Börsiteade

Pealkiri

Financial results 9M 2008

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 01.08.2008-30.09.2008, AS Järvevana's financial profit was
1 421 433 million kroons. As at 30.09.2008, the company had one employee -
the CEO Toomas Annus. The company's financial results for 2008 the 9 months
include also the financial figures of the company for the 7 months preceding
the division of AS Järvevana.

On 24 October 2008, after looking through the documents concerning the
suspicions, the representative of AS Järvevana submitted a number of
applications to the Public Prosecutor's Office including the application
requesting the termination of the criminal case since adequate proof for
the carrying out of incriminating actions and the execution of multiple
breaches of substantive and procedural laws during the execution of the
procedural acts could not be found in the documents presented. By the
submission date of the report the Public Prosecutor's Office had not
resolved the application of AS Järvevana.


INCOME STATEMENT 9M 2008
consolidated, in thousand EEK and EUR
                                           EEK                   EUR
                                   9M 2008     9M 2007    9M 2008    9M 2007

Revenue                          2 798 466   3 863 605    178 855    246 929
Cost of goods sold              (2 273 798) (3 388 412)  (145 322)  (216 559)

GROSS PROFIT                       524 668     475 193     33 533     30 370

Marketing expenses                 (21 143)    (20 244)    (1 351)    (1 294)
Administrative and gen. expenses  (122 199)   (124 180)    (7 810)    (7 937)
Other operating income               6 781       5 345        433        342
Other operating expenses            (7 773)     (4 338)      (497)      (277)

OPERATING PROFIT                   380 334     331 776     24 308     21 204

Financial income and expenses
from stocks of associate
companies and joint ventures         1 282      61 486         82      3 930
Interest expense                    (8 734)    (14 355)      (558)      (917)
Foreign exchange gain               (5 875)     (3 179)      (375)      (203)
Other financial income              14 325       9 295        916        594
Other financial expenses            (1 308)        (70)       (84)        (4)
Total financial income and expenses   (310)     53 177        (19)     3 400

PROFIT BEFORE TAX                  380 024     384 953     24 289     24 604

Corporate income tax expense       (41 100)    (18 346)    (2 627)    (1 173)

NET PROFIT FOR FINANCIAL YEAR      338 924     366 607     21 662     23 431
   incl. net profit attributable to equity holders
         of the parent company      334 709    358 024     21 392     22 882
         minority interest            4 215      8 583        270        549

Earnings per share for profit attributable
to the equity holders of the parent company
(basic and diluted, in EEK and EUR)   18,91      20,23       1,21       1,29


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

                                           EEK                   EUR
                                 IIIq 2008   IIIq 2007  IIIq 2008  IIIq 2007

Revenue                            426 162   1 367 855     27 237     87 422
Cost of goods sold                (360 550) (1 198 290)   (23 043)   (76 585)

GROSS PROFIT                        65 612     169 565      4 194     10 837

Marketing expenses                  (3 652)     (7 788)      (233)      (498)
Administrative and general expenses(21 180)    (42 725)    (1 354)    (2 731)
Other operating income                 852       2 856         54        183
Other operating expenses              (173)     (1 393)       (11)       (89)

OPERATING PROFIT                    41 459     120 515      2 650      7 702

Financial income and expenses
from stocks of associate
companies and joint ventures            80       8 711          5        557
Interest expense                    (1 055)     (7 827)       (67)      (500)
Foreign exchange gain                   (5)     (3 317)        (0)      (212)
Other financial income               5 801       4 225        370        270
Other financial expenses               (10)        (68)        (1)        (4)
Total financial income and expenses  4 811       1 724        307        111

PROFIT BEFORE TAX                   46 270     122 239      2 957      7 813

Corporate income tax expense          (477)     (3 267)       (30)      (209)

NET PROFIT FOR FINANCIAL YEAR       45 793     118 972      2 927      7 604
  incl. net profit attributable to equity holders
        of the parent company       44 531     116 023      2 846      7 416
        minority interest            1 262       2 949         81        188

Earnings per share for profit attributable
to the equity holders of the parent company
(basic and diluted, in EEK and EUR)   2,52        6,55       0,16       0,42


BALANCE SHEET AS OF 30.09.2008
consolidated, in thousand EEK and EUR
                                       EEK                      EUR
                             30.09.2008   31.12.2007  30.09.2008  31.12.2007
ASSETS
Current assets
Cash and cash equivalents        25 611      205 564       1 637      13 138
Trade and other receivables     225 672    1 201 942      14 423      76 818
Inventories                           -    2 025 426           -     129 448
Total current assets            251 283    3 432 932      16 060     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                    251 283    3 916 631      16 060     250 318

LIABILITIES AND OWNERS' EQUITY
Current liabilities
Borrowings                            -      304 879           -      19 485
Trade and other payables            149    1 032 210           9      65 970
Government grants                     -        1 498           -          96
Short-term provisions            17 500       73 212       1 119       4 680
Total current liabilities        17 649    1 411 799       1 128      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                17 649    1 866 935       1 128     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                38 934    1 826 142       2 489     116 712
Total equity attributable to equity
holders of the parent company   233 634    2 015 757      14 932     128 830
Total equity                    233 634    2 049 696      14 932     130 999

TOTAL LIABILITIES AND EQUITY    251 283    3 916 631      16 060     250 318


Toomas Annus
Member of Board
+372 6 805 220
[email protected]