City Service SE — Interim / Quarterly Report 2017

Feb 28, 2018

CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE TWELVE MONTHS PERIOD ENDED 31 DECEMBER, 2017 (UNAUDITED)

City Service SE

CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE TWELVE MONTHS PERIOD ENDED 31 DECEMBER, 2017 (UNAUDITED)

Beginning of the reporting period 1 January 2017 End of the reporting period 31 December 2017

Business name City Service SE Registration number 12827710 Telephone +370 5 239 49 00 Fax +370 5 239 48 48 E-mail info@cityservice.eu Auditor Ernst & Young Baltic AS

Legal address Narva mnt. 5, 10117 Tallinn, the Republic of Estonia Website http://www.cityservice.eu

DECLARATION OF THE MANAGEMENT 4
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 5
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 7
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 9
CONSOLIDATED STATEMENT OF CASH FLOWS 10
NOTES TO THE FINANCIAL STATEMENTS 11
1.GENERAL INFORMATION 11
1.1. ACTIVITIES 11
1.2. SHARE CAPITAL OF THE COMPANY 12
1.3. SHAREHOLDERS OF THE COMPANY 12
1.4. CITY SERVICE GROUP 13
1.5. COMPANY'S SUPERVISORY BOARD 17
1.6. COMPANY'S MANAGEMENT BOARD 18
1.7. GROUP'S MANAGEMENT 20
1.8. ACTIVITY AND SEGMENT INFORMATION 21
2.ACCOUNTING POLICIES 23
3.GOODWILL 23
4.SIGNIFICANT EVENTS 25
5.OTHER INTANGIBLE ASSETS 28
6.PROPERTY, PLANT AND EQUIPMENT 29
7.TRADE RECEIVABLES 30
8.BORROWINGS 30
9.COST OF SALES 31
GENERAL AND ADMINISTRATIVE EXPENSES 31
OTHER OPERATING INCOME (EXPENSES) 32
FINANCE INCOME AND (EXPENSES) 32
DIVIDENDS PER SHARE 32
RELATED PARTY TRANSACTIONS 33
SUBSEQUENT EVENTS 34

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	Notes	As of 31	As of 31
		December 2017	December 2016
Assets
NON-CURRENT ASSETS
Goodwill	3	11,925	11,532
Other intangible assets	5	27,443	26,092
Property, plant and equipment	6	18,463	18,606
Investment property		81	160
Investments into associates		185	184
Non-current receivables	7	5,669	5,419
Deferred income tax asset		2,634	2,474
Total non-current assets		66,400	64,467
CURRENT ASSETS
Inventories		1,493	1,607
Prepayments		1,718	1,125
Trade receivables	7	31,017	34,718
Receivables from related parties	14	169	135
Other receivables and current assets		5,242	5,611
Cash and cash equivalents		7,871	30,271
Total current assets		47,510	73,467
Total assets		113,910	137,934

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (cont'd)

		As of 31	As of 31
	Notes	December 2017	December 2016
Equity and liabilities
Equity attributable to equity holders of the Company
Share capital		9,483	9,483
Reserves and share premium		21,067	21,067
Other reserves		213	263
Retained earnings (deficit)		25,193	38,002
		55,956	68,815
Non-controlling interests		354	317
TOTAL EQUITY		56,310	69,132
Liabilities
Non-current liabilities
Non-current borrowings	8	14,611	17,998
Financial lease obligations		2,710	2,027
Deferred income tax liabilities		3,751	3,815
Non-current payables		1,833	1,990
TOTAL NON-CURRENT LIABILITIES		22,905	25,830
Current liabilities
Current portion of non-current borrowings	8	3,290	2,989
Current portion of financial lease obligations		1,002	998
Short-term loans	8	-	334
Trade payables		13,827	17,288
Payables to related parties	14	959	1,112
Advances received		5,324	5,850
Other current liabilities		10,293	14,401
TOTAL CURRENT LIABILITIES		34,695	42,972
Total liabilities		57,600	68,802
Total equity and liabilities		113,910	137,934

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(for the period 1 January – 31 December)

	Notes	2017 Q4	2016 Q4
Sales	1.8	161,057	174,267
Cost of sales	9	(121,866)	(141,636)
Gross profit (loss)		39,191	32,631
General and administrative expenses	10	(29,922)	(26,721)
Other operating activity, net	11	(573)	(557)
Profit (loss) from operations		8,696	5,353
Finance income	12	1,001	1,497
Finance expenses	12	(994)	(1,269)
Share profit of associates		1	(54)
Profit (loss) before tax		8,704	5,527
Income tax		(1,914)	(4,261)
Net profit (loss)		6,790	1,266
Other comprehensive income
Exchange differences on translation of foreign operations		(66)	456
Total comprehensive income		6,724	1,722
Attributable to:
The shareholders of the Company		6,789	1,385
Non-controlling interests		1	(119)
		6,790	1,266
Total comprehensive income attributable to:
The shareholders of the Company		6,723	1,841
Non-controlling interests		1	(119)
		6,724	1,722
Basic and diluted earnings per share (EUR)		0.21	0.04

STATEMENTS OF COMPREHENSIVE INCOME

(for the period 1 October – 31 December)

	2017 Q4	2016 Q4
Sales	42,947	49,780
Cost of sales	(31,524)	(40,413)
Gross profit (loss)	11,423	9,367
General and administrative expenses	(8,548)	(6,859)
Other operating income, net	(207)	(518)
Profit (loss) from operations	2,668	1,990
Finance activity result, net	367	97
Share profit of associates	1	(54)
Profit (loss) before tax	3,036	2,033
Income tax	(671)	(3,799)
Net profit	2,365	(1,766)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Notes	Share capital	Share premium	Foreign currency translation reserve	Other reserves	Retained earnings	Total	Non controlling interest	Total
Balance as of 1 January 2016		9,483	21,067	(2,882)	2,656	39,811	70,135	434	70,569
Net profit		-	-	-	-	1,385	1,385	(119)	1,266
Other comprehensive income		-	-	456	-	-	456	-	456
Total comprehensive income		-	-	456	-	1,385	1,841	(119)	1,722
Dividends declared	13	-	-	-	-	(3,161)	(3,161)	-	(3,161)
Acquisition of non-controlling interest		-	-	-	-	-	-	2	2
Transfer to legal reserve		-	-	-	33	(33)	-	-	-
Balance as of 31 December 2016		9,483	21,067	(2,426)	2,689	38,002	68,815	317	69,132
Balance as of 1 January 2017		9,483	21,067	(2,426)	2,689	38,002	68,815	317	69,132
Net profit		-	-	-	-	6,789	6,789	1	6,790
Other comprehensive income		-	-	(66)	-	-	(66)	-	(66)
Total comprehensive income		-	-	(66)	-	6,789	6,723	1	6,724
Dividends declared	13	-	-	-	-	(19,598)	(19,598)	-	(19,598)
Disposal of subsidiaries		-	-	16	-	-	16	-	16
Acquisition of non-controlling interest		-	-	-	-	-	-	36	36
Balance as of 31 December 2017		9,483	21,067	(2,476)	2,689	25,193	55,956	354	56,310

CONSOLIDATED STATEMENT OF CASH FLOWS

	Notes	2017 Q4	2016 Q4
Cash flows from (to) operating activities
Net profit		6,790	1,266
Adjustments for non-cash items:		-	-
Income tax expenses		1,914	4,261
Depreciation and amortisation	5,6	4,389	4,326
Impairment and discounting of accounts receivable		862	692
Loss from sale of investments	12	421	-
Loss (gain) on disposal of property plant and equipment	11	728	(10)
Result on remeasuring of assets and liabilities to liquidation value		(2,025)	(3,318)
(subsidiary Concentra, see Note 1.8) Provisions for potential obligations from guarantees provided for
subsidiary Concentra customers		-	1,253
Other financial activity, net		(474)	323
		12,605	8,793
Changes in working capital:
Decrease (increase) in inventories		20	(14)
(Increase) decrease in receivables and other current assets		(3,403)	16,347
(Increase) decrease in prepayments		(980)	279
(Decrease) increase in trade payables and payables to related parties		(913)	4,907
Income tax (paid)		(2,595)	(1,701)
Increase (decrease) in advances received and other current liabilities		2,029	(1,580)
Net cash flows from operating activities		6,763	27,031
Cash flows from (to) investing activities
(Acquisition) of non-current assets (except investments)	5,6	(4,242)	(3,555)
Proceeds from sale of non-current assets (Acquisition) of investments in subsidiaries (net of cash acquired in		995	199
the Group)		(406)	(7,185)
Disposal of investments in subsidiaries and associates		(422)	-
Interest received		384	793
Net cash flows (to) investing activities		(3,691)	(9,748)
Cash flows from (to) financing activities
Dividends (paid)		(19,598)	(3,161)
(Repayment) proceeds of loans		(3,427)	964
(Repayment) of financial lease liabilities		(1,820)	(1,213)
Interest (paid)		(441)	(774)
Net cash flows (to) financial activities		(25,286)	(4,184)
Net (decrease) increase in cash and cash equivalents		(22,214)	13,099
Foreign exchange difference		(186)	314
Cash and cash equivalents at the beginning of the period		30,271	16,858
Cash and cash equivalents at the end of the period		7,871	30,271

NOTES TO THE FINANCIAL STATEMENTS

City Service SE (hereinafter – "the Company") is a public limited liability company registered in the Republic of Estonia on 2 April 2015, which in the course of reorganization has taken over a public limited liability company City Service AS rights and liabilities.

The Company controls corporate group, engaged in provision of facility management and integrated utility services in Western, Central and Eastern Europe. The City Service group is the market leader in facility management and integrated utility services in the Baltic States. It provides services in whole Lithuania, Poland, Spain, Latvia, in the city of St. Petersburg in Russian Federation.

1.1. ACTIVITIES

City Service group provides facility management; maintenance and repair of engineering systems; management and renovation of energy resources; technical and energy audit of buildings; maintenance and cleaning of territories and premises; marketplaces administration; security services.

The most important buildings segments, administered by the City Service group are: residential apartment buildings; commercial buildings; public buildings; industrial buildings. The total area of buildings under the management of the Group is 35.8 million sq. m. at present.

During this year City Service group carried on implementing confirmed strategy and was further looking for growth opportunities in Central and Western Europe. Extensive negotiations with potential foreign companies regarding their acquisition, reorganization and implementation according to the Group's business model and standards were carried out.

The Group's areas of activity are relatively stable (core activities include: commercial and residential property administration and cleaning services) and tend not to fluctuate materially throughout the year unless significant acquisitions or divestments of certain subsidiaries occur during the reporting period. On 23 February 2017 Concentra Servicios y Mantenimiento, S.A., a Spanish subsidiary operating in commercial building administration segment, filled a petition for bankruptcy. On 10 May 2017, Concentra received court decision, stating that bankruptcy administrator was appointed and from this date the Group ceased to consolidate it in its Financial statements. In 2016 Concentra operations constituted 22% of the Group's total revenue.

1.2. SHARE CAPITAL OF THE COMPANY

The share capital of the Company is EUR 9,483 thousand as of 31 December 2017. It is divided into 31,610 thousand ordinary shares with the nominal value of EUR 0.30 each. All shares of the Company are paid up.

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 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.

As of 31 December 2017 all 31,610 thousand ordinary shares of the Company are included into the Parallel Market of Warsaw Stock Exchange (ISIN Code of the shares is EE3100126368). Trading Code of the shares on Warsaw Stock Exchange is CTS.

1.3. SHAREHOLDERS OF THE COMPANY

As of 31 December 2017 the total number of shareholders of the Company was 269.

COMPANY'S SHARES DISTRIBUTION AMONG SHAREHOLDERS WHO HAVE MORE THAN 5% SHARES OF THE COMPANY AS OF 29 DECEMBER 2017 (THE LAST OPERATING DAY IN DECEMBER OF ESTONIAN CENTRAL SECURITIES DEPOSITORY) WAS THE FOLLOWING:

	Number of shares held	Owned percentage of the share capital and votes, %
UAB ICOR, legal entity code 300021944, address: Ozo str. 12A, Vilnius, Lithuania	26,813,293	84.83%
Other private and institutional shareholders	4,796,707	15.17%
TOTAL	31,610,000	100 %

1.4. CITY SERVICE GROUP

AS OF 31 DECEMBER 2017 THE CITY SERVICE GROUP CONSISTS OF CITY SERVICE SE AND THE FOLLOWING SUBSIDIARIES (HEREINAFTER REFERRED TO AS "THE GROUP"):

Company	Region	Share of the stock held by the Group as of 31 December 2017	Share of the stock held by the Group as of 31 December 2016	Main activities
UAB Alytaus būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Alytaus namų valda	Lithuania	76%	76%	Dormant
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 NT valdymas	Lithuania	100%	100%	Real estate management
UAB Baltijos transporto valdymas	Lithuania	100%	100%	Asset management
UAB Baltijos turto valdymas	Lithuania	100%	100%	Dormant
UAB Birštono būstas	Lithuania	100%	100%	Dormant
UAB Biržų butų ūkis	Lithuania	57.71%	-	Administration of dwelling-houses
UAB City Service Engineering	Lithuania	100%	-	Commercial real estate management and building maintenance
UAB Dainavos būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Danės būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Economus	Lithuania	100%	100%	Administration of buildings
UAB Grindos būstas	Lithuania	100%	-	Dormant
UAB Justiniškių būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Jūros būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Karoliniškių būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Karoliniškių turgus	Lithuania	100%	100%	Marketplace administration services
UAB Kauno centro būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Klaipėdos būstas LT	Lithuania	100%	100%	Administration of dwelling-houses
UAB Konarskio turgelis	Lithuania	100%	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	Lithuania	100%	100%	Maintenance and cleaning of territories and premises
UAB Mano aplinka plius	Lithuania	100%	100%	Maintenance and cleaning of territories and premises
UAB Mano Būstas	Lithuania	100%	100%	Building maintenance
UAB Mano Būsto Sauga	Lithuania	100%	100%	Security services
UAB Mano sauga LT	Lithuania	100%	100%	Security services
UAB Nacionalinis renovacijos fondas	Lithuania	100%	-	Dormant
UAB Namų priežiūros centras	Lithuania	100%	100%	Administration of dwelling-houses
UAB Naujamiesčio būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Naujosios Vilnios turgavietė	Lithuania	100%	100%	Marketplace administration services

UAB Nemuno būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Pastatų priežiūra	Lithuania	100%	100%	Building maintenance
UAB Pašilaičių būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Pietinis būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Radviliškio būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Rinkų vystymas	Lithuania	100%	-	Dormant
UAB Saugos projektų valdymas	Lithuania	100%	100%	Security services
UAB Skolos LT	Lithuania	100%	100%	Debt collection services
UAB Šiaulių būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Šilalės butų ūkis	Lithuania	-	100%	Administration of dwelling-houses
UAB Šilalės būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Šilutės būstas	Lithuania	99.84%	99.84%	Administration of dwelling-houses
UAB Tauragės būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Toirenta	Lithuania	100%	100%	Rental of bio toilets and sewage disposal services
UAB Vaizdo stebėjimo sprendimai	Lithuania	100%	-	Dormant
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%	100%	Dormant
UAB Viršuliškių būstas	Lithuania	100%	100%	Administration of dwelling-houses
UAB Žirmūnų būstas	Lithuania	100%	100%	Administration of dwelling-houses
Administracion Urbana y Rural Chorro, S.L.U.	Spain	100%	100%	Administration of dwelling-houses
Afimen administración de finques, S.L.U.	Spain	100%	100%	Administration of dwelling-houses
Administración de Fincas Jimenez, S.L.	Spain	100%	-	Administration of dwelling-houses
Aresi administracion de fincas S. L.	Spain	100%	100%	Administration of dwelling-houses
Aresi Euroinmo, S.L.	Spain	100%	-	Dormant
Aresi Gestion residencial, S.L.	Spain	100%	-	Administration of dwelling-houses
Concentra Servicios y Mantenimiento, S.A.(Note 1.8)	Spain	100%	100%	Commercial real estate management and building maintenance
Elche administracion de fincas, S.L.U.	Spain	100%	100%	Administration of dwelling-houses
Eurodrauda Correguria de Seguros, S.L.U.	Spain	100%	-	Dormant
Euronamas Gestion de Fincas Madr, S.L.	Spain	100%	-	Dormant
Euronamas Gestion de Fincas Mrc, S.L.	Spain	100%	-	Dormant
Grupo Aresi de Inversiones, S.L.	Spain	100%	100%	Holding company
Interlift Mantenimiento y Ascensores, S.L.	Spain	100%	-	Dormant

Vetell dos iberica, S.L.	Spain	100%	-	Administration of dwelling-houses
SIA City Service	Latvia	100%	100%	Holding company
SIA City Service Engineering	Latvia	100%	100%	Commercial real estate management and building maintenance
SIA Ēku pārvaldīšanas serviss	Latvia	100%	-	Building maintenance
SIA Laba Enerģija	Latvia	100%	-	Sale of electricity
SIA Latvijas Namsaimnieks	Latvia	100%	100%	Administration of dwelling-houses
SIA L-Namsaimnieks	Latvia	-	100%	Administration of dwelling-houses
SIA Namserviss	Latvia	-	100%	Administration of dwelling-houses
SIA Namu serviss APSE	Latvia	100%	100%	Administration of dwelling-houses
Atrium 21 sp. z o.o.	Poland	100%	100%	Administration of dwelling-houses
City Service Grupa Techniczna sp. z o.o.	Poland	-	100%	Building maintenance
City Service Poland sp. z o.o.	Poland	100%	100%	Dormant
City Service Polska sp. z o.o.	Poland	100%	100%	Country holding company
Certus-Serwis Sp. z o. o.	Poland	100%	-	Administration of dwelling-houses
Concierge - Zarządzanie Nieruchomościami sp. z o.o.	Poland	100%	100%	Administration of dwelling-houses
Dom Best sp. z o.o.	Poland	100%	100%	Administration of dwelling-houses
EnergiaOK sp. z o.o.	Poland	100%	100%	Sale of electricity
Famix sp. z o.o.	Poland	100%	100%	Administration of dwelling-houses
Gerente - Serwis Nieruchomości sp. z o.o.	Poland	100%	100%	Commercial real estate management and building maintenance
Grupa Techniczna 24 sp. z o.o.	Poland	100%	100%	Dormant
Home Rent sp. z o.o.	Poland	50%	50%	Administration of dwelling-houses
Hoone - Usługi Budowlane sp. z o.o.	Poland	100%	100%	Construction and engineering
Parama Blue sp. z o.o.	Poland	100%	100%	Dormant
Parama Group sp. z o.o.	Poland	100%	100%	Holding company
Parama Yellow sp. z o.o.	Poland	100%	100%	Dormant
Parama Red sp. z o.o.	Poland	100%	100%	Dormant
Parama White sp. z o.o.	Poland	100%	100%	Dormant
Progresline sp. z o.o.	Poland	100%	100%	Administration of dwelling-houses
Santer Zarządzanie Nieruchomościami sp. z o.o.	Poland	100%	100%	Administration of dwelling-houses
Skydas - Przeglądy Budowlane sp. z o.o.	Poland	100%	100%	Construction and engineering
TED sp. z o.o.	Poland	100%	100%	Real estate management
Zespół Zarządców Nieruchomości sp. z o.o.	Poland	100%	100%	Administration of dwelling-houses
ZZN Inwestycje sp. z o.o.	Poland	100%	100%	Dormant
OAO Cити Сервис / ОАО City service	St. Petersburg	100%	100%	Administration of dwelling-houses
ЗAO Cити Сервис / ZAO City service	St. Petersburg	100%	100%	Administration of dwelling-houses

OAO Специализи-рованное ремонтно-наладочное управление	St. Petersburg	100%	100%	Construction and engineering
ООО МН Групп	St. Petersburg	100%	100%	Country holding company
ООО Жилкомсервис № 3 Фрунзенского района	St. Petersburg	80%	80%	Administration of dwelling-houses
ООО Чистый дом	St. Petersburg	100%	100%	Maintenance and cleaning of territories
ООО Подъемные механизмы	St. Petersburg	100%	100%	Elevator installing & tech. support
OOO Территория комфорта	St. Petersburg	100%	-	Dormant

The Group's investment in an associate as of 31 December 2017 included an investment in Marijampolės butų ūkis UAB (34% of the share capital).

1.5. COMPANY'S SUPERVISORY BOARD

AS OF 31 DECEMBER 2017, THE SUPERVISORY BOARD OF THE COMPANY COMPRISES OF THE FOLLOWING

PERSONS:

Name and surname	Position	Start of term	End of term
Andrius Janukonis	Chairman of the Supervisory Board	April 8, 2015	April 9, 2019
Gintautas Jaugielavičius	Member of the Supervisory Board	April 8, 2015	April 9, 2019

The Supervisory Board members do not control any shares of the Company.

Andrius Janukonis

Andrius Janukonis (born in 1971) is the Chairman of the Supervisory Board of City Service SE (since 2009 until 2015 the Chairman of the Board). He holds a Master's degree in Law. He works as a consultant for UAB ICOR and is the chairman of the board of UAB ICOR (since 2004).

Gintautas Jaugielavičius

Gintautas Jaugielavičius (born in 1971) is a Member of the Supervisory Board of City Service SE (since 2005 until 2015 a Member of the Board). He holds a Bachelor's degree in Economics. At present, he works as a consultant for UAB ICOR and is a member of the board of UAB ICOR (since 2004).

1.6. COMPANY'S MANAGEMENT BOARD

AS OF 31 DECEMBER 2017, THE MANAGEMENT BOARD OF THE COMPANY COMPRISES OF THE FOLLOWING PERSONS:

Name and surname	Position within the Group	Start of term	End of term
Artūras Gudelis	Chairman of the Management Board	June 26, 2017	June 26, 2021
Tomas Kleiva	Member of the Management Board	June 26, 2017	June 26, 2021
Edvinas Paulauskas	Member of the Management Board	June 26, 2017	June 26, 2021
Vytautas Turonis	Member of the Management Board	June 26, 2017	June 26, 2021
Algė Jablonskienė	Member of the Management Board	June 26, 2017	June 26, 2021
Ignas Krasauskas	Member of the Management Board	October 17, 2017	October 17, 2021

They do not control any shares of the Company.

Artūras Gudelis

Artūras Gudelis (born in 1977) is a Chairman of the Management Board of City Service SE (since 2017). Artūras Gudelis was a Member of the Supervisory Board of City Service SE (2015 – 2017). He holds Bachelor's degree in Economics and Master's degree in Business Management.

Artūras Gudelis is responsible for carrying the formal functions of the chairman of the Management Board as well as for signing of the consolidated financial statements, representing the Company in the stock exchanges, securities depositories and in relations with the investors, as well as in all other general matters related to the Company.

Tomas Kleiva

Tomas Kleiva (born in 1979) is a Member of the Management Board of City Service SE (since 2017). Tomas Kleiva was Member of the Board and acting CEO instead of Jonas Janukėnas until was approved new management structure of City Service SE (23 February 2017 – 26 June 2017).

Prior to that, Tomas Kleiva was the Financial Manager of City Service SE (2016 - 2017) and Financial Manager and Executive Manager of the Group's subsidiaries operating in St. Petersburg (2009 – 2016). He started to work in the Group as a Project Manager (2006 – 2009). Tomas Kleiva has a Master's degree in Environmental Engineering.

Tomas Kleiva is responsible and accountable for any and all financial matters and operations within the Group in all the jurisdictions and carries functions of Group's CFO, except for Lithuania, Latvia and Estonia. Tomas Kleiva is also responsible for the organization and supervision of Group's activities in Russia.

1.6. COMPANY'S MANAGEMENT BOARD (cont'd)

Edvinas Paulauskas

Edvinas Paulauskas (born in 1976) is a Member of the Management Board of City Service SE (since 2017). Previously he worked as the Executive Manager at City Service SE (2015 - 2017), Commercial director (2008 – 2015). Edvinas Paulauskas started working in the Company as the Project Manager (2005 – 2006). He holds a Bachelor's degree in an Environment Engineering.

Edvinas Paulauskas is responsible and accountable for the organization and supervision of Group's activities (except for financial and HR matters) in Poland and Spain.

Vytautas Turonis

Vytautas Turonis (born in 1972) is a Member of the Management Board of City Service SE (since 2017). Vytautas Turonis woks as the General Manager at UAB Mano Būstas. 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 the Company as the Market Development Department Manager (2004 – 2008).

Vytautas Turonis is responsible and accountable for the organization and supervision of Group's activities (including the financial but except for HR matters) in Lithuania, Latvia and Estonia.

Algė Jablonskienė

Algė Jablonskienė (born in 1971) is a Member of the Management Board of City Service SE (since 2017). Previously she worked as the HR Director of City Service SE (2017). She has a Master's degree in Psychology and an Executive Master's degree in Business Administration. Previously Mrs. Jablonskienė was working as the Human Resources and Administration Director within international and local companies. She also brings nearly 10 years experience as a business consultant.

Mrs. Jablonskienė is responsible and accountable for human resources matters within the Group's in all jurisdictions.

Ignas Krasauskas

Ignas Krasauskas (born in 1983) is a member of the Management Board of City Service SE (since 2017). He also is an Executive manager at Mano Būstas (since 2016). Mr. Krasauskas works in City Service SE since year 2007. Previously he worked as the director of Legal department at City Service SE (2007-2013) and the director of Administration and legal department at Mano Būstas (2013-2016). Mr. Krasauskas holds a Bachelors degree in Economics and a Masters degree in Law.

Ignas Krasauskas is responsible and accountable for the Group's information technology policy and enforcement, e-commerce and legal issues in countries, where active activities are taking place.

1.7. GROUP'S MANAGEMENT

AS OF 31 DECEMBER 2017 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 Group	Start of employment
Anna Górecka – Kolasa	Head of the Group's companies, operating in Poland	2013
Larijus Lapinskas	Chairman of the Board of the Group's companies, operating in St. Petersburg	2017
Evgenij Grachiov	Head of the Group's companies, operating in Spain (residential building administration)	2012

They do not control any shares of the Company.

Anna Górecka – Kolasa

Anna Górecka - Kolasa (born 1975) is the Head of the Group companies, operating in Poland. Anna Górecka – Kolasa has been working for the Group since 2013, prior to that she held positions of Management and Control Director, Chief Analysis Specialist and Deputy Accountant General (2004 – 2013). Anna Górecka-Kolasa has a higher education in the area of management and marketing.

Anna Górecka-Kolasa is responsible for the Group's day-to-day activities in Poland.

Larijus Lapinskas

Larijus Lapinskas (born 1972) has been the Chairman of the Board for the City Service Group companies, operating in St. Petersburg, since 2017. Larijus Lapinskas has a Bachelor's degree in Information Technology.

Larijus Lapinskas is responsible for the Group's activities in St. Petersburg.

Evgenij Grachiov

Evgenij Grachiov (born 1985) has been Chairman of the Board of Grupo Aresi De Inversiones S.L, operating in residential buildings administration segment in Spain, since 2017. Evgenij Grachiov works in Company since year 2012. Previously he worked as LEAN projects manager at City Service SE (2012 - 2017). Evgenij Grachiov holds a Master's degree in an Industry Engineering and Management.

Evgenij Grachiov is responsible for the Group's residential buildings administration activities in Spain.

1.8. ACTIVITY AND SEGMENT INFORMATION

INFORMATION ON MAIN GROUP'S GEOGRAPHICAL SEGMENTS:

2017 Q4	Baltic states	St. Petersburg	Poland	Spain	Total
Revenue:	83,155	42,776	26,032	9,094	161,057
Total revenue					161,057
Segment results	8,182	1,721	54	(495)	9,462
Unallocated expenses					(766)
Profit from operations					8,696
Net financial income					8
Profit before income tax					8,704
Income tax expenses					(1,914)
Net profit for the year					6,790
OTHER SEGMENT INFORMATION
Capital expenditure	3,336	118	1,290	1,976	6,720

2016 Q4	Baltic states	St. Petersburg	Poland	Spain	Total
Revenue:	74,211	34,439	26,794	38,823	174,267
Total revenue					174,267
Segment results	2,811	526	(1,091)	3,8121	6,058
Unallocated expenses					(705)
Profit from operations					5,353
Net financial income					174
Profit before income tax					5,527
Income tax expenses					(4,261)
Net profit for the year					1,266
OTHER SEGMENT INFORMATION
Capital expenditure	1,971	74	1,432	1,563	5,040

1 Includes operating loss for the year of commercial property administration activity amounting to EUR 3,375 thousand as well as positive effect of write-off of liabilities exceeding total assets at liquidation value available to satisfy claims of the creditors of EUR 3,318 thousand.

1.8. ACTIVITY AND SEGMENT INFORMATION (cont'd)

On 23 February 2017 Concentra Servicios y Mantenimiento, S.A. has submitted a petition for bankruptcy to official institutions in Spain, authorized to initiate the bankruptcy procedure. The decision to ask for initiation of bankruptcy of Concentra has been made after evaluation of commercial property administration and cleaning sector prospects in Spain. The revenue of Concentra in 2016 amounted to EUR 38.1 million. In 2016 Concentra operations constituted 22% of the Group's total revenue. On 10 May 2017, Concentra received court decision, stating that bankruptcy administrator was appointed and from this date the Group ceased to consolidate this subsidiary in its Financial statements as from that date the Group has lost its effective control to it. Concentra is still presented in the Group's structure (Note 1.4) as City Service SE remains shareholder of the subsidiary until the end of bankruptcy process.

INFORMATION ON MAIN GROUP'S GEOGRAPHICAL SEGMENTS:

	Baltic states	St. Petersburg	Poland	Spain	Total
Sales to external
customers
2017 Q4	83,155	42,776	26,032	9,094	161,057
2016 Q4	74,211	34,439	26,794	38,823	174,267

	Baltic states	St. Petersburg	Poland	Spain	Total
Segment non-current assets
As of 31 December 2017	41,396	2,337	17,440	5,227	66,400
As of 31 December 2016	41,416	2,617	17,244	3,190	64,467

MAIN ACTIVITY INDICATORS FOR THE GROUP:

	2017 Q4	2016 Q4	Change (%)
Area of residential apartment buildings under administration (million square meters)	31.6	29.3	7.8%
Area of public, commercial building and atypical properties under administration (million square meters)	4.2	12.4	(66.1%)
Number of employees	4,202	5,559	(24.4%)
Sales for the period	161,057	174,267	(7.6%)
Sales (main activity)*	135,899	153,663	(11.6%)
Gross margin*	28.8%	20.9%	37.8%
EBITDA margin*	9.6%	6.4%	50.0%
EBIT margin*	6.4%	3.6%	77.8%
Net margin*	5.0%	0.9%	455.6%
Number of shares (thousand)	31,610	31,610	-
Return on equity	12.1%	1.9%	536.8%
Return on assets	6.0%	1.0%	500.0%
Financial Net Debt to equity**	17.8%	(13.2%)	(235.4%)

* 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.

In the Interim Financial Statements same accounting policies and methods of computation are followed as compared with the most recent annual financial statements.

Interim Financial Statements are prepared in compliance with International Accounting Standard (IAS) 34 Interim financial reporting.

These Interim Financial Statements were authorised for issue on 28 February 2018 by responsible persons listed in the confirmation, which is attached to the Interim Financial Statements.

3. GOODWILL

COST:
Balance as of 1 January 2016	9,475
Additions	2,053
Exchange differences	88
Balance as of 31 December 2016	11,616
Acquisition of subsidiaries	449
Disposals of subsidiaries
Exchange differences	(56)
Balance as of 31 December 2017	12,009
IMPAIRMENT
Balance as of 1 January 2016	84
Balance as of 31 December 2016	84
Balance as of 31 December 2017	84
Net book value as of 31 December 2017	11,925
Net book value as of 31 December 2016	11,532

3. GOODWILL (cont'd)

During reporting period the Company through its subsidiaries acquired UAB Visos apsaugos paslaugos, UAB Biržų butų ūkis, SIA Laba Enerģija, Administracion de Fincas Jimenez and Certus-Serwis Sp. z.o.o. At the acquisition of these subsidiaries a provisional goodwill of EUR 449 thousand has been accounted for.

Fair value of assets, liabilities and contingent liabilities of acquired subsidiaries	Visos apsaugos paslaugos	Biržų butų ūkis	Laba Enerģija	Jimenez	Certus - Serwis
At the date of acquisition	27 January	6 April	16 June	1 October	12 December
Intangible assets	-	51	-	-	-
Property, plant and equipment	-	9	2	-	-
Trade receivables	-	96	-	3	2
Deferred tax asset	-	3	-	2	-
Other current assets	3	63	8	51	2
Total assets	3	222	10	56	4
Trade payables	-	22	-	-	-
Deferred tax liability	-	8	-	-	-
Other current liabilities	1	116	10	17	2
Total liabilities	1	146	10	17	2
Total identifiable net assets at fair value	2	76	-	39	2
Fair value of acquired assets, liabilities	2	76	-	39	2
and contingent liabilities
Goodwill	10	8	-	325	106
Total purchase consideration	12	48	-	364	108
Fair value of non-controlling interest	-	36	-	-	-
acquired
Cash acquired	3	62	8	51	2
Total purchase consideration, net of
cash acquired	9	22	(8)	313	106

At the date of acquisition, the fair value of the trade receivables was EUR 101 thousand. The gross amount of trade receivables was EUR 111 thousand. The difference between the fair value and the gross amount is allowance for doubtful trade receivables.

4. SIGNIFICANT EVENTS

Investments and other changes during the year 2017

On 12 January 2017 the Company, through its Lithuanian subsidiary, established new company UAB Nacionalinis renovacijos fondas (share capital EUR 2.5 thousand).

On 13 January 2017 UAB Neries būstas company title was changed into UAB Tauragės būstas. Director and other contact details did not change.

On 20 January 2017 the Company, through its Lithuanian subsidiary, established new company UAB Grindos būstas (share capital EUR 2.5 thousand).

On 24 January 2017 the Company, through its Spanish subsidiary, established new company Vetell dos ibérica, S.L. (share capital EUR 3 thousand) which manages facilities in Spain.

On 25 January 2017 Administraciones SantaPola S.L. company title was changed into Aresi administracion de fincas S. L. Governing body and other contact details did not change.

On 27 January 2017 the Company, through its Lithuanian subsidiary, acquired company UAB Visos apsaugos paslaugos (acquisition price EUR 12 thousand).

On 30 January 2017 SIA Latio Namsaimnieks company title was changed into SIA Latvijas Namsaimnieks. Director and other contact details did not change.

On 30 January 2017 SIA Latvijas Namsaimnieks company title was changed into SIA L-Namsaimnieks. Director and other contact details did not change.

On 30 January 2017 the Company, through its Spanish subsidiary, established two new companies Aresi Gestion Residencial, S.L. and Aresi Euroinmo, S.L.

On 23 February 2017 Concentra Servicios y Mantenimiento, S.A. has submitted a petition for bankruptcy to official institutions in Spain, authorized to initiate the bankruptcy procedure. The decision to ask for initiation of bankruptcy of Concentra has been made after evaluation of commercial property administration and cleaning sector prospects in Spain.

On 23 February 2017 the Management Board Member Jonas Janukėnas, acting as CEO, left the Company, following petition for bankruptcy of Concentra.

On 16 March 2017 reorganization of the companies UAB Šilalės butų ūkis and UAB Šilalės būstas was completed. After the process of reorganization UAB Šilalės būstas was incorporated into UAB Šilalės butų ūkis with all the assets, rights and obligations. UAB Šilalės būstas ceased operations and was deregistered. After reorganization UAB Šilalės butų ūkis title was changed in to UAB Šilalės būstas, director and other contact details did not change.

On 5 April 2017 City Service SE sold Grupa Techniczna Sp. z o.o., enterprise code 122420503, a company active in Poland. The company was founded in 2014 and provided technical maintenance services to residential facilities and commercial facilities, managed by City Service group. City Service SE will continue investments in Poland in residential facility management market. Value of share sale — purchase agreement is EUR 46 thousand. Net assets of disposed subsidiary as of 31 December 2016 amounted to EUR (2,883) thousand.

4. SIGNIFICANT EVENTS (cont'd)

On 6 April 2017 the Company, through its Lithuanian subsidiary, acquired 57.71% stake in UAB Biržų butų ūkis. Value of the share purchase amounts to EUR 48 thousand.

On 13 April 2017 the Company, through its subsidiary operating in St. Peterburg, established new company OOO БЕРИНГ (share capital EUR 0.4 thousand). After establishment companies title was changed into OOO Территория комфорта.

On 21 April 2017 City Service received a lawsuit from Vilnius City municipality's administration and General Procurator's office. Quantum of the lawsuit is EUR 20.6 million. The Company is reasonably convinced that Vilnius City municipality's administration and General Procurator's office lawsuit on recovery of losses is without merit and legally unfounded. According to plaintiffs, loses might have arisen from public procurement agreements. Previously those agreements were investigated by Lithuanian courts and Supreme Court once and for all ruled that agreements are lawful, binding and, absolutely compliant with the laws. In spite of this, the term to file such kind of lawsuit to the court has long expired. As a result, the Company did not form any provisions related to this matter in its financial statements. Curently the case is being examined in the first instance court.

On 3 May 2017 City Service SE through a subsidiary sold SIA Namserviss, a company active in Latvia. The company was managed by City Service group. City Service SE will continue investments in Latvia in residential facility management market. Value of share sale — purchase agreement is EUR 3 thousand. Net assets of disposed subsidiary as of 31 December 2016 amounted to EUR (6) thousand.

On 4 May 2017, the Extraordinary General Shareholders meeting of City Service SE has been held. The shareholders increased the number of members of the management board of the Company and provided that there might be 1 (one) to 7 (seven) members of the management board and approved new wording of the Statutes.

On 22 May 2017, the Annual General Meeting of Shareholders of the Company has been held. The shareholders approved the set of consolidated annual financial statements of the Company for 2016, distributed the Company's profit for the year 2016.

On 23 May 2017 SIA CS company title was changed into SIA City Service. Other contact details did not change.

On 23 May 2017 SIA City Service company title was changed into SIA City Service Engineering. Other contact details did not change.

On 16 June 2017 the Company, through its Latvian subsidiary, acquired 100% stake in SIA Laba Enerģija.

On 19 June 2017 the Company, through its Latvian subsidiary, established new company SIA Ēku pārvaldīšanas serviss.

On 23 June 2017 Supervisory Board member Artūras Gudelis resigned from the Supervisory Board.

On 26 June 2017 new management structure of City Service SE was approved. Management board consisted of 5 management board members including chairman of the management board.

On 11 July 2017 the Company, through its Spanish subsidiary, established new companies Euronamas Gestion de Fincas Mrc, S.L. (share capital EUR 3 thousand), Euronamas Gestion de Fincas Madr, S.L. (share capital EUR 3 thousand), Esibrok Correduria de Seguros, S.L. (share capital EUR 3 thousand) and Interlift Mantenimiento y Ascensores, S.L (share capital EUR 3 thousand).

4. SIGNIFICANT EVENTS (cont'd)

On 20 July 2017 UAB Mano Sauga company title was changed into UAB Saugos projektų valdymas. Director and other contact details did not change.

On 24 July 2017 was initiated bankruptcy procedure for UAB Saugos projektų valdymas after Court of appeal did not change the ruling by which first instance court adjudged EUR 141 thousand from UAB Saugos projektų valdymas. From this date the Group ceased to consolidate this subsidiary in its Financial statements as from that date the Group has lost its effective control to it. UAB Saugos projektų valdymas is still presented in the Group's structure (Note 1.4) as City Service SE remains indirect shareholder of the subsidiary until the end of bankruptcy process.

On 11 August 2017 reorganization of UAB Mano Būstas was finished. Method of reorganisation was separation. After separation of property, rights and responsibilities was established a new company UAB City Service Engineering. After reorganization UAB Mano Būstas management and other contact details did not change.

In September 2017 the subsidiary of the Company operating in Poland, Zespół Zarządców Nieruchomości sp. z o.o., received a claim for PLN 6 million on compensation of damages. The subsidiary is convinced that claim is not reasonable and brought a civil action.

On 12 September 2017 the Company, through its Lithuanian subsidiary, established new company UAB Rinkų vystymas (share capital EUR 2.5 thousand).

On 1 October 2017 the Company, through its Spanish subsidiary, acquired company Administración de Fincas Jimenez, S.L. The main companies activity is administration of dwelling-houses in Spain (acquisition price EUR 364 thousand).

On 11 October 2017 Esibrok Correduria de Seguros, S.L. company title was changed into Eurodrauda Correguria de Seguros, S.L.U. Other contact details did not change.

On 17 October 2017 the Supervisory Board of the Company elected Ignas Krasauskas as a new Management Board member. Management Board consists of 6 management board members including chairman of the Management Board.

On 1 November 2017 the Company, through its Spanish subsidiary, acquired Jenasa portfolio, providing administration services to Madrid's apartment building owners communities. The investment amounted to EUR 1,000 thousand.

On 11 December 2017 the Company, through its Lithuanian subsidiary, established new company UAB Vaizdo stebėjimo sprendimai (share capital EUR 2.5 thousand).

On 12 December 2017 the Company, through its Polish subsidiary, acquired 100% stake in Certus-Serwis Sp. z o. o (acquisition price EUR 108 thousand).

5. OTHER INTANGIBLE ASSETS

Movement of other intangible assets in 2017 and 2016 is presented below:

	Total
COST:
Balance as of 1 January 2016	22,959
Additions arising from acquisitions of subsidiaries	6,664
Additions	1,759
Exchange differences	21
Retirements	(73)
Reclassifications	9
Balance as of 31 December 2016	31,339
Additions arising from acquisitions of subsidiaries	51
Additions	1,971
Disposals of subsidiaries	(526)
Exchange differences	422
Retirements	(89)
Reclassifications	175
Balance as of 31 December 2017	33,343
ACCUMULATED AMORTISATION:
Balance as of 1 January 2016	3,914
Charge for the year	1,130
Impairment	289
Exchange differences	(13)
Retirements	(73)
Balance as of 31 December 2016	5,247
Charge for the period	1,197
Disposals of subsiadiaries	(511)
Impairment	(34)
Exchange differences Retirements	42 (41)
Balance as of 31 December 2017	5,900
Net book value as of 31 December 2017	27,443
Net book value as of 31 December 2016	26,092

6. PROPERTY, PLANT AND EQUIPMENT

MOVEMENT OF FIXED ASSETS IN 2017 AND 2016 IS PRESENTED BELOW:

	Buildings and land	Vehicles	Other property, plant and equipment	Construction in progress*	Total
COST:
Balance as of 1 January 2016	9,498	6,867	10,413	39	26,817
Additions arising from acquisitions of subsidiaries	3	18	245	-	266
Additions	334	1,030	1,381	536	3,281
Disposals	(63)	(148)	(15)	-	(226)
Exchange differences	(62)	122	(127)	(5)	(72)
Retirements	-	-	(257)	-	(257)
Reclassifications	449	47	(3)	(88)	405
Balance as of 31 December 2016	10,159	7,936	11,637	482	30,214
Additions arising from acquisition of subsidiaries	3	3	5	-	11
Additions	58	2,180	1,667	844	4,749
Disposals of subsidiaries	-	(414)	(1,080)	-	(1,494)
Disposals	(1,432)	(76)	(50)	(3)	(1,561)
Exchange differences	123	45	359	18	545
Retirements	(116)	(50)	(298)	-	(464)
Reclassifications	258	18	614	(1,065)	(175)
Balance as of 31 December 2017	9,053	9,642	12,854	276	31,825
ACCUMULATED DEPRECIATION:
Balance as of 1 January 2016	1,859	3,446	2,937	-	8,242
Charge for the year	391	1,182	1,575	-	3,148
Impairment	-	-	410	-	410
Disposals	(14)	(135)	(4)	-	(153)
Exchange differences	-	103	(3)	-	100
Retirements	-	-	(225)	-	(225)
Reclassifications	87	20	(21)	-	86
Balance as of 31 December 2016	2,323	4,616	4,669	-	11,608
Charge for the period	420	1,143	1,611	-	3,174
Disposals of subsidiaries	-	(167)	(925)	-	(1,092)
Disposals	(77)	(16)	(34)	-	(127)
Impairment	-	-	(39)	-	(39)
Exchange differences	17	12	93	-	122
Retirements	(53)	(49)	(182)	-	(284)
Balance as of 31 December 2017	2,630	5,539	5,193	-	13,362
Net book value as of 31 December 2017	6,423	4,103	7,661	276	18,463
Net book value as of 31 December 2016	7,836	3,320	6,968	482	18,606

* Includes prepayments for tangible and intangible assets.

7. TRADE RECEIVABLES

TRADE RECEIVABLES OF THE GROUP AS OF 31 DECEMBER 2017 AND 31 DECEMBER 2016 WERE AS FOLLOWS:

	Balance as of 31 December 2017	Balance as of 31 December 2016
Trade receivables, gross	40,026	46,593
Less: allowance for doubtful trade receivables	(9,009)	(9,107)
Less: remeasurement of trade receivables to liquidation value	-	(2,768)
Trade receivables, net	31,017	34,718

Trade receivables and other receivables generally have 30 - 90 days payment terms.

Non-current receivables mainly comprise of long-term part of receivables for residential buildings' repair works performed.

1. BORROWINGS

BORROWINGS OF THE GROUP AND THE COMPANY AS OF 31 DECEMBER 2017 AND 31 DECEMBER 2016 WERE AS FOLLOWS:

Creditor	Currency	Balance as of 31 December 2017	Balance as of 31 December 2016
SHORT-TERM LOANS
Bank loans	EUR	-	110
Bank loans	PLN	-	224
SHORT-TERM LOANS BALANCE		-	334
LONG-TERM LOANS
Bank loans	EUR	17,901	20,987
Minus: long term loans of the current year		(3,290)	(2,989)
LONG-TERM LOANS BALANCE		14,611	17,998

For the loans and overdraft the Company and its subsidiaries have pledged to the bank real estate and bank accounts of the Company and its subsidiaries in Lithuania. Shares of UAB Mano Būstas are pledged to Luminor Bank AB as well.

9. COST OF SALES

	2017 Q4	2016 Q4
Services of subcontractors and materials used	76,133	77,000
Wages and salaries and social security	41,199	60,352
Depreciation	1,050	1,140
Cost of goods sold	150	47
Other	3,334	3,097
Total cost of sales	121,866	141,636

10. GENERAL AND ADMINISTRATIVE EXPENSES

	2017 Q4	2016 Q4
Wages and salaries and social security	17,156	14,495
Depreciation and amortisation	3,311	3,120
Consulting and similar expenses	1,912	1,733
Rent of premises and other assets	1,579	1,199
Commissions for collection of payments	659	698
Allowance for and write-off of receivables	619	628
Taxes other than income tax	568	583
Computer software maintenance	542	604
Representational costs	517	438
Advertising	471	499
Fuel expenses	449	352
Communication expenses	397	375
Insurance	375	365
Business trips and training	333	290
Utilities	286	242
Transportation	272	360
Bank payments	168	143
Consulting and tax expenses related with acquisitions, disposals and reorganisation	131	414
Charity and support	85	76
Impairment of fixed assets	(73)	-
Result on revaluation of accounts receivable and payables to liquidation value (associated with subsidiary Concentra)	(1,952)	(3,318)
Acrruals related with potentially realizable guarantees provided for Spanish subsidiary Concentra	-	1,253
Other	2,117	2,172
Total general and administrative expenses	29,922	26,721

11. OTHER OPERATING INCOME (EXPENSES)

	2017 Q4	2016 Q4
Income from rent	118	191
(Loss) gain on disposal of property, plant and equipment	(728)	10
Depreciation of rented assets	(28)	(66)
Other income (expenses), net	65	(692)
Total other operating activity	(573)	(557)

12. FINANCE INCOME AND (EXPENSES)

	2017 Q4	2016 Q4
Interest income	540	786
Foreign currency exchange gain	461	233
Other financial income	-	478
Total finance income	1,001	1,497
Interest (expenses)	(539)	(692)
Foreign currency exchange (loss)	(34)	(544)
(Loss) on disposal of investments	(421)	-
Other financial (loss)	-	(33)
Total finance (expenses)	(994)	(1,269)
Financial activity, net	7	228

13. DIVIDENDS PER SHARE

	2017 Q4	2016 Q4
Approved dividends	19,598	3,161
Number of shares (in thousand)	31,610	31,610
Approved dividends per share	0.62	0.10

14. 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 are considered the following:

• − Global energy consulting OU (Estonia) the ultimate shareholder of the Company since 2013;
• − UAB Lag&d controlled by the same ultimate parent;
• − UAB ICOR the shareholder of the Company;
• − Subsidiaries of UAB ICOR (same ultimate controlling shareholder);
• − Subsidiaries of City Service SE (for the list of the subsidiaries, see also Note 1.4);
• − A. Gudelis, T. Kleiva, E. Paulauskas, V. Turonis, A. Jablonskienė, I. Krasauskas, A. Górecka Kolasa, L. Lapinskas, E. Grachiov (Management of the Group companies);

Transactions with related parties include sales and purchases of goods and services in the ordinary course of business, and acquisitions and disposals of property, plant and equipment. Property, plant and equipment to related parties during the 2017 were sold in accordance of arm's length principle.

UAB Mano Būstas and Zespół Zarządców Nieruchomości sp. z o.o. have provided EUR 34.5 million guarantees each for City Service SE to Luminor Bank AB under credit agreement. Also, UAB Mano Būstas has provided EUR 5.75 million guarantee for City Service SE to Luminor Bank AB under bank account credit agreement. Shares of UAB Mano Būstas are pledged to Luminor Bank AB as well. City Service SE has an accrual EUR 1.25 million for possible loss arrising from guarantees for Concentra to its clients.

2017 Q4	Purchases	Sales	Receivables and prepayments	Payables
UAB ICOR Subsidiaries of UAB ICOR:	460	37	-	386
AB Axis Industries	328	324	67	-
Other subsidiaries of UAB ICOR	472	463	102	573
Total	1,260	824	169	959

15. SUBSEQUENT EVENTS

On 12 January 2018 the Company, through its Polish subsidiary, established new company Tumieszkamy Sp. z o. o (share capital EUR 1.2 thousand).

On 18 January 2018 the Company, through its Lithuanian subsidiary, acquired 100% stake in UAB Acta iuventus (acquisition price EUR 305 thousand) which provides security services. At the moment of issuance of these financial statements Group's management was not able to obtain reliable financial information of the newly acquired company and evaluate fair value of net assets as at the acquistion.

City Service SE Narva mnt. 5, 10117, Tallinn, the Republic of Estonia; address in Lithuania: Ozo str. 12A, LT – 08200 Vilnius, Phone (+370 5) 2394900, fax (+370 5) 2394848, E-mail. info@cityservice.eu www.cityservice.eu

Consolidated interim financial statements for the twelve months period ended