Tallinn, Estonia, 2011-05-20 08:30 CEST (GLOBE NEWSWIRE) --
MANAGEMENT REPORT
General information
The company was formed after the demerger from AS Järvevana (former AS Merko Ehitus), as a result of which the complete set of assets related to the business activities of the construction company was separated and transferred to the new 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 EUR 16.0 million (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 the land swap.
Operating activities
The company does not have active business operations and its only income is finance income earned on the investment of the company’s liquid funds. Between 01.01.2011 and 31.03.2011, AS Järvevana earned finance income in the amount of EUR 43.9 thousand. The most significant cost article is the legal costs related to the criminal proceedings of the land swap, which totalled 41% of the administrative expenses in 2011 3 months. A claim against AS Merko Ehitus arising from a collaboration agreement totalled EUR 13.4 million of the company’s assets (http://www.merko.ee/upload/File/Restruktureerimise%20dokumendid/Koost%F6%F6leping%20ENG.pdf). As of 31 December 2010, one person was employed by AS Järvevana, its Management Board member Toomas Annus. The company’s activities do not have seasonal or cyclical nature.
At 3 April 2009, the Public Prosecutor’s Office submitted a statement of charges (dated 31.03.2009) against AS Järvevana and Toomas Annus in criminal case no. 05913000055 concerning the land swap (http://www.nasdaqomxbaltic.com/market/?pg=news&news_id=232810).
At 12 November 2009, the judicial proceedings concerning the land swap case commenced at Harju County Court. An overview of the proceedings is available at: http://www.nasdaqomxbaltic.com/market/?pg=details&instrument=
EE3100003559&list=3&tab=news&news_id=238437. In the statement of charges, AS Järvevana has been incriminated with five episodes of giving a bribe and the matter has been referred for judicial proceedings to Harju County Court. The subject of proof concerning bribery charges has three elements, the absence of even one of which precludes the necessary elements of criminal offence: (i) promising or giving of a material reward to an official; (ii) illegal act by an official in favour of a person giving a bribe; (iii) equivalence relation between the first and second elements, i.e. giving of a reward to an official for a favourable act. Evidence also needs to be produced against AS Järvevana in the matter that (i) the act was committed by a senior executive of a legal person, and (ii) the act was committed in the interests of the legal person. AS Järvevana has not concluded any land swap transactions described in the statement of charges. These transactions were concluded and hypothetical benefits could have been reaped by independent subsidiaries as legal persons who have not been charged. Even according to the statement of charges, AS Järvevana has never swapped land. It is also evident that the acts could not have been illegal because they had been permitted under § 19 of the Nature Conservation Act which rules out the qualification of bribery.
By the end of 2010, the court had heard 81 prosecution’s witnesses, and none of these witnesses have testified to a bribe being promised or given, or to any illegal actions. The prosecution has not asked any of its witnesses about the fact to be proved – whether anyone has been promised or has been given a bribe. When the court and the defence have asked about this, the prosecution’s witnesses have always answered with “No”. The Prosecutor’s Office has now presented all of its documentary evidence. This means that the prosecution has finished the presentation of its evidence. In our opinion, not a single piece of evidence presented by the prosecution has proven that a bribe was promised or given or that illegal transactions have taken place or that the aforementioned things are related in any way.
In 2011, the court hearings in the land swap case continued with the questioning of the witnesses called by the accused. By now, the court has heard all the witnesses called by AS Järvevana. The 2011 court schedule for this case has been set until 15 December 2011, and will involve the questioning of the witnesses called by the other defence lawyers as well as the presentation of a great amount of documentary evidence by the defence. The Court of First Instance is expected to make its ruling in 2011 or in the first quarter of 2012. The court case could take a very long time, as the Republic of Estonia has a three-level court system and the case may further be filed with the European Court of Human Rights.
The company considers the charges brought against it to be groundless. The Supervisory Board and Management Board of AS Järvevana are convinced that the activities of the company and its governing bodies have been conducted properly and in conformity with the laws of the Republic of Estonia, and that relevant proof can be supplied in the court.
Share and shareholders
The largest shareholders of AS Järvevana as of 31.03.2011
| Number of shares | % of shares | |
| AS Riverito | 12 742 686 | 71,99% |
| ING Luxembourg S.A., clients | 963 376 | 5,44% |
| Skandinaviska Enskilda Banken Ab, clients | 597 459 | 3,38% |
| Tenlion OÜ | 208 495 | 1,18% |
From 15.09.2009, the shares of AS Järvevana are included in the secondary list of NASDAQ OMX Tallinn Stock Exchange. During the demerger of AS Merko Ehitus, the company’s business name was changed to AS Järvevana and from 04.08.2008, the shares of AS Järvevana are traded under the symbol of JRV1T. In 2011 3 months, 72 transactions were performed with the shares of AS Järvevana in the course of which 64 848 shares were traded and the total monetary value of transactions was EUR 23 246. The lowest transaction price was EUR 0.33 and the highest transaction price was EUR 0.39 per share. The closing price of the shares as of 31.03.2011 was EUR 0.36.
STATEMENT OF COMPREHENSIVE INCOME
unaudited, in thousand euros
|
2011 3 months |
2010 3 months |
||
| General and administrative expenses | (61) | (69) | |
| Operating profit (loss) | (61) | (69) | |
| Finance income and costs | 44 | 65 | |
| incl. interest income | 44 | 65 | |
| Net profit (loss) for the period | (17) | (4) | |
|
incl. net profit (loss) attributable to equity holders of the parent |
(17) | (4) | |
| Comprehensive profit (loss) for the period | (17) | (4) | |
|
incl. comprehensive profit (loss) attributable to equity holders of the parent |
(17) | (4) | |
|
Earnings per share for profit attributable to equity holders of the parent (basic and diluted, in EUR) |
(0,00) | (0,00) | |
STATEMENT OF FINANCIAL POSITION
unaudited, in thousand euros
| 31.03.2011 | 31.12.2010 | |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 1 252 | 1 266 |
| Short-term deposits | 1 300 | 1 300 |
| Trade and other receivables | 13 401 | 13 402 |
| Total current assets | 15 953 | 15 968 |
| Non-current assets | ||
| Property, plant and equipment | 1 | 1 |
| Total non-current assets | 1 | 1 |
| TOTAL ASSETS | 15 954 | 15 969 |
| LIABILITIES AND EQUITY | ||
| Current liabilities | ||
| Trade and other payables | 24 | 22 |
| Short-term provisions | 1 118 | 1 118 |
| Total current liabilities | 1 142 | 1 140 |
| Total liabilities | 1 142 | 1 140 |
| Equity | ||
| Share capital | 11 312 | 11 312 |
| Statutory reserve capital | 1 131 | 1 131 |
| Retained earnings | 2 369 | 2 386 |
| Total equity | 14 812 | 14 829 |
| TOTAL LIABILITIES AND EQUITY | 15 954 | 15 969 |
Toomas Annus
Member of Management Board
+372 6 805 400
toomas.annus@merko.ee
