Results of 2017 approved by the sole shareholder

At the annual general meeting of shareholders of OÜ Transpordi Varahaldus (TVH) held on 30 May 2017, Mrs Kadri Simson, Estonian Minister of Economic Affairs and Infrastructure, approved the state-owned company’s second annual report, which indicates the company’s turnover for the 2017 accounting year as 6,707 million euros and the net profit as 2,908 million euros. TVH’s operating profit was 3,694 million euros.

TVH Board Member Ergo Blumfeldt explained that TVH has been developing according to the approved business plan as an investment company in the transport sector with lower than average risks and a conservative capital structure. He added that the most important event of the 2017 financial year was the acquisition and lease of two additional Bombardier CRJ900 type aircraft. He explained that TVH issued 25 million euros worth of bonds subscribed by AS LHV Pank and funds administered by LHV to finance the transaction.

TVH owns and leases six Bombardier CRJ900NG-type passenger jet aircraft. The long-term lessee of TVH’s aircraft is Estonia’s national airline AS Nordic Aviation Group (Nordica). In the 2018 financial year, TVH is aiming for a turnover of approximately 7.8 million euros.

 

Further information and questions:

Ergo Blumfeldt

Member of the Management Board

OÜ Transpordi Varahaldus

Ergo.Blumfeldt@triniti.ee

+372 513 82 77

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2.9 million profit for TVH in 2017

According to the audited results of the 2017 financial year of OÜ Transpordi Varahaldus (TVH) the profit for the 2017 financial year was 2.9 million euros at a turnover of 6.7 million. The annual report of the company was audited by AS Deloitte Audit Eesti.

TVH is a state-owned private limited liability company founded on September 30, 2015 by the Republic of Estonia as a sole shareholder with the objective of operating as an investment firm financing and managing fixed assets in the field of transport (including acquisition and lease). The company owns six Bombardier CRJ-900 NG 88-seater passenger aircraft.

According to the member of the management board of TVH Ergo Blumfeldt, the most important event of the 2017 financial year was an increase in the aircraft fleet from four planes to six. In summer 2017, TVH acquired two vintage Bombardier CRJ-900 NG passenger aircrafts, which are leased to the Estonian national airline Nordica and operated by Regional Jet, a joint venture between Nordica and the Polish National Airline LOT. The transaction was funded by the issue of bonds of 24 million euros, which were subscribed in equal parts by LHV Pank and LHV funds.

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The first financial year for TVH ends in profit

At the May 25, 2017 annual general meeting of shareholders of OÜ Transpordi Varahaldus (TVH) Kadri Simson, Estonian Minister of Economic Affairs and Infrastructure, approved the state company’s first annual report, which indicates the Company’s turnover for the 2015–2016 accounting year as 3,177 million euros and the net profit as 3,092 million euros.

TVH’s first commercial profit was 1,908 million euros and financial income 1,184 million euros. The first annual report of the Company in the state’s sole ownership was audited by AS Deloitte Audit Eesti.

“The source of the financial income was the value increase of the repair reserve resulting from strengthening of the dollar against the euro,” explained TVH Board Member Ergo Blumfeldt.

Blumfeldt added that the Company commenced its economic activity by acquiring from Export Development Canada, a Canadian export agency, a loan agreement and related collateral for three CRJ900 type aircraft. In August 2016 TVH acquired another CRJ900 aircraft. The long-term lessee of all TVH’s aircraft is Estonia’s national airline AS Nordic Aviation Group (Nordica).

Blumfeldt says that this financial year TVH is planning to acquire and rent out two additional Bombardier CRJ900 type aircraft and so as to finance the transaction has issued 25 million euros worth of bonds subscribed for by AS LHV Pank and funds administered by LHV. In the 2017 financial year TVH is aiming for a turnover of approximately 7 million euros.

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The largest commercial investment in Estonian aviation

As a result of successful issue of bonds of Transpordi Varahaldus (TVH), TVH is now to acquire two CRJ900 NextGen type aircraft which it will rent out long-term to Estonia’s national airline AS Nordic Aviation Group (Nordica).

Half of the 25 million euro bond issue was subscribed for by LHV pension funds and the rest by AS LHV Pank subject to a loan interest of 2.85 per cent a year and a term of 8 years. The loan is guaranteed with TVH’s four CRJ900 aircraft of the same type.

Andres Viisemann, Manager of LHV Pension Funds, said at a press conference that he considers this investment to be very safe and added that TVH might indeed be a new business sventure, yet constitutes a company with an exceedingly strong capital structure.

A TVH aircraft in Nordica colors at Tallinn Airport. Picture: Mihkel Maripuu, Postimees

As a result of the transaction, TVH aircraft fleet shall include six CRJ900 NextGen type aircraft. As agreed, the first of the two additional aircraft is set to arrive in Tallinn in June and the second in July. Both aircraft will start operation in the beginning of August at the latest. The aircraft were manufactured in 2011 at the Bombardier factory in Canada and have been well maintained.

In an interview with the daily Postimees, Kadri Simson, Estonian Minister of Economic Affairs, noted that the decision by a private bank to finance Nordica’s investment first and foremost demonstrates the bank’s trust in the Company’s business plan.

“Today Nordica is doing well; the finding of a strategic partner and step-by-step expansion constitute a logical continuation of the Company’s development. Competition in aviation is really tight and Nordica must make an effort every day to please its customers. We must certainly remember to praise LHV whose investment demonstrates the belief of an Estonian bank in an Estonian enterprise,” the Minister explained.

The relevant transaction constitutes the largest commercial investment in Estonian aviation. The main financing in the aviation sector has so far come from owners or partner companies and the government.

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TVH aircraft to start flying Nordica routes

As a result of an international competition carried out by Lufthansa Consulting, OÜ Transpordi Varahaldus (TVH) is to rent three Bombardier CRJ-900NG passenger planes to Estonian airline AS Nordic Aviation Group (Nordica) for a duration of thirteen years.

Ergo Blumfeldt, TVH Management Board Member, says that two tenders were received in the lease competition, of which Nordica’s tender was deemed to be the best. “The lease agreements last for 13 years,” he added. The European Commission has been informed of the lease agreements.

TVH had the aircraft, which were previously used by Estonian Air and returned to their owner upon expiry of the lease agreements, painted white at Airbourne Colours in England to be presented to the new lessee. The aircraft have undergone required maintenance and now are parking at Tallinn Airport. CRJ-900NG type aircraft are manufactured by Bombardier in Canada, they are 88-seaters, and their estimated useful life is 25-30 years.

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TVH acquired lease agreements for three aircraft

OÜ Transpordi Varahaldus, founded by the state, acquired for 31 million euros from EDC (Export Development Canada), a Canadian export agency, the lease agreements of three passenger planes previously used by Estonian Air.

“These aircraft were built by a Canadian aircraft manufacturer Bombardier and financed by Export Development Canada (EDC). Estonian Air used the three planes on the basis of lease agreements and failed to make any more rental payments after the termination of the company’s flight operations. As a result of negotiations, Transpordi Varahaldus concluded an agreement with EDC, acquiring the loan granted by EDC, and basically stepped into the boots of this financial institution,” explained Ergo Blumfeldt, OÜ Transpordi Varahalduse (TVH) Management Board Member

Next, TVH is planning to organize an international public tender with negotiations to find a new long-term lessee for the aircraft. AS Nordic Aviation Group has already indicated its interest in participating in the lease tender.

OÜ Transpordi Varahaldus is a state-owned company founded on September 30, 2015 by the Republic of Estonia as a sole shareholder with the objective of operating as an investment firm financing and managing investments into fixed assets in the field of transport (including acquisition and rental). The Company was entered in the commercial register on October 10, 2015.

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