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Pealkiri

2013 3 months unaudited interim report

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Tallinn, Estonia, 2013-05-30 15:00 CEST (GLOBE NEWSWIRE) --


MANAGEMENT REPORT

General information

The company was formed after the demerger from AS Järvevana (former AS Merko
Ehitus), as a result of which the complete set of assets related to the
business activities of the construction company was separated and transferred
to the new 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 EUR 16.0 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. As at 31 March 2013, one person
was employed by AS Järvevana, its Director Toomas Annus. The company’s
activities do not have a seasonal or cyclical nature. 

Operating activities

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). 

At 12 November 2009, the judicial proceedings concerning the statement of
charges no. 1-09-4486 commenced at Harju County Court. An overview of the
proceedings is available at:
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 incriminated with five
episodes of giving a bribe in accordance with § 298 of the Penal Code and the
proceedings were conducted at the court of first instance of Harju County
Court. The subject of proof concerning bribery charges has three elements, the
absence of even one of which precludes the necessary elements of criminal
offence: (i) promising or giving of a material reward to an official; (ii)
illegal act by an official in favour of a person giving a bribe; (iii)
equivalence relation between the first and second element, i.e. giving of a
reward to an official for a favourable act. Evidence also needs to be produced
against AS Järvevana in the matter that (i) the act was committed by a senior
executive of a legal person, and (ii) the act was committed in the interests of
the legal person. AS Järvevana has not concluded any land swap transactions
described in the statement of charges. These transactions were concluded and
hypothetical benefits could have been reaped by independent subsidiaries as
legal persons who have not been charged. Even according to the statement of
charges, AS Järvevana has never swapped land. It is also evident that the acts
could not have been illegal because they had been permitted under § 19 of the
Nature Conservation Act which rules out the qualification of a bribery. It has
been proven (and established by the judgement of the court of first instance)
that more than 180 legal transactions have been performed on the same bases and
by the same procedure by different persons. With the statement of charges and
judgment, an absence of damage and civil action was established. 

At 19 June 2012, the final hearing of the land swap criminal case was held at
Harju County Court, where the court fully acquitted AS Järvevana and Toomas
Annus in the criminal case no. 1-09-4486 and ruled that the state would have to
pay EUR 611,810 to cover the legal aid expenses of AS Järvevana. 

The court categorically established that AS Järvevana and Toomas Annus have not
committed any offences; all relevant land swap transactions were legitimate,
that the Estonian Internal Security Service and the Public Prosecutor’s Office
have committed a significant breach of the law, the Constitution and the
European Convention for the Protection of Human Rights and Fundamental
Freedoms. This carefully deliberated judgement was reached as a result of three
years of comprehensive and direct proceedings, which, inter alia, included the
hearing of approximately 120 witnesses. The judgment of acquittal was unanimous
and it was also supported by lay judges. 

The Public Prosecutor’s Office has filed an appeal against the judgment of
acquittal in the land swap case by the court of the first instance, therefore
the judgment of the court of first instance has not yet taken effect. AS
Järvevana and Toomas Annus presented comprehensive arguments against the appeal
on 374 pages. The petition by AS Järvevana and Toomas Annus to examine the
surveillance file and to ensure the right of defense which, inter alia, is
based on the judicial decision of European Court of Human Rights in the case of
Leas v. Estonia, is still unresolved. The defence counsel of AS Järvevana and
Toomas Annus, sworn advocate Leon Glikman, cited that releasing the materials
forming the basis for surveillance would correspond to principles emphasized
repeatedly by European Court of Human Rights and would facilitate exercising
the right of defense. The court of first instance has established extensive
procedural violations in conducting of surveillance. In addition to
aforementioned, Harju County Court established that the respective petition of
defence counsel Leon Glikman was lawful and justified but the court repealed
its lawful affirmative injunction because the judge was threatened with
criminal prosecution: ”After publicizing named injunction in court information
system, a phone call was placed to the court chairman from the Public
Prosecutor’s Office, asking to ascertain whether the judge has released the
documents named in the injunction to the defence counsel and the accused. As
the judge had not yet released the documents, criminal prosecution of the judge
for breach of duty to maintain state secrets was not initiated.”; ”Based on
this information from the Public Prosecutor’s Office, the court partially
repealed the previously formalised injunction with an injunction dated
16.04.2010”. The court of first instance established by the same judgment that
against the conscience of the court and as a result of pressure outside the
legislative proceeding, AS Järvevana and Toomas Annus were not provided fair
and equal judicial proceedings for which they had the right based on law, the
Constitution and the European Convention for the Protection of Human Rights and
Fundamental Freedoms. Despite the fact that the court established that equal
judicial proceedings and right of defence were not ensured for AS Järvevana,
the court was still convinced based on the analysis of the body of evidence,
that the accused Toomas Annus and AS Järvevana are not guilty in any of the
episodes of the charges. 

Hearings in Tallinn Circuit Court took place in January and February 2013.
Public prosecutors applied for annulment of the judgment of acquittal of Harju
County Court and either for obtaining a new judgment of conviction, or as an
alternative, re-opening the case in the court of first instance. The defence
counsel of AS Järvevana submitted a comprehensive argument to the court, asking
not to annul the judgment of acquittal and pointed to the passing of reasonable
time-limits of proceedings together with alternative petition, based on
economics of proceedings, for the termination of the proceedings that would
have consequences equivalent to acquittal. Tallinn Circuit Court partially
released materials forming the basis for surveillance to the defence counsel,
which according to the judgment of the court of first instance was considered
necessary but which the County Court did not release as a consequence of
threatening of the judge established in the judgment. The defence counsel
examined the surveillance material and presented voluminous positions with
arguments supporting the judgment, why surveillance had been conducted
unlawfully. It is significant, that according to the judgment of the court of
first instance, the Public Prosecutor’s Office threatened the judge in
connection with his intention to release materials forming the basis for
surveillance to the defence counsel, with the justification that these
contained state secret. However, the injunctions released by the court of
appeal did not contain state secret. 

Tallinn Circuit Court will rule on the case at 19 June 2013.

Considering the extraordinary volume and complexity of the case as well as the
three-tier court system, it is not certain that final judgment will be achieved
during 2013. 

In case of the judgment of conviction, its entry into force and judicial
record, the legal risks consist of pecuniary punishment, which according to the
Income Tax Act is also subject to taxation with income tax. The entry into
force of the judgment of conviction would also concur with impediments for AS
Järvevana in participation in public procurements. 

AS Järvevana cites that the principle of the direct court hearing is applicable
in full only in the court of first instance. As a result of lengthy,
comprehensive and direct proceedings, the court of first instance was convinced
that AS Järvevana and Toomas Annus were not guilty, thereby casting doubt upon
the entire statement of charges. We consider significant, that the court gave a
judgment of acquittal regardless of pressure outside the judicial proceeding
that disregarded the independence of court and was established in the judgment,
and in a situation where the court could not ensure equal procedural rights
deemed appropriate to the accused due to threats. 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 that this has been successfully
substantiated to the court of appeal. 

Share and shareholders

The main shareholders of AS Järvevana as at 31.03.2013

                              Number of shares  % of shares
AS Riverito                        12, 742,686       71.99%
ING Luxembourg S.A., clients           963,376        5.44%
Tenlion OÜ                             237,674        1.34%
Andersson Investeeringud OÜ            177,742        1.00%
Ridge Capital AS                       162,599        0.92%

From 15.09.2009, the shares of AS Järvevana are included in the secondary list
of NASDAQ OMX Tallinn Stock Exchange. During the demerger of AS Merko Ehitus,
the company’s business name was changed to AS Järvevana and from 04.08.2008,
the shares of AS Järvevana are traded under the symbol of JRV1T. In 2013 3
months, 82 transactions were performed with the shares of AS Järvevana in the
course of which 211,986 shares were traded and the total monetary value of
transactions was EUR 119,860. The lowest transaction price was EUR 0.54 and the
highest transaction price was EUR 0.67 per share. The closing price of the
shares as at 31.03.2013 was EUR 0.60. 

Structure of shareholders as at 31.03.2013

Number of shares       Number of           % of          Number of       % of   
                     shareholders      shareholders       shares        shares  
           1-100                 244          31.32%          11,669       0.07%
        101-1000                 276          35.43%         121,447       0.69%
     1001-10 000                 181          23.23%         703,521       3.97%
10 001 – 100 000                  70           8.99%       2,236,415      12.63%
 100 001 – 1 000                   7           0.90%       1,884,262      10.65%
             000                                                                
   1 000 001 - …                   1           0.13%      12,742,686      71.99%
           Total                 779            100%      17,700,000        100%


STATEMENT OF COMPREHENSIVE INCOME
in thousand euros, unaudited

                                                    2013      2012
                                                3 months  3 months
                                                                  
General and administrative expenses                 (59)      (71)
                                               -------------------
                                               -------------------
Operating profit (loss)                             (59)      (71)
                                                                  
Finance income and costs                              40        57
                                               -------------------
incl. interest income                                 40        57
                                                                  
Net profit (loss) for the period                    (19)      (14)
                                               -------------------
                                                                  
Comprehensive profit (loss) for the period          (19)      (14)
                                               -------------------
                                                                  
Earnings per share (basic and diluted, in EUR)    (0.00)    (0.00)


STATEMENT OF FINANCIAL POSITION
in thousand euros, unaudited

                               31.03.2013  31.12.2012
ASSETS                                               
Current assets                                       
Cash and cash equivalents           2,314       2,532
Trade and other receivables        13,585      13,584
Total current assets               15,899      16,116
                                                     
Non-current assets                                   
Property, plant and equipment          21          24
Total non-current assets               21          24
                                                     
TOTAL ASSETS                       15,920      16,140
                              -----------------------
                              -----------------------
                                                     
LIABILITIES AND EQUITY                               
Current liabilities                                  
Trade and other payables               20         221
Short-term provisions               1,118       1,118
Total current liabilities           1,138       1,339
Total liabilities                   1,138       1,339
                                                     
Equity                                               
Share capital                      12,000      12,000
Statutory reserve capital           1,200       1,200
Retained earnings                   1,582       1,601
Total equity                       14,782      14,801
                                                     
TOTAL LIABILITIES AND EQUITY       15,920      16,140
                              -----------------------


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