Börsiteade

Pealkiri

2010 6 months and II quarter consolidated unaudited interim report

Teade

MANAGEMENT REPORT

General information

The company was formed after the 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 the 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 01.01.2010 and 30.06.2010,
AS Järvevana earned finance income in the amount of EEK 1.7 million. The
most significant cost item was the legal expenses related to the “land swap”
criminal case; these expenses constitute 46% of the general administrative
costs in 2010 6 months. 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 at 30 June 2010, the sole member of AS Järvevana's Management Board is
Toomas Annus. The company's operation does not have a seasonal and cyclic
nature. 

Last land swap spring session proceeding at the Harju County Court took
place at 2 June 2010. Next session is planned at 28 September present year.

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).

The trial over the land swap charges started on 12 November 2009, at the
Harju County Court. For an overview of the trial, please visit:
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 accused of five counts of bribery. The proceedings are conducted
at the Harju County Court. The evidence required to substantiate the
charges of bribery consists of three elements and the absence of even one
element invalidates the charges of criminal offence. The three elements
to be proved are: (i) giving, or promising to give, a tangible asset or
benefit to a public official; (ii) an illegal act by a public official for
the benefit of the bribing party; (iii) a correlation between the first
and second elements, i.e. providing a benefit to a public official for
a favourable act. In case of AS Järvevana, it also needs to be proved that
(i) the offence was committed by a senior official of the legal entity,
and that (ii) the offence was committed in the interests of the legal
entity. AS Järvevana has not conducted any of the land swap transactions
described in the statement of charges. Instead, these transactions were
made - and the hypothetical benefits were gained - by the company's
subsidiaries, who are independent legal entities and who are not being
prosecuted. It is also clearly obvious that the activities cannot have
been illegal since they are allowed under section 19 of the Nature
Conservation Act - this calls the bribery charges into question.
By 8 April 2010, the court had heard nearly 80 prosecution witnesses,
and none of the witnesses have testified about a promise to give or the
giving of a bribe, or about illegal activities. The presentation of
documentary evidence has now started at the request of the prosecutor's
office. The procedure schedule of the litigation has been fixed until
28 April 2011 and presumably the ruling of the court of first instance
will be reached during the year 2011. The legal proceedings may prove
to be very prolonged due to the fact that the Estonian court system
consists of three instances and additionally, it is possible to go to
the European Court of Human Rights.

The company considers the brought charges 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 are also able
to supply relevant proof in the court.


STATEMENT OF COMPREHENSIVE INCOME 6M 2010
unaudited, in thousand EEK and EUR

                                           EEK                   EUR
                                   6M 2010     6M 2009    6M 2010    6M 2009

Administrative and general expenses (2 077)     (1 017)      (133)       (65)
Other operating expenses                (3)          -         (0)         -

Operating profit                    (2 080)     (1 017)      (133)       (65)

Financial income and expenses        1 671       4 625        107        296
  incl. other financial income       1 673       4 626        107        296
        other financial expenses        (2)         (1)        (0)        (0)

Net profit for current period         (409)      3 608        (26)       231
  incl. equity holders of the parent  (409)      3 608        (26)       231

Comprehensive income                  (409)      3 608        (26)       231
  incl. equity holders of the parent  (409)      3 608        (26)       231

Earnings per share for profit attributable
to the equity holders of the parent
(basic and diluted, in EEK and EUR)  (0,02)       0,20      (0,00)      0,01


STATEMENT OF COMPREHENSIVE INCOME Q2 2010
consolidated, unaudited, in thousand EEK and EUR

                                           EEK                   EUR
                                   Q2 2010     Q2 2009    Q2 2010    Q2 2009

Administrative and general expenses (1 001)       (574)       (64)       (37)
Other operating expenses                (3)          -         (0)         -

Operating profit                    (1 004)       (574)       (64)       (37)

Financial income and expenses          662       2 580         42        165
  incl. other financial income         663       2 580         42        165
        other financial expenses        (1)          -         (0)         -

Net profit for current period         (342)      2 006        (22)       128
  incl. equity holders of the parent  (342)      2 006        (22)       128

Comprehensive income                  (342)      2 006        (22)       128
  incl. equity holders of the parent  (342)      2 006        (22)       128

Earnings per share for profit attributable
to the equity holders of the parent

(basic and diluted, in EEK and EUR)  (0,02)       0,11      (0,00)      0,01


STATEMENT OF FINANCIAL POSITION AS AT 30.06.2010
unaudited, in thousand EEK and EUR

                                       EEK                      EUR
                             30.06.2010   31.12.2009  30.06.2010  31.03.2009
ASSETS
Current assets
Cash and cash equivalents        19 957       30 425       1 275       1 944
Short-term deposits              20 000       10 000       1 278         639
Trade and other receivables     209 733      209 890      13 405      13 415
Total current assets            249 690      250 315      15 958      15 998

Non-current assets
Property, plant and equipment        32           40           2           2
Total non-current assets             32           40           2           2

TOTAL ASSETS                    249 722      250 355      15 960      16 000

LIABILITIES AND OWNERS' EQUITY
Current liabilities
Trade and other payables            306          530          20          34
Short-term provisions            17 500       17 500       1 118       1 118
Total current liabilities        17 806       18 030       1 138       1 152

Equity
Share capital                   177 000      177 000      11 312      11 312
Statutory reserve capital        17 700       17 700       1 131       1 131
Retained earnings                37 216       37 625       2 379       2 405
Total equity                    231 916      232 325      14 822      14 848

TOTAL LIABILITIES AND EQUITY    249 722      250 355      15 960      16 000


Toomas Annus
Member of Management Board
+372 6 805 400
[email protected]