Market announcement

Title

Financial results 6M 2009

Message

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 30.06.2009,
AS Järvevana earned finance income in the amount of EEK 4.6 million.
EEK 225 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 30 June
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statement of charges, the Public Prosecutor's Office has withdrawn the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. The
first hearing in the land-swap case has been scheduled for 12 November 2009.

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 pro-
ceedings. (http://www.nasdaqomxbaltic.com/market/?pg=news&news_id=234331).

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 6M 2009
consolidated, in thousand EEK and EUR
                                           EEK                   EUR
                                   6M 2009     6M 2008    6M 2009    6M 2008

Revenue                                  -   2 372 305          -    151 618
Cost of goods sold                       -  (1 913 248)         -   (122 279)

Gross profit                             -     459 057          -     29 339

Marketing expenses                       -     (17 491)         -     (1 118)
Administrative and general expenses (1 017)   (101 020)       (65)    (6 456)
Other operating income                   -       5 929          -        379
Other operating expenses                 -      (7 601)         -       (486)

Operating profit                    (1 017)    338 874        (65)    21 658
Financial income and expenses        4 625      (5 120)       296       (327)
 incl. investments into associate
       companies and joint ventures      -       1 202          -         77
       interest expense                  -      (7 678)         -       (491)
       foreign exchange gain             -      (5 870)         -       (375)
       other fin. income and expen.  4 625       7 226        296        462

Profit before tax                    3 608     333 754        231     21 331

Corporate income tax expense             -     (40 623)         -     (2 596)

Net profit for current period        3 608     293 131        231     18 735
 incl. equity holders of the parent  3 608     290 178        231     18 546
       minority interest                 -       2 953          -        189

Other comprehensive income
Exchange differences on
translating foreign subsidiaries         -      (6 142)         -       (393)

Comprehensive income                     -     286 989          -     18 342
 incl. equity holders of the parent  3 608     284 036        231     18 153
       minority interest                 -       2 953          -        189

Earnings per share for profit attributable
to the equity holders of the parent
(basic and diluted, in EEK and EUR)   0,20       16,39       0,01       1,05


STATEMENT OF COMPREHENSIVE INCOME Q2 2009
consolidated, unaudited, in thousand EEK and EUR

                                           EEK                   EUR
                                   Q2 2009     Q2 2008    Q2 2009    Q2 2008

Revenue                                  -   1 252 733          -     80 064
Cost of goods sold                       -  (1 028 871)         -    (65 757)

Gross profit                             -     223 862          -     14 307

Marketing expenses                       -      (9 603)         -       (614)
Administrative and general expenses   (574)    (51 647)       (37)    (3 301)
Other operating income                   -       4 236          -        271
Other operating expenses                 -      (5 874)         -       (375)

Operating profit                      (574)    160 974        (37)    10 288
Financial income and expenses        2 580      (3 359)       165       (215)
 incl.investments into associate
      companies and joint ventures       -      (1 078)         -        (69)
      interest expense                   -      (2 095)         -       (134)
      foreign exchange gain              -      (4 178)         -       (267)
      other fin. income and expenses 2 580       3 992        165        255

Profit before tax                    2 006     157 615        128     10 073

Corporate income tax expense             -     (20 485)         -     (1 309)

Net profit for current period        2 006     137 130        128      8 764
 incl. equity holders of the parent  2 006     135 296        128      8 647
       minority interest                 -       1 834          -        117

Other comprehensive income
Exchange differences on
translating foreign subsidiaries         -      (5 251)         -       (336)

Comprehensive income                     -     131 879          -      8 428
 incl. equity holders of the parent  2 006     130 045        128      8 311
       minority interest                 -       1 834          -        117

Earnings per share for profit attributable
to the equity holders of the parent
(basic and diluted, in EEK and EUR)   0,11        7,64       0,01       0,49


STATEMENT OF FINANCIAL POSITION AS OF 30.06.2009
consolidated, in thousand EEK and EUR
                                       EEK                      EUR
                             30.06.2009   31.12.2008  30.06.2009  31.12.2008
ASSETS
Current assets
Cash and cash equivalents        30 026       26 242       1 919       1 677
Trade and other receivables     225 724      225 927      14 427      14 439
Total current assets            255 750      252 169      16 346      16 116

Non-current assets
Property, plant and equipment        48            -           3           -
Total non-current assets             48            -           3           -

TOTAL ASSETS                    255 798      252 169      16 349      16 116

LIABILITIES AND OWNERS' EQUITY
Current liabilities
Trade and other payables            263          242          18          16
Short-term provisions            17 500       17 500       1 118       1 118
Total current liabilities        17 763       17 742       1 136       1 134

Total liabilities                17 763       17 742       1 136       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                43 335       39 727       2 770       2 539
Total equity                    238 035      234 427      15 213      14 982

TOTAL LIABILITIES AND EQUITY    255 798      252 169      16 349      16 116


Toomas Annus
Member of Board
+372 6 805 400
toomas.annus@merko.ee