Börsiteade

Pealkiri

Interim financial results for 2008 and Q4

Teade

MANAGEMENT REPORT

General information

At a joint meeting held at 14 March 2008, the Management Board and the
Supervisory Board of AS Järvevana adopted a resolution to restructure the
Company and separate operating activities from the criminal proceedings
related to the land swap. The Company's management estimates that the
restructuring of the Company is the best way to ensure its sustainable
development and protect the interests of shareholders and employees in
the long-lasting criminal proceedings related to the land swap.

On 15 April 2008, the management of AS Järvevana presented the Company's
restructuring plan (http://www.baltic.omxgroup.com/market/?pg=details&
instrument=EE3100003559&list=2&tab=news&news_id=222602), according to
which AS Merko Ehitus was split up/demerged so that AS Merko Ehitus, e.g.
assets (other than liquid assets in the amount of 250 million kroons),
liabilities and contracts as well as the business name was separated and
transferred to the new company being set up.

Pursuant to the division plan (http://www.merko.ee/upload/File/Restruktu
reerimise%20dokumendid/AS%20Merko%20Ehitus%20jagunemiskava%20ENG.pdf), upon
the division, AS Järvevana transferred to AS Merko Ehitus the entire set of
assets related to the economic activities of the building company, including
all concluded building, subcontracting and supply contracts; the equipment,
machinery and employees; all professional know-how and cash-flows without
interrupting the continuing economic activities and finding a way for a rapid
acquittal in the criminal case no 05913000055 that would consider the
interests of the shareholders remained as the sole activity of the company
(http://www.baltic.omxnordicexchange.com/market/?pg=news&news_id=226059).

On 3 June 2008 the Annual General Meeting (http://www.baltic.omxnordic
exchange.com/market/?pg=news&news_id=226094) approved the division of the
company to into the limited companies new Merko Ehitus (registry code
11520257) and Järvevana (registry code 10068022).

On 1 August 2008, the registration department of Harju County Court made an
entry in the Commercial Register registering the division of AS Merko Ehitus
(registry code 10068022, with the new business name ‘Aktsiaselts Järvevana')
into the limited companies Merko Ehitus (registry code 11520257) and
Järvevana (registry code 10068022).

Business operations
 
The company was formed after the division of AS Järvevana which resulted in
the assigning and surrendering of the entire set of assets connected to the
business activities of the construction company including the concluded
construction contracts, subcontracts and supply contracts, machines,
equipment and employees, all the professional knowhow and cash flows from
the uninterrupted and continuing business activities to AS Merko Ehitus,
except the liabilities arising from the criminal case no 05913000055,
including the payable compensations for damages, fines and other claims,
legal costs and the cover funds for the potential liabilities arising from
the criminal case in the amount of 250 million Estonian kroons of liquid
assets.

The company is not currently active. The only real revenue of the company
is the financial profit received from the allocation of the company's liquid
assets. During 01.08.2008-31.12.2008, AS Järvevana's financial profit was
3.7 million kroons. As at 31.12.2008, the company had one employee - the
CEO Toomas Annus. The company's financial results for 2008 include also the
financial figures of the company for the 7 months preceding the division
of AS Järvevana.

On 24 October 2008, after having reviewed the materials concerning the
suspicion, the criminal defence counsel of AS Järvevana submitted a number
of applications to the Public Prosecutor's Office, including an application
requesting the termination of the criminal proceedings since the materials
concerning the suspicion did not contain adequate evidence that an
incriminating act had been committed and due to the numerous instances on
which the substantive and the procedural law had been broken in the course
of carrying out the procedural acts. The Public Prosecutor's Office did not
accede to the application submitted by the counsel with the regulations
issued on 10.12.2008 and 18.12.2008. Since the regulations did not comply
with the procedural law and since the Public Prosecutor's Office failed to
form an opinion on various requests without having any basis for doing so,
the counsel filed a complaint to the Chief Public Prosecutor who did not
review the complaint with a regulation issued on 20.01.2009. The counsel
filed a complaint to a preliminary investigation judge of the Harju County
Court concerning the breaking of the procedural law but the preliminary
investigation judge has not adjudicated the complaint by the time this
report is made public.

In addition, by the time this report is made public, the Public Prosecutor's
Office has neither issued a statement of charges nor submitted it to the
court. At present it is impossible to predict the schedule of the legislative
proceedings.


INCOME STATEMENT 12M 2008
consolidated, in thousand EEK and EUR
                                           EEK                   EUR
                                  12M 2008    12M 2007   12M 2008   12M 2007

Revenue                          2 798 466   5 510 760    178 854    352 202
Cost of goods sold              (2 273 798) (4 731 752)  (145 322)  (302 415)

GROSS PROFIT                       524 668     779 008     33 532     49 787

Marketing expenses                 (21 143)    (32 472)    (1 351)    (2 075)
Administrative and gen. expenses  (123 699)   (213 806)    (7 906)   (13 665)
Other operating income               6 781       6 424        434        411
Other operating expenses            (7 773)    (18 109)      (497)    (1 157)

OPERATING PROFIT                   378 834     521 045     24 212     33 301

Financial income and expenses
from stocks of associate
companies and joint ventures         1 282      76 440         82      4 885
Interest expense                    (8 734)    (16 948)      (558)    (1 083)
Foreign exchange gain               (5 875)       (809)      (375)       (52)
Other financial income              16 618      11 016      1 062        704
Other financial expenses            (1 308)         (5)       (84)        (0)
Total financial income and expenses  1 983      69 694        127      4 454

PROFIT BEFORE TAX                  380 817     590 739     24 339     37 755

Corporate income tax expense       (41 100)    (30 830)    (2 627)    (1 970)

NET PROFIT FOR FINANCIAL YEAR      339 717     559 909     21 712     35 785
  incl. net profit attributable
        to equity holders of
        the parent company         335 502     545 049     21 442     34 835
        minority interest            4 215      14 860        270        950

Earnings per share for profit attributable
to the equity holders of the parent company
(basic and diluted, in EEK and EUR)  18,95       30,79       1,21       1,97


INCOME STATEMENT IV quarter 2008
consolidated, unaudited in thousand EEK and EUR

                                           EEK                   EUR
                                  IVq 2008    IVq 2007   IVq 2008   IVq 2007

Revenue                                  -   1 647 155          -    105 272
Cost of goods sold                       -  (1 343 339)         -    (85 855)

GROSS PROFIT                             -     303 816          -     19 417

Marketing expenses                       -     (12 228)         -       (782)
Administrative and general expenses (1 499)    (89 626)       (96)    (5 728)
Other operating income                   -       1 263          -         81
Other operating expenses                 -     (13 956)         -       (892)

OPERATING PROFIT                    (1 499)    189 269        (96)    12 096

Financial income and expenses
from stocks of associate
companies and joint ventures             -      14 953          -        956
Interest expense                         -       2 593          -        166
Foreign exchange gain                    -       2 371          -        152
Other financial income               2 293       1 722        147        110
Other financial expenses                (1)        (64)        (0)        (4)
Total financial income and expenses  2 292      16 517        147      1 056

PROFIT BEFORE TAX                      793     205 786         51     13 152

Corporate income tax expense             -     (12 484)         -       (798)

NET PROFIT FOR FINANCIAL YEAR          793     193 302         51     12 354
  incl. net profit attributable
        to equity holders of
        the parent company             793     187 025         51     11 953
        minority interest                -       6 277          -        401

Earnings per share for profit attributable
to the equity holders of the parent company
(basic and diluted, in EEK and EUR)   0,04       10,57       0,00       1,00


BALANCE SHEET AS OF 31.12.2008
consolidated, in thousand EEK and EUR
                                       EEK                      EUR
                                31.12.2008 31.12.2007  31.12.2008 31.12.2007
ASSETS
Current assets
Cash and cash equivalents           26 242    205 564       1 677     13 138
Trade and other receivables        225 927  1 201 942      14 439     76 818
Inventories                              -  2 025 426           -    129 448
Total current assets               252 169  3 432 932      16 116    219 404

Non-current assets
Long-term financial investments          -    290 852           -     18 589
Investment property                      -      7 361           -        470
Property, plant and equipment            -    172 912           -     11 051
Intangible assets                        -     12 574           -        804
Total non-current assets                 -    483 699           -     30 914

TOTAL ASSETS                       252 169  3 916 631      16 116    250 318

LIABILITIES AND OWNERS' EQUITY
Current liabilities
Borrowings                               -    304 879           -     19 485
Trade and other payables               242  1 032 210          16     65 970
Government grants                        -      1 498           -         96
Short-term provisions               17 500     73 212       1 118      4 680
Total current liabilities           17 742  1 411 799       1 134     90 231

Non-current liabilities
Long-term borrowings                     -    397 713           -     25 418
Long-term payables to suppliers          -     11 091           -        709
Long-term suppliers advance payments     -     46 332           -      2 961
Total non-current liabilities            -    455 136           -     29 088

Total liabilities                   17 742  1 866 935       1 134    119 319

Equity
Minority interest                        -     33 939           -      2 169
Equity attributable to equity holders of the parent company
Share capital                      177 000    177 000      11 312     11 312
Statutory reserve capital           17 700     17 700       1 131      1 131
Currency translation adjustment          -     (5 085)          -       (325)
Retained earnings                   39 727  1 826 142       2 539    116 712
Total equity attributable to equity
holders of the parent company      234 427  2 015 757      14 982    128 830
Total equity                       234 427  2 049 696      14 982    130 999

TOTAL LIABILITIES AND EQUITY       252 169  3 916 631      16 116    250 318


Toomas Annus
Member of Board
+372 6 805 220
tallinn@merko.ee