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Pealkiri

2014 3 months unaudited interim report

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Tallinn, Estonia, 2014-05-28 07:00 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 2014, 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). 

The judicial proceedings concerning the statement of charges no. 1-09-4486
commenced at Harju County Court at 12 November 2009. 

An overview of the proceedings:
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 plots of 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 criminal 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, who had
observed the process for years. 

The Public Prosecutor’s Office filed an appeal against the judgment of
acquittal to the Tallinn Circuit Court, therefore the judgment of the court of
first instance has not taken effect. AS Järvevana and Toomas Annus presented
comprehensive arguments against 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. AS Järvevana applied for leaving
the judgement of acquittal unchanged. Tallinn Circuit Court gave the counsel an
opportunity to become acquainted with some of the materials (insufficient for
excercising the right of defence) forming the basis for surveillance, that the
court of first instance considered necessary according to the judgement, but
which the county court did not allow due to the force of threatening 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 to 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, the counsel was not allowed to get acquainted
with all the surveillance files, which precluded 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. 

At 19 June 2013, Tallinn Circuit Court rendered a judgement, which was strictly
contrary to that of the Harju County Court, annulling completely the judgement
of acquittal and convicted AS Järvevana 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) which is additionally subject to taxes
imposed by law. Prior judicial practice has not recognised pecuniary
punishments of such magnitude. 

At 19 July 2013, AS Järvevana 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) rendering a new judgement of acquittal, or (iv)
terminating the procedure on the basis of the Code of Criminal Procedure §
274´´ in connection with expiry of reasonable time of processing, as the
procedure has been going on in relation to the accused ever since 2 September
2004 when the surveillance was started. 

AS Järvevana has thoroughly analysed the judgement of the court of appeal and
has come to a conclusion that it is mostly based on propositions of the
prosecutors with the mistakes included therein, inter alia additions copied
into the judgement misrepresenting the evidence, giving a reason to claim that
the substance of evidence has not been studied, but the judge has rather been
content with the unilateral dysmorphic 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 reasoningdeficiencies 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
proceeding, let alone misrepresenting the evidence 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 as a
significant violation of the proceeding, whereas in order to reason the
contradictions the actual information reflected in evidence has been presented
in the form of tables as appendices to the appeal in cassation. 

AS Järvevana has relied on the positions of the Supreme Court that the
principle of direct 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 direct proceeding,
the court of first instance came to a unanimous conscience that AS Järvevana
and Toomas Annus were not guilty, thereby calling the entire accusation into
question. AS Järvevana is convinced that a 14-day indirect proceeding could not
overrule the conscience of the court of first instance formed on the basis of
the years of direct proceeding. When reading the judgement, it remains
ambiguous for AS Järvevana 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 convicted AS Järvevana, which according to the
judgement, never swapped lands or was a party to such transactions or had been
an addressee of administrative acts. 

At 17 December 2013, the Criminal Chamber of the Supreme Court accepted the
lawyers' cassations submitted against the decision of Tallinn Circuit Court in
the criminal case of land swap. A three-member composition of Criminal Chamber
of the Supreme Court discussed the submitted cassation on 19 March 2014. On 10
April 2014, the three-member composition of the Criminal Chamber of the Supreme
Court made a court ruling, which gave the matter to the whole composition of
the Criminal Chamber of the Supreme Court to be reviewed. According to the
reasoning of the ruling, the three-member court composition had fundamentally
different opinions in the adjudication of the criminal matter, which may lead
to the need to amend a position regarding application of the law maintained by
the Criminal Chamber in an earlier practice. The decision of the Supreme Court
will be announced on 30 June 2014 the latest. In exceptional cases, the Supreme
Court may extend the term by one month. 

In case of entry into force of the judgement of conviction and entry into 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 AS Järvevana are convinced that
the activities of the company and its management have been correct and 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 have not entered into force and, according to the Constitution § 22, AS
Järvevana 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 31.03.2014

                                             Number of shares  % of shares
--------------------------------------------                              
AS Riverito                                        12,742,686       71.99%
OÜ Seitse Samuraid                                    352,000        1.99%
Compensa Life Vienna Insurance Group SE               263,806        1.49%
Tenlion OÜ                                            246,230        1.39%
Clearstream Banking Luxembourg S.A. clients           154,538        0.87%
OÜ Watermelon                                         150,000        0.85%


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 2014 3 months, 194 transactions were performed with the shares of AS
Järvevana in the course of which 424,070 shares were traded and the total
monetary value of transactions was EUR 292,189. The lowest transaction price
was EUR 0.60 and the highest transaction price was EUR 0.74 per share. The
closing price of the shares as at 31.03.2014 was EUR 0.69. 

Structure of shareholders as at 31.03.2014

Number of shares       Number of           % of          Number of       % of   
                     shareholders      shareholders       shares        shares  
-----------------                                                               
           1-100                 236          29.46%          11,210       0.06%
       101-1,000                 259          32.34%         113,877       0.65%
    1,001-10,000                 209          26.09%         820,972       4.64%
10,001 – 100,000                  89          11.11%       2,631,968      14.87%
       100,001 –                   7           0.87%       1,379,287       7.79%
       1,000,000                                                                
   1,000,001 - …                   1           0.13%      12,742,686      71.99%
           Total                 801            100%      17,700,000        100%



STATEMENT OF COMPREHENSIVE INCOME
in thousand euros, unaudited

                                                    2014      2013
                                                3 months  3 months
                                                                  
General and administrative expenses                 (49)      (59)
                                               -------------------
                                               -------------------
Operating profit (loss)                             (49)      (59)
                                                                  
Finance income and costs                              31        40
                                               -------------------
incl. interest income                                 31        40
                                                                  
Net profit (loss) for the period                    (18)      (19)
                                               -------------------
                                                                  
Comprehensive profit (loss) for the period          (18)      (19)
                                               -------------------
Earnings per share (basic and diluted, in EUR)    (0.00)    (0.00)



STATEMENT OF FINANCIAL POSITION
in thousand euros, unaudited

                               31.03.2014  31.12.2013
ASSETS                                               
Current assets                                       
Cash and cash equivalents           2,394       2,392
Trade and other receivables        13,483      13,490
Total current assets               15,877      15,882
                                                     
Non-current assets                                   
Property, plant and equipment          11          14
Total non-current assets               11          14
                                                     
TOTAL ASSETS                       15,888      15,896
                              -----------------------
                              -----------------------
                                                     
LIABILITIES AND EQUITY                               
Current liabilities                                  
Trade and other payables               31          21
Short-term provisions               1,118       1,118
Total current liabilities           1,149       1,139
Total liabilities                   1,149       1,139
                                                     
Equity                                               
Share capital                      12,000      12,000
Statutory reserve capital           1,200       1,200
Retained earnings                   1,539       1,557
Total equity                       14,739      14,757
                                                     
TOTAL LIABILITIES AND EQUITY       15,888      15,896
                              -----------------------



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