for finance and administration, controls 1308 shares of the Company.

Ms. Irena Veligor, chief accountant, does nor control any shares 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 NASDAQ OMX Vilnius.

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 Committee operates in accordance with the Regulations approved 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 NASDAQ OMX Vilnius. In accordance with Article 52(3) of the Law on Audit, the functions of the Company's Audit Committee are as follows:

1) to monitor the process of drawing up financial statement;

2) to monitor the effectiveness of the systems of corporate internal control, risk management and internal audit, if any;

3) to monitor the process of carrying out audit;

4) to monitor how the auditor and the audit firm adhere to the principles of independence and objectivity.

The Audit Committee monitors the external audit firm of the Company at the performance of Company's Annual Report

and the Annual set of the Financial Statements audit. The conclusions of the Audit Committee are presented to the

Board of the Company in accordance with the requirements of the Regulations of the Audit Committee.

The principal objective of the Audit Committee is to generate higher added value to the Company.

10. Key risk activity types and uncertainties

In 2013 the market was stable, prices and purchasing power did not decline, in comparison with 2012. Due to heavy competition in facility management market the Company had to concentrate on further efficiency of activities. Building administration tariffs have not changed significantly in a course of the year. Improving customer climate and active sales led to rapid increase in additional services sales volume.

The risks remain similar to last year's: inflation, customers' ability to pay, competition-influenced stricter demands from commercial and residential clients, supply of qualified personnel in the market.

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 building administration and maintenance.

On the 1st of January, 2013 the amendmends of the Civil code of Republic of Lithuania (hereinafter - the Civil Code) regarding to the apartment building regulation have came into force. The amendments of Civil code clearly state that the majority of the apartments and other premises owners have the right to select the company for the apartment building maintenance (the administrator). Although the similar derivative right the owners of the apartments and other premises had under the previous Civil code, these amendments

highlited such right and expressed it directly in Civil code. Obvious possibilities to replace existing administrator establish more competitive environment for the companies of the Group. After the amendments of Civil code have come into force, the Government is preparing bylaws, although at the time of preparation of this Annual Report there is no final drafts of definite legislation.

There were no other material changes in the legal regulation of the area of administration and maintenance of apartment buildings in 2012, 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.

Financial assets and liabilities and risk management

Credit risk

The Group's and the Company'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. Furthermore, the credit risk of the main customer of the Company, regarding which there is a trading and credit risk concentration (Note 30), however Vilnius City Municipality is considered as low risk customer in this respect. Receivables from Vilnius City Municipality as of 31 December 2013 amounted to 25% and 97% of the Group's and the Company's trade accounts receivable, respectively (23% and 95% as of 31 December 2012, respectively).

The maximum exposure to credit risk is represented by the carrying amount of each financial asset. Therefore, the Company's 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 VILIBOR, which create an interest rate risk (Notes 14 and 16). There are no financial instruments designated to manage the exposure to the interest rate risk outstanding as of 31 December 2013 and 2012.

11. Trading information

Shares of City Service, AB are listed on the Baltic Main List of the NASDAQ OMX Vilnius Stock Exchange (trading code: CTS1L). The Company is listed since 8 June, 2007.

During the accounting period the Company's shares lowest price was LTL 5.74, the highest price LTL 6.76, average price LTL 6.25. At the end of the period market capitalisation was LTL 203 million.

Share turnover reached LTL 15.63 million with total 2.5 million shares traded.

P/E ratio was equal to 13.4.

AB City Service and OMX Baltic Benchmark GI indexes development

11. Trading information

AB City Service share price (LTL) and volume 2012

AB City Service share price (LTL) and volume 2011

12. Data about agreements with intermediaries of public trading in securities

On 27 March 2007 the Company and AB Swedbank concluded the contract on transfer of issuer's securities accounting which is valid so far.

UAB FMĮ Orion Securities, which started a liquidity provider activity from 3 December 2007. The contract is still valid.

On 27 November 2007 the Company signed a liquidity provider agreement with

13. Data about issuer's securities traded on regulated markets

During period from 1 January 2013 till 31 December 2013 all 31,610,000 ordinary book-entry registered shares of the Company were included into Official List of NASDAQ OMX Vilnius Stock Exchange, nominal value of one share – LTL 1 each.

ISIN Code of the shares is LT0000127375, trading code of the shares on NASDAQ OMX Vilnius Stock Exchange – CTS1L.

Trading of the shares on NASDAQ OMX Vilnius Stock Exchange started on 8 June 2007.

14. The structure of the Company's share capital

The authorised share capital of the Company is LTL 31,610,000 and is divided into 31,610 thousand ordinary book-entry registered shares with the nominal value of 1 LTL each.

There are no any restrictions of share rights or special control rights for the shareholders settled 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 changeable value or with the warrants or any other securities are issued by the Company.

There are no outstanding acquisition rights or undertakings to increase share capital.

All shares of the Company are paid up. All shares of the Company give equal rights to the shareholders of the Company. The Company has not issued any other class of shares than ordinary shares mentioned above.

Shares of the Company give the following rights to the shareholders:

The property rights of the shareholders:

• to receive a part of the Company's profit (dividend);
• to receive a share of the assets of the Company in liquidation;
• to receive funds from the Company, if the authorised capital of the Company is decreased in order to pay off funds of the Company to the shareholders;
• to receive shares without payment if the authorized capital is being increased out of the Company's funds, except in cases provided for by the laws;
• to have the pre-emption right, except in cases when the General Meeting decides to withdraw for all shareholders the pre-emption right, in acquiring the Company's newly issued shares;
• to lend funds to the Company in ways prescribed by laws, but when borrowing from its shareholders, the Company may not offer its assets to the shareholders as collateral. When the Company borrows from a shareholder, the interest may not be higher than the average interest rate offered by commercial banks in the place of residence or business of the lender, which was in effect on the day of

conclusion of the loan agreement. In such a case the Company and shareholders shall be prohibited from settlement of a higher interest rate;

• other property rights prescribed by the Laws.

The non-property rights of the shareholders:

• to attend the General Meetings. A shareholder's right to attend the General Meeting of Shareholders shall also include the right to speak and ask;
• to vote at the General Meetings according to voting rights carried by their shares;
• electronic means of communication, natural or legal person to attend and vote on behalf of the shareholder at the general meeting of shareholders. Shareholder of electronic means of communication given the authority must notify the Company
• to receive information about the Company as provided for in the Law on Companies of the Republic of Lithuania;
• to address the court claiming compensation for damage caused as a result of nonfeasance or malfeasance by the Manager of the Company of his duties

prescribed by the Law on Companies of the Republic of Lithuania and by other laws and these Articles of Association as well as in other cases provided for by laws;

• to give any questions to the Company, relating to the agenda of general meetings of shareholders in advance;
• other non-property rights prescribed by the laws of the Republic of Lithuania.

A right to vote at General Meetings may be prohibited or restricted in cases provided for in the Law on Companies of the Republic of Lithuania and other laws and in case of a dispute regarding the ownership right to the share.

Each share of the Company shall grant one vote at the General Meeting. The right to vote at the General Meetings convened after the expiry of the time limit for payment for the first issue of shares shall be granted only by fully paid shares.

The General Meeting shall have the exclusive right to:

• to amend the Articles of Association of the Company except where otherwise provided by the Law on Companies;
• to change the registered address of the Company;
• to select and recall the firm of auditors to perform the Company's annual set of financial statements audit, to set the conditions for payment for audit services;
• to elect and recall the members of the Board;
• to determine the class, number, nominal value and the minimum issue price of the shares issued by the Company;
• to take the decision regarding conversion of shares of one class into shares of another class, to approve the description of the share conversion procedure;
• to approve annual set of financial statements;
• to take the decision on appropriation of the profit (loss);
• to approve interim set of financial statements, prepared in order to adopt the decision regarding paying the dividends for the less period than a financial year;

• to take the decision on paying the dividends for the less period than a financial year;

• to take the decision on building up, drawing on, reduction or liquidation of the reserves;

• to take the decision to issue convertible debentures;
• to take the decision to withdraw for all shareholders the right of pre-emption in acquiring the shares or convertible debentures of a specific issue of the Company;
• to take the decision to increase the authorised capital;
• to take the decision to reduce the authorised capital except where otherwise provided for by the Law on Companies;
• to take the decision for the Company to purchase its own shares;
• to take the decision on reorganisation or division of the Company and approve the conditions of reorganisation or division except where otherwise provided for by the Law on Companies;
• to take the decision to transform the Company;
• to take the decision to restructure of the Company;
• to take the decision to liquidate the Company, cancel the liquidation of the Company except where otherwise provided for by the Law on Companies;
• to elect and remove the liquidator of the Company except where otherwise provided for by the Law on Companies.

The shareholders shall have no other obligations to the Company except for the obligation to pay up, in the prescribed manner, all the shares subscribed for at their issue price.

The authorised share capital of the Company is LTL 31,610,000 and is divided into 31,610 thousand ordinary book-entry registered shares with the nominal value of 1 LTL each.

15. Shareholders of the Company

On 31 December 2013 the total number of shareholders of the Company was 1879.

The distribution of the Company's shares among the shareholders who control more than 5 percent of the Company on 31 December 2013:

	Number of shares held	Owned percentage of the share capital and votes, %
ICOR UAB, legal entity code 300021944, address: Konstitucijos av. 7, Vilnius, Lithuania	20.205.595	63,92 %
East Capital Asset Management AB, registration no. 556546-8435, address: Kungsgatan 33, Stok holm, Sweeden	3.167.722	10,02 %
Genesis Asset Managers LLP, registration no. OC 306866, address: 21 Grosvenor Place, London, United Kingdom	1.644.183	5,20 %
Other private and institutional shareholders	6.592.500	20,86 %
Total	31.610.000	100%

Shareholders by investors groups

		Shareholders		Share of votes given by the owned shares
Investors	number	part %	number	part %
Households	1803	95,96	4304122	13,62
Private corporations	38	2,02	20348886	64,37
Financial institutions and insurance corporations	38	2,02	6956992	22,01
Total	1879	100,00	31610000	100

More detailed information on equity hold by the shareholders is disclosed in Note 1 in financial statements.

16. Shareholders with special control rights and agreements between the shareholders

16.1. Shareholders with special control rights

There are no shareholders with special control rights in the Company; the ordinary book-entry registrated shares grant equal rights to all the shareholders of the Company.

16.2. Agreements between the shareholders

At the General Meeting the shareholders have taken the decision to allocate at least 25 % (twenty-five percent) of the net profit of the financial year after (i) deduction of unappropriated loss of previous financial year (if any), and (ii) compulsory deductions to the reserve for payment of dividends each year during appropriation of the profit of the last reporting period (starting from appropriation of profit for 2007). Notably, General Shareholders Meeting have to

adopt the decision on dividend distribution each year in order to follow such policy.

Except for the above mentioned agreements between the shareholders and in part "14 Restrictions on the transfer of securities and restrictions on voting rights" presented pledge, to the best knowledge of the Company and its management, there were no any other agreements between the shareholders, including the agreements which may impose restrictions on the transfer of securities and/or restrictions on voting rights within the year 2012.

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

The major shareholder of the Company, UAB ICOR, has pledged the part of its shares, i.e. 6'916'275 pieces, which constitutes 21, 88 % of the authorized capital of the Company to the bank. The right to transfer, pledge or dispose of the above mentioned shares otherwise has been restricted. All other property and nonproperty rights of UAB ICOR, as the

shareholder, are free from any encumbrances or restrictions.

To the best knowledge of the Company and its management, the transfer of the shares was free from any restrictions, except for the above mentioned restriction on the transfer of the Company's shares in 2013.

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, except for those specified above in 2013. To the best knowledge of the Company, all shareholders of the Company have the voting right in the General Meeting.

18. Procedure for amendment of the Articles of Association of the Company

• The Articles of Association shall be amended in accordance with the procedure provided for by the Law on Companies of the Republic of Lithuania and the Articles of Association of the Company. The Articles of Association of the Company may be amended only by the decision of the General Meeting, except for the cases when there is an effective court order to reduce the Company's authorised capital or when the right to take the decisions regarding amendment of the Company's Articles of Association has been granted to other subjects under the Law on Companies of the Republic of Lithuania and other laws. The decision regarding amendment of the Articles of Association 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 Articles of Association of the Company, the full text of the amended Articles of Association shall be drawn up and signed by the person authorised by the General Meeting. In case of the court order to reduce the authorised capital of the Company and provided that such court order has become effective the amended Articles of Association shall be signed by the Manager of the Company.

• The amended Articles of Association shall become effective and may be used as the basis following registration of the amended Articles of Association with the Register of Legal Entities of the Republic of Lithuania.

The amendments of Company's Articles of Association

In the period since the 1st of January 2013 by the 3rd of May 2013 was valid The Company's Articles of Association which was approved on the 9th of May 2011, which according to the Lithuanian Company Law was amended and approved on the 30 of April 2013. At the company's annual shareholders' meeting. In the period since the 3rd of May 2013 by the 31st of December 2013 and the day of Annual Report 2013 was released is valid. 3 May. Lithuanian Register of Legal Entities registered in the Company's Articles of Association. The relevant Articles of Association of the Company is available on its website at www.cityservice.lt.

19. Bodies of the Company and its competence

The Company has the two-level management system: the Board and the Administration directed by the single-person management body – the General Director. The Supervisory Board is not formed in the Company. It should be noted that the Law on Companies of the Republic of Lithuania does not require companies to have both the Board and the Supervisory Board.

The Board is responsible for strategic planning of the activities and expansion of the Group as well as supervision of the activities and implementation of the decisions of the Company's management, while the management of the Company is responsible for implementation of strategic decisions, direction of the daily activities of the Company and has the right to represent the Company on all issues related with the activities pursuant to the laws, the Articles of Association and on the basis of individual powers of attorney.

19.1. BOARD OF THE COMPANY

The Board is a collegial management body of the Company. The Board shall consist of 4 (four) 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 Lithuania. Only a natural person may be elected to serve on the Board. There is no limitation on the number of terms of offices a member of the Board may serve. The Board shall elect its chairman from among its members.

The General Meeting may remove from office the entire Board or its individual members before the expiry of their term of office. A member of the Board may resign from office prior to the expiry of his term of office by giving a written notice thereof to the Company at least 14 (fourteen) days in advance.

The powers of the Board shall cover consideration of the following issues and taking of the following decisions:

• the operating strategy of the Company;
• the annual report of the Company;
• the interim report of the Company;
• the management structure of the Company and the positions of the employees;
• the positions to which employees are

recruited by holding competitions;

• regulations of branches and representative offices of the company;

• The Board shall elect and remove from office the Manager of the Company, fix his salary and set other terms of the employment contract, his job description, provide incentives for him and impose penalties.

• The Board shall determine which information shall be considered to be the Company's commercial (industrial) secret and confidential information;.

• for the Company to become an incorporator or a member of other legal entities as well as solutions for any company held shares (shares), or rights granted to other persons or lien;

• to open branches and representative offices of the company; to approve regulations of branches and representative offices of the company;

• to invest, dispose of or lease the fixed assets the book value whereof exceeds 1/20 of the authorised capital of the Company (calculated individually for every type of transaction);

• to pledge or mortgage the fixed assets the book value whereof exceeds 1/20 of the authorised capital of the Company (calculated for the total amount of transactions);

• to offer surety or guarantee for the discharge of obligations of third persons the amount whereof exceeds 1/20 of the authorised capital of the Company;

• decisions of the company to launch a new kind of business and stop specific activities;

• deciding whether to approve participation in the peace agreements and the conclusion of litigation in which the Company expresses or implies company requirement greater than 1/5 of the Company's authorized capital;

• decision to issue bonds or other forms of borrowing from any natural or legal persons (regardless of the amount of borrowing);

• to acquire the fixed assets the price whereof exceeds 1/20 of the Company's authorised capital;

• the decision to restructure the Company in the cases laid down in the Law on Restructuring of Enterprises;

19. Bodies of the Company and its competence

• other decisions within the powers of the Board as prescribed by the Articles of Association or the decisions of the General Meeting.

The Board shall analyse and evaluate the documents submitted by the Manager of the Company on:

• implementation of the operating strategy of the Company;

• organisation of the activities of the company;

• the financial status of the Company;

• the results of business activities, income and expenditure estimates, the stocktaking data and other accounting data of changes in the assets.

The 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 Board determines the methods used by the Company to calculate the depreciation of tangible assets and the amortisation of intangible assets.

The Board is responsible for convocation of the General Meeting and its arrangement on time.

19.2. GENERAL MANAGER OF THE COMPANY

The Manager of the Company is a singleperson management body of the Company. In his activities, the Manager of the Company shall comply with laws and other legal acts, the Articles of Association of the Company, decisions of the General Meeting and his job description.

The Manager of the Company shall be elected and removed from office by the Board of the Company which shall also fix his salary, approve his job description, provide incentives and impose penalties. The Manager of the Company shall commence in his office after his election. The employment contract with the Manager of the Company shall be concluded and signed by the chairman of the Board or other person authorized by the General Meeting on behalf of the Company. If the body which elected the Manager of the Company takes the decision to remove him from office, his employment contract shall be terminated.

The Manager of the Company shall be responsible for:

• organisation of activities and the implementation of objects of the Company;

• drawing up of the annual set of financial statements and the drafting of the annual report of the Company;
• drawing up the project of the decision regarding paying the dividends for the less period than a financial year and drawing of the interim set of financial statements and the drafting of the interim report of the Company in order to adopt the decision regarding paying the dividends for the less period than a financial year;
• conclusion of the contract with the firm of auditors;
• submission of information and documents to the General Meeting and the Board in cases laid down in the Law on Companies or at their request;
• submission of documents and particulars of the Company to the manager of the Register of Legal Entities;
• submission of the documents of a public limited liability company to the Bank of Lithuania and the Central Securities Depository of Lithuania;
• public announcement of the information specified in the Law on Companies in the daily newspaper "Lietuvos rytas";
• submission of information to the shareholders;

• the fulfilment of other duties laid down in the Law on Companies and other legal acts as well as in the Articles of Association of the Company and the job description of the Manager of the Company.

In his activities, the Manager of the Company shall comply with laws and other legal acts, the Articles of Association of the Company, decisions of the General Meeting and his job description.

The leader of the Company shall act on behalf of the Company and have the right at his sole discretion to transact

The Manager of the Company shall be entitled, within the limits of his powers, to issue procuracies by executing them in accordance with the procedure prescribed by the legal acts of the Republic of Lithuania.

20. 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.

21. Major related party transactions

Major related party transactions are provided in the Explanatory Note No. 32 to the Consolidated Annual Financial Statements for the year 2013.

22. Information on transactions that would be harmful may have had or will have a negative impact on the Company's operations and (or) performance

There were no significant transactions on behalf of the Company that would be harmful may have had or will have a negative impact on the Company's operations and (or) performance during the reporting period.

23. Information on trancations made under a conflict of interests between the Company's managers, controlling shareholders or other related parties obligations to the Company and their private interestsand (or) other duties

There were no material transactions on behalf of Company that would enter a conflict of interests between the Company's managers, controlling shareholder or other related parties obligations to the Company and their private interests and (or) other duties during the reporting period.

24. Information on compliance with the Corporate Governance Code

The Company is in compliance with the procedure for management of companies provided for by the Law on Companies of the Republic of Lithuania. The Company follows the essential principles of governance specified in the Governance Code for Companies Listed on NASDAQ OMX

Vilnius Stock Exchange, however it complies with the code in part. Compliance with the Governance Code for Companies Listed on NASDAQ OMX Vilnius Stock Exchange has been disclosed in the form approved by the stock exchange enclosed to the Annual Report as Annex No. 1.

25. Data on publicly disclosed information

Since 1 January 2013 till 31 December 2013 the Company publicly disclosed in NASDAQ OMX GlobeNewswire system the following information:

Date	Subjects
31.12.2013	Investor's calendar for 2014
29.11.2013	City Service consolidated results for the nine months of 2013
15.11.2013	City Service group enters residential facility management sector in Spain
26.09.2013	City Service group expands to Spain
23.09.2013	Ž.Lapinskas is replaced by J.Janukėnas as General Director of AB City Service
09.09.2013	Regarding new financing agreements
30.08.2013	City Service consolidated results for the six months of 2013
21.08.2013	City Service group signed the contract with Poznan's Communal Apartment Office
13.06.2013	City Service group won a tender in Poznan
31.05.2013	City Service consolidated results for the three months of 2013
30.04.2013	The Decisions of the Ordinary General Shareholders Meeting of City Service AB held on the 30th of April, 2013
30.04.2013	City Service AB annual information for the year 2012
26.04.2013	Accusations regarding City Service group company in Russia admitted to be false
11.04.2013	Regarding intentions to sell the shares of Ecoservice UAB
09.04.2013	Notice on Ordinary General Shareholders Meeting of City Service AB
07.03.2013	On the decision of the Bank of Lithuania
28.02.2013	City Service consolidated results for the year 2012

26. General information on AB City Service and City Service group

26.1. issuer ab city service, data and contacts

Name	AB City Service
Legal form:	public company (limited liability legal person)
Date and place of registration:	28 January 1997, Board of Vilnius City
Company code:	123905633
The registered address of the Company:	Konstitucijos av. 7, LT-09308 Vilnius, Lithuania
The principal place of business:	Smolenskas st. 12, LT-03201 Vilnius, Lithuania
Information on bank account:	LT22 2140 0300 0312 9829, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	phone (+370 5) 2394900, fax (+370 5) 2394848 email info@cityservice.lt
Website:	www.cityservice.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Subsidiaries operating in Lithuania:

Name	UAB Antakalnio būstas
Legal form:	Private limited liability company
Date and place of registration:	11 June 1992, Board of Vilnius City
Company code:	21449152
The registered address of the Company:	Antakalnio st. 51, LT-10325 Vilnius, Lithuania
The principal place of business:	Antakalnio st. 51, LT-10325 Vilnius, Lithuania
Information on bank account:	LT51 2140 0300 0313 3381, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail – info@cityservice.lt
Website:	www.antakalniobustas.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"
Name	UAB Aukštaitijos būstas
Legal form:	Private limited liability company
Date and place of registration:	16 April 2010 VĮ Registrų Centras Vilnius Branch
Company code:	302496548
The registered address of the Company:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
The principal place of business:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
Information on bank account:	LT44 2140 0300 0313 1082, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail – info@aukstaitijosbustas.lt
Website:	www.aukstaitijosbustas.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"
Name	UAB Baltijos būsto priežiūra

Legal form:	Private limited liability company
Date and place of registration:	6 April 2010., Vilnius
Company code:	302496377
The registered address of the Company:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
The principal place of business:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
Information on bank account:	LT49 2140 0300 0313 3514, Nordea Bank Finland Plc., Lithuanian department
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Baltijos liftai
Legal form:	Private limited liability company
Date and place of registration:	6 April 2010, VĮ Registrų Centras Vilnius Branch
Company code:	302496587
The registered address of the Company:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
The principal place of business:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
Information on bank account:	LT17 2140 0300 0313 2926, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail – info@baltijosliftai.lt
Website:	www.baltijosliftai.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Baltijos NT valdymas
Legal form:	Private limited liability company
Date and place of registration:	12 January 2012, Vilnius
Company code:	302711125
The registered address of the Company:	Kęstučio st. 9, LT - 08118, Vilnius, Lithuania
The principal place of business:	Kęstučio st. 9, LT - 08118, Vilnius, Lithuania
Information on bank account:	LT12 2140 0300 0313 3598, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 5 239 49 00 e-mail – info@cityservice.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Baltijos pastatų valdymas
Legal form:	Private limited liability company
Date and place of registration:	30 November 2011, Vilnius
Company code:	302692963
The registered address of the Company:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
The principal place of business:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
Information on bank account:	LT26 2140 0300 0313 3637, Nordea Bank Finland Plc., Lithuanian department
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Dainavos būstas
Legal form:	Private limited liability company
Date and place of registration:	10 January 2012, Vilnius
Company code:	302709722
The registered address of the Company:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
The principal place of business:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
Information on bank account:	LT02 7300 0101 3014 3465, "Swedbank", AB
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Danės būstas
Legal form:	Private limited liability company
Date and place of registration:	16 August 1991, Board of Klaipėda City
Company code:	140336725
The registered address of the Company:	S. Daukanto st. 37, LT- 92229 Klaipėda, Lithuania
The principal place of business:	Kauno st. 5, LT-91156 Klaipėda, Lithuania
Information on bank account:	LT12 2140 0300 0313 3695, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail – info@danesbustas.lt
Website:	www.danesbustas.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras

Name	UAB Economus
Legal form:	Private limited liability company
Date and place of registration:	12 July 2006 VĮ Registrų Centras Vilnius Branch
Company code:	300582646
The registered address of the Company:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
The principal place of business:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
Information on bank account:	LT70 2140 0300 0313 1875, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail – info@economus.lt
Website:	www.economus.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Justiniškių būstas
Legal form:	Private limited liability company
Date and place of registration:	22 May 1991., VĮ Registrų Centras Vilnius Branch
Company code:	220664740
The registered address of the Company:	Justiniškių st. 62 A, LT-05239 Vilnius, Lithuania
The principal place of business:	Justiniškių st. 62 A, LT-05239 Vilnius, Lithuania
Information on bank account:	LT49 2140 0300 0313 6618, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail - info@justiniskiubustas.lt
Website:	www.justiniskiubustas.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Jūros būstas
Legal form:	Private limited liability company
Date and place of registration:	12 June 1992, Board of Klaipėda City
Company code:	140514359
The registered address of the Company:	Minijos st. 130, LT-93244, Klaipėda, Lithuania
The principal place of business:	Minijos st. 130, LT-93244, Klaipėda, Lithuania
Information on bank account:	LT53 2140 0300 0313 5091, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail – info@jurosbustas.lt
Website:	www.jurosbustas.lt
Registration data about the Company stored:	Register of Enterprises of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Kauno centro būstas
Legal form:	Private limited liability company
Date and place of registration:	3 July 2012, Vilnius
Company code:	302798639
The registered address of the Company:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
The principal place of business:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Karoliniškių būstas
Legal form:	Private limited liability company
Date and place of registration:	18 June 1992, Board of Vilnius City
Company code:	121457971
The registered address of the Company:	A. J. Povilaičio st. 18, LT-04338 Vilnius, Lithuania
The principal place of business:	A. J. Povilaičio st. 18, LT-04338 Vilnius, Lithuania
Information on bank account:	LT95 2140 0300 0313 5208, Nordea Bank Finland Plc. Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail – info@karoliniskiubustas.lt
Interneto svetainės adresas:	www.karoliniskiubustas.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Karoliniškių turgus
Legal form:	Private limited liability company
Date and place of registration:	16 August 2013, Vilnius
Company code:	303121177
The registered address of the Company:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
The principal place of business:	Loretos Asanavičiūtės st. 35, LT-04318 Vilnius, Lithuania
Information on bank account:	LT24 2140 0300 0312 9308, Nordea Bank Finland Plc. Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail – info@manobustas.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

UAB Konarskio turgelis
Private limited liability company
16 August 2013, Vilnius
303121451
Medeinos st. 8A, LT-06112 Vilnius, Lithuania
J. Basanavičiaus st. 44 / Muitinės st. 43, LT-03109, Vilnius, Lithuania
LT24 2140 0300 0312 9308, Nordea Bank Finland Plc. Lithuanian department
Phone 8 239 49 00 e-mail – info@manobustas.lt

Registration data about the Company stored: Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Lazdynų butų ūkis
Legal form:	Private limited liability company
Date and place of registration:	11 June 1992., Board of Vilnius City
Company code:	121449348
The registered address of the Company:	Architektų st. 13; LT-04118 Vilnius, Lithuania
The principal place of business:	Architektų st. 13; LT-04118 Vilnius, Lithuania
Information on bank account:	LT65 2140 0300 0313 1189, Nordea Bank Finland Plc. Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail - info@lazdynubustas.lt
Website:	www.lazdynubustas.lt

Registration data about the Company stored: Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Lazdynų būstas
Legal form:	Private limited liability company
Date and place of registration:	8 June 2012, VĮ Registrų Centras Vilnius Branch
Company code:	302798646
The registered address of the Company:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
The principal place of business:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
Information on bank account:	LT88 2140 0300 0313 6401, Nordea Bank Finland Plc. Lithuanian department
Contacts of the Company:	Phone 8 5 239 49 00 e-mail – info@cityservice.lt

Registration data about the Company stored: Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name UAB Mano aplinka Legal form: Private limited liability company Date and place of registration: April 2013, VĮ Registrų Centras Vilnius Branch Company code: 303039285 The registered address of the Company: Medeinos st. 8A, LT-06112 Vilnius, Lithuania The principal place of business: Smolensko g. 12, LT – 03201, Vilnius, Lithuania Information on bank account: LT88 2140 0300 0313 6692, Nordea Bank Finland Plc. Lithuanian department Contacts of the Company: Phone 8 700 55966 e-mail – info@manoaplinka.lt Registration data about the Company stored: Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Mano būstas LT
Legal form:	Private limited liability company
Date and place of registration:	19 June 2007, VĮ Registrų Centras
Company code:	300883806
The registered address of the Company:	Konstitucijos av. 7; LT-09308 Vilnius, Lithuania
The principal place of business:	Smolenskas st. 12; LT-03201 Vilnius, Lithuania
Information on bank account:	LT45 2140 0300 0312 9803, Nordea Bank Finland Plc , Lithuanian department
Contacts of the Company:	Phone (+370 5) 2394900, Fax (+370 5) 2394848, e-mail – info@manobustas.lt
Website:	www.manobustas.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Mano Sauga
Legal form:	Private limited liability company
Date and place of registration:	17 May 2011, Vilnius
Company code:	302628213
The registered address of the Company:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
The principal place of business:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
Information on bank account:	LT67 2140 0300 0249 7549, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail – info@msauga.lt
Website:	www.msauga.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Namų priežiūros centras
Legal form:	Private limited liability company
Date and place of registration:	2 May 2001, Ministry of Economy of Lithuania
Company code:	125596783
The registered address of the Company:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
The principal place of business:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
Information on bank account:	LT26 2140 0300 0313 1891, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail – info@npc.lt
Website:	www.npc.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Naujamiesčio būstas
Legal form:	Private limited liability company
Date and place of registration:	11 July 1992, Board of Vilnius City
Company code:	121452091
The registered address of the Company:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
The principal place of business:	Smolenskas st. 12, LT – 03201, Vilnius, Lithuania
Information on bank account:	LT84 2140 0300 0313 1817, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail – info@naujamiescio-bustas.lt
Website:	www.naujamiescio-bustas.lt

Registration data about the Company stored: Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Nemuno būstas
Legal form:	Private limited liability company
Date and place of registration:	4 December 2001 VĮ Registrų Centras Kaunas Branch
Company code:	135836853
The registered address of the Company:	Maironio st. 14B-4, LT-44298, Kaunas, Lithuania
The principal place of business:	Maironio st. 14B-4, LT-44298, Kaunas, Lithuania
Information on bank account:	LT77 2140 0300 0313 1846, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail - info@bustas.net
Website:	www.bustas.net
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Nemuno būsto priežiūra
Legal form:	Private limited liability company
Date and place of registration:	10 January 2012, Vilnius
Company code:	302709715
The registered address of the Company:	Kęstučio st. 9, LT - 08118, Vilnius, Lithuania
The principal place of business:	Kęstučio st. 9, LT - 08118, Vilnius, Lithuania
Information on bank account:	LT28 2140 0300 0313 6414, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 5 239 49 00
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Pašilaičių būstas
Legal form:	Private limited liability company
Date and place of registration:	9 July 1992, Board of Vilnius City
Company code:	121474935
The registered address of the Company:	Medeinos st. 8A; LT-06112 Vilnius, Lithuania
The principal place of business:	Medeinos st. 8A; LT-06112 Vilnius, Lithuania
Information on bank account:	LT77 2140 0300 0313 1943, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail – info@pasilaiciubustas.lt
Website:	www.pasilaiciubustas.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Pempininkų būstas
Legal form:	Private limited liability company
Date and place of registration:	12 June 1992, Board of Klaipėda City
Company code:	140514544
The registered address of the Company:	Šilutės rd. 40, LT-94137, Klaipėda, Lithuania
The principal place of business:	Taikos av. 117, LT-94231, Klaipėda, Lithuania
Information on bank account:	LT05 2140 0300 0313 6537, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail – info@pempininkubustas.lt
Website:	www.pempininkubustas.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Radviliškio būstas
Legal form:	Private limited liability company
Date and place of registration:	13 December 1990, Board of Šiauliai town
Company code:	171205389
The registered address of the Company:	Maironio st. 65, LT-82129 Radviliškis, Lithuania
The principal place of business:	Maironio st. 65, LT-82129 Radviliškis, Lithuania
Information on bank account:	LT81 2140 0300 0313 2065, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail – info@radviliskiobustas.lt
Website:	www.radviliskiobustas.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras" Šiauliai Branch

Name	UAB Saulėtos dienos
Legal form:	Private limited liability company
Date and place of registration:	10 January 2010, Vilnius
Company code:	302798639
The registered address of the Company:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
The principal place of business:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
Information on bank account:	LT28 2140 0300 0313 6414, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 5 239 49 00 e-mail– info@manobustas.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras" Šiauliai Branch

Name	UAB SKOLOS LT
Legal form:	Private limited liability company
Date and place of registration:	6 April 2010., VĮ Registrų Centras
Company code:	302496530
The registered address of the Company:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
The principal place of business:	Medeinos st. 8A, LT-06112 Vilnius, Lithuania
Information on bank account:	LT51 2140 0300 0313 6388, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail - info@skoloslt.lt
Website:	www.skoloslt.lt
Registration data about the Company stored:	LR juridinių asmenų registras, VĮ "Registrų centras"
Name	UAB Šiaulių būstas
Legal form:	Private limited liability company
Date and place of registration:	1 June 1992, 9 December 2010 re-registered as UAB Saules Valda, Board of Šiauliai City
Company code:	144619514
The registered address of the Company:	Žemaitės st. 20, LT-77167 Šiauliai, Lithuania
The principal place of business:	Žemaitės st. 20, LT-77167 Šiauliai, Lithuania
Information on bank account:	LT28 2140 0300 0313 5347, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail – info@siauliubustas.lt
Website:	www.siauliubustas.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"
Name	UAB Šiaulių liftas
Legal form:	Private limited liability company
Date and place of registration:	19 April 1993, VĮ Registrų Centras Šiauliai Branch
Company code:	144707512
The registered address of the Company:	Liejyklos st. 3, LT-78148, Šiauliai, Lithuania
The principal place of business:	Liejyklos st. 3, LT-78148, Šiauliai, Lithuania
Information on bank account:	LT19 2140 0300 0313 2890, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail – info@siauliuliftas.lt
Website:	www.siauliuliftas.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras" Šiauliai Branch
Name	UAB Šilutės būstas
Legal form:	Private limited liability company
Date and place of registration:	13 November 1990, VĮ Registrų Centras Klaipėda Branch
Company code:	177000697
The registered address of the Company:	Lietuvininkų st. 60; LT-99116 Šilutė , Lithuania
The principal place of business:	Lietuvininkų st. 60; LT-99116 Šilutė , Lithuania
Information on bank account:	LT49 2140 0300 0313 6715, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail - info@silutesbustas.lt
Website:	www.silutesbustas.lt
Registration data about the Company stored:	LR juridinių asmenų registras, VĮ "Registrų centras". Klaipėdos filialas
Name	UAB Vėtrungės būstas
Legal form:	Private limited liability company
Date and place of registration:	16 August 1991, Board of Klaipėda City
Company code:	140337065
The registered address of the Company:	Kauno st. 5, LT-91156 Klaipėda, Lithuania
The principal place of business:	Kauno st. 5, LT-91156 Klaipėda, Lithuania

Information on bank account:	LT28 2140 0300 0313 5541, Nordea Bank Finland Plc., Lithuanian depart ment
Contacts of the Company:	Phone 8 700 55966 e-mail – info@vetrungesbustas.lt
Website:	www.vetrungesbustas.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Vilkpėdės būstas
Legal form:	Private limited liability company
Date and place of registration:	9 July 1992., Board of Vilnius City
Company code:	121480265
The registered address of the Company:	Architektų st. 13, LT-04118 Vilnius , Lithuania
The principal place of business:	Architektų st. 13, LT-04118 Vilnius , Lithuania
Information on bank account:	LT14 2140 0300 0313 2010, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail - info@vilkpedesbustas.lt
Website:	www.vilkpedesbustas.lt

Registration data about the Company stored: Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Vilniaus turgus
Legal form:	Private limited liability company
Date and place of registration:	21 February 2013, Vilnius
Company code:	303005920
The registered address of the Company:	Architektų st. 13, LT-04118 Vilnius, Lithuania
The principal place of business:	J. Basanavičiaus st. 44 / Muitinės st. 43, LT-03109, Vilnius, Lithuania
Information on bank account:	LT10 2140 0300 0312 9269, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 239 49 00 email – info@manobustas.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Vingio būstas
Legal form:	Private limited liability company
Date and place of registration:	12 June 1992, Board of Klaipėda City
Company code:	140524990
The registered address of the Company:	I.Simonaitytės st. 29, LT-95131, Klaipėda, Lithuania
The principal place of business:	Taikos av. 117, LT-94231, Klaipėda, Lithuania
Information on bank account:	LT58 2140 0300 0313 6553, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail – info@vingiobustas.lt
Website:	www.vingiobustas.lt

Registration data about the Company stored: Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Viršuliškių būstas
Legal form:	Private limited liability company
Date and place of registration:	18 June 1992, Board of Vilnius City
Company code:	121446576
The registered address of the Company:	A. J. Povilaičio st. 18, LT-04338 Vilnius, Lithuania
The principal place of business:	A. J. Povilaičio st. 18, LT-04338 Vilnius, Lithuania
Information on bank account:	LT97 2140 0300 0313 6142, Nordea Bank Finland Plc., Lithuanian depart ment
Contacts of the Company:	Phone 8 700 55966 e-mail – info@virsuliskiubustas.lt
Website:	www.virsuliskiubustas.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Žaidas
Legal form:	Private limited liability company
Date and place of registration:	30 July 1992, Board of Alytus town
Company code:	149650823
The registered address of the Company:	Žiburio st. 10-2, LT-63235, Alytus, Lithuania
The principal place of business:	Žiburio st. 10-2, LT-63235, Alytus, Lithuania
Information on bank account:	LT88 2140 0300 0313 1163, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail – info@zaidas.lt
Website:	www.zaidas.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Žardės būstas
Legal form:	Private limited liability company
Date and place of registration:	12 June 1992, Board of Klaipėda City
Company code:	140524848
The registered address of the Company:	Taikos av. 117, LT-94231, Klaipėda, Lithuania
The principal place of business:	Taikos av. 117, LT-94231, Klaipėda, Lithuania
Information on bank account:	LT05 2140 0300 0313 6634, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail – info@zardesbustas.lt
Website:	www.zardesbustas.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Žirmūnų būstas
Legal form:	Private limited liability company
Date and place of registration:	9 July 1992 d., Vilnius
Company code:	121483222
The registered address of the Company:	Kalvarijų st. 156, LT- 08207 Vilnius, Lithuania
The principal place of business:	Kalvarijų st. 156, LT- 08207 Vilnius, Lithuania
Information on bank account:	LT58 2140 0300 0313 6359, Nordea Bank Finland Plc., Lithuanian department
Contacts of the Company:	Phone 8 700 55966 e-mail – info@zirmunubustas.lt
Website:	www.zirmunubustas.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Subsidiaries operating in Latvia, Poland, Russia Federation, Spain and Ukraine:

Name	Concentra Servicios y Mantenimiento, S.A.
Legal form:	Private limited liability company
Date and place of registration:	7 March 2006, Madrid
Company code:	A-84659614
The registered address of the Company:	Calle Bahía de Pollensa 13, 28042 Madrid
The principal place of business:	Calle Bahía de Pollensa 13, 28042 Madrid
Contacts of the Company:	Phone 91 381 92 20, Fax 91 381 78 03 e-mail - flopez@concentra-servicios.es
Registration data about the Company stored:	Registro Mercantil de Madrid

Name	SIA Riga City Service
Legal form:	Limited liability company
Date and place of registration:	19 April 2006, Register of Enterprises of Republic of Latvia Riga division
Company code:	40003819844
The registered address of the Company:	G. Astras iela 8b, Riga, Latvia
The principal place of business:	G. Astras iela 8b, Riga, Latvia
Contacts of the Company:	Phone (+371) 67 511 222, Fax (+371) 67 511 223, e-mail – office@rigacs.lv
Website:	www.rigacs.lv
Registration data about the Company stored:	Register of Legal Entities of Republic of Latvia

Name	City Service Poland Sp .z.o.o
Legal form:	Private limited liability company
Date and place of registration:	22 November 2012, Warszaw
Company code:	0000441249
The registered address of the company:	ul. Wolnej Wszechnicy 5, 02-097 Warszaw
The principal place of business:	ul. Wolnej Wszechnicy 5, 02-097 Warszaw
Registration data about the company stored:	Polish register of enterprises: National Court registre (Krajowy Rejestr Sądowy – KRS)

Name	City Service Polska Sp. Z.O.O
Legal form:	Private limited liability company
Date and place of registration:	28 October 2013, Warszaw
Company code:	483372
The registered address of the company:	ul. Wolnej Wszechnicy 5, 02-097, Warszaw
The principal place of business:	ul. Wolnej Wszechnicy 5, 02-097, Warszaw
Registration data about the company stored:	Polish register of enterprises: National Court registre (Krajowy Rejestr Sądowy – KRS)

Name	INTERBUD MAX SP. Z.O.O
Legal form:	Private limited liability company
Date and place of registration:	28 December 2011, Krakow
Company code:	6762449581
The registered address of the company:	ul. Wolnej Wszechnicy 5, 02-097, Warszawa
The principal place of business:	ul. Wolnej Wszechnicy 5, 02-097, Warszawa
Registration data about the company stored:	Polish register of enterprises: National Court registre (Krajowy Rejestr Sądowy – KRS)

Name	Zespół Zarządców Nieruchomości WAM Sp.z.o.o.
Legal form:	Limited liability company
Date and place of registration:	29 September 2004, Polish register of enterprises: National Court regis tre (Krajowy Rejestr Sądowy – KRS)
Company code:	0000218420
The registered address of the company:	Wolnej Wszechnicy 5, 02-097 Warszawa, Poland
The principal place of business:	Wolnej Wszechnicy 5, 02-097 Warszawa, Poland
Contacts of the company:	Phone (+48 22) 572 55 70, Fax. (+48 22) 659 27 77, e-mail – biuro@zzn.pl
Website:	www.zzn.pl
Registration data about the company stored:	Polish register of enterprises: National Court registre (Krajowy Rejestr Sądowy – KRS)

Name	ЗАТ Київ Сіті Сервіс
Legal form:	Private limited liability company
Date and place of registration:	7 July 2010, Kiev
Company code:	34576553
The registered address of the company:	11 Panas Myrniy Street, Kyiv, 01011
The principal place of business:	11 Panas Myrniy Street, Kyiv, 01011

Name	ОАО Сити Сервис
Legal form:	public company with the limited liability (открытое акционерное общество)
Company code:	780701001
The registered address of the company:	198260, St. Petersburg, ул. Петергофское шоссе дом 3/2
The principal place of business:	195197, St. Petersburg, Финляндский пр. 4A, Бизнес-центр "Петровский Форт", офю 435
Contacts of the company:	Phone (+7 812) 742-19-19, Faksas (+7 812) 742-19-19 e-mail – cityservice@spcs.spb.ru
Registration data about the company stored:	St. Petersburg Federal Office, Inter regional inspection No.15 (Межрайонная инспекция Федеральной службы №15 по Санкт Петербургу)

Name	ЗАО Сити Сервис
Legal form:	Private limited liability company (закрытое акционерное общество)
Company code:	780101001
The registered address of the company:	199397, St. Petersburg, ул. Кораблестроителей, д. 31, корп. 2
The principal place of business:	199397, St. Petersburg, ул. Кораблестроителей, д. 31, корп. 2
Contacts of the company:	Phone (+7 812) 3525066, Fax (+7 812) 3525742, e-mail – cityservice@bk.ru
Registration data about the company stored:	St. Petersburg Federal Office, Inter regional inspection No.15 (Межрайонная инспекция Федеральной службы №15 по Санкт Петербургу)
Name	ОАО Специализированное ремонтно-наладачное управление
Legal form:	public company with the limited liability (открытое акционерное общество)
Company code:	044030791
The registered address of the company:	195009, St. Petersburg, Бобруйская ул., д.5
The principal place of business:	195197, St. Petersburg, Кондратьевский пр., д.15, к.3
Contacts of the company:	Phone (+7 812) 542-95-00, Faks.: (+7 812) 542-95-00 e-mail - specrnu@rambler.ru
Registration data about the company stored:	St. Petersburg Federal Office, Kalinino regional inspection (Инспекция Федеральной налоговой службы по Калининскому району Санкт Петербурга)
Name	ООО Жилкомсервис № 3 Фрунзенского района
Legal form:	company with the limited liability (oбщество с ограниченной
	ответственностью)
Company code:	7816451699
The registered address of the company:	192283, Санкт-Петербург, ул. Купчинская, д. 30, корп.2
The principal place of business:	192283, Санкт-Петербург, ул. Купчинская, д. 30, корп.2
Contacts of the company:	phone (+7 812) 771-75-52, Fax (+7 812) 7717552
Registration data about the company stored:	St. Petersburg Federal Office, Inter regional inspection No.15 (Межрайонная инспекция Федеральной службы №15 по Санкт Петербургу)
Name	ООО Чистый дом
Legal form:	company with the limited liability (oбщество с ограниченной ответственностью)
Company code:	7804437890
The registered address of the company:	195197, Санкт-Петербург, Кондратьевский пр., д. 15, к. 3
The principal place of business:	195197, Санкт-Петербург, Кондратьевский пр., д. 15, к. 3
Contacts of the company:	Phone (+7 812) 4585569, Fax (+7 812) 4585569,
Registration data about the company stored:	St. Petersburg Federal Office, Inter regional inspection No.15 (Межрайонная инспекция Федеральной службы №15 по Санкт Петербургу)
Name	ООО Подъемные механизмы
Legal form:	company with the limited liability (oбщество с ограниченной ответственностью
Company code:	780401001
The registered address of the company:	195197, Санкт-Петербург, Кондратьевский пр., д. 15, к. 3
The principal place of business:	195197, Санкт-Петербург, Кондратьевский пр., д. 15, к. 3
Contacts of the company:	Phone (+7 812) 742-19-19, Fax (+7 812) 742-19-19 e-mail – cityservice@spcs.spb.ru
Registration data about the company stored:	St. Petersburg Federal Office, Inter regional inspection No.15 (Межрайонная инспекция Федеральной службы №15 по Санкт Петербургу)
Name	OOO «ПРОМИНТЕР-управление проектами»
Legal form:	company with the limited liability (oбщество с ограниченной ответственностью)
Company code:	2635126803
The registered address of the company:	355000, г.Ставрополь, ул.Пирогова, 15 а

The principal place of business:	355000, г.Ставрополь, ул.Пирогова, 15 а
Contacts of the company:	Phone 8(8652)72-25-44, Fax 8 (8652)55-15-76, e-mail - info.prominter@prominter.net
Registration data about the company stored:	Federal tax inspection of Stavropolis region industrial district (ИФНС России Ставропольского края по Промышленному району города Ставрополя)
Name	OOO «Управляющая компания-1»
Legal form:	company with the limited liability (oбщество с ограниченной ответственностью)
Company code:	2635085410
The registered address of the company:	355000, г.Ставрополь, ул.Серова,2
The principal place of business:	355000, г.Ставрополь, ул. Серова 6/1
Contacts of the company:	Phone 8 (8652) 71-84-32, Fax 8 (8652) 71-84-32, e-mail - serova6-1@mail.ru
Registration data about the company stored:	Federal tax inspection of Stavropolis region industrial district (ИФНС России Ставропольского края по Промышленному району города Ставрополя)
Name	OOO «Управляющая компания-2»
Legal form:	company with the limited liability (oбщество с ограниченной ответственностью)
Company code:	2635085427
The registered address of the company:	355000, г.Ставрополь, ул.Серова,2
The principal place of business:	355000, г.Ставрополь, ул. Серова 6/1
Contacts of the company:	Phone 8 (8652) 71-84-32, Fax 8 (8652) 71-84-32, e-mail - serova6-1@mail.ru
Registration data about the company stored:	Federal tax inspection of Stavropolis region industrial district (ИФНС России Ставропольского края по Промышленному району города Ставрополя)
Name	OOO «Управляющая компания-3»
Legal form:	company with the limited liability (oбщество с ограниченной ответственностью)
Company code:	2635085434
The registered address of the company:	355029, г.Ставрополь, ул.Ленина, 450
The principal place of business:	355029, г.Ставрополь, ул. Краснофлотская, 32
Contacts of the company:	Phone 8 (8652) 35-45-76, Fax 8 (8652) 35-45-76, e-mail - stav5tv@yandex.ru
Registration data about the company stored:	Federal tax inspection of Stavropolis region industrial district (ИФНС России Ставропольского края по Промышленному району города Ставрополя)
Name Legal form:	OOO «Управляющая компания-4» company with the limited liability (oбщество с ограниченной ответственностью)
Company code:	2635085441
The registered address of the company:	355029, г.Ставрополь, ул.Ленина,450
The principal place of business:	355029, г.Ставрополь, ул. Краснофлотская, 32
Contacts of the company:	Phone 8 (8652) 35-45-76, Fax 8 (8652) 35-45-76, e-mail - stav5tv@yandex.ru
Registration data about the company stored:	Federal tax inspection of Stavropolis region industrial district (ИФНС России Ставропольского края по Промышленному району города Ставрополя)
Name	OOO «Управляющая компания-5»
Legal form:	company with the limited liability (oбщество с ограниченной ответствен ностью)
Company code:	2635085635
The registered address of the company:	355000, г.Ставрополь, ул.Бруснева,2/3а
The principal place of business:	355000, г.Ставрополь, ул.Буйнакского, 39/а

Registration data about the company stored:	Federal tax inspection of Stavropolis region industrial district (ИФНС России Ставропольского края по Промышленному району города Ставрополя)
Name Legal form:	OOO «УК-5» company with the limited liability (oбщество с ограниченной
Company code:	ответственностью) 2635085635
The registered address of the company:	355000, г.Ставрополь, ул.Бруснева,2/3а
The principal place of business:	355000, г.Ставрополь, ул. Буйнакского, 39/а
Contacts of the company:	Phone 8 (8652) 38-55-41, Fax 8 (8652) 38-55-41, e-mail: yk5stav@yandex.ru
Registration data about the company stored:	Federal tax inspection of Stavropolis region industrial district (ИФНС России Ставропольского края по Промышленному району города Ставрополя)
Name	OOO «Жилищная управляющая компания № 6»
Legal form:	company with the limited liability (oбщество с ограниченной ответственностью)
Company code:	2636086896
The registered address of the company:	355040, г.Ставрополь, ул.Доваторцев, 44/2,
The principal place of business:	355040, г.Ставрополь, ул50 лет ВЛКСМ,14а
Contacts of the company:	Phone 8 (8652) 55-12-18, Fax 8 (8652) 38-55-41, e-mail - yk6stav@yandex.ru
Registration data about the company stored:	Federal tax inspection of Stavropolis region industrial district (ИФНС России Ставропольского края по Промышленному району города Ставрополя)
Name	OOO «Управляющая компания-6»
Legal form:	company with the limited liability (oбщество с ограниченной ответственностью)
Company code:	2635105070
The registered address of the company:	355040, г.Ставрополь, ул.50 лет ВЛКСМ,8а/1
The principal place of business:	355040, г.Ставрополь, ул. 50 лет ВЛКСМ, 14
Contacts of the company:	Phone 8 (8652) 55-12-18, Fax 8 (8652) 38-55-41, e-mail - yk6stav@yandex.ru
Registration data about the company stored:	Federal tax inspection of Stavropolis region industrial district (ИФНС России Ставропольского края по Промышленному району города Ставрополя)
Name Legal form:	OOO «Управляющая компания-6» company with the limited liability (oбщество с ограниченной ответственностью)
Company code:	2635085674
The registered address of the company:	355040, г.Ставрополь, ул. 50 лет ВЛКСМ,8а/1
The principal place of business:	355040, г.Ставрополь, ул. 50 лет ВЛКСМ, 14а
Contacts of the company:	Phone 8 (8652) 55-12-18, Fax 8 (8652) 38-55-41, e-mail - yk6stav@yandex.ru
Registration data about the company stored:	Federal tax inspection of Stavropolis region industrial district (ИФНС России Ставропольского края по Промышленному району города Ставрополя)
Name	OOO «Управляющая компания-8»
Legal form:	company with the limited liability (oбщество с ограниченной
	ответственностью)
Company code:	2635105218
The registered address of the company:	355040, г.Ставрополь, пр.Ворошилова,1
The principal place of business:	355040, г.Ставрополь, пр.Ворошилова,1
Contacts of the company:	Phone 8 (8652) 72-63-67, Fax 8 (8652) 72-63-67, e-mail - yk8stav@yandex.ru
Registration data about the company stored:	Federal tax inspection of Stavropolis region industrial district (ИФНС России Ставропольского края по Промышленному району города Ставрополя)

Name	OOO «Управляющая компания-10»
Legal form:	company with the limited liability (oбщество с ограниченной ответственностью)
Company code:	2635104119
The registered address of the company:	355000, г.Ставрополь, ул.Пирогова,18/4, кв.1
The principal place of business:	355000, г. Ставрополь, ул. 50 лет ВЛКСМ,20Б
Contacts of the company:	Phone 8 (8652) 31-53-06, Fax 8 (8652) 31-53-06, e-mail - yk10_4119@rambler.ru
Registration data about the company stored:	Federal tax inspection of Stavropolis region industrial district (ИФНС России Ставропольского края по Промышленному району города Ставрополя)

Companies sold after reporting period:

Name	UAB Ecoservice
Legal form:	Private limited liability company
Date and place of registration:	6 April 1995 Vilnius
Company code:	123044722
The registered address of the Company:	Gariūnų st. 71, LT-02242, Vilnius, Lithuania
The principal place of business:	Jočionių st. 13, LT-02300, Vilnius, Lithuania
Information on bank account:	LT88 4010 0424 0120 4310, AB bankas "DnB"
Contacts of the Company:	Phone (+370 5) 2649251, fax (+370 5) 2649259, e-mail – ecoservice@ecoservice.lt
Website:	www.ecoservice.lt

Registration data about the Company stored: Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Specialus autotransportas
Legal form:	Private limited liability company
Date and place of registration:	16 November 1990, Klaipėda
Company code:	140026178
The registered address of the Company:	Taikos st. 13, LT-93012 Neringa, Lithuania
The principal place of business:	Tilžės st. 60, LT-91108, Klaipėda, Lithuania
Information on bank account:	LT86 7300 0100 0231 5062, "Swedbank", AB
Contacts of the Company:	Phone (+370 46) 383 473 , fax (+370 46) 310 170, e-mail – info@specauto.lt
Website:	www.specauto.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Name	UAB Komunalinių įmonių kombinatas
Legal form:	Private limited liability company
Date and place of registration:	19 February 1992, Trakai
Company code:	181212948
The registered address of the Company:	Gedimino st. 34, LT- 21118 Trakai, Lithuania
The principal place of business:	Gariūnų st. 71, LT-02300, Vilnius, Lithuania
Information on bank account:	LT33 7300 0100 9023 7398, AB "Swedbank"
Contacts of the Company:	Phone (+370 528) 55395, fax (+370 528) 55395, e-mail – trakai@ecoservice.lt
Website:	www.trakukikas.lt
Registration data about the Company stored:	Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"
Name	UAB Pagėgių savivaldybės komunalinis ūkis

Legal form:	Private limited liability company
Date and place of registration:	23 May, 2006 Pagėgiai
Company code:	300570583
The registered address of the Company:	Vilniaus st. 16A, Pagėgiai, Lithuania
The principal place of business:	Vilniaus g. 16A, Pagėgiai, Lithuania
Information on bank account:	A/s Nr. a/s LT43 7300 0100 0259 6069, "Swedbank", AB, banko kodas 73000

Registration data about the Company stored: Register of Legal Entities of Republic of Lithuania, VĮ "Registrų centras"

Annex 1 To AB City Service Consolidated annual report for year 2013

Ab city service disclosure on compliance with the governance code for the companies listed on nasdaq omx vilnius in 2013

AB City Service, following Article 21 paragraph 3 of the Law on Securities of the Republic of Lithuania and item 24.5 of the Listing Rules of AB NASDAQ OMX Vilnius, discloses its compliance with the Corporate Governance Code, for the Companies Listed on NASDAQ OMX Vilnius, and its specific provisions. In the event of non-compliance with the Code or with certain provisions thereof, it must be specified which provisions are not complied with and the reasons of non-compliance.

Principles / Recommendations	Yes / No / Not applicable	Commentary
Principle I: Basic Provisions The overriding objective of a company should be to operate in common interests of all the shareholders by optimizing over time shareholder value.
1.1. A company should adopt and make public the company's development stra tegy and objectives by clearly declaring how the company intends to meet the interests of its shareholders and optimize shareholder value.	Yes	Main trends and objectives of development and of the Company were publicly announced and emphasized in 2011 and 2012 annul reports. The trends of development of the Company are also disclosed by the essential events and reports to investors about the activities of the Company announced by the Company, periodical reports, communications presented in the statements of the managers of the Company in the press.
1.2. All management bodies of a company should act in furtherance of the decla red strategic objectives in view of the need to optimize shareholder value.	Yes	The Board of the Company has formed the long term and short-term strategic objectives of the development of the activities of the Company. The Management of the Company, managers of respective fields make every effort for he imple mentation of these objectives – the structure of Company and divisions of the companies of the group is optimized, the qualification of responsible persons and specialists is raised.
1.3. A company's supervisory and management bodies should act in close co operation in order to attain maximum benefit for the company and its sharehol ders.	Yes	The Board is formed in the Company, which represents the interests of shareholders of the Company. The Board of the Company takes the strategic decisions, adopts the strategy of activities of the Company, annual budget, etc. The decisions adopted by the Board shall be implemented by the managing bodies of the Company. The Board of the Company also performs the maintenance of the implementation of the above-mentioned stra tegical decisions. The Board representing the sha reholders' interests holds sessions according to the need and continuously maintains the direct contact with the managing bodies of the Company.
1.4. A company's supervisory and management bodies should ensure that the rights and interests of persons other than the company's shareholders (e.g. em ployees, creditors, suppliers, clients, local community), participating in or con nected with the company's operation, are duly respected.	Yes	The managing bodies of the Company seek, in their activities, to ensure the interests of all per sons related to the activities of the Company. The Management of the Company as well as the mana gers of separate fields give much time to commu nication with clients, suppliers, separate owners (residents) of the blocks of flats, in order to find the most optimum solutions. The particularity of acti vities of the Company determines that the clients, local community are periodically informed about the activities of the Company, the issues important to the community, being dealt with. The Company follows the obligations undertaken and set out in the legal acts and it helps to main tain the long-term relationships with its business partners, ensure the long-term development of activities of the Company. The employees of the Company are continuously informed by the Management and managers of separate fields about the news in the activities of the Company, internal changes. The events are or ganized for the employees, the employees' opinion surveys are conducted, the motivational system is continuously improved.

Principles / Recommendations	Yes / No / Not applicable	Commentary
Principle II: The corporate governance framework
The corporate governance framework should ensure the strategic guidance of the company, the effective oversight of the company's management bodies, an appropriate balance and distribution of functions between the company's bodies, protection of the shareholders' interests.
2.1. Besides obligatory bodies provided for in the Law on Companies of the Republic of Lithuania – a general shareholders' meeting and the chief executive officer, it is recommended that a company should set up both a collegial super visory body and a collegial management body. The setting up of collegial bodies for supervision and management facilitates clear separation of management and supervisory functions in the company, accountability and control on the part of the chief executive officer, which, in its turn, facilitate a more efficient and trans parent management process.	No	There is one collegiate managing body in the Company – Board of 4 (four) members. The Supervisory Board is not formed.
2.2. A collegial management body is responsible for the strategic management of the company and performs other key functions of corporate governance. A colle gial supervisory body is responsible for the effective supervision of the company's management bodies.	Yes	The Board is responsible for strategic manage ment of the Company. The Supervisory Board is not formed.
2.3. Where a company chooses to form only one collegial body, it is recommen ded that it should be a supervisory body, i.e. the supervisory board. In such a case, the supervisory board is responsible for the effective monitoring of the functions performed by the company's chief executive officer.	Not applicable	In this period of activities of the Company, the Board is, beside its functions of strategic mana gement, able to properly perform the super vision of implementation of adopted strategic decisions as well as the control of management of the Company; therefore, there is no objecti ve need for forming the Supervisory Board. The Supervisory Board may be formed in the future, if needed.
2.4. The collegial supervisory body to be elected by the general shareholders' meeting should be set up and should act in the manner defined in Principles III and IV. Where a company should decide not to set up a collegial supervisory body but rather a collegial management body, i.e. the board, Principles III and IV should apply to the board as long as that does not contradict the essence and purpose of this body. 1	Yes	The order stipulated in III and IV principles is currently followed,The essential requirements provided for in the principles are not violated.
2.5. Company's management and supervisory bodies should comprise such number of board (executive directors) and supervisory (non-executive directors) board members that no individual or small group of individuals can dominate decision-making on the part of these bodies.2	No	The Board of the Company is formed from 4 (four) members. The Board adopts the decisi ons with a majority vote; therefore, the votes of two members of the Board import on, whether the certain decisions will be adopted, or not.
2.6. Non-executive directors or members of the supervisory board should be appointed for specified terms subject to individual re-election, at maximum in tervals provided for in the Lithuanian legislation with a view to ensuring necessary development of professional experience and sufficiently frequent reconfirmation of their status. A possibility to remove them should also be stipulated however this procedure should not be easier than the removal procedure for an executive director or a member of the management board.	Not applicable	The Supervisory Board is not formed in the Company.
2.7. Chairman of the collegial body elected by the general shareholders' meeting may be a person whose current or past office constitutes no obstacle to con duct independent and impartial supervision. Where a company should decide not to set up a supervisory board but rather the board, it is recommended that the chairman of the board and chief executive officer of the company should be a different person. Former company's chief executive officer should not be immediately nominated as the chairman of the collegial body elected by the ge neral shareholders' meeting. When a company chooses to departure from these recommendations, it should furnish information on the measures it has taken to ensure impartiality of the supervision.	Yes	The Chairman of the Board of the Company and the head of the Company – General Mana ger are different persons. The Chairman of the Board of the Company has not been the head of the Company. The Chairman of the Board of the Company is not related to the daily activi ties of the Company.
Principle III: The order of the formation of a collegial body to be elected by a general shareholders' meeting The order of the formation a collegial body to be elected by a general shareholders' meeting should ensure representation of minority shareholders, accountability of this body to the shareholders and objective monitoring of the company's operation and its management bodies. 3
3.1. The mechanism of the formation of a collegial body to be elected by a ge neral shareholders' meeting (hereinafter in this Principle referred to as the 'colle gial body') should ensure objective and fair monitoring of the company's manage ment bodies as well as representation of minority shareholders.	Yes	The mechanism of formation of the Board, that meets the requirements of the Law on Com panies of the Republic of Lithuania, ensures the objective supervision of managing bodies.
3.2. Names and surnames of the candidates to become members of a collegial body, information about their education, qualification, professional background, positions taken and potential conflicts of interest should be disclosed early eno ugh before the general shareholders' meeting so that the shareholders would have sufficient time to make an informed voting decision. All factors affecting the candidate's independence, the sample list of which is set out in Recommendation 3.7, should be also disclosed. The collegial body should also be informed on any subsequent changes in the provided information. The collegial body should, on yearly basis, collect data provided in this item on its members and disclose this in the company's annual report.	Not applicable	The main shareholder of the Company, who delegated his members to the Board, ensures that the members have the competence and experience necessary for their work. Information about Company's Board member's education and work experience is disclosed in the Company's interim information and annual reports.

Principles / Recommendations	Yes / No / Not applicable	Commentary
3.3. Should a person be nominated for members of a collegial body, such nomina tion should be followed by the disclosure of information on candidate's particular competences relevant to his/her service on the collegial body. In order share holders and investors are able to ascertain whether member's competence is further relevant, the collegial body should, in its annual report, disclose the in formation on its composition and particular competences of individual members which are relevant to their service on the collegial body.	Not applicable	Detail information is provided in Clause 3.2.
3.4. In order to maintain a proper balance in terms of the current qualifications possessed by its members, the desired composition of the collegial body shall be determined with regard to the company's structure and activities, and have this periodically evaluated. The collegial body should ensure that it is composed of members who, as a whole, have the required diversity of knowledge, judgment and experience to complete their tasks properly. The members of the audit com mittee, collectively, should have a recent knowledge and relevant experience in the fields of finance, accounting and/or audit for the stock exchange listed com panies. At least one of the members of the remuneration committee should have knowledge of and experience in the field of remuneration policy. For more than a year the Seimas of the Republic of Lithuania is considering variuos amendments of the Civil code that are related to the apartment building regulation.	Yes	The composition of the Board of the Company and the number of members meets the scopes of activities of the Company and the size of the exis ting structure. The members of the Board of the Company and the members of the Audit Committee of the Com pany have sufficient experience in the fields, where the Company performs its main activities; also, all members have versatile knowledge in the fields of finance, economy, investment management, management, maintenance of technologies and engineering systems, keep trace of innovations in these fields.
3.5. All new members of the collegial body should be offered a tailored program focused on introducing a member with his/her duties, corporate organization and activities. The collegial body should conduct an annual review to identify fields where its members need to update their skills and knowledge.	Not applicable	No event occurred in the Company, with the member of the Board becoming the person not familiar with the activities, structure as well as strategic objectives of the Company. Skills as well as knowledge of the members of the Board are continuously updated and enhanced, with the members performing their functions in the Board.
3.6. In order to ensure that all material conflicts of interest related with a mem ber of the collegial body are resolved properly, the collegial body should compri se a sufficient4 number of independent5 members.	No	The issue on the independent members and their sufficient number in the collegiate mana ging body maybe discussed in the future.
3.7. A member of the collegial body should be considered to be independent only if he is free of any business, family or other relationship with the company, its controlling shareholder or the management of either, that creates a conflict of interest such as to impair his judgment. Since all cases when member of the collegial body is likely to become dependant are impossible to list, moreover, relationships and circumstances associated with the determination of independence may vary amongst companies and the best practices of solving this problem are yet to evolve in the course of time, as sessment of independence of a member of the collegial body should be based on the contents of the relationship and circumstances rather than their form. The key criteria for identifying whether a member of the collegial body can be considered to be inde pendent are the following: 1. He/she is not an executive director or member of the board (if a collegial body elected by the general shareholders' meeting is the supervisory board) of the com pany or any associated company and has not been such during the last five years; 2. He/she is not an employee of the company or some any company and has not been such during the last three years, except for cases when a member of the collegial body does not belong to the senior management and was elected to the collegial body as a representative of the employees; 3. He/she is not receiving or has been not receiving significant additional remunera tion from the company or associated company other than remuneration for the office in the collegial body. Such additional remuneration includes participation in share options or some other performance based pay systems; it does not include compensation payments for the previous office in the company (provided that such payment is no way related with later position) as per pension plans (inclusive of deferred compensations); 4. He/she is not a controlling shareholder or representative of such shareholder (control as defined in the Council Directive 83/349/EEC Article 1 Part 1); 5. He/she does not have and did not have any material business relations with the company or associated company within the past year directly or as a partner, shareholder, director or superior employee of the subject having such relationship. A subject is considered to have business relations when it is a major supplier or service provider (inclusive of financial, legal, counseling and consulting services), major client or organization receiving significant payments from the company or its group; 6. He/she is not and has not been, during the last three years, partner or employee of the current or former external audit company of the company or associated company; 7. He/she is not an executive director or member of the board in some other com pany where executive director of the company or member of the board (if a colle gial body elected by the general shareholders' meeting is the supervisory board) is non-executive director or member of the supervisory board, he/she may not also have any other material relationships with executive directors of the company that arise from their participation in activities of other companies or bodies;	Not applicable	According to the comment of Clause 3.6., it is still not relevant.

Principles / Recommendations	Yes / No / Not applicable	Commentary
8. He/she has not been in the position of a member of the collegial body for over than 12 years; 9. He/she is not a close relative to an executive director or member of the board (if a collegial body elected by the general shareholders' meeting is the supervisory board) or to any person listed in above items 1 to 8. Close relative is considered to be a spouse (common-law spouse), children and parents.
3.8. The determination of what constitutes independence is fundamentally an is sue for the collegial body itself to determine. The collegial body may decide that, despite a particular member meets all the criteria of independence laid down in this Code, he cannot be considered independent due to special personal or com pany-related circumstances.	Not applicable	According to the comment of Clause 3.6., it is still not relevant.
3.9. Necessary information on conclusions the collegial body has come to in its determination of whether a particular member of the body should be considered to be independent should be disclosed. When a person is nominated to become a member of the collegial body, the company should disclose whether it consi ders the person to be independent. When a particular member of the collegial body does not meet one or more criteria of independence set out in this Code, the company should disclose its reasons for nevertheless considering the mem ber to be independent. In addition, the company should annually disclose which members of the collegial body it considers to be independent.	Not applicable	According to the comment of Clause 3.6., it is still not relevant.
3.10. When one or more criteria of independence set out in this Code has not been met throughout the year, the company should disclose its reasons for con sidering a particular member of the collegial body to be independent. To ensure accuracy of the information disclosed in relation with the independence of the members of the collegial body, the company should require independent mem bers to have their independence periodically re-confirmed.	Not applicable	According to the comment of Clause 3.6., it is still not relevant.
3.11. In order to remunerate members of a collegial body for their work and participation in the meetings of the collegial body, they may be remunerated from the company's funds6. The general shareholders' meeting should approve the amount of such remuneration.	Not applicable	According to the comment of Clause 3.6., it is still not relevant.
Principle IV: The duties and liabilities of a collegial body elected by the general shareholders' meeting The corporate governance framework should ensure proper and effective functioning of the collegial body elected by the general shareholders' meeting, and the powers granted to the collegial body should ensure effective monitoring7 interests of all the company's shareholders.		of the company's management bodies and protection of
4.1. The collegial body elected by the general shareholders' meeting (hereinafter in this Principle referred to as the 'collegial body') should ensure integrity and transparency of the company's financial statements and the control system. The collegial body should issue recommendations to the company's management bodies and monitor and control the company's management performance.8	Yes	The member of the Board of the Company, who is responsible for the finance supervision of the Company, continuously maintains the contact and regularly meets with the Chief Accountant of the Company to discuss the financial state of the Company as well as the last occurred essen tial financial changes, if any.
		The Chairman of the Board of the Company continuously maintains the contact and regularly meets with the General Director of the Compa ny to discuss the changes occurred or occurring in the activities of the Company, essential issues of organization of activities, development of activities of the Company.
		The Board of the Company analyzes and asses ses the material about the activities and finance of the Company, received from the General Manager as well as Chief Accountant of the Company, if necessary, gives recommendations and suggestions.
4.2. Members of the collegial body should act in good faith, with care and respon sibility for the benefit and in the interests of the company and its shareholders with due regard to the interests of employees and public welfare. Independent members of the collegial body should (a) under all circumstances maintain in dependence of their analysis, decision-making and actions (b) do not seek and accept any unjustified privileges that might compromise their independence, and (c) clearly express their objections should a member consider that decision of the	Yes	The Members of the Board of the Company act responsibly as well in goodwill in favour of the Company as well as shareholders, seek to retain their independence in adopting the decisions and taking into account the interests of the third persons.

collegial body is against the interests of the company. Should a collegial body have passed decisions independent member has serious doubts about, the member should make adequate conclusions. Should an independent member resign from his office, he should explain the reasons in a letter addressed to the collegial body or audit committee and, if necessary, respective company-not-pertaining body

(institution).

Principles / Recommendations	Yes / No / Not applicable	Commentary
4.3. Each member should devote sufficient time and attention to perform his duties as a member of the collegial body. Each member of the collegial body should limit other professional obligations of his (in particular any directorships held in other companies) in such a manner they do not interfere with proper performance of duties of a member of the collegial body. In the event a member of the collegial body should be present in less than a half9 of the meetings of the collegial body throughout the financial year of the company, shareholders of the company should be notified.	Yes	The members of the Board of the Company, each individually and all collectively, pay suffi cient time and attention to have the function attributed to the competence of the Board duly performed. The members of the Board take part in the sessions, the time of which is agreed among the members so that all members of the Board could take part in the session.
4.4. Where decisions of a collegial body may have a different effect on the com pany's shareholders, the collegial body should treat all shareholders impartially and fairly. It should ensure that shareholders are properly informed on the com pany's affairs, strategies, risk management and resolution of conflicts of interest. The company should have a clearly established role of members of the collegial body when communicating with and committing to shareholders.	Yes	The Board of the Company seeks, in its work, to conduct in good faith and impartially with all shareholders of the Company, and according to the data available in the Company, there has been no case, so far, that it were vice versa. The Chairman of the Board of the Company is, by adjusting as well as coordinating the interactions with the General Manager of the Company, obliged and authorized to, in the name of the Board, communicate with the shareholders, inform the shareholders about the activities, strategy, other essential matters of the Compa ny; also to give official binding clarifications.
4.5. It is recommended that transactions (except insignificant ones due to their low value or concluded when carrying out routine operations in the company under usual conditions), concluded between the company and its shareholders, members of the supervisory or managing bodies or other natural or legal per sons that exert or may exert influence on the company's management should be subject to approval of the collegial body. The decision concerning approval of such transactions should be deemed adopted only provided the majority of the independent members of the collegial body voted for such a decision.	Yes	All transactions specified in this recommen dation, if they are not insignificant due to the low value, are concluded upon the decisions of the Board which may be adopted only in case of the required quorum and majority and follo wing the provisions of the Company's Articles of Association that complies with the Law on Companies of the Republic of Lithuania.
4.6. The collegial body should be independent in passing decisions that are signi ficant for the company's operations and strategy. Taken separately, the collegial body should be independent of the company's management bodies10. Members of the collegial body should act and pass decisions without an outside influence from the persons who have elected it. Companies should ensure that the col legial body and its committees are provided with sufficient administrative and financial resources to discharge their duties, including the right to obtain, in par ticular from employees of the company, all the necessary information or to seek independent legal, accounting or any other advice on issues pertaining to the competence of the collegial body and its committees. When using the services of a consultant with a view to obtaining information on market standards for remu neration systems, the remuneration committee should ensure that the consultant concerned does not at the same time advice the human resources department, executive directors or collegial management organs of the company concerned.	Yes	The Board of the Company adopts the de cisions, following only the interests of the Company; therefore, the independence of the members in adopting the decisions significant to the activities and strategy of the Company, shall be assessed according to the interests of the Company and its shareholders. The members of the Board are provided with all possibilities and they have the right to all resources necessary to duly perform the obliga tions, including the possibilities to apply to the independent external legal, accounting or other specialists. The General Manager of the Com pany ensured that the managers or employees of the separate fields of the Company provide directly the Board or through the General Manager with the required information to the members of the Board, so that they could duly perform their functions and deal with the issues attributed to their competence
4.7. Activities of the collegial body should be organized in a manner that indepen dent members of the collegial body could have major influence in relevant areas where chances of occurrence of conflicts of interest are very high. Such areas to be considered as highly relevant are issues of nomination of company's directors, determination of directors' remuneration and control and assessment of com pany's audit. Therefore when the mentioned issues are attributable to the com petence of the collegial body, it is recommended that the collegial body should establish nomination, remuneration, and audit committees11. Companies should ensure that the functions attributable to the nomination, remuneration, and audit committees are carried out. However they may decide to merge these functions and set up less than three committees. In such case a company should explain in detail reasons behind the selection of alternative approach and how the selected approach complies with the objectives set forth for the three different commit tees. Should the collegial body of the company comprise small number of mem bers, the functions assigned to the three committees may be performed by the collegial body itself, provided that it meets composition requirements advocated for the committees and that adequate information is provided in this respect. In such case provisions of this Code relating to the committees of the collegial body (in particular with respect to their role, operation, and transparency) should	Yes	The recommendation is implemented partly. The Audit Committee was established by im plementing the decision adopted in the General Meeting of Shareholders on 30 April 2009. The Audit Committee was established in order to comply with the requirements of the Law on Audit and to this Code. According to the existing scopes of the activities of the Company, results as well as objective needs, and to the fact that the Board of the Company consists of 4 (four) members, the Company in not in need of the establishment other committees, but the establishment of nomination and remuneration committees shall be considered in the future.

apply, where relevant, to the collegial body as a whole.

	Yes / No /
Principles / Recommendations	Not applicable	Commentary
4.8. The key objective of the committees is to increase efficiency of the activities of the collegial body by ensuring that decisions are based on due consideration, and to help organize its work with a view to ensuring that the decisions it takes are free of material conflicts of interest. Committees should exercise indepen dent judgement and integrity when exercising its functions as well as present the collegial body with recommendations concerning the decisions of the collegial body. Nevertheless the final decision shall be adopted by the collegial body. The recommendation on creation of committees is not intended, in principle, to cons trict the competence of the collegial body or to remove the matters considered from the purview of the collegial body itself, which remains fully responsible for the decisions taken in its field of competence.	Yes	The Audit Committee operates in accordance with the Regulations approved by the General Meeting of Shareholders of the Company. The Audit Committee in accordance with the need provides the Company's Board with recom mendations.
4.9. Committees established by the collegial body should normally be composed of at least three members. In companies with small number of members of the collegial body, they could exceptionally be composed of two members. Majority of the members of each committee should be constituted from independent members of the collegial body. In cases when the company chooses not to set up a supervisory board, remuneration and audit committees should be entirely comprised of non-executive directors. Chairmanship and membership of the committees should be decided with due regard to the need to ensure that com mittee membership is refreshed and that undue reliance is not placed on particu lar individuals.	Yes	The Audit Committee consists of three mem bers elected for the term of office of four years. One of the members is independent. The composition and the term of office of the Audit Committee is approved by the General Meeting of Shareholders. Audit Committee composition and their terms ensure the nature of aims and objectives of the Company and its shareholders.
4.10. Authority of each of the committees should be determined by the collegial body. Committees should perform their duties in line with authority delegated to them and inform the collegial body on their activities and performance on regular basis. Authority of every committee stipulating the role and rights and duties of the committee should be made public at least once a year (as part of the informa tion disclosed by the company annually on its corporate governance structures and practices). Companies should also make public annually a statement by existing committees on their composition, number of meetings and attendance over the year, and their main activities. Audit committee should confirm that it is satisfied with the independence of the audit process and describe briefly the actions it has taken to reach this conclusion.	Yes	Under the regulations of the Audit Committee of the Company the Audit Committee presents the report about its activity to the Board of the Company no less than one time per year.
4.11. In order to ensure independence and impartiality of the committees, members of the collegial body that are not members of the committee should commonly have a right to participate in the meetings of the committee only if invited by the committee. A committee may invite or demand participation in the meeting of particular officers or experts. Chairman of each of the committees should have a possibility to maintain direct communication with the shareholders. Events when such are to be performed should be specified in the regulations for committee activities.	Yes	The regulations of the Company's Audit Committee shall grant the right for the Audit Committee members to convene to the Audit Committee metings the Board members and the other employees of the Company.
4.12. Nomination Committee.	Not	The appointment committee was not formed
4.12.1. Key functions of the nomination committee should be the following:	applicable	according to the circumstances set out in Clause
1) Identify and recommend, for the approval of the collegial body, candidates to fill board vacancies. The nomination committee should evaluate the balance of skills, knowledge and experience on the management body, prepare a des cription of the roles and capabilities required to assume a particular office, and assess the time commitment expected. Nomination committee can also consider candidates to members of the collegial body delegated by the shareholders of the company;		4.7.
2) Assess on regular basis the structure, size, composition and performance of the supervisory and management bodies, and make recommendations to the
collegial body regarding the means of achieving necessary changes;
3) Assess on regular basis the skills, knowledge and experience of individual di rectors and report on this to the collegial body;
4) Properly consider issues related to succession planning;
5) Review the policy of the management bodies for selection and appointment of senior management.
4.12.2. Nomination committee should consider proposals by other parties, inclu ding management and shareholders. When dealing with issues related to execu tive directors or members of the board (if a collegial body elected by the general shareholders' meeting is the supervisory board) and senior management, chief

executive officer of the company should be consulted by, and entitled to submit

proposals to the nomination committee.

55

Principles / Recommendations Yes / No /

4.13. Remuneration Committee.

4.13.1. Key functions of the remuneration committee should be the following:

1) Make proposals, for the approval of the collegial body, on the remuneration policy for members of management bodies and executive directors. Such policy should address all forms of compensation, including the fixed remuneration, performance-based remuneration schemes, pension arrangements, and termination payments. Proposals considering performance-based remuneration schemes should be accompanied with recommendations on the related objectives and evaluation criteria, with a view to properly aligning the pay of executive director and members of the management bodies with the long-term interests of the shareholders and the objectives set by the collegial body;

2) Make proposals to the collegial body on the individual remuneration for executive directors and member of management bodies in order their remunerations are consistent with company's remuneration policy and the evaluation of the performance of these persons concerned. In doing so, the committee should be properly informed on the total compensation obtained by executive directors and members of the management bodies from the affiliated companies;

3) Ensure that remuneration of individual executive directors or members of management body is proportionate to the remuneration of other executive directors or members of management body and other staff members of the company;

4) Periodically review the remuneration policy for executive directors or members of management body, including the policy regarding share-based remuneration, and its implementation;

5) Make proposals to the collegial body on suitable forms of contracts for executive directors and members of the management bodies;

6) Assist the collegial body in overseeing how the company complies with applicable provisions regarding the remuneration-related information disclosure (in particular the remuneration policy applied and individual remuneration of directors);

7) Make general recommendations to the executive directors and members of the management bodies on the level and structure of remuneration for senior management (as defined by the collegial body) with regard to the respective information provided by the executive directors and members of the management bodies.

4.13.2. With respect to stock options and other share-based incentives which may be granted to directors or other employees, the committee should:

1) Consider general policy regarding the granting of the above mentioned schemes, in particular stock options, and make any related proposals to the collegial body;

2)Examine the related information that is given in the company's annual report and documents intended for the use during the shareholders meeting;

3) Make proposals to the collegial body regarding the choice between granting options to subscribe shares or granting options to purchase shares, specifying the reasons for its choice as well as the consequences that this choice has.

4.13.3. Upon resolution of the issues attributable to the competence of the remuneration committee, the committee should at least address the chairman of the collegial body and/or chief executive officer of the company for their opinion on the remuneration of other executive directors or members of the management bodies.

4.14. Audit Committee.

4.14.1. Key functions of the audit committee should be the following:

• Observe the integrity of the financial information provided by the company, in particular by reviewing the relevance and consistency of the accounting methods used by the company and its group (including the criteria for the consolidation of the accounts of companies in the group);

• At least once a year review the systems of internal control and risk management to ensure that the key risks (inclusive of the risks in relation with compliance with existing laws and regulations) are properly identified, managed and reflected in the information provided;

• Ensure the efficiency of the internal audit function, among other things, by making recommendations on the selection, appointment, reappointment and removal of the head of the internal audit department and on the budget of the department, and by monitoring the responsiveness of the management to its findings and recommendations. Should there be no internal audit authority in the company, the need for one should be reviewed at least annually;

• Make recommendations to the collegial body related with selection, appointment, reappointment and removal of the external auditor (to be done by the general shareholders' meeting) and with the terms and conditions of his engagement. The committee should investigate situations that lead to a resignation of the audit company or auditor and make recommendations on required actions in such situations;

Not applicable The salary committee was not formed according to the circumstances set out in Clause

4.7.

Not applicable Commentary

Yes The Company has the Audit Committee in place. The composition and Regulations of the Audit Committee were approved in the General Meeting of Shareholders on 30 April 2009. The Audit Committee consists of three members elected for the term of office of four years. One of the members is independent.

The Audit Committee was established under the requirements for Audit Committees approved on 13 August, 2008 by the Securities Commission of Lithuanian Republic.

In accordance with Article 52(3) of the Law on Audit, the functions of the Company's Audit Committee are as follows:

1) to monitor the process of drawing up financial statement;

2) to monitor the effectiveness of the systems of corporate internal control, risk management and internal audit, if any;

3) to monitor the process of carrying out audit;

56 Consolidated Annual Report for 2013 (Reviewed by Auditors)

Principles / Recommendations Yes / No /

• Monitor independence and impartiality of the external auditor, in particular by reviewing the audit company's compliance with applicable guidance relating to the rotation of audit partners, the level of fees paid by the company, and similar issues. In order to prevent occurrence of material conflicts of interest, the committee, based on the auditor's disclosed inter alia data on all remunerations paid by the company to the auditor and network, should at all times monitor nature and extent of the non-audit services. Having regard to the principals and guidelines established in the 16 May 2002 Commission Recommendation 2002/590/ EC, the committee should determine and apply a formal policy establishing types of non-audit services that are (a) excluded, (b) permissible only after review by the committee, and (c) permissible without referral to the committee;

• Review efficiency of the external audit process and responsiveness of management to recommendations made in the external auditor's management letter.

4.14.2. All members of the committee should be furnished with complete information on particulars of accounting, financial and other operations of the company. Company's management should inform the audit committee of the methods used to account for significant and unusual transactions where the accounting treatment may be open to different approaches. In such case a special consideration should be given to company's operations in offshore centers and/or activities carried out through special purpose vehicles (organizations) and justification of such operations.

4.14.3. The audit committee should decide whether participation of the chairman of the collegial body, chief executive officer of the company, chief financial officer (or superior employees in charge of finances, treasury and accounting), or internal and external auditors in the meetings of the committee is required (if required, when). The committee should be entitled, when needed, to meet with any relevant person without executive directors and members of the management bodies present.

4.14.4. Internal and external auditors should be secured with not only effective working relationship with management, but also with free access to the collegial body. For this purpose the audit committee should act as the principal contact person for the internal and external auditors.

4.14.5. The audit committee should be informed of the internal auditor's work program, and should be furnished with internal audit's reports or periodic summaries. The audit committee should also be informed of the work program of the external auditor and should be furnished with report disclosing all relationships between the independent auditor and the company and its group. The committee should be timely furnished information on all issues arising from the audit.

4.14.6. The audit committee should examine whether the company is following applicable provisions regarding the possibility for employees to report alleged significant irregularities in the company, by way of complaints or through anonymous submissions (normally to an independent member of the collegial body), and should ensure that there is a procedure established for proportionate and independent investigation of these issues and for appropriate follow-up action. 4.14.7. The audit committee should report on its activities to the collegial body at least once in every six months, at the time the yearly and half-yearly statements are approved.

4.15. Every year the collegial body should conduct the assessment of its activities. The assessment should include evaluation of collegial body's structure, work organization and ability to act as a group, evaluation of each of the collegial body member's and committee's competence and work efficiency and assessment whether the collegial body has achieved its objectives. The collegial body should, at least once a year, make public (as part of the information the company annually discloses on its management structures and practices) respective information on its internal organization and working procedures, and specify what material changes were made as a result of the assessment of the collegial body of its own activities.

Principle V: The working procedure of the company's collegial bodies

The working procedure of supervisory and management bodies established in the company should ensure efficient operation of these bodies and decision-making and encourage active co-operation between the company's bodies.

5.1. The company's supervisory and management bodies (hereinafter in this Principle the concept 'collegial bodies' covers both the collegial bodies of supervision and the collegial bodies of management) should be chaired by chairpersons of these bodies. The chairperson of a collegial body is responsible for proper convocation of the collegial body meetings. The chairperson should ensure that information about the meeting being convened and its agenda are communicated to all members of the body. The chairperson of a collegial body should ensure appropriate conducting of the meetings of the collegial body. The chairperson should ensure order and working atmosphere during the meeting.

4) to monitor how the auditor and the audit firm adhere to the principles of independence and objectivity.

Not applicable Commentary

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 Committee operates in accordance with the Regulations approved 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 this Code.

No The practice has not so far being formed in the Company for the Board of the Company to perform the assessment of its activities as well as to separately inform the shareholders about it, as the controlling shareholder, by appointing the members of the Board, already knows the experience, competence and determination of each member to act only for the interests of the Company.

Yes The Company implements this recommendation in a full scope. The Board of the Company is both de jure and de facto managed by the Chairman of the Board. Following the work procedure of the Board, the Chairman convenes the sessions of the Board, organized the work of the Board, has, without the separate decision of the members, the right to chair in the sessions of the Board; also, have other authorities set out in the Company's Articles of Association, work regulation of the Board and/or separately mentioned in the separate clauses of this report.

Principles / Recommendations	Yes / No / Not applicable	Commentary
5.2. It is recommended that meetings of the company's collegial bodies should be carried out according to the schedule approved in advance at certain intervals of time. Each company is free to decide how often to convene meetings of the collegial bodies, but it is recommended that these meetings should be convened at such intervals, which would guarantee an interrupted resolution of the essen tial corporate governance issues. Meetings of the company's supervisory board should be convened at least once in a quarter, and the company's board should meet at least once a month.12	Yes	The sessions of the Board of the Company are arranged in a respective periodicity, although no schedule confirmed in advance, with a provision of specific dates. It is actually held not rarer than twice per calendar month. The continuous dealing with the essential issues on the management of the Company is ensured not only by the regular sessions of the Board; but, also by the work of the separate members of the Board in the field attributed to them, in receiving and analyzing the information impor tant for the activities of the Company, preparing for the sessions of the Board.
5.3. Members of a collegial body should be notified about the meeting being convened in advance in order to allow sufficient time for proper preparation for the issues on the agenda of the meeting and to ensure fruitful discussion and adoption of appropriate decisions. Alongside with the notice about the meeting being convened, all the docu ments relevant to the issues on the agenda of the meeting should be submitted to the members of the collegial body. The agenda of the meeting should not be changed or supplemented during the meeting, unless all members of the collegial body are present or certain issues of great importance to the company require immediate resolution.	Yes	The work procedure of the Board of the Com pany ensures the compliance with this recom mendation. All members of the Board take part in most sessions.
5.4. In order to co-ordinate operation of the company's collegial bodies and en sure effective decision-making process, chairpersons of the company's collegial bodies of supervision and management should closely co-operate by co-coor dinating dates of the meetings, their agendas and resolving other issues of cor porate governance. Members of the company's board should be free to attend meetings of the company's supervisory board, especially where issues concerning removal of the board members, their liability or remuneration are discussed.	Yes	Session dates of the Board and Audit Commit tee are organised in order not to make obsta cles for duly operating and decision making for these bodies.
Principle VI: The equitable treatment of shareholders and shareholder rights The corporate governance framework should ensure the equitable treatment of all shareholders, including minority and foreign shareholders. The corporate governance framework should protect the rights of the shareholders.
6.1. It is recommended that the company's capital should consist only of the sha res that grant the same rights to voting, ownership, dividend and other rights to all their holders.	Yes	The authorized capital of the Company con sists only of the ordinary nominal intangible shares which grant the equal property and non-property rights to the shareholders of the Company.
6.2. It is recommended that investors should have access to the information con cerning the rights attached to the shares of the new issue or those issued earlier in advance, i.e. before they purchase shares.	Yes	The Company's Articles of Association which complies with an actual redaction of Law on Companies guarantees the rights to the in vestors by the shares already issued by the Company. Company's Articles of Association are publicly accessed and the rights set out in them meet the rights, which are set out in the Law on Companies of the Republic of Lithuania. Company is also preparing the prospectuses for the new emissions of shares which are attached to the regulation of the legislation of the Republic of Lithuania.
6.3. Transactions that are important to the company and its shareholders, such as transfer, investment, and pledge of the company's assets or any other type of encumbrance should be subject to approval of the general shareholders' mee ting.13 All shareholders should be furnished with equal opportunity to familiarize with and participate in the decision-making process when significant corporate issues, including approval of transactions referred to above, are discussed.	No	The shareholders of the Company approve only those transactions of the Company, for the approval of which, the exclusive rights for the General Meeting of Shareholders are provided for according to the Law on Companies of the Republic of Lithuania, as well as the Company's Articles of Association. With a full-scope im plementation of this recommendation, the risk would arise due to the effective management and decision-making of the Company.
6.4. Procedures of convening and conducting a general shareholders' meeting should ensure equal opportunities for the shareholders to effectively participate at the meetings and should not prejudice the rights and interests of the sharehol ders. The venue, date, and time of the shareholders' meeting should not hinder wide attendance of the shareholders. Prior to the shareholders' meeting, the company's supervisory and management bodies should enable the shareholders to lodge questions on issues on the agenda of the general shareholders' meeting and receive answers to them.	Yes	The information about the General Meetings of Shareholders is announced through the informa tion system of NASDAQ OMX Globe Newswire in Lithuanian and English languages; web site of the Company. The sessions are held in Vilnius, at the building where the Company operates. The sessions are convened on the working day and at the premises where the shareholders would be provided with the conditions to duly take part in the meeting. One may become familiar with the material of the meeting not later than 21 days be fore the day of the meeting at the premises of the Company, the draft decisions are also presented through the information system of NASDAQ OMX Globe Newswire in Lithuanian and English.

Principles / Recommendations	Yes / No / Not applicable	Commentary
6.5. If is possible, in order to ensure shareholders living abroad the right to access to the information, it is recommended that documents on the course of the general shareholders' meeting should be placed on the publicly accessible website of the company not only in Lithuanian language, but in English and /or other foreign languages in advance. It is recommended that the minutes of the general shareholders' meeting after signing them and/or adopted resolutions should be also placed on the publicly accessible website of the company. Seeking to ensure the right of foreigners to familiarize with the information, whenever feasible, documents referred to in this recommendation should be published in Lithuanian, English and/or other foreign languages. Documents referred to in this recommendation may be published on the publicly accessible website of the com pany to the extent that publishing of these documents is not detrimental to the company or the company's commercial secrets are not revealed.	Yes	The Company announces to the General Mee ting of Shareholders the prepared draft decisions not later 21 days before the day of the meeting through the information system of NASDAQ OMX Globe Newswire and Company's website in Lithuanian and English. The decisions adopted by the General Meeting of Shareholders are announced not later than within one day from the day of their adoption through the information system of NASDAQ OMX Globe Newswire in Lithuanian and English. The decisions adopted by the General Meeting of Shareholders are provided also in the web site of the Company.
6.6. Shareholders should be furnished with the opportunity to vote in the general shareholders' meeting in person and in absentia. Shareholders should not be pre vented from voting in writing in advance by completing the general voting ballot.	Yes	The shareholders of the Company may imple ment the right to take part in the General Mee ting of Shareholders both in person and through the representative, if the person has the due authority or the contract on transfer of the voting right was concluded with him according to the order established by the legal acts. Upon shareholders' request, the Company provides the shareholders with the conditions to vote by fulfilling the general voting-paper, as set out in the Law on Companies.
6.7. With a view to increasing the shareholders' opportunities to participate effectively at shareholders' meetings, the companies are recommended to expand use of modern technologies by allowing the shareholders to participate and vote in general meetings via electronic means of communication. In such cases security of transmitted information and a possibility to identify the identity of the participating and voting person should be guaranteed. Moreover, compa nies could furnish its shareholders, especially shareholders living abroad, with the opportunity to watch shareholder meetings by means of modern technologies.	No	So far, there has not been any objective need and possibilities to execute the recommen dation of this Clause. In the future, the issue on provision of such possibility will be discussed in the Company, by taking into account the neces sary financial resources, existing legal regulation as well as objective distribution of the sharehol ders of the Company and their wishes.
Principle VII: The avoidance of conflicts of interest and their disclosure The corporate governance framework should encourage members of the corporate bodies to avoid conflicts of interest and assure transparent and
effective mechanism of disclosure of conflicts of interest regarding members of the corporate bodies. 7.1. Any member of the company's supervisory and management body should avoid a situation, in which his/her personal interests are in conflict or may be in conflict with the company's interests. In case such a situation did occur, a member of the company's supervisory and management body should, within reasonable time, inform other members of the same collegial body or the com pany's body that has elected him/her, or to the company's shareholders about a situation of a conflict of interest, indicate the nature of the conflict and value, where possible.	yes	The members of the Board avoid situations where their personal interest could conflict with the interest of Company. The members of The Company Board abstain from voting or refuse to vote when the matter is related to the person.
7.2. Any member of the company's supervisory and management body may not mix the company's assets, the use of which has not been mutually agreed upon, with his/her personal assets or use them or the information which he/she learns by virtue of his/her position as a member of a corporate body for his/her per sonal benefit or for the benefit of any third person without a prior agreement of the general shareholders' meeting or any other corporate body authorized by the meeting.	Yes	The members of the Board act for the interests of the Company and their own competence as well as personal traits allow to claim that they conduct so that the conflicts of interest would not arise and they did not occur in their practi ce, so far.
7.3. Any member of the company's supervisory and management body may con clude a transaction with the company, a member of a corporate body of which he/she is. Such a transaction (except insignificant ones due to their low value or concluded when carrying out routine operations in the company under usual conditions) must be immediately reported in writing or orally, by recording this in the minutes of the meeting, to other members of the same corporate body or to the corporate body that has elected him/her or to the company's shareholders. Transactions specified in this recommendation are also subject to recommen dation 4.5.	Yes	The members of the Board of the Company have not concluded the transactions with the Company, including those of low value or con cluded under non-standard conditions.
7.4. Any member of the company's supervisory and management body should abstain from voting when decisions concerning transactions or other issues of personal or business interest are voted on.	Yes	The Law on Companies of the Republic of Lithu ania requires that the member of the Board has no right to vote, when the session of the Board deals with the question related with its activity in the Board or that of its liability. The members of the Board of the Company know this provision and apply it broader than required by the Law, i.e. abstain from voting or refuse voting, when it is related to his person and the Company, or another conflict of interests may arise.

Principles / Recommendations	Yes / No / Not applicable	Commentary
Principle VIII : Company's remuneration policy
Remuneration policy and procedure for approval, revision and disclosure of directors' remuneration established in the company should prevent potential conflicts of interest and abuse in determining remuneration of directors, in addition it should ensure publicity and transparency both of company's remuneration policy and remuneration of directors.
8.1. A company should make a public statement of the company's remuneration policy (hereinafter the remuneration statement) which should be clear and easily understandable. This remuneration statement should be published as a part of the company's annual statement as well as posted on the company's website.	No	The Company has not prepared the salary policy report; therefore, it cannot execute this recommendation. Brief information about the past period, payments of the Company to the members of members of the issuer's managing bodies; Senior Management is announced in Company's interim and annual information prepared according to the order established by the legal acts. To the opinion of the Company and the Board of the Company, according to the competitive
		environment and economic conditions of activi ties in the Lithuanian market and other markets where the Company operates, such information is off-the-record (confidential); currently, to be considered as the trade secret of the Company. The issue on the need for and preparation of the salary policy report recommended by the Code is expected to start dealing with in the future, with the change of market conditions.
8.2. Remuneration statement should mainly focus on directors' remuneration policy for the following year and, if appropriate, the subsequent years. The sta tement should contain a summary of the implementation of the remuneration policy in the previous financial year. Special attention should be given to any si gnificant changes in company's remuneration policy as compared to the previous financial year.	Not applicable	The Company has no salary policy report due to the reasons specified in Clause 8.1.
8.3. Remuneration statement should leastwise include the following information:	Not	The Company has no salary policy report due
1) Explanation of the relative importance of the variable and non-variable com ponents of directors' remuneration;	applicable	to the reasons specified in Clause 8.1.
2) Sufficient information on performance criteria that entitles directors to share options, shares or variable components of remuneration;
3) An explanation how the choice of performance criteria contributes to the long-term interests of the company;
4) An explanation of the methods, applied in order to determine whether per formance criteria have been fulfilled;
5) Sufficient information on deferment periods with regard to variable compo nents of remuneration;
6) Sufficient information on the linkage between the remuneration and perfor mance;
7) The main parameters and rationale for any annual bonus scheme and any ot her non-cash benefits;
8) Sufficient information on the policy regarding termination payments;
9) Sufficient information with regard to vesting periods for share-based remune ration, as referred to in point 8.13 of this Code;
10) Sufficient information on the policy regarding retention of shares after ves ting, as referred to in point 8.15 of this Code;
11) Sufficient information on the composition of peer groups of companies the remuneration policy of which has been examined in relation to the establishment of the remuneration policy of the company concerned:
12) A description of the main characteristics of supplementary pension or early retirement schemes for directors;
13) Remuneration statement should not include commercially sensitive information.
8.4. Remuneration statement should also summarize and explain company's po licy regarding the terms of the contracts executed with executive directors and members of the management bodies. It should include, inter alia, information on the duration of contracts with executive directors and members of the manage ment bodies, the applicable notice periods and details of provisions for termina tion payments linked to early termination under contracts for executive directors and members of the management bodies.	Not applicable	The Company has no salary policy report due to the reasons specified in Clause 8.1.

Principles / Recommendations	Yes / No / Not applicable	Commentary
8.5. Remuneration statement should also contain detailed information on the entire amount of remuneration, inclusive of other benefits, that was paid to indi vidual directors over the relevant financial year. This document should list at least the information set out in items 8.5.1 to 8.5.4 for each person who has served as a director of the company at any time during the relevant financial year.	Not applicable	The Company has no salary policy report due to the reasons specified in Clause 8.1.
8.5.1. The following remuneration and/or emoluments-related information should be disclosed:
1) The total amount of remuneration paid or due to the director for services per formed during the relevant financial year, inclusive of, where relevant, attendance fees fixed by the annual general shareholders meeting;
2) The remuneration and advantages received from any undertaking belonging to the same group;
3) The remuneration paid in the form of profit sharing and/or bonus payments and the reasons why such bonus payments and/or profit sharing were granted;
4) If permissible by the law, any significant additional remuneration paid to direc tors for special services outside the scope of the usual functions of a director;
5) Compensation receivable or paid to each former executive director or mem ber of the management body as a result of his resignation from the office during the previous financial year;
6) Total estimated value of non-cash benefits considered as remuneration, other than the items covered in the above points.
8.5.2. As regards shares and/or rights to acquire share options and/or all other share-incentive schemes, the following information should be disclosed:
1) The number of share options offered or shares granted by the company during the relevant financial year and their conditions of application;
2) The number of shares options exercised during the relevant financial year and, for each of them, the number of shares involved and the exercise rice or the value of the interest in the share incentive scheme at the end of the financial year;
3) The number of share options unexercised at the end of the financial year; their exercise price, the exercise date and the main conditions for the exercise of the rights;
4) All changes in the terms and conditions of existing share options occurring during the financial year.
8.5.3. The following supplementary pension schemes-related information should be disclosed:
1) When the pension scheme is a defined-benefit scheme, changes in the direc tors' accrued benefits under that scheme during the relevant financial year;
2) When the pension scheme is defined-contribution scheme, detailed informa tion on contributions paid or payable by the company in respect of that director during the relevant financial year.
8.5.4. The statement should also state amounts that the company or any subsidia ry company or entity included in the consolidated annual financial report of he company has paid to each person who has served as a director in the company at any time during the relevant financial year in the form of loans, advance payments or guarantees, including the amount outstanding and the interest rate.
8.6. Where the remuneration policy includes variable components of remune ration, companies should set limits on the variable component(s). The non-va riable component of remuneration should be sufficient to allow the company to withhold variable components of remuneration when performance criteria are not met.	Not applicable	The Company has no salary policy report due to the reasons specified in Clause 8.1.
8.7. Award of variable components of remuneration should be subject to prede termined and measurable performance criteria.	Not applicable	The Company has no salary policy report due to the reasons specified in Clause 8.1.
8.8. Where a variable component of remuneration is awarded, a major part of the variable component should be deferred for a minimum period of time. The part of the variable component subject to deferment should be determined in relation to the relative weight of the variable component compared to the non variable component of remuneration.	Not applicable	The Company has no salary policy report due to the reasons specified in Clause 8.1.
8.9. Contractual arrangements with executive or managing directors should include provisions that permit the company to reclaim variable components of remuneration that were awarded on the basis of data which subsequently proved to be manifestly misstated.	Not applicable	The Company has no salary policy report due to the reasons specified in Clause 8.1.
8.10. Termination payments should not exceed a fixed amount or fixed number of years of annual remuneration, which should, in general, not be higher than two years of the non-variable component of remuneration or the equivalent thereof.	Not applicable	The Company has no salary policy report due to the reasons specified in Clause 8.1.
8.11. Termination payments should not be paid if the termination is due to ina dequate performance.	Not applicable	The Company has no salary policy report due to the reasons specified in Clause 8.1.

Principles / Recommendations	Yes / No / Not applicable	Commentary
8.12. The information on preparatory and decision-making processes, during which a policy of remuneration of directors is being established, should also be disclosed. Information should include data, if applicable, on authorities and composition of the remuneration committee, names and surnames of external consultants whose services have been used in determination of the remuneration policy as well as the role of shareholders' annual general meeting.	Not applicable	The Company has no salary policy report due to the reasons specified in Clause 8.1.
8.13. Shares should not vest for at least three years after their award.	Not applicable	The Company has no salary policy report due to the reasons specified in Clause 8.1.
8.14. Share options or any other right to acquire shares or to be remunerated on the basis of share price movements should not be exercisable for at least three years after their award. Vesting of shares and the right to exercise share options or any other right to acquire shares or to be remunerated on the basis of share price movements, should be subject to predetermined and measurable perfor mance criteria.	Not applicable	The Company has no salary policy report due to the reasons specified in Clause 8.1.
8.15. After vesting, directors should retain a number of shares, until the end of their mandate, subject to the need to finance any costs related to acquisition of the shares. The number of shares to be retained should be fixed, for example, twice the value of total annual remuneration (the non-variable plus the variable components).	Not applicable	The Company has no salary policy report due to the reasons specified in Clause 8.1.
8.16. Remuneration of non-executive or supervisory directors should not include share options.	Not applicable	The Company has no salary policy report due to the reasons specified in Clause 8.1.
8.17. Shareholders, in particular institutional shareholders, should be encouraged to attend general meetings where appropriate and make considered use of their votes regarding directors' remuneration.	Not applicable	The Company has no salary policy report due to the reasons specified in Clause 8.1.
8.18. Without prejudice to the role and organization of the relevant bodies res ponsible for setting directors' remunerations, the remuneration policy or any other significant change in remuneration policy should be included into the agen da of the shareholders' annual general meeting. Remuneration statement should be put for voting in shareholders' annual general meeting. The vote may be either mandatory or advisory.	Not applicable	The Company has no salary policy report due to the reasons specified in Clause 8.1.
8.19. Schemes anticipating remuneration of directors in shares, share options or any other right to purchase shares or be remunerated on the basis of share price movements should be subject to the prior approval of shareholders' annual general meeting by way of a resolution prior to their adoption. The approval of scheme should be related with the scheme itself and not to the grant of such sha re-based benefits under that scheme to individual directors. All significant chan ges in scheme provisions should also be subject to shareholders' approval prior to their adoption; the approval decision should be made in shareholders' annual general meeting. In such case shareholders should be notified on all terms of sug gested changes and get an explanation on the impact of the suggested changes.	Not applicable	The Company has no salary policy report due to the reasons specified in Clause 8.1.
8.20. The following issues should be subject to approval by the shareholders' annual general meeting: 1) Grant of share-based schemes, including share options, to directors; 2) Determination of maximum number of shares and main conditions of share granting; 3) The term within which options can be exercised; 4) The conditions for any subsequent change in the exercise of the options, if permissible by law; 5) All other long-term incentive schemes for which directors are eligible and which are not available to other employees of the company under similar terms. Annual general meeting should also set the deadline within which the body res ponsible for remuneration of directors may award compensations listed in this article to individual directors.	Not applicable	The Company has no salary policy report due to the reasons specified in Clause 8.1.
8.21. Should national law or company's Articles of Association allow, any dis counted option arrangement under which any rights are granted to subscribe to shares at a price lower than the market value of the share prevailing on the day of the price determination, or the average of the market values over a number of days preceding the date when the exercise price is determined, should also be subject to the shareholders' approval.	Not applicable	The Company has no salary policy report due to the reasons specified in Clause 8.1.
8.22. Provisions of Articles 8.19 and 8.20 should not be applicable to schemes allowing for participation under similar conditions to company's employees or employees of any subsidiary company whose employees are eligible to participate in the scheme and which has been approved in the shareholders' annual general meeting.	Not applicable	The Company has no salary policy report due to the reasons specified in Clause 8.1.

Principles / Recommendations	Yes / No / Not applicable	Commentary
8.23. Prior to the annual general meeting that is intended to consider decision stipulated in Article 8.19, the shareholders must be provided an opportunity to familiarize with draft resolution and project-related notice (the documents should be posted on the company's website). The notice should contain the full text of the share-based remuneration schemes or a description of their key terms, as well as full names of the participants in the schemes. Notice should also specify the relationship of the schemes and the overall	Not applicable	The Company has no salary policy report due to the reasons specified in Clause 8.1.
remuneration policy of the directors. Draft resolution must have a clear referen ce to the scheme itself or to the summary of its key terms. Shareholders must also be presented with information on how the company intends to provide for the shares required to meet its obligations under incentive schemes. It should be clearly stated whether the company intends to buy shares in the market, hold the shares in reserve or issue new ones. There should also be a summary on sche me-related expenses the company will suffer due to the anticipated application of the scheme. All information given in this article must be posted on the company's website.
Principle IX: The role of stakeholders in corporate governance
The corporate governance framework should recognize the rights of stakeholders as established by law and encourage active co-operation between companies and stakeholders in creating the company value, jobs and financial sustainability. For the purposes of this Principle, the concept "stakehol ders" includes investors, employees, creditors, suppliers, clients, local community and other persons having certain interest in the company concer ned.
9.1. The corporate governance framework should assure that the rights of stake holders that are protected by law are respected.	Yes	The Company performs its activities and is ma naged, following the legal acts of the Republic of Lithuania, legal normative acts of municipal institutions, according to the reasonable and lawful interests of the community and the third persons, which do not contradict with and do not cause the threat to violate the reasonable and lawful interests of the Company.
9.2. The corporate governance framework should create conditions for the stakeholders to participate in corporate governance in the manner prescribed by law. Examples of mechanisms of stakeholder participation in corporate go vernance include: employee participation in adoption of certain key decisions for the company; consulting the employees on corporate governance and other important issues; employee participation in the company's share capital; creditor involvement in governance in the context of the company's insolvency, etc.	Yes	The employees of the Company have the pos sibility to take part in purchasing the shares in the share capital of the Company through NAS DAQ OMX Vilnius Stock Exchange.
9.3. Where stakeholders participate in the corporate governance process, they should have access to relevant information.	Yes	All persons concerned or the third persons may become familiar with the announceable public information about the activities of the Company publicly at the web site of NASDAQ OMX Vil nius Stock Exchange, web site of the Company, to apply in oral or written form to the public relations agent of the Company or the manage ment of the Company.
Principle X: Information disclosure and transparency The corporate governance framework should ensure that timely and accurate disclosure is made on all material information regarding the company, including the financial situation, performance and governance of the company.
10.1. The company should disclose information on: • The financial and operating results of the company; • Company objectives; • Persons holding by the right of ownership or in control of a block of shares in the company; • Members of the company's supervisory and management bodies, chief executi ve officer of the company and their remuneration; • Material foreseeable risk factors; • Transactions between the company and connected persons, as well as tran sactions concluded outside the course of the company's regular operations; • Material issues regarding employees and other stakeholders; • Governance structures and strategy. This list should be deemed as a minimum recommendation, while the companies are encouraged not to limit themselves to disclosure of the information specified in this list.	Yes	The information about the Company specified in this Clause is announced through the infor mation system of NASDAQ OMX Vilnius Stock Exchange; the reports (periodical information) of the Company, prepared according to the order established by the legal acts of the Re public of Lithuania; also, at the web site of the Company. By presenting the information specified in this Clause, the Company presents the consolidated information of both the Company and the who le group of companies.
10.2. It is recommended to the company, which is the parent of other compa nies, that consolidated results of the whole group to which the company belongs should be disclosed when information specified in item 1 of Recommendation 10.1 is under disclosure.	Yes	This recommendation is implemented as it is specified in Clause 10.1.

Principles / Recommendations	Yes / No / Not applicable	Commentary
10.3. It is recommended that information on the professional background, quali fications of the members of supervisory and management bodies, chief executive officer of the company should be disclosed as well as potential conflicts of inte rest that may have an effect on their decisions when information specified in item 4 of Recommendation 10.1 about the members of the company's supervisory and management bodies is under disclosure. It is also recommended that information about the amount of remuneration received from the company and other income should be disclosed with regard to members of the company's supervisory and management bodies and chief executive officer as per Principle VIII.	Yes	This recommendation is implemented as it is specified in Clause 10.1.
10.4. It is recommended that information about the links between the company and its stakeholders, including employees, creditors, suppliers, local community, as well as the company's policy with regard to human resources, employee par ticipation schemes in the company's share capital, etc. should be disclosed when information specified in item 7 of Recommendation 10.1 is under disclosure.	Yes	This recommendation is implemented as it is specified in Clause 10.1.
10.5. Information should be disclosed in such a way that neither shareholders nor investors are discriminated with regard to the manner or scope of access to information. Information should be disclosed to all simultaneously. It is recom mended that notices about material events should be announced before or after a trading session on NASDAQ OMX Vilnius, so that all the company's sharehol ders and investors should have equal access to the information and make infor med investing decisions.	yes	The information specified in this Clause is announced through the information system of NASDAQ OMX Vilnius Stock Exchange and in Company's website in Lithuanian and English. All essential events and information to investors are presented not during the trade session, except few cases, when it was necessary to perform already at the beginning of the trade.
10.6. Channels for disseminating information should provide for fair, timely and cost-efficient or in cases provided by the legal acts free of charge access to re levant information by users. It is recommended that information technologies should be employed for wider dissemination of information, for instance, by placing the information on the company's website. It is recommended that in formation should be published and placed on the company's website not only in Lithuanian, but also in English, and, whenever possible and necessary, in other languages as well.	Yes	The Company ensures the impartial, timely and inexpensive access to the information, by an nouncing it in Lithuanian and English at its web site as well as through the information system of NASDAQ OMX Vilnius Stock Exchange.
10.7. It is recommended that the company's annual reports and other periodical accounts prepared by the company should be placed on the company's website. It is recommended that the company should announce information about materi al events and changes in the price of the company's shares on the Stock Exchange on the company's website too.	Yes	This recommendation is implemented with a full scope.
Principle XI: The selection of the company's auditor The mechanism of the selection of the company's auditor should ensure independence of the firm of auditor's conclusion and opinion.
11.1. An annual audit of the company's financial reports and interim reports should be conducted by an independent firm of auditors in order to provide an external and objective opinion on the company's financial statements.	yes	This recommendation is implemented in part, the independent audit company assesses the annual report as well as annual financial state ments. In the meantime, the legal acts of the Republic of Lithuania do not require auditing the interim financial statements; also, it would cause the additional costs as well as time costs.
11.2. It is recommended that the company's supervisory board and, where it is not set up, the company's board should propose a candidate firm of auditors to the general shareholders' meeting.	Yes	This recommendation is implemented with a full scope.
11.3. It is recommended that the company should disclose to its shareholders the level of fees paid to the firm of auditors for non-audit services rendered to the company. This information should be also known to the company's supervisory board and, where it is not formed, the company's board upon their consideration which firm of auditors to propose for the general shareholders' meeting.	Yes	The audit company provided the Company with the consultations on tax issues in the year 2012. As it is required the information was disclosed and for shareholders and for the Company's Board.