Market announcement

Title

Financial results 12M 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 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statement of charges, the Public Prosecutor's Office has withdrawn the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