Market announcement

Title

Financial results 9M 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 30.09.2009,
AS Järvevana earned finance income in the amount of EEK 5.9 million.
The most significant cost item was the legal expenses related to the
“land swap” criminal case; these expenses constitute nearly 80% of the
general administrative costs in the first 9 months of 2009. EEK 217 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statement of charges, the Public Prosecutor's Office has withdrawn the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.

The trial in the “land swap” case began at the Harju County Court
on 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
proceedings. (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 9M 2009
consolidated, in thousand EEK and EUR
                                           EEK                   EUR
                                   9M 2009     9M 2008    9M 2009    9M 2008

Revenue                                  -   2 798 466          -    178 855
Cost of goods sold                       -  (2 273 798)         -   (145 322)

Gross profit                             -     524 668          -     33 533

Marketing expenses                       -     (21 143)         -     (1 351)
Administrative and general expenses (7 989)   (122 199)      (510)    (7 810)
Other operating income                   -       6 781          -        433
Other operating expenses                 -      (7 773)         -       (497)

Operating profit                    (7 989)    380 334       (510)    24 308

Financial income and expenses        5 934        (310)       379        (19)
 incl. investments into associate
 companies and joint ventures            -       1 282          -         82
 interest expense                        -      (8 734)         -       (558)
 foreign exchange gain                   -      (5 875)         -       (375)
 other financial income and expenses 5 934      13 017        379        832

Profit before tax                   (2 055)    380 024       (131)    24 289

Corporate income tax expense             -     (41 100)         -     (2 627)

Net profit for current period       (2 055)    338 924       (131)    21 662
 incl. equity holders of the parent (2 055)    334 709       (131)    21 392
       minority interest                 -       4 215          -        270

Other comprehensive income
Exchange differences on
translating foreign subsidiaries         -       5 085         -         325

Comprehensive income                (2 055)    344 009          -     21 987
 incl. equity holders of the parent (2 055)    339 794        231     21 717
       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       18,91       0,01       1,21


STATEMENT OF COMPREHENSIVE INCOME Q3 2009
consolidated, unaudited, in thousand EEK and EUR

                                           EEK                   EUR
                                   Q3 2009     Q3 2008    Q3 2009    Q3 2008

Revenue                                  -     426 162          -     27 237
Cost of goods sold                       -    (360 550)         -    (23 043)

Gross profit                             -      65 612          -      4 194

Marketing expenses                       -      (3 652)         -       (233)
Administrative and general expenses (6 973)    (21 180)      (446)    (1 354)
Other operating income                   -         852          -         54
Other operating expenses                 -        (173)         -        (11)

Operating profit                    (6 973)     41 459       (446)     2 650

Financial income and expenses        1 310       4 811         84        307
 incl. investments into associate
 companies and joint ventures            -          80          -          5
 interest expense                        -      (1 055)         -        (67)
 foreign exchange gain                   -          (5)         -         (0)
 other financial income and expenses 1 310       5 791         84        369

Profit before tax                   (5 663)     46 270       (362)     2 957

Corporate income tax expense             -        (477)         -        (30)

Net profit for current period       (5 663)     45 793       (362)     2 927
 incl. equity holders of the parent (5 663)     44 531       (362)     2 846
       minority interest                 -       1 262          -         81

Other comprehensive income
Exchange differences on
translating foreign subsidiaries         -      11 228          -        718

Comprehensive income                (5 663)     57 021       (362)     3 645
 incl. equity holders of the parent (5 663)     55 759       (362)     3 564
       minority interest                 -       1 262          -         81

Earnings per share for profit attributable
to the equity holders of the parent
(basic and diluted, in EEK and EUR)  (0,32)       2,52      (0,02)      0,16


STATEMENT OF FINANCIAL POSITION AS OF 30.09.2009
consolidated, in thousand EEK and EUR
                                       EEK                      EUR
                             30.09.2009   31.12.2008  30.09.2009  31.12.2008
ASSETS
Current assets
Cash and cash equivalents        31 174       26 242       1 992       1 677
Trade and other receivables     218 784      225 927      13 983      14 439
Total current assets            249 958      252 169      15 975      16 116

Non-current assets
Property, plant and equipment        44            -           3           -
Total non-current assets             44            -           3           -

TOTAL ASSETS                    250 002      252 169      15 978      16 116

LIABILITIES AND OWNERS' EQUITY
Current liabilities
Trade and other payables            130          242           9          16
Short-term provisions            17 500       17 500       1 118       1 118
Total current liabilities        17 630       17 742       1 127       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                37 672       39 727       2 408       2 539
Total equity                    232 372      234 427      14 851      14 982

TOTAL LIABILITIES AND EQUITY    250 002      252 169      15 978      16 116


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