Börsiteade

Pealkiri

2013 6 months and II quarter unaudited interim report

Teade

Tallinn, Estonia, 2013-08-27 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 30 June 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

On 3 April 2009, the Public Prosecutor’s Office submitted a statement of
charges to Järvevana AS and Toomas Annus (dating from 31 March 2009) in the
land exchange criminal matter No. 05913000055
(http://www.nasdaqomxbaltic.com/market/?pg=news&news_id=232810). 

On 12 November 2009, Harju County Court initiated the court proceeding of the
“land exchange” charges No. 1-09-4486. 

Overview of the court proceeding:
http://www.nasdaqomxbaltic.com/market/?pg=details&instrument=EE3100003559&list=3
&tab=news&news_id=238437.
The statement of charges incriminated Järvevana AS in five episodes of giving a
bribe under § 298 of the Penal Code, and the proceeding was conducted at the
Harju County Court as the court of first instance. The subject of proof of the
charge of giving a bribe contains three elements, the lack of at least one of
these would preclude the necessary elements of a criminal offence: (i) giving
or promising a material benefit to an official; (ii) illegal act conducted by
an official in benefit of the bribe giver; (iii) correlation between the first
and the second element, i.e. providing a benefit to an official for a
favourable deed. Concerning Järvevana AS, it must also be proved that (i) the
offence was committed by a senior official of a legal person, and (ii) the
offence was committed in the interests of the legal person. Järvevana AS has
not committed any land exchange act described in the statement of charges. The
relevant operations were made and hypothetical benefit could have been gained
by subsidiaries instead, which are independent legal persons and who have not
been charged. Järvevana AS, however, has never exchanged lands also according
to the charge. It is also obvious that the acts could not have been illegal, as
these were allowed on the basis of § 19 of the Nature Conservation Act
precluding the qualification of a bribe. It has been proved and ascertained by
the judgement of the court of first instance that on the same basis and
according to the same procedure more than 180 similar legal transactions were
conducted by various persons. The statement of charges and the judgement
ascertained the lack of damage and civil action. 

On 19 June 2012, the Harju County Court fully acquitted Järvevana AS and Toomas
Annus in the land exchange criminal matter No. 1-09-4486 and ordered the state
the payment of EUR 611,810 to cover the costs of legal assistance of Järvevana
AS. 

The County Court ascertained in a categorical form that Järvevana AS and Toomas
Annus have not committed any crimes, all relevant land exchange transactions
were legal, and that the Estonian Internal Security Service and the
Prosecutor’s Office have considerably violated the law, the Constitution and
the European Convention for the Protection of Human Rights and Fundamental
Freedoms. The prudent judgement was achieved as a result of a three years of
thorough and immediate proceeding during which among other things about 120
witnesses were heard. The judgement of acquittal was unanimous with also lay
judges who had been following the process for years supporting the judgement. 

The Prosecutor’s Office appealed the judgement of acquittal at the Tallinn
Circuit Court, which is why the judgement of the court of the first instance
did not enter into force. Järvevana AS and Toomas Annus submitted thorough
objections to the appeal on 374 pages. 

The 14 sessions of the Tallinn Circuit Court took place in January and February
2013. The prosecutors applied for annulling the judgement of acquittal and, as
an alternative, making a new judgement of conviction or sending the case to the
court of first instance to reopen the matter. Järvevana AS applied for leaving
the judgement of acquittal unchanged. Tallinn Circuit Court gave the counsel an
opportunity to become acquainted with some of the insufficient materials
forming the basis for the surveillance that the court of first instance
considered necessary according to the judgement, but that the county court did
not allow due to the force of threat of the judge stated in the judgement. It
is noteworthy that according to the judgement of the court of the first
instance, the Prosecutor’s Office threatened the judge in relation to the
latter’s intention of introducing the counsel the materials forming the basis
for the surveillance reasoning it being a state secret, but the regulations
assigned by the court of appeal did not entail any state secrets.
Unfortunately, they did not allow the counsel to get acquainted with all the
surveillance files, which precluded the equal proceeding and which was in
contradiction with the protection guarantees provided for in the case Leas vs
Estonia of the European Court of Human Rights. 

On 19 June 2013, Tallinn Circuit Court made a judgement, which was strictly
contrary to that of the Harju County Court annulling completely the judgement
of acquittal and convicted Järvevana AS pursuant to the Penal Code § 298 (3)
punishing it with a pecuniary punishment in the sum of EUR 798,000 (seven
hundred and ninety eight thousand). The prior court practice has not recognised
that huge pecuniary punishments. 

On 19 July 2013, Järvevana AS submitted an appeal in cassation to the judgement
of conviction. 

The counsel applied for a full annulment of the judgement of conviction of the
Tallinn Circuit Court of 19 June 2013 and, as an alternative: (i) enforcing the
judgement of acquittal of the Harju County Court of 19 June 2012; or (ii)
sending the case to the court of first instance or to the court of appeal to
reopen the case; or (iii) making a new judgement of acquittal, or (iv)
disposing the trial on the basis of the Code of Criminal Procedure § 274´´ in
connection with expiry of reasonable time of processing, as the proceeding has
been going on in relation to the accused ever since 2 September 2004 when the
surveillance was started. 

Järvevana AS has thoroughly analysed the judgement of the court of appeal and
has come to a conviction that it is largely based on propositions of the
prosecutors together with the mistakes, incl. also additions copied in the
judgement misrepresenting the evidence giving a reason to claim the substance
of evidence has not been studied, but the judge has been content with the
unilateral dimorphic vision of the Prosecutor’s Office. The majority of
arguments and evidence of the counsel have not been reflected in the judgement
and, in this sense, there are obvious reasoned deficiencies in the judgement.
It has been pointed out in the appeal in cassation that building up the
judgement on the basis of the statements and evidence of one party alone is not
in accordance with honest, equal and competitive principles of the proceeding,
let alone misrepresenting the latter by a significant violation of the
proceeding. There are detailed references in the appeal in cassation of the
pages where the circuit court has directly misrepresented the evidence by a
significant violation of the proceeding, whereby the actual information
reflecting in evidence has been submitted in the form of tables as appendices
to the appeal in cassation to reason the contradictions. 

Järvevana AS has relied on the positions of the Supreme Court that the
principle of instant proceedings were valid in full only in the court of first
instance where more than a hundred witnesses testified in the course of
cross-examination. As a result of a long-term, thorough and immediate
proceeding, the court of first instance came to a unanimous conscience that
Järvevana AS and Toomas Annus were not guilty, thereby calling the entire
accusation into question. Järvevana AS is convinced that a 14-day non-immediate
proceeding could not overrule the conscience of the court of first instance
formed on the basis of the years of immediate proceeding. When reading the
judgement, it remains ambiguous for Järvevana AS on the basis of which evidence
the conclusion has been made that its senior official has promised or given a
bribe. It also remains incomprehensible why was Järvevana AS convicted, which
according to the judgement, never exchanged lands or been a party to such
transactions or had been an addressee of administrative acts. 

Järvevana AS hopes the Supreme Court would make a positive solution of the
proceeding and the case would be designated for hearing within the year 2013.
When the decision in such a voluminous case would be reached is difficult to
predict and depends on whether and to which lower court the case would be sent
by the Supreme Court to reopen the matter. 

In case of entry into force of the judgement of conviction, for example due to
non-proceeding at the Supreme Court, and entry in the punishment register, the
legal risk is pecuniary punishment, which pursuant to the Income Tax Act is
taxable with income tax and restrictions in participation in public procurement
proceedings. 

The supervisory board and management board of Järvevana AS are convinced that
the activities of the company and its management has been correct and acted in
compliance with the legislation of the Republic of Estonia and hopes for the
annulment of the judgement of conviction. We emphasise that the judgement of
acquittal of the county court and the judgement of conviction of the circuit
court are not enforced and, according to the Constitution § 22, Järvevana AS
shall be considered innocent until a conviction by a court against it enters
into force. 

Share and shareholders

The main shareholders of AS Järvevana as at 30.06.2013

                                             Number of shares  % of shares
AS Riverito                                        12,742 686       71.99%
ING Luxembourg S.A. AIF account                       963,376        5.44%
Tenlion OÜ                                            237,674        1.34%
Clearstream Banking Luxembourg S.A. clients           159,938        0.90%
Andersson Investeeringud OÜ                           137,742        0.78%

From 15 September 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
4 August 2008, the shares of AS Järvevana are traded under the symbol of JRV1T.
In 2013 6 months, 193 transactions were performed with the shares of AS
Järvevana in the course of which 492,398 shares were traded and the total
monetary value of transactions was EUR 289,900. 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 30.06.2013 was EUR 0.60. 


STATEMENT OF COMPREHENSIVE INCOME
in thousand euros, unaudited

                                                    2013      2012
                                                6 months  6 months
                                                                  
General and administrative expenses                (105)     (114)
                                               -------------------
                                               -------------------
Operating profit (loss)                            (105)     (114)
                                                                  
Finance income and costs                              80       114
                                               -------------------
incl. interest income                                 80       114
                                                                  
Net profit (loss) for the period                    (25)         0
                                               -------------------
                                                                  
Comprehensive profit (loss) for the period          (25)         0
                                               -------------------
Earnings per share (basic and diluted, in EUR)    (0.00)      0.00


STATEMENT OF COMPREHENSIVE INCOME
in thousand euros, unaudited

                                                      2013        2012
                                                II quarter  II quarter
                                                                      
General and administrative expenses                   (46)        (43)
                                               -----------------------
                                               -----------------------
Operating profit (loss)                               (46)        (43)
                                                                      
Finance income and costs                                40          57
                                               -----------------------
incl. interest income                                   40          57
                                                                      
Net profit (loss) for the period                       (6)          14
                                               -----------------------
                                                                      
Comprehensive profit (loss) for the period             (6)          14
                                               -----------------------
Earnings per share (basic and diluted, in EUR)      (0.00)        0.00


STATEMENT OF FINANCIAL POSITION
in thousand euros, unaudited

                               30.06.2013  31.12.2012
                                                     
ASSETS                                               
Current assets                                       
Cash and cash equivalents           2,316       2,532
Trade and other receivables        13,589      13,584
Total current assets               15,905      16,116
                                                     
Non-current assets                                   
Property, plant and equipment          19          24
Total non-current assets               19          24
                                                     
TOTAL ASSETS                       15,924      16,140
                              -----------------------
                              -----------------------
                                                     
LIABILITIES AND EQUITY                               
Current liabilities                                  
Trade and other payables               30         221
Short-term provisions               1,118       1,118
Total current liabilities           1,148       1,339
Total liabilities                   1,148       1,339
                                                     
Equity                                               
Share capital                      12,000      12,000
Statutory reserve capital           1,200       1,200
Retained earnings                   1,576       1,601
Total equity                       14,776      14,801
                                                     
TOTAL LIABILITIES AND EQUITY       15,924      16,140
                              -----------------------



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