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City Service SE Interim / Quarterly Report 2009
5564_rns_2010-02-26_5f1be7f7-65ed-4f21-acdc-80e0e6210fdd.pdf
Interim / Quarterly Report
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February 2010
CITYservice
City Service AB
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited)
Prepared in accordance with the Rules of preparation and submission of periodic and additional information of the Lithuanian Securities Commission
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited), thousand Litas
Page 2
Confirmation of responsible persons to the shareholders of the company and Lithuanian securities commission
Following the Law on Securities of Republic of Lithuania and rules of preparation and submission of periodic and additional information of Lithuanian Securities Commission hereby confirm that City Service AB Interim Consolidated and parents company's Financial Statements for the twelve months of 2009, prepared in accordance with International Financial Reporting Standards as adopted by the European Union, give a true and fair view of activity results, assets, liabilities and financial position of City Service AB and the Group as well. To our knowledge, there are no any concealed essential facts herein which may influence the value of the shares.
General Manager
Chief financial officer and head of administration
Žilvinas Lapinskas
Jonas Janukėnas
AB City Service
Company code 123905633,
Adress: Komėtiacijos Ave. 7, Vilnius, Lithuania
www.cityservice.lt
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited), thousand Litas
Page 3
Balance sheet
| Group | Company | |||
|---|---|---|---|---|
| As of 31 December 2009 | As of 31 December 2008 | As of 31 December 2009 | As of 31 December 2008 | |
| Assets | ||||
| Non-current assets | ||||
| Goodwill | 13,772 | 16,711 | - | - |
| Other intangible assets | 76,548 | 5,743 | 37 | 77 |
| Property, plant and equipment | 27,553 | 16,974 | 3,042 | 2,682 |
| Investment property | 609 | 658 | - | - |
| Investments into subsidiaries | - | - | 46,163 | 30,177 |
| Investments into associates | 311 | 311 | 220 | 220 |
| Non-current financial assets receivables and prepayments | 578 | 4,760 | 208 | 2,172 |
| Deferred income tax asset | 4,551 | 2,325 | 395 | 324 |
| Total non-current assets | 123,922 | 47,482 | 50,065 | 35,652 |
| Current assets | ||||
| Inventories | 2,974 | 6,830 | 329 | 1,103 |
| Prepayments | 3,147 | 6,532 | 44 | 4,514 |
| Prepayment to related parties | - | 102 | 102 | 102 |
| Trade receivables | 77,880 | 57,896 | 33,522 | 36,244 |
| Receivables from related parties(including loans granted) | 5,028 | 7,645 | 53,651 | 34,408 |
| Other receivables and current assets | 10,184 | 6,750 | 120 | 2,233 |
| Cash and cash equivalents | 5,186 | 5,386 | 371 | 613 |
| Total current assets | 104,399 | 91,141 | 88,139 | 79,217 |
| Total assets | 228,321 | 138,623 | 138,204 | 114,869 |
AB City Service
Company code 123905633,
Adress: Koneitucijos Ave. 7, Vilnius, Lithuania
www.cityservice.lt
[email protected]
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited), thousand Litas
Page 4
Balance sheet (cont'd)
| Group | Company | |||
|---|---|---|---|---|
| As of 31 December 2009 | As of 31 December 2008 | As of 31 December 2009 | As of 31 December 2008 | |
| Equity and liabilities | ||||
| Equity attributable to equity holders of the Company | ||||
| Share capital | 19,110 | 19,110 | 19,110 | 19,110 |
| Reserves and share premium | 25,367 | 25,042 | 25,367 | 25,031 |
| Foreign currency translation | (1,184) | (644) | - | - |
| Retained earnings (deficit) | 27,405 | 15,483 | 26,759 | 15,547 |
| 70,698 | 58,991 | 71,236 | 59,688 | |
| Minority interests | 18 | 266 | - | - |
| Total equity | 70,716 | 59,257 | 71,236 | 59,688 |
| Liabilities | ||||
| Non-current liabilities | ||||
| Non-current borrowings and financial lease obligations | 21,878 | 7,772 | 21,780 | 8,872 |
| Deferred income tax liabilities | 16,242 | 2,999 | - | - |
| Non-current payables | 656 | 112 | 226 | - |
| Total non-current liabilities | 38,776 | 10,883 | 22,006 | 8,872 |
| Current liabilities | ||||
| Current portion of non-current borrowings and financial lease obligations, short term loans | 13,905 | 4,934 | 7,381 | 4,738 |
| Trade payables | 66,194 | 39,377 | 18,482 | 22,199 |
| Payables to related parties | 8,759 | 5,806 | 11,966 | 9,880 |
| Advances received | 12,223 | 10,433 | 3,925 | 5,990 |
| Other current liabilities | 17,748 | 7,933 | 3,208 | 3,502 |
| Total current liabilities | 118,829 | 68,483 | 44,962 | 46,309 |
| Total equity and liabilities | 228,321 | 138,623 | 138,204 | 114,869 |
AB City Service
Company code 123905633,
Adress: Konestucijos Ave. 7, Vilnius, Lithuania
www.cityservice.lt
[email protected]
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited), thousand Litas
Page 5
Income statement (for the period from 1 January to 31 December)
| Group | Company | |||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Sales | 375,132 | 263,850 | 125,919 | 140,937 |
| Cost of sales | (310,224) | (217,299) | (101,434) | (117,693) |
| Gross profit (loss) | 64,908 | 46,551 | 24,485 | 23,244 |
| General and administrative expenses | (45,506) | (34,276) | (14,470) | (15,458) |
| Other operating income (expenses) | 1,203 | 165 | 81 | 205 |
| Profit (loss) from operations | 20,605 | 12,440 | 10,096 | 7,991 |
| Income from financial and investment activities, net | (3,147) | (1,406) | 5,644 | 1,865 |
| Profit (loss) before tax | 17,458 | 11,034 | 15,740 | 9,856 |
| Income tax | (3,359) | (2,348) | (2,091) | (1,236) |
| Net profit (loss) | 14,099 | 8,686 | 13,649 | 8,620 |
| Attributable to: | ||||
| The shareholders of the Company | 14,091 | 8,660 | ||
| Minority interests | 8 | 26 | ||
| 14,099 | 8,686 |
All City Service
Company code 123905633,
Adress: Konstitucijos Ave. 7, Vilnius, Lithuania
www.cityservice.lt
[email protected]
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited), thousand Litas
Page 6
Income statement (for the period from 1 October to 31 December)
| Group | Company | |||
|---|---|---|---|---|
| 2009 4th Q | 2008 4th Q | 2009 4th Q | 2008 4th Q | |
| Sales | 121,695 | 89,677 | 40,921 | 52,240 |
| Cost of sales | (103,113) | (73,940) | (34,330) | (42,324) |
| Gross profit (loss) | 18,582 | 15,737 | 6,591 | 9,916 |
| General and administrative expenses | (14,761) | (12,497) | (3,953) | (4,286) |
| Other operating income (expenses) | 2,123 | (73) | (23) | (256) |
| Profit (loss) from operations | 5,944 | 3,167 | 2,615 | 5,374 |
| Income from financial and investment activities, net | 105 | (1,361) | 234 | 246 |
| Profit (loss) before tax | 6,049 | 1,806 | 2,849 | 5,620 |
| Income tax | (1,042) | (689) | (570) | (727) |
| Net profit (loss) | 5,007 | 1,117 | 2,279 | 4,893 |
| Attributable to: | ||||
| The shareholders of the Company | 5,005 | 1,111 | ||
| Minority interests | 2 | 6 | ||
| 5,007 | 1,117 |
All City Service
Company code 123905633,
Adress: Kometitacijos Ave. 7, Vilnius, Lithuania
www.cityservice.lt
[email protected]
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited), thousand Litas
Page 7
Statement of changes in equity
| Group | Share capital | Share premium | Legal reserve | Foreign currency translation | Retained earnings (deficit) | Total | Minority interest | Total |
|---|---|---|---|---|---|---|---|---|
| Balance as of 31 December 2007 | 19,110 | 23,456 | 1,061 | (54) | 10,406 | 53,979 | 240 | 54,219 |
| Net profit for the year | - | - | - | - | 8,660 | 8,660 | 26 | 8,686 |
| Income (expenses) for the year recognised directly in equity | - | - | - | (590) | - | (590) | - | (590) |
| Total income and (expense) for the year | - | - | - | (590) | 8,660 | 8,070 | 26 | 8,096 |
| Transfer to legal reserve | - | - | 525 | - | (525) | - | - | - |
| Dividends declared | - | - | - | - | (3,058) | (3,058) | - | (3,058) |
| Balance as of 31 December 2008 | 19,110 | 23,456 | 1,586 | (644) | 15,483 | 58,991 | 266 | 59,257 |
| Net profit for the year | - | - | - | - | 14,091 | 14,091 | 8 | 14,099 |
| Income (expenses) for the year recognised directly in equity | - | - | - | (540) | - | (540) | - | (540) |
| Total income and (expense) for the year | - | - | - | (540) | 14,091 | 13,551 | 8 | 13,559 |
| Transfer to legal reserve | - | - | 325 | - | (325) | - | - | - |
| Dividends declared | - | - | - | - | (2,100) | (2,100) | - | (2,100) |
| Acquisition of minority | - | - | - | - | 256 | 256 | (256) | - |
| Balance as of 31 December 2009 | 19,110 | 23,456 | 1,911 | (1,184) | 27,405 | 70,698 | 18 | 70,716 |
AB City Service
Company code 123905633,
Adress: Kométnicijos Ave. 7, Vilnius, Lithuania
www.cityservice.lt
[email protected]
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited), thousand Litas
Page 8
Cash flow statement
| Group | Company | |||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| I. Cash flows from (to) operating activities | ||||
| I.1. Net profit | 14,099 | 8,686 | 13,649 | 8,620 |
| Adjustments for non-cash items: | ||||
| I.2. Income tax expenses | 3,359 | 2,348 | 2,091 | 1,236 |
| I.3. Depreciation and amortisation | 4,845 | 2,024 | 1,132 | 960 |
| I.4. Impairment and discounting of accounts receivable | 6,678 | 3,091 | - | - |
| I.5. Financial activity, net | 2,327 | (367) | (6,013) | (1,874) |
| 31,308 | 15,782 | 10,859 | 8,942 | |
| Changes in working capital: | ||||
| I.6. Decrease in inventories | 4,583 | 1,392 | 773 | 115 |
| I.7. Decrease (increase) in receivables and other current assets | (25,153) | (19,623) | (24,328) | (2,921) |
| I.8. Decrease in prepayments | 4,126 | (1,061) | 4,306 | (172) |
| I.9. (Decrease) in trade payables and payables to related parties | 7,116 | 4,416 | 24,144 | 9,960 |
| I.10. Income tax (paid) | (7,703) | (3,379) | (2,190) | (1,205) |
| I.11. (Decrease) in advances received and other current liabilities | 2,154 | (9,912) | 3,557 | (9,832) |
| Net cash flows from (to) operating activities | 16,431 | (12,385) | 17,121 | 4,887 |
| II. Cash flows (to) investing activities | ||||
| II.1. (Acquisition) of non-current assets (except investments) | (3,248) | (1,444) | (1,485) | (767) |
| II.2. Proceeds from sale of non-current assets (except investments) | - | 1,647 | 34 | 49 |
| II.3. (Acquisition) of investments in subsidiaries and associates (net of cash acquired in the Group) | (16,534) | (10,400) | (11,068) | (12,368) |
| II.4. (Acquisition) decrease in other financial assets | - | (2,000) | - | (2,000) |
| II.5. Dividend received | - | - | 5,225 | 840 |
| II.6. Interest received | 135 | 420 | 135 | 163 |
| II.7. Loans granted | - | - | (24,230) | (15,719) |
| Net cash flows (to) investing activities | (19,647) | (11,777) | (31,389) | (29,802) |
| III. Cash flows (to) from financing activities | ||||
| III.1. Dividends (paid) | (637) | (765) | (639) | (765) |
| III.2. Proceeds from IPO, net of issuance cost | - | - | - | - |
| III.3. (Repayment) of loans and financial lease liabilities | (19,031) | (991) | (5,082) | (685) |
| III.4. Proceeds from loans | 25,496 | 11,447 | 20,606 | 12,759 |
| III.5. Interest (paid) | (2,812) | (225) | (859) | (332) |
| Net cash flows from (to) financial activities | 3,016 | 9,466 | 14,026 | 10,977 |
| IV. Net increase (decrease) increase in cash and cash equivalents | (200) | (14,696) | (242) | (13,938) |
| V. Cash and cash equivalents at the beginning of the period | 5,386 | 20,082 | 613 | 14,551 |
| VI. Cash and cash equivalents at the end of the period | 5,186 | 5,386 | 371 | 613 |
All City Service
Company code 123905633,
Adress: Kometitucijos Ave. 7, Vilnius, Lithuania
www.cityservice.lt
[email protected]
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited), thousand Litas
Page 9
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.
The Company together with the controlled subsidiaries is the leader in public utilities and facility management market in the Baltic States. The Company and its subsidiaries provide the facilities management services in the following cities and their regions: in Lithuania – in the cities and towns such as Vilnius, Kaunas, Klaipeda, Siauliai, Alytus, Utena, Marijampole, Palanga, Šilutė, Pagėgiai and regions of these cities and towns; in Latvia – in the city of Riga and other regions; in the Russian Federation – in the city of Saint Petersburg and in Leningrad district. In Ukraine, in the city of Kiev, the subsidiary still had not started to render the facilities management services due to uncertainty of legal and economical conditions of building administration.
1.1. Activities
The Company and its subsidiaries provide the following services: (i) administration, (ii) maintenance of engineering systems (heat and hot water supply, water supply and sewerage, ventilation and cooling, maintenance of power supply systems, etc.); (iii) management of energy resources; (iv) services in the field of technical audits of buildings, consultations on the issues of technical service and usage of energy resources; (iv) management of various subcontractors (interior and exterior cleaning, security, repair works and renovation, maintenance of gas supply systems, elevators, etc.); (vi) management of the projects on heating facility renovation; (vii) services on healthcare and security for employees; (viii) management of waste and recycling.
1.2. Share capital of the Company
The share capital of the Company was LTL 19,110 thousand as of 31 December 2009. It is divided into 19,110 thousand ordinary shares with the nominal value of LTL 1 each. All shares of the Company are paid up. The Company does not have any other classes of shares than ordinary shares mentioned above, there are no any restrictions of share rights or special control rights for the shareholders settled in the 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.
On 31 December 2009 all 19,110,000 ordinary shares of the Company are included into Official List of Vilnius Stock Exchange (ISIN Code of the shares is LT0000127375). Trading Code of the shares on Vilnius Stock Exchange is CTS1L.
1.3. Shareholders of the Company
On 31 December 2009 the total number of shareholders of the Company was 1419.
On 31 December 2009 directly or together with the associated persons more than 5 percent of Company's share capital was owned by Rubicon group UAB (at the date of issue of this report named ICOR UAB), company code 300021944, address Konstitucijos av. 7, Vilnius, and below in the table listed individuals, who control the mentioned company as at 31 December 2009.
AB City Service
Company code 123905633,
Adress: Konstitucijos Ave. 7, Vilnius, Lithuania
www.cityservice.lt
[email protected]
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited), thousand Litas
Page 10
| Number of shares held | Owned percentage of the share capital and votes, % | |
|---|---|---|
| Rubicon group UAB (currently ICOR UAB) | 13,303,544 | 69.62% |
| Rubicon group UAB (currently ICOR UAB) shareholders: | ||
| Andrius Janukonis | 146,434 | 0.766% |
| Arūnas Mačiuitis | 146,432 | 0.766% |
| Rimantas Bukauskas | 115,403 | 0.603% |
| Gintautas Jaugielavičius | 146,432 | 0.766% |
| Linas Samuolis | 146,432 | 0.766% |
| Remigijus Lapinskas | 50,000 | 0.260% |
| Other private and institutional shareholders | 5,055,323 | 26.45% |
| Total | 19,110,000 | 100% |
1.4. City Service group
On 31 December 2009 the City Service AB group consisted of City Service AB and the following subsidiaries (hereinafter referred to as „the Group“):
| Company | Country | Share of the stock held by the Group as of 31 December 2009 | Share of the stock held by the Group as of 31 December 2008 | Main activities |
|---|---|---|---|---|
| UAB Žaidas | Lithuania | 99% | 99% | Administration of dwelling-houses |
| UAB Vingio valdos | Lithuania | 100% | 100% | Administration of dwelling-houses |
| UAB Buitis be rūpesčių | Lithuania | 100% | 100% | Administration of dwelling-houses |
| UAB Sostinės Naujienos | Lithuania | 100% | 100% | Dormant |
| UAB Ąžuolyno valda | Lithuania | 100% | 100% | Administration of dwelling-houses |
| UAB Marių valdos | Lithuania | 100% | 100% | Administration of dwelling-houses |
| UAB Pempininkų valdos | Lithuania | 100% | 87.3% | Administration of dwelling-houses |
| UAB Mūsų namų valdos | Lithuania | 100% | 100% | Administration of dwelling-houses |
| UAB Namų priežiūros centras | Lithuania | 100% | 100% | Administration of dwelling-houses |
| UAB Pašilaita | Lithuania | 100% | 100% | Administration of dwelling-houses |
| OAO Сити Сервис | Russia | 100% | 100% | Administration of dwelling-houses |
| OAO Сити Сервис | Russia | 100% | 100% | Administration of dwelling-houses |
| OAO Citeų PHY" (full name – OAO Citeциализированное ремонтно-наладочное управление) | Russia | 100% | 100% | Construction and engineering |
| SIA Riga City Service | Latvia | 100% | 100% | Administration of dwelling-houses |
| ZAT Kiev City Service | Ukraine | 100% | 100% | Administration of dwelling-houses |
| UAB Sinsta | Lithuania | 100% | 100% | Dormant |
| UAB Atidumas | Lithuania | 100% | 100% | Administration of dwelling-houses |
| UAB Ūkvedys | Lithuania | 100% | 100% | Administration of dwelling-houses |
| UAB Šiaulių būtų remonto tarnyba | Lithuania | 100% | 100% | Construction |
| UAB Įazdynų būstas | Lithuania | 100% | - | Administration of dwelling-houses |
| UAB Šilutės būtų ūkis | Lithuania | 99.84% | 19.82% | Administration of dwelling-houses |
| UAB Vilko peda | Lithuania | 100% | - | Administration of dwelling-houses |
| UAB Fervėja | Lithuania | 100% | - | Dormant |
| UAB Antakalnio ūkis | Lithuania | 100% | - | Administration of dwelling-houses |
| UAB Naujamiesčio būstas | Lithuania | 100% | - | Administration of dwelling-houses |
| UAB Karoliniškių būstas | Lithuania | 100% | - | Administration of dwelling-houses |
| UAB Viršuliškių būstas | Lithuania | 100% | - | Administration of dwelling-houses |
| OOO Жилкомсервис г. Ломоносов | Russia | 80% | - | Administration of dwelling-houses |
| OOO Жилкомсервис № 3 Фрунзенского района | Russia | 80% | - | Administration of dwelling-houses |
| OOO Жилкомсервис № 2 Невского района | Russia | 80% | - | Administration of dwelling-houses |
AB City Service
Company code 123905633,
Adress: Konežisrjujov Ave. 7, Vilnius, Lithuania
www.cityservice.lt
[email protected]
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited), thousand Litas
Page 11
As it is indicated in the Group subsidiaries table, the Group in the period of twelve months of 2009 has been enlarged by:
- Antakalnio ūkis UAB, company code 121449152; Karoliniškių būstas UAB, company code 121457971; Naujamiesčio būstas UAB, company code 121452091; Viršuliškių būstas UAB, company code 121446576. All the listed companies exercise administration and exploitation of dwelling-houses in Vilnius.
- Three companies in St. Petersburg, Russian Federation, that are under control of OAO Сити Сервис, which has 80% of the capital of the following companies: ООО Жилкомсервис г. Ломоносов, ООО Жилкомсервис № 3 Фрунзенского района и ООО Жилкомсервис № 2 Невского района.
1.5. Company's board
As of 31 December 2009, the Board of the Company comprised of the following persons:
| Name and surname | Position | Start of term | End of term |
|---|---|---|---|
| Andrius Janukonis | Board Chairman | February 23, 2009 | October 6, 2013 |
| Arūnas Mačiuitis | Board Member | October 6, 2005 | resigned on January 18, 2010 |
| Gintautas Jaugielavičius | Board Member | October 6, 2005 | October 6, 2013 |
| Darius Leščinskas | Board Member | February 23, 2009 | October 6, 2013 |
Andrius Janukonis
At present he is a member of the Board of UAB Litesko (since 1999), a member of the Board of UAB Vilniaus Energija (since 2002), as well as chairman of the council of the Lithuanian Heat Supplier's Association (since 2005) and a member of the Lithuanian Committee of the World Energy Council since 2005). He works as a consultant for Rubicon Group UAB (currently ICOR UAB) and is the chairman of the Board of the Company (since 2004). On 31 December 2009 Andrius Janukonis held the title to 146,432 shares of the Company and was also a shareholder of UAB Rubicon Group (currently ICOR UAB). Within the report term the Company did not pay any compensation or other amounts to this Board Member.
Gintautas Jaugielavičius
Currently he is a consultant and a member of the Board (since May 2004) of Rubicon group UAB, currently named ICOR UAB. As at 31 December 2009 Gintautas Jaugielavičius owned 146,432 shares of the Company and was a shareholder of Rubicon group UAB (currently ICOR UAB). Within the report term the Company did not pay any compensation or other amounts to this Board Member.
Arūnas Mačiuitis
On 31 December 2009 he was a consultant and a member of the Board (since May 2004) of Rubicon group UAB, currently named ICOR UAB. As at 31 December 2009 Arūnas Mačiuitis owned 146,432 shares of the Company and was a shareholder of Rubicon group UAB (currently ICOR UAB). Within the report term the Company did not pay any compensation or other amounts to this Board Member.
On 18 January 2010 Arūnas Mačiuitis resigned from the position of the Board Member of the Company, as he decided to stop his membership at the Board of the Company and a shareholder position.
Darius Leščinskas
Darius Leščinskas works as a consultant of Rubicon Group UAB (currently ICOR UAB) and is a member of the Board of the Company (since 2004). As at 31 December 2009 he did not own shares of the Company whereas was a shareholder of Rubicon Group UAB (currently ICOR UAB). Within the report term the Company did not pay any compensation or other amounts to this Board Member.
AB City Service
Company code 123905633,
Adress: Konstitucijos Ave. 7, Vilnius, Lithuania
www.cityservice.lt
[email protected]
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited), thousand Litas
Page 12
1.6. Company's management
As of 31 December, 2009 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 work |
|---|---|---|
| Žilvinas Lapinskas | General Manager | March 1999 |
| Vytautas Turonis | Executive Manager for Lithuania | May 2004 |
| Jonas Janukėnas | Financial and Administrative Director | May 2007 |
| Arūnas Kubilius | Foreign Markets Head | July 2002 |
They do not control any shares of the Company.
Žilvinas Lapinskas
Žilvinas Lapinskas, general manager of the Company, has managed the building sector of the Company since the very beginning (in the capacity of the sales manager since 1999, as the head of building sector management department since 2002, and as the general manager since 2004).
The current key task for the general manager is the management of the development of the Group both in Lithuania and abroad. He is also direct manager of the Group heating sector renovation projects.
The Company manager is the sole management body of the Company. The Company manager acts in compliance with the laws, other legislation, Company statutes, decisions of the general meeting and job description.
The Company manager shall be elected and removed from office by the Company board; the board shall further set the remuneration, approve job description, provide incentives and impose penalties. The Company manager shall take up the office upon election. The Company manager shall be a party to the employment contract, to be signed, on account of the company, by the chairman of the board or another person authorised by the board. In the event the body that has elected the manager passes a decision on his removal, the employment contract concluded shall be terminated.
Vytautas Turonis
Vytautas Turonis, managing director Lithuania, is in charge of the Group activity in Lithuania, he is also, together with the general manager, is in charge of the Group development in Lithuania. Vytautas Turonis has been with Company since 2004; his previous position was the director of the markets' development department.
Jonas Janukėnas
Jonas Janukėnas, director for finance and administration, is in charge of the management of the Group financial resources and the work of administrative staff. He has been with the Company since 2007.
Arūnas Kubilius
Arūnas Kubilius, manager for foreign markets at City Service AB and general manager at OAO CИТИ СЕРВИС (OAO City Service) is in charge of current activity of the Group entities operating in Russia. He has first started at the Company as the director of building sector management department (since 2002).
AB City Service
Company code 123905633,
Adress: Komtitucijos Ave. 7, Vilnius, Lithuania
www.cityservice.lt
[email protected]
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited), thousand Litas
Page 13
1.7. Activity and segment information
Information on main activity segments:
| Heating infrastructure renovation, extra works | 2009 | Heating infrastructure renovation, extra works | 2008 | |||
|---|---|---|---|---|---|---|
| Buildings' administration | Buildings' administration | |||||
| Resale of utility services | Administration services | Resale of utility services | Administration services | |||
| Income: Company | 32,620 | - | 93,299 | 56,064 | - | 84,873 |
| Income: Group | 32,620 | 101,361 | 241,151 | 56,064 | 42,858 | 164,928 |
Information on main geographical segments for the Group:
| 2009 | 2008 | |||
|---|---|---|---|---|
| Baltic states | CIS States | Baltic states | CIS States | |
| Revenue | 185,713 | 189,419 | 181,883 | 81,967 |
| Net profit (loss) | 8,569 | 5,530 | 9,977 | (1,291) |
Main activity indicators for the Group:
| 2009 | 2008 | Change (%) | |
|---|---|---|---|
| Area of multi-flat apartment buildings under administration (million square meters) | 15.6 | 8.9 | 75% |
| Area of public, commercial building and a typical properties under administration (million square meters) | 2.5 | 2.5 | 0% |
| Number of employees | 3,234 | 1,644 | 109% |
| Sales for the period | 375,132 | 263,850 | 42% |
| Pardavimai (pagrindinė veikla)* | 273,771 | 220,992 | 24% |
| Gross margin* | 23.7% | 21.1% | 12% |
| EBITDA margin* | 9.3% | 6.5% | 43% |
| EBIT margin* | 7.5% | 5.6% | 34% |
| Net margin* | 5.1% | 3.9% | 32% |
| Number of shares (thousand) | 19,110 | 19,110 | 0% |
| Return on equity | 21.7% | 15.3% | 42% |
| Return on assets | 7.7% | 6.7% | 15% |
| Financial Net Debt to equity** | 43% | 10% | N/A |
- Calculated by reducing sales for the resale of utility services;
** Interest bearing debt (net of cash balance) to Shareholders' equity.
2. Accounting policies
These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union.
AB City Service
Company code 123905633,
Adress: Konežiusijos Ave. 7, Vilnius, Lithuania
www.cityservice.lt
[email protected]
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited), thousand Litas
Page 14
3. Goodwill
| Group | |
|---|---|
| Cost: | |
| Balance as of 31 December 2007 | 11,976 |
| Additions | 5,025 |
| Balance as of 31 December 2008 | 17,001 |
| Additions | 55,145 |
| Balance as of 31 December 2009 | 72,146 |
| Impairment: | |
| Balance as of 31 December 2007 | 290 |
| Impairment for the year | - |
| Balance as of 31 December 2008 | 290 |
| Impairment for the year | 58,084 |
| Balance as of 31 December 2009 | 58,374 |
| Net book value as of 31 December 2009 | 13,772 |
| Net book value as of 31 December 2008 | 16,711 |
Acquisitions in 2009
During the twelve months of the year 2009 the Company has acquired 6 new subsidiaries in Lithuania and 6 buildings' administration companies in St. Petersburg. On 6 February 2009 UAB Fervéja was acquired, at the same time appending UAB Būsto investicijų valdymas, UAB Antakalnio ūkis, UAB Karoliniškių būstas, UAB Naujamiesčio būstas, UAB Lazdynų būstas.
Moreover, in the beginning of June 80% of the following companies in St. Petersburg was acquired: OOO Жилкомсервис г. Ломоносов, OOO Жилкомсервис № 3 Фрунзенского района, OOO Жилкомсервис № 2 Невского района, OOO Жилкомсервис № 2 Центрального района, OOO Жилкомсервис № 1 Красногвардейского района and OOO Жилкомсервис № 1 Кировского района. The latter three companies were sold on 28 of August, with a gain of LTL 280 thousand; and not included into consolidation, as were primarily purchased for sale.
The differences between the amounts paid and the fair values of assets acquired and liabilities and contingent liabilities assumed for the acquisitions of 2009 were as follows:
| | Fervéja UAB | OOO
Жилкомсервис
г. Ломоносов | OOO
Жилкомсервис №
3 Фрунзенского
района | OOO
Жилкомсервис
№ 2 Невского
района |
| --- | --- | --- | --- | --- |
| Date of acquisition | 1 January, 2009 | 1 June, 2009 | 1 June, 2009 | 1 June, 2009 |
| Fair value of acquired assets, liabilities and contingent liabilities attributable to the Group | (15,942) | (4,069) | (5,664) | (9,117) |
| Goodwill | 28,910 | 7,234 | 7,296 | 11,705 |
| Total purchase consideration | 12,968 | 3,165 | 1,632 | 2,588 |
| Cash acquired | 754 | 123 | 515 | 247 |
| Total purchase consideration, net of cash acquired | 12,214 | 3,042 | 1,117 | 2,341 |
All purchase consideration has been settled in cash.
AB City Service
Company code 123905633,
Adress: Konstitucijos Ave. 7, Vilnius, Lithuania
www.cityservice.lt
[email protected]
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited), thousand Litas
Page 15
4. Other intangible assets
Movement of other intangible assets in 2009 and 2008 is presented below:
| Group | Company | |
|---|---|---|
| Cost: | ||
| Balance as of 31 December 2007 | 1,428 | 663 |
| Additions arising from acquisitions of subsidiaries | 1 | - |
| Additions | 5,266 | 18 |
| Disposals | (2) | - |
| Exchange differences | (98) | - |
| Retirements | (317) | (307) |
| Balance as of 31 December 2008 | 6,278 | 374 |
| Additions arising from acquisitions of subsidiaries | 72,600 | - |
| Additions | 26 | 19 |
| Disposals | (8) | (1) |
| Balance as of 31 December 2009 | 78,896 | 392 |
| Accumulated amortisation: | ||
| Balance as of 31 December 2007 | 663 | 545 |
| Charge for the year | 224 | 59 |
| Disposals | (1) | - |
| Exchange differences | (34) | - |
| Retirements | (317) | (307) |
| Balance as of 31 December 2008 | 535 | 297 |
| Charge for the year | 1,684 | 59 |
| Disposals | (8) | (1) |
| Exchange differences | - | - |
| Retirements | 137 | - |
| Balance as of 31 December 2009 | 2,348 | 355 |
| Net book value as of 31 December 2009 | 76,548 | 37 |
| Net book value as of 31 December 2008 | 5,743 | 77 |
The Group and the Company has not capitalised any internally generated intangible assets. Amortisation expenses of intangible assets are included within general and administrative expenses in the income statement.
AB City Service
Company code 123905633,
Adress: Konstitucijos Ave. 7, Vilnius, Lithuania
www.cityservice.lt
[email protected]
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited), thousand Litas
Page 16
5. Investment property
Movement in the Group's investment property during 2009 and 2008 can be specified as follows:
| Buildings | |
|---|---|
| Cost: | |
| Balance as of 1 January 2008 | - |
| Reclassifications from property, plant and equipment | 759 |
| Balance as of 31 December 2008 | 759 |
| Reclassifications from property, plant and equipment | (29) |
| Balance as of 31 December 2009 | 730 |
| Accumulated depreciation: | |
| Balance as of 1 January 2008 | - |
| Reclassifications from property, plant and equipment | 83 |
| Charge for the year | 18 |
| Balance as of 31 December 2008 | 101 |
| Reclassifications from property, plant and equipment | - |
| Charge for the year | 20 |
| Balance as of 31 December 2009 | 121 |
| Net book value as of 31 December 2009 | 609 |
Investment property includes part of office building in Vilnius and premises in Alytus owned by UAB Pašilaita leased to other entities. The expenses related to investment property comprising of depreciation charge are included under the cost of sales caption in the income statement. The fair value of investment property as of 31 December 2009 is estimated by the management to approximate LTL 1 million.
As of 31 December 2009 investment property of the Group with a net book value of LTL 609 thousand was pledged to banks as a collateral for the loans.
AB City Service
Company code 123905633,
Adress: Komitiusijos Ave. 7, Vilnius, Lithuania
www.cityservice.lt
[email protected]
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited), thousand Litas
Page 17
6. Investments into subsidiaries
The Company's investments in subsidiaries stated at cost as of 31 December 2009 and 31 December 2008 are as follows:
| 2009 | 2008 | |
|---|---|---|
| Cost of investments at the beginning of the year | 30,177 | 17,736 |
| Acquisition of UAB Fervéja | 12,968 | - |
| Acquisition of minority of UAB Pempininkų valdos | 100 | - |
| Increase of authorised share capital of OAO City Service | 1,133 | - |
| Set-off of loss of OAO City Service carried from 2008 | 1,785 | - |
| Acquisition of UAB Lazdynų būstas | - | 7,551 |
| Acquisition of UAB Vilko pėda | - | 2,740 |
| Acquisition of UAB Šilutės Butų Ūkis | - | 2,087 |
| Transfer of UAB Šilutės Butų Ūkis shares before 1 January 2008 from other financial assets | - | 73 |
| Disposal of UAB Fervéja | - | (10) |
| Investment value at the period end | 46,163 | 30,177 |
7. Borrowings
The list of borrowings of the Group and the Company as of 31 December 2009 and 31 December 2008 are as follows:
| Creditor | Currency of the loan | Amount of the loan (in currency of the loan) | Final repayment date | Balance as of 31 December 2009 (in LTL) | Balance as of 31 December 2008 (in LTL) |
|---|---|---|---|---|---|
| Swedbank, AB (short-term overdraft) | EUR | 1,448 | 25 August 2010 | 5,000 | 5,000 |
| Swedbank, AB (short-term overdraft) | LTL | 887 | 25 August 2010 | 887 | 2,135 |
| Swedbank, AB (long-term loan of City Service AB) | EUR | 8,331 | 25 August 2013 | 28,765 | 4,313 |
| Loans from subsidiaries (eliminated in the accounts of the Group) | LTL | 800 | 31 December 2009 | 800 | 3,950 |
| Group account (eliminated in the accounts of the Group)* | Unspecified | Unspecified | Unspecified | 3,430 | 1,312 |
| Less: Current portion of loans from subsidiaries** | (3,814) | (3,950) | |||
| Less: Current portion of other non-current borrowings in the Company | (13,419) | (4,211) | |||
| Less: Current portion of other non-current borrowings in the Group | (7,116) | (4,211) | |||
| Non-current borrowings excluding current portion in the Company | 21,649 | 8,549 | |||
| Non-current borrowings excluding current portion in the Group | 21,649 | 7,237 |
- On 25 August 2008 the Company and its subsidiaries operating in Lithuania signed an overdraft facility agreement with Swedbank, AB under which the Group can utilise net cash balances of the Company and its subsidiaries operating in Lithuania as inter-group borrowings.
**Current portion of borrowings from subsidiaries as of 31 December 2009 has been reported under payables to related parties caption in the Company (the amount was eliminated in consolidated accounts of the Group).
For the loan and overdraft facility the Company and its subsidiaries have pledged to the bank real estate (market value LTL 18,175 thousand as of 31 December 2009) and bank accounts of the Company and its subsidiaries in Lithuania.
AB City Service
Company code 123905633,
Adress: Konežiacijos Ave. 7, Vilnius, Lithuania
www.cityservice.lt
[email protected]
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited), thousand Litas
Page 18
8. 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 952 thousand as of 31 December 2009 in the Group and LTL 533 thousand in the Company (LTL 1,629 thousand in the Group and LTL 1,226 thousand in the Company as of 31 December 2008). The terms of the financial lease agreements are from 3 to 5 years. The currencies of the financial lease agreements are euro and litas.
As of 31 December 2009 the interest rate on the financial lease obligations is 6 month EUR LIBOR + 1.2% - 3.8%; 6 month EURIBOR + 1.6% - 4.1%; 3 month EURIBOR + 3.0%; or 6 month VILIBOR + 2.3%.
Future minimal lease payments under the above mentioned financial lease contracts as of 31 December 2009 are as follows:
| Group | Company | |
|---|---|---|
| Within one year | 515 | 282 |
| From one to five years | 238 | 141 |
| Total financial lease obligations | 753 | 423 |
| Interest | (38) | (27) |
| Present value of financial lease obligations | 715 | 396 |
| Financial lease obligations are accounted as: | ||
| - current | 486 | 265 |
| - non-current | 229 | 131 |
9. Cost of sales
| Group | Company | |||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Services of subcontractors and materials used | 247,330 | 175,836 | 80,508 | 101,406 |
| Wages and salaries and social security | 53,099 | 35,777 | 17,638 | 15,238 |
| Cost of goods sold | 6,189 | 4,803 | 632 | 1,049 |
| Depreciation | 420 | 432 | - | - |
| Other | 3,186 | 451 | 2,656 | - |
| 310,224 | 217,299 | 101,434 | 117,693 |
AB City Service
Company code 123905633,
Adress: Konstitucijos Ave. 7, Vilnius, Lithuania
www.cityservice.lt
[email protected]
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited), thousand Litas
Page 19
10. General and administrative expenses
| Group | Company | |||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Wages and salaries and social security | 17,235 | 13,733 | 5,071 | 5,335 |
| Allowance for and write-off of receivables | 5,551 | 3,094 | - | - |
| Rent of premises and other assets | 1,822 | 2,412 | 1,112 | 1,390 |
| Consulting and similar expenses | 2,041 | 1,961 | 884 | 1,027 |
| Fuel expenses | 508 | 1,677 | 134 | 1,438 |
| Depreciation and amortisation | 4,364 | 1,546 | 1,089 | 914 |
| Communication expenses | 868 | 853 | 289 | 459 |
| Advertising | 678 | 846 | 557 | 602 |
| Business trips and training | 595 | 808 | 546 | 640 |
| Vacation pay accrual | 1,415 | 725 | 298 | 280 |
| Transportation | 445 | 562 | 209 | 381 |
| Utilities | 677 | 483 | 250 | 251 |
| Commissions for collection of payments | 505 | 442 | 77 | 845 |
| Insurance | 485 | 393 | 225 | 226 |
| Charity and support | 453 | 351 | 443 | 348 |
| Computer software maintenance | 658 | 322 | 44 | 42 |
| Taxes other than income tax | 352 | 234 | 22 | 96 |
| Other | 6,854 | 3,834 | 3,220 | 1,184 |
| 45,506 | 34,276 | 14,470 | 15,458 |
11. Other operating income (expenses), net
| Group | Company | |||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Income from rent (net) | 259 | 707 | 253 | 285 |
| Gain (loss) on disposal of property, plant and equipment | 23 | 17 | 4 | 2 |
| Depreciation of rented assets | (61) | (46) | (47) | (46) |
| Other income (expenses), net | 982 | (513) | (129) | (36) |
| 1,203 | 165 | 81 | 205 |
AB City Service
Company code 123905633,
Adress: Koneitucijos Ave. 7, Vilnius, Lithuania
www.cityservice.lt
[email protected]
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited), thousand Litas
Page 20
12. Financial income (expenses), net
| Group | Company | |||
|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |
| Interest income | 215 | 420 | 1,768 | 1,446 |
| Foreign currency exchange gain | 610 | 5 | 71 | 5 |
| Gain on investment sales | 280 | - | - | - |
| Dividend income | - | - | 5,225 | 840 |
| Other financial income | 309 | 158 | 13 | 51 |
| Total financial income | 1,414 | 583 | 7,077 | 2,342 |
| Interest (expenses) | (2,325) | (226) | (1,199) | (386) |
| Foreign currency exchange loss | (826) | (1,619) | (206) | (4) |
| Long-term loans discounting effect | (913) | - | - | - |
| Other financial (expenses) | (497) | (144) | (28) | (87) |
| Total financial (expenses) | (4,561) | (1,989) | (1,433) | (477) |
| (3,147) | (1,406) | 5,644 | 1,865 |
13. Related party transactions
The parties are considered related when one party has the possibility to control the other one or have significant influence over the other party in making financial and operating decisions. The related parties of the Group and the Company and transactions with them in 2009 were as follows (see also the table below):
- UAB Rubicon Group (the shareholder of the Company);
- Subsidiaries of UAB Rubicon Group (same ultimate controlling shareholder);
- Subsidiaries of AB City Service (subsidiaries, see also Note 1 for details)
- Mr. Ž. Lapinskas (general director 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.
The sales price for the intercompany subsidiary purchase and sale transactions are established by the management and shareholders of the UAB Rubicon Group 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.
Property, plant and equipment to related parties in 2009 and 2008 was sold for the net book 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 set-off against payables / receivables to / from a respective related party.
AB City Service
Company code 123905633,
Adress: Konstitucijos Ave. 7, Vilnius, Lithuania
www.cityservice.lt
[email protected]
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited), thousand Litas
Page 21
13. Related party transactions (cont'd)
2009
| Group | Purchases | Sales | Receivables and prepayments | Loans granted | Payables |
|---|---|---|---|---|---|
| UAB Rubicon Group (currently ICOR UAB) | 2,454 | 58 | 1,160 | - | 37 |
| Subsidiaries of UAB Rubicon Group: | |||||
| AB Axis Industries | 18,699 | 1,122 | 48 | - | 6,837 |
| Other subsidiaries of UAB Rubicon Group | 9,648 | 4,710 | 3,605 | 36 | 1,885 |
| Management of the Company | - | 8 | 9 | 150 | - |
| Shareholders of the Company | - | 4 | 20 | - | - |
| 30,801 | 5,902 | 4,842 | 186 | 8,759 |
Company
| Company | Purchases | Sales | Receivables and prepayments | Loans granted | Payables |
|---|---|---|---|---|---|
| UAB Rubicon Group (currently ICOR UAB) | 2,176 | 58 | 1,160 | - | - |
| Subsidiaries of UAB Rubicon Group: | |||||
| AB Axis industries | 18,615 | 1,108 | 3 | - | 6,990 |
| Other subsidiaries of UAB Rubicon Group | 1,141 | 3,785 | 3,847 | 36 | 39 |
| Subsidiaries of the Company | 6,456 | 21,353 | 48,426 | - | 1,507 |
| Management of the Company | - | 8 | 9 | 150 | - |
| Shareholders of the Company | - | 4 | 20 | - | - |
| 28,388 | 26,316 | 53,465 | 186 | 8,536 |
14. Subsequent events
On 5 January 2010, the Company via a 100% owned subsidiary acquired the title to 100% shareholding interest in Ecoservice UAB, legal entity code 123044722, transferred to it by Bionovus UAB under the Share Purchase Agreement dated 5 January 2010. The price of the share purchase transaction is LTL 55 million.
Ecoservice UAB in its turn holds Specialus Autotransportas UAB, legal entity code 140026178, and Traku Rajono Komunaliniu Imoniu Kombinatas UAB, legal entity code 181212948, which perform their operations in Vilnius, Klaipėda and Trakai regions.
On 15 January 2010, new Articles of Association of the Company were registered as the share capital was increased up to 31,610,000 LTL. The authorised share capital of the Company was divided into 31,610 thousand ordinary registered shares with the nominal value of 1 LTL each.
The share capital was increased based on the shareholders decision dated 5 October 2009 to increase the authorised share capital by issuing new emission of 12,500 thousand shares. As per Board decision dated 21 December 2009 the price of the new emission was 5.06 LTL per share, distribution period – from 28 December 2009 to 13 January 2010.
After having successfully issued the new share emission, trade of the new shares of the Company in NASDAQ OMX Vilnius Stock Exchange started on 21 January 2010.
In addition, since 18 January 2010, the name of the controlling shareholder of the Company Rubicon Group UAB was changed into a new one – ICOR UAB. The replacement of the name is related to changes in the structure of the shareholders: three former shareholders of the group Rimantas Bukauskas, Arunas Maciuitis and Remigijus Lapinskas sold the remaining four shareholders their holdings.
AB City Service
Company code 123905633,
Adress: Konstitucijos Ave. 7, Vilnius, Lithuania
www.cityservice.lt
[email protected]
Consolidated and parent company's interim financial statements for the twelve months of 2009 (unaudited), thousand Litas
Page 22
14. Subsequent events (cont'd)
After new share emission and changed structure of the owners of the Company, the shareholders' ownership structure is the following:
| Number of shares held | Owned percentage of the share capital and votes, % | |
|---|---|---|
| ICOR UAB | 19,312,249 | 61.09% |
| Shareholders of ICOR UAB: | ||
| Andrius Janukonis | 242,218 | 0.77% |
| Gintautas Jaugielavičius | 242,214 | 0.77% |
| Linas Samuolis | 242,214 | 0.77% |
| Other private and institutional shareholders | 11,571,105 | 36.60% |
| Total | 31,610,000 | 100% |
In January 2010 the Company signed a cooperation agreement with the largest bank in Russia – Sberbank. According to the agreement, a development coordination group will be formed consisting of 6 people - 3 representatives of City Service and 3 representatives of Sberbank. Within the following six months the group will prepare projects that City Service will implement together with Sberbank in specific cities and regions of Russia.
Sberbank, the largest bank in Russia, manages the State fund devoted to the reform of communal services provided to apartment buildings. Sberbank is the largest bank in Russia with 17 regional offices, 783 branches, and more than 20,000 sub-branches. 60 percent of the bank's shares are owned by the Central Bank of Russia.
AB City Service
Company code 123905633,
Adress: Konstitucijos Ave. 7, Vilnius, Lithuania
www.cityservice.lt
[email protected]