MANAGEMENT REPORT
General information
The Company was formed after demerger from AS Järvevana, as a result of
which the complete set of assets related to the business activities of the
construction company was separated and transferred to AS Merko Ehitus,
including all concluded construction contracts, subcontracts and supply
contracts, machinery, equipment and employees, all professional know-how
and cash flows from uninterrupted, continuous economic activities, except
for liabilities arising from the criminal case no. 05913000055, including
compensations for damage, penalties and other payables, legal expenses and
liquid assets to cover potential liabilities arising from the criminal
proceedings in the amount of EEK 250 million. The Company does not have
ordinary economic activities and the only objective of its activities is to
protect the interests of the Company and shareholders in the long-lasting
criminal proceedings related to land swap.
Operating activities
The public limited company does not have active business operations. The
Company's only income is generated from finance income earned on the
investment of the Company's liquid funds. Between 01.01.2009 and 31.12.2009,
AS Järvevana earned finance income in the amount of EEK 7.2 million. The
most significant cost item was the legal expenses related to the “land swap”
criminal case; these expenses constitute 75% of the general administrative
costs in 2009. EEK 209 million of the assets constitutes the claim against
AS Merko Ehitus from cooperation agreement (http://www.merko.ee/upload/File/
Restruktureerimise%20dokumendid/Koost%F6%F6leping%20ENG.pdf).
As of 31 December 2009, the sole member of AS Järvevana's Management Board
is Toomas Annus. The company's operation does not have a seasonal and
cyclic nature.
On 3 April 2009, the Public Prosecutor's Office presented the statement of
charges (dated 31 March 2009) against AS Järvevana and Toomas Annus in the
criminal matter No 05913000055 concerning the land-swap
(http://www.nasdaqomxbaltic.com/market/?pg=news&news_id=232810). In the
statement of charges, the Public Prosecutor's Office has withdrawn the
initially included criminal episodes (http://www.nasdaqomxbaltic.com/market/
?pg=news&news_id=218499) whereby Toomas Annus abused the trust in the
company, by not purchasing the property under protection, and the
suspicion that the property received as a result of the swap deal was
transferred to the person chosen by Villu Reiljan. The Prosecutor's Office
has added a criminal episode to the charges stating that AS Järvevana
allegedly brokered the swap of two properties with the state at the request
of Kalev Kangur. Based on the statement of charges, five episodes in total
will be presented at the court hearing. The contents of the statement of
charges have been included in the 2008 annual report of AS Järvevana.
On 3 April 2009, the Prosecutor's Office declared AS Järvevana a suspect in
the criminal case on a bribery related to Ivo Parbus. According to the
suspicion, a representative of the Company gave Ivo Parbus a gift coupon
of EEK 15 thousand for accelerated proceedings with two detailed plans and
one construction project. The suspicion was submitted against AS Järvevana
because the Company owns properties in the interests of which the bribe
suspected was allegedly given.
On 26 May 2009 the Prosecutor's Office terminated the proceedings in Ivo
Parbus criminal case regarding the suspected AS Järvevana on the basis
of § 203, sub-section 6 of the Code of Criminal Procedure on the ground of
the lack of purposefulness of the punishment. AS Järvevana has agreed to
the termination of the criminal proceedings for the purposes of procedural
efficiency, in order to save time and expenses. No conditions or
obligations were stipulated for AS Järvevana upon the termination of the
criminal proceedings.
(http://www.nasdaqomxbaltic.com/market/?pg=news&news_id=234331).
On 26 November the court hearing on the so called land-swapping case
commenced in the Harju County Court. Overview of the land-swapping case:
http://www.nasdaqomxbaltic.com/market/?pg=details&instrument=EE3100003559&list=3
&tab=news&news_id=238437.
The Company considers the submitted suspicion to be groundless. The
Supervisory Board and Management Board of AS Järvevana are convinced that
the activities of the Company and its directing bodies have been correct
and in compliance with the laws of the Republic of Estonia and are able
to provide relevant evidence in court.
STATEMENT OF COMPREHENSIVE INCOME 12M 2009
consolidated, unaudited, in thousand EEK and EUR
EEK EUR
12M 2009 12M 2008 12M 2009 12M 2008
Revenue - 2 798 466 - 178 854
Cost of goods sold - (2 273 798) - (145 322)
Gross profit - 524 668 - 33 532
Marketing expenses - (21 143) - (1 351)
Administrative and general expenses (9 273) (123 699) (593) (7 906)
Other operating income - 6 781 - 434
Other operating expenses - (7 773) - (497)
Operating profit (9 273) 378 834 (593) 24 212
Financial income and expenses 7 171 1 983 459 127
incl. investments into associate
companies and joint ventures - 1 282 - 82
interest expense - (8 734) - (558)
foreign exchange gain - (5 875) - (375)
other fin. income and expen. 7 171 15 310 459 978
Profit before tax (2 102) 380 817 (134) 24 339
Corporate income tax expense - (41 100) - (2 627)
Net profit for current period (2 102) 339 717 (134) 21 712
incl. equity holders of the parent (2 102) 335 502 (134) 21 442
minority interest - 4 215 - 270
Other comprehensive income
Exchange differences on
translating foreign subsidiaries - 5 085 - 325
Comprehensive income (2 102) 344 802 (134) 22 037
incl. equity holders of the parent (2 102) 340 587 (134) 21 767
minority interest - 4 215 - 270
Earnings per share for profit attributable
to the equity holders of the parent
(basic and diluted, in EEK and EUR) (0,12) 18,95 (0,01) 1,21
STATEMENT OF COMPREHENSIVE INCOME Q4 2009
consolidated, unaudited, in thousand EEK and EUR
EEK EUR
Q4 2009 Q4 2008 Q4 2009 Q4 2008
Administrative and general expenses (1 284) (1 499) (82) (96)
Operating profit (1 284) (1 499) (82) (96)
Financial income and expenses 1 237 2 292 79 147
other financial income and expenses 1 237 2 292 79 147
Net profit for current period (47) 793 (3) 51
incl. equity holders of the parent (47) 793 (3) 51
Comprehensive income (47) 793 (3) 51
incl. equity holders of the parent (47) 793 (3) 51
Earnings per share for profit attributable
to the equity holders of the parent
(basic and diluted, in EEK and EUR) 0,00 0,04 0,00 0,00
STATEMENT OF FINANCIAL POSITION AS OF 31.12.2009
consolidated, unaudited, in thousand EEK and EUR
EEK EUR
31.12.2009 31.12.2008 31.12.2009 31.12.2008
ASSETS
Current assets
Cash and cash equivalents 30 425 26 242 1 944 1 677
Short-term deposits 10 000 - 639 -
Trade and other receivables 209 890 225 927 13 415 14 439
Total current assets 250 315 252 169 15 998 16 116
Non-current assets
Property, plant and equipment 40 - 2 -
Total non-current assets 40 - 2 -
TOTAL ASSETS 250 355 252 169 16 000 16 116
LIABILITIES AND OWNERS' EQUITY
Current liabilities
Trade and other payables 530 242 34 16
Short-term provisions 17 500 17 500 1 118 1 118
Total current liabilities 18 030 17 742 1 152 1 134
Equity
Share capital 177 000 177 000 11 312 11 312
Statutory reserve capital 17 700 17 700 1 131 1 131
Retained earnings 37 625 39 727 2 405 2 539
Total equity 232 325 234 427 14 848 14 982
TOTAL LIABILITIES AND EQUITY 250 355 252 169 16 000 16 116
Toomas Annus
Member of Board
+372 6 805 400
toomas.annus@merko.ee
