Tallinn, Estonia, 2012-05-25 15:30 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. 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 01.01.2012 and 31.03.2012, AS Järvevana earned finance income in the amount of EUR 56.8 thousand. The most significant cost article is the legal costs related to the criminal proceedings of the land swap, which made up 55% of the administrative expenses in 2012 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%F6
leping%20ENG.pdf). As at 31 March 2012, one person was employed by AS Järvevana, its Director Toomas Annus. The company’s activities do not have a 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 a bribery. It has been proven that more than 180 legal transactions have been performed on the same bases and by the same procedure by different persons.
The court has completed the judicial investigation relating to the so-called “land swap case”. During the judicial investigation, more than a hundred witnesses were questioned, none of whom mentioned promising or giving a bribe which is element of the subject of proof. All documentary evidence has been disclosed which according to the company’s view lacks any kind of information referring to bribe.
The prosecutor has requested AS Järvevana to be punished by a pecuniary punishment of EUR 1.598 million. The requested pecuniary punishment is unusually large and a pecuniary punishment of such magnitude has not hitherto been applied in Estonian court practice. In case of an acquittal, no such financial liabilities arise; on the contrary, the state would have to compensate all reasonable legal fees.
The defence counsel of AS Järvevana has submitted a defence speech on 350 pages for the court and has asked the court to acquit the accused because no criminal offence has been committed. The accused have also presented their closing arguments.
The court of first instance will render its judgment on 22 June or in September 2012. Both counterparties have the right to appeal. Considering the extraordinary volume and complexity of the case, also the court system consisting of three instances, the final judgment is probably not achieved in 2012 but rather in the second half of 2013 or even later.
In case of the judgment of conviction, its entry into force and judicial record, the legal risks consist of pecuniary punishment, which according to the Income Tax Act is also subject to taxation with income tax, and hindrances to participation in public procurement.
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 main shareholders of AS Järvevana as of 31.03.2012
| 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 | 527 923 | 2,98% |
| Tenlion OÜ | 222 690 | 1,26% |
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 2012 3 months, 119 transactions were performed with the shares of AS Järvevana in the course of which 150,660 shares were traded and the total monetary value of transactions was EUR 60,021. The lowest transaction price was EUR 0.35 and the highest transaction price was EUR 0.44 per share. The closing price of the shares as of 31.03.2012 was EUR 0.41.
STATEMENT OF COMPREHENSIVE INCOME
unaudited, in thousand euros
|
2012 3 months |
2011 3 months |
|
| General and administrative expenses | (71) | (61) |
| Operating loss | (71) | (61) |
| Finance income and costs | 57 | 44 |
| incl. interest income | 57 | 44 |
| Net loss for the period | (14) | (17) |
| Comprehensive loss for the period | (14) | (17) |
| Earnings per share (basic and diluted, in EUR) | (0,00) | (0,00) |
STATEMENT OF FINANCIAL POSITION
unaudited, in thousand euros
| 31.03.2012 | 31.12.2011 | |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 2 509 | 2 531 |
| Trade and other receivables | 13 401 | 13 403 |
| Total current assets | 15 910 | 15 934 |
| Non-current assets | ||
| Property, plant and equipment | 32 | 35 |
| Total non-current assets | 32 | 35 |
| TOTAL ASSETS | 15 942 | 15 969 |
| LIABILITIES AND EQUITY | ||
| Current liabilities | ||
| Trade and other payables | 16 | 29 |
| Short-term provisions | 1 118 | 1 118 |
| Total current liabilities | 1 134 | 1 147 |
| Total liabilities | 1 134 | 1 147 |
| Equity | ||
| Share capital | 12 000 | 12 000 |
| Statutory reserve capital | 1 131 | 1 131 |
| Retained earnings | 1 677 | 1 691 |
| Total equity | 14 808 | 14 822 |
| TOTAL LIABILITIES AND EQUITY | 15 942 | 15 969 |
Toomas Annus
Member of Management Board
+372 6 805 400
toomas.annus@merko.ee
