2014-04-24 07:30:01 CEST
2014-04-24 07:30:06 CEST
REGULATED INFORMATION
Trainer's House Oyj - Interim report (Q1 and Q3)
TRAINERS' HOUSE GROUP'S INTERIM REPORT FOR 1 JANUARY – 31 MARCH 2014
Espoo, 2014-04-24 07:30 CEST (GLOBE NEWSWIRE) -- TRAINERS' HOUSE PLC, INTERIM
REPORT, 24 APRIL 2014 AT 8:30
January - March 2014 in brief (the figures are figures for the company's
continuing operations)
-- Net sales amounted to EUR 2.2 million (EUR 2.9 million).
-- Operating profit (EBIT) before non-recurring items was EUR -0.2 million
(EUR 0.2 million), or -8.2% of net sales (5.7%).
-- Based on the results of impairment testing, the goodwill values were lower
than the book value, resulting in a goodwill write-off in the amount of EUR
1.6 million.
-- Operating profit was EUR -1.8 million (EUR 0.04 million), or -84.5% of net
sales (1.4%).
-- Cash flow from operating activities was EUR -0.3 million (EUR 1.1 million).
-- Earnings per share were EUR -0.03 (EUR 0.00).
Key figures at the end of the first quarter of 2014
-- Liquid assets totalled EUR 2.0 million (EUR 2.6 million).
-- Interest-bearing liabilities amounted to EUR 7.4 million (EUR 5.2 million),
and interest-bearing net debt totalled EUR 5.4 million (EUR 2.6 million).
-- Net gearing was 92.0% (15.6%).
-- Equity-to-assets ratio was 34.4% (62.1%).
OUTLOOK FOR 2014
Long-term visibility remains limited due to the general economic situation. The
company estimates that the net sales for 2014 will be lower than the 2013
level. The company has previously estimated that the net sales for 2014 will be
slightly lower than the 2013 level.
The company further estimates that operating profit before non-recurring items
will be lower year-on-year.
REPORT OF ARTO HEIMONEN, CEO
During the first quarter, the company's orders did not develop as expected,
causing the company's forecast of its net sales to decrease in comparison to
the previous year's level. The company's business environment is expected to
remain challenging. The decrease in net sales despite cost savings will have a
negative impact on the company's operating profit.
The company will focus on developing the Pulssi management system and the
trainee programme. Based on customer results, the company has started
discussions with some pilot customers about switching to results-based
invoicing. The decision is based on the practical impact of management system
Pulssi on customers' results. In addition, the company has developed new
productisation for small and medium-sized enterprises, which will be piloted
during the second quarter.
For more information, please contact:
Arto Heimonen, CEO, tel. +358 40 412 3456
Mirkka Vikström, CFO, tel. +358 50 376 1115
REVIEW OF OPERATIONS
During the final quarter of 2013, the company concluded a comprehensive
arrangement that significantly supports the company's financial position.
Implementation of the arrangement was continued during the review period as
regards hybrid bonds and subordinated loans in the manner described in more
detail under the financial section.
The company is continuing with measures and negotiations concerning a better
solution for the company's office facilities.
During the period, the company has continued to invest in developing a product
and service model that provides quantifiable results to customers. Key elements
of this are Vaikutuskartta and Pulssi, a change management system.
Vaikutuskartta is used to clarify the goals of the customer company, to agree
on operative indicators, as well as to crystallise repeated weekly activities
through which the goals are achieved. Pulssi is used to measure and monitor
change in the critical activities and results.
The change projects executed by Trainers' House are usually connected with
clarifying our customers' business strategies; marketing the strategies; and
implementing them by spurring sales, by enhancing customer service (for
example, through service design), and by developing the work of leaders and
supervisors along with the skills of their subordinates. Managing work capacity
through physical and mental coaching holds an important role in an increasing
number of customer projects.
FINANCIAL PERFORMANCE
Net sales development during the review period was weaker than in the first
quarter of 2013. As expected, the company's operating profit before
non-recurring items showed a loss due to the weak sales performance in the
second half of last year. Due to the write-down of goodwill, operating profit
before non-recurring items was clearly weaker than in the corresponding period
in the previous year.
Net sales from continuing operations during the period under review came to EUR
2.2 million (EUR 2.9 million). Operating profit (EBIT) from continuing
operations before non-recurring items was EUR -0.2 million, or -8.2% of net
sales (EUR 0.2 million, or 5.7%). Profit for the period was EUR -1.9 million,
or -87.6% of net sales (EUR 0.03 million, or 1.1%).
Result
The comparative figures used for reporting on operating profit include the
operating profit reported as well as operating profit before non-recurring
items (i.e., operating profit, EBIT). According to the company's management,
these figures provide a more accurate view of company productivity.
The following table itemises the Group's key figures (in thousands of euros
unless otherwise noted:
1-3/2014 1-3/2013
Net sales 2,154 2,945
Expenses:
Personnel-related expenses -1,320 -1,576
Other expenses -971 -1,132
EBITDA -137 237
Depreciation of non-current assets -40 -70
Operating profit before non-recurring -177 167
items
Non-recurring items *) -1,643 -125
EBIT -1,820 42
% of net sales -84.5 1.4
Financial income and expenses -66 1
Profit/loss before tax -1,886 43
Tax **) 0 -11
Profit/loss for the period -1,886 32
% of net sales -87.6 1.1
*) Non-recurring items in 2014 include a write-down in the Group's goodwill in
the amount of EUR 1.6 million. Non-recurring items in 2013 include a
restructuring provision in the amount of EUR 0.1 million.
**) The tax included in the income statement is deferred. Taxes recognised in
the income statement have no effect on cash flow. On 31 March 2014, the
company's balance sheet included deferred tax assets from losses carried
forward in the amount of EUR 0.4 million. The deferred tax assets will expire
during 2019-2021.
The following table itemises distribution of net sales from continuing
operations and shows the quarterly profit/loss from the start of 2013 (in
thousands of euros).
Q113 Q213 Q313 Q413 Q114
---------------------------------------------
Net sales 2945 2582 1800 2793 2154
---------------------------------------------
Operating 167 56 -153 430 -177
profit
before
non-recurring
items *)
---------------------------------------------
Operating 42 -4465 -153 430 -1820
profit
---------------------------------------------
LONG-TERM OBJECTIVES
The company's long-term objective is profitable growth.
FINANCING, INVESTMENTS AND SOLVENCY
In connection with the merger of Trainers' House Oy and Satama Interactive Plc,
the company concluded a loan agreement in the amount of EUR 40 million. At the
end of the reporting period, the company had loans related to this loan
agreement negotiated at the end of 2013 in the amount of EUR 2.5 million.
The company will issue a new, low-interest subordinated loan of approximately
EUR 1.2- EUR 1.5 million during 2013 and 2014. The significant shareholders and
key personnel of the company are committed to subscribing for the loan. The
interest rate of the subordinated loan is 3.0% until 31 December 2016. The
interest is capitalised at the end of each year. As of 1 January 2017, a 5.0%
cash rate will be payable within the boundaries of distributable assets. The
subordinated loan will mature on 31.12.2018. At the end of the first quarter of
the financial year, EUR 0.7 million of the loan had been subscribed.
Hybrid bond
On 15 January 2010, Trainers' House Plc issued domestic hybrid bond in the
amount of EUR 5.0 million. Interest of EUR 1.0 million related to the hybrid
bond was recognised in shareholders' equity.
According to the terms of the hybrid bond, the company has the right to decide,
subject to certain limitations specified in the terms, either to pay the
interest on the hybrid bond annually or to postpone these payments. Interest in
the amount of EUR 0.5 million has been paid to the subscribers on 21 January
2011 and EUR 0.5 million on 20 January 2012. The interest paid reduces the
non-restricted equity and is not recognised as income.
In accordance with its stock exchange release dated 17 December 2012, Trainers'
House has decided to defer interest payments on the hybrid loan for the time
being. The purpose of the deferment of interest payments is to strengthen the
company's financial position and to ensure that the company fulfils the terms
of its loan agreement. According to the terms of the hybrid bond, the company
must pay the deferred interest and any interest accrued on it by the latest if,
for example, the company pays dividends in excess of the minimum dividend
stipulated in the Companies Act, or otherwise distributes equity to its
shareholders.
In January 2014, the company has made an offer to the bearers of the hybrid
bond in the amount of EUR 5.0 million in which an opportunity was offered to
convert the hybrid bond into a low-interest loan instrument with secondary
priority compared with a senior loan and the key terms of which are same as the
subordinated loan's terms. The company's financiers, representing a total of
approximately EUR 4.1 million of the hybrid bond's capital, accepted the offer.
Cash flow and financing
Cash from operating activities before financial items totalled EUR -0.3 million
in the reporting period (EUR 1.1 million) and cash flow after financial items
was EUR -0.3 million (EUR 1.1 million).
Cash from investments totalled EUR -0.02 million during the period under review
(EUR 0.02 million). Cash flow from financing came to EUR -0.3 million (EUR -0.1
million).
Total cash flow amounted to EUR -0.6 million (EUR 1.1 million).
On 31 March 2014, the Group's liquid assets totalled EUR 2.0 million (EUR 2.6
million). The equity ratio was 34.4% (62.1% ). Net gearing was 92.0% (15.6%).
At the end of the reporting period, the Group had interest-bearing liabilities
in the amount of EUR 7.4 million (EUR 5.2 million).
Financial risks
Interest rate risk is managed by covering some of the risk with hedging
agreements. A bad-debt provision, which is booked on the basis of ageing and
case-specific risk analyses, covers risks to accounts receivable.
Better loan terms were negotiated last year to improve a financial structure
that was heavy in relation to the wide range of the company's previous business
operations. Furthermore, the company will endeavour to find a better solution
to lighten the remaining lease liabilities.
SHORT-TERM BUSINESS RISKS AND FACTORS OF UNCERTAINTY
Risks in the company's operating environment have remained unchanged. On
account of the project-based nature of the company's operations, the order life
cycle is short, which makes it more difficult to estimate future developments.
Because of the overall economic situation, long-term trends remain unclear.
Short-term risks
The Group's goodwill and deferred tax assets recognised in the balance sheet
were re‑tested for impairment at the end of the quarter. Based on the results
of this impairment testing, the goodwill values were EUR 1.6 million lower than
the book value, resulting in a goodwill write-off.
If the company's profitability should fail to develop as predicted, or if
external factors beyond the company's control, such as interest rates, should
change significantly, there is a risk that some of the Group's goodwill may
have to be written down. Such a write-down would not affect the company's cash
flow.
At the end of the period under review, Trainers' House Plc's balance sheet
included deferred tax assets from losses carried forward in the amount of EUR
0.4 million. The deferred tax assets will expire during 2019-2021.
The company's new loan agreement, under which there were loans in an amount of
EUR 2.5 million at the end of the reporting period, includes standard covenants
including one concerning the ratio of net debt to EBITDA.
If the company's profitability should fail to develop as expected, there is a
risk that the company might not be able to fulfil the covenants, which would
increase the company's financial expenses.
Risks are discussed in more detail in the annual report and on the company's
website, at www.trainershouse.fi > Investors.
PERSONNEL
At the end of March 2014, the Group employed 81 (94) people.
DECISIONS REACHED AT THE ANNUAL GENERAL MEETING
The Annual General Meeting of Trainers' House Plc was held on 26 March 2014 in
Espoo.
In accordance with the proposal of the Board of Directors, the Annual General
Meeting decided that no dividend be paid for the financial year 2013.
In accordance with the proposal by the Board of Directors, the Annual General
Meeting decidedthat the company's premium fund be decreased by EUR 4,037,620.81
to cover the parent company's losses. On 31 December 2013, before the
offsetting of losses, the parent company's premium fund amounted to EUR
4,532,159.97. After the write-off the company's premium fund totals EUR
494,539.16.
The Annual General Meeting adopted the company's Financial Statements and
discharged the CEO and the members of the Board of Directors from liability for
the period 1 January to 31 December 2013.
It was confirmed that the Board of Directors shall consist of five (5) members.
Aarne Aktan, Vesa Honkanen, Jarmo Hyökyvaara and Jari Sarasvuo were re-elected
as members of the Board of Directors. Marjaana Toiminen was elected a new
member of the Board. In its assembly meeting held after the AGM, the Board of
Directors elected Aarne Aktan as the Chairman of the Board. The Annual General
Meeting decided that the members of the Board be entitled to a monthly
emolument of EUR 1,500 and Chairman of the Board to a monthly emolument of EUR
3,500.
Authorised Public Accountants Ernst & Young Oy were elected as the
company's auditors. Auditor's fees are paid on the basis of a reasonable
invoice.
It was decided to authorise the Board of Directors to decide on a share issue,
on transfer of own shares and on the granting of special rights entitling to
shares. The number of shares to be granted or transferred on the basis of the
authorisation may not exceed 13,000,000 shares. A share issue, transfer of own
shares and the granting of other special rights entitling to shares may take
place in deviation of the shareholders' pre-emptive subscription rights. This
authorization overrides previous authorizations concerning share issue,
transfer of own shares and granting of other special rights entitling to
shares. The authorization shall remain in force until 30 June 2017.
SHARES AND SHARE CAPITAL
The shares of Trainers' House Plc are listed on NASDAQ OMX Helsinki Ltd under
the symbol TRH1V.
At the end of the period reviewed, Trainers' House Plc had issued 68,016,704
shares and the company's registered share capital amounted to EUR 880,743.59.
No changes took place in the number of shares or share capital during the
period under review.
Share performance and trading
In the period under review, 3.5 million shares in total, or 5.2% of the average
number of all company shares (2.6 million shares, or 3.9%), were traded on the
Helsinki stock exchange, for a value of EUR 0.2 million (EUR 0.3 million). The
period's highest share quotation was EUR 0.08 (EUR 0.11), the lowest EUR 0.05
(EUR 0.09) and the closing price EUR 0.05 (EUR 0.09). The weighted average
price was EUR 0.07 (EUR 0.10). At the closing price on 31 March 2014, the
company's market capitalisation was EUR 3.4 million (EUR 6.1 million).
PERSONNEL OPTION PROGRAMMES
Trainers' House Plc has three option programmes for its personnel, included in
the personnel's commitment and incentive scheme.
The Annual General Meeting held on 21 March 2012 decided to initiate an
employee option programme for key employees in Trainers' House and its
subsidiaries. The number of option rights granted shall not exceed 5,000,000,
and the option rights shall entitle their holders to subscribe for no more than
5,000,000 new shares or treasury shares in total. Of the warrants, 3,000,000
will be titled 2012A and 2,000,000 will be titled 2012B. The subscription price
for the warrants is EUR 0.16. The subscription period for shares converted
under the warrant 2012A is from 1 September 2013 to 31 December 2014 and for
warrant 2012B from 1 September 2014 to 31 December 2015. The options have not
yet been offered.
The company's Board of Directors has decided on 5 August 2013 to adopt a new
option programme under the authorization of the Annual General Meeting on 21
March 2012. The number of option rights granted shall not exceed 7,500,000, and
the option rights shall entitle their holders to subscribe for no more than
7,500,000 new shares or treasury shares in total. 2,500,000 of the converted
shares will be under the warrant 2013A and the subscription period for the
converted shares is 1 January 2015 - 1 January 2018. 2,500,000 of the converted
shares will be under the warrant 2013B and the subscription period for the
converted shares is 1 January 2016 - 1 January 2018. 2,500,000 of the converted
shares will be under the warrant 2013C and the subscription period for the
converted shares is 1 January 2017 - 1 January 2018. The subscription price for
each warrant is EUR 0.09. The total number of warrants granted to the personnel
is 5.0 million. A total cost of EUR 0.03 million has been expensed for the 2014
financial year.
The company's Board of Directors has decided on 18 December 2013 to adopt a new
option programme under the authorization of the Annual General Meeting on 21
March 2012. The number of option rights granted shall not exceed 5,250,000, and
the option rights shall entitle their holders to subscribe for no more than
5,250,000 new shares or treasury shares in total. The warrants are titled
2013D. The subscription period for shares converted under the warrant is from 1
January 2018 to 31 December 2018, and the subscription price for each warrant
is EUR 0.06. The options have not yet been offered.
CONDENSED FINANCIAL STATEMENTS AND NOTES
The interim report was compiled in accordance with the IAS 34 standard. This
interim report has been prepared in accordance with the IFRS standards and
interpretations adopted in the EU, valid on 31 December 2013.
In producing this interim report, Trainers' House has applied the same
accounting principles for key figures as in its 2013 financial statements. The
calculation of key figures is described on page 92 of the financial statements
included in the Annual Report 2013.
The figures given in the interim report are unaudited.
INCOME STATEMENT, IFRS (kEUR)
Group Group Group
01/01- 01/01- 01/01-
31/03/14 31/03/13 31/12/13
CONTINUING OPERATIONS
NET SALES 2,154 2,945 10,120
Other income from operations 127 177 785
Costs:
Materials and services -213 -323 -1,032
Personnel-related -1,320 -1,691 -5,615
expenses
Depreciation -40 -70 -207
Impairment -1,643 -4,521
Other operating expenses -885 -996 -3,676
Operating profit/loss -1,820 42 -4,147
Financial income and expenses -66 1 -1,054
Profit/loss before tax -1,886 43 -5,201
Tax *) 0 -11 432
PROFIT/LOSS FOR THE PERIOD -1,886 32 -4,769
TOTAL COMPREHENSIVE -1,886 32 -4,769
INCOME FOR THE YEAR
Profit/loss attributable to:
Owners of the parent company -1,886 32 -4,769
Total comprehensive income
attributable to:
Owners of the parent company -1,886 32 -4,769
Earnings per share, undiluted:
EPS result for the period from -0.03 0.00 -0.07
continuing operations
EPS attributable to equity -0.03 0.00 -0.07
holders of the parent company
EPS result for the period -0.03 0.00 -0.07
Diluted earnings per share are the same as undiluted earning per share.
*) The tax included in the income statement is deferred.
BALANCE SHEET IFRS (kEUR)
Group Group Group
31/03/14 31/03/13 31/12/13
ASSET
Non-current assets
Property, plant and equipment 238 321 236
Goodwill 2,971 9,135 4,614
Other intangible assets 9,664 9,698 9,669
Other financial assets 4 202 4
Other receivables 27 1,475 42
Deferred tax receivables 381 371 380
Total non-current assets 13,285 21,202 14,946
Current assets
Inventories 10 10 10
Accounts receivables and 1,689 2,760 1,791
other receivables
Cash and cash equivalents 2,024 2,595 2,630
Total current assets 3,723 5,366 4,432
TOTAL ASSETS 17,008 26,568 19,377
SHAREHOLDERS' EQUITY AND
LIABILITIES
Equity attributable to equity
holders of the parent company
Share capital 881 881 881
Premium fund 216 4,253 4,253
Distributable non-restricted 31,872 31,872 31,872
equity fund
Other equity fund 900 4,962
Retained earnings -28,034 -25,398 -30,215
Total shareholders' equity 5,835 16,571 6,791
Long-term liabilities
Deferred tax liabilities 1,929 2,363 1,929
Other long-term liabilities 6,285 3,052 7,455
Accounts payable and other 2,960 4,582 3,202
liabilities
Total liabilities 11,173 9,997 12,586
TOTAL SHAREHOLDERS' EQUITY AND 17,008 26,568 19,377
LIABILITIES
CASH FLOW STATEMENT, IFRS (kEUR)
Group Group Group
01/01- 01/01- 01/01-
31/03/14 31/03/13 31/12/13
Profit/loss for the period -1,886 32 -4,769
Adjustments to profit/loss 1,773 150 5,372
for the period
Change in working capital -170 934 1,142
Financial items -23 -1 -218
Cash flow from operations -306 1,114 1,527
Investments in tangible and -37 -19
intangible assets
Divestment of business 472
Repayment of loan receivables 15 15 30
Sales from available-for-sale 770
financial assets
Cash flow from investments -22 15 1,253
Withdrawal of long-term loans 1 700
Repayment of long-term loans -250 -2,225
Repayment of finance lease -30 -55 -145
liabilities
Cash flow from financing -278 -55 -1,670
Change in cash and cash -606 1,075 1,110
equivalents
Opening balance of cash and 2,630 1,520 1,520
cash equivalents
Closing balance of cash and 2,024 2,595 2,630
cash equivalents
CHANGE IN SHAREHOLDERS' EQUITY (kEUR)
Equity attributable to equity holders of the parent company
A. Share capital
B. Premium fund
C. Distributable non-restricted equity
D. Other equity fund
E. Retained earnings
F. Total
A. B. C. D. E. F.
----------------------------------------------------------
Equity 881 5,077 31,872 4,962 -26,397 16,394
01/01/2013
----------------------------------------------------------
Re- 145 145
measurement
of deferred
tax - change
in tax rate
----------------------------------------------------------
Adjusted 881 5,077 31,872 4,962 -26,253 16,539
equity
01/01/2013
----------------------------------------------------------
Other 32 32
comprehensive
income
----------------------------------------------------------
Decrease of -823 823 0
share premium
fund to cover
losses
----------------------------------------------------------
Equity 881 4,253 31,872 4,962 -25,398 16,571
31/03/2013
----------------------------------------------------------
----------------------------------------------------------
Equity 881 4,253 31,872 0 -30,215 6,791
01/01/2014
----------------------------------------------------------
Other -1,886 -1,886
comprehensive
income
----------------------------------------------------------
Decrease of -4,038 4,038 0
share premium
fund to cover
losses
----------------------------------------------------------
Sharebased 30 30
payments
----------------------------------------------------------
Hybrid bond 900 900
transferred
from non-
current
liabilities
----------------------------------------------------------
Equity 881 216 31,872 900 -28,034 5,835
31/03/2014
----------------------------------------------------------
RESTRUCTURING PROVISION (kEUR) Group Group Group
01/01- 01/01- 01/01-
31/03/14 31/03/13 31/12/13
Provisions 1 January 222 240 240
Provisions increased 125 125
Provisions used -57 -143
Provisions 31 March/31 December 222 308 222
PERSONNEL Group Group Group
01/01- 01/01- 01/01-
31/03/14 31/03/13 31/12/13
Average number of personnel 81 101 93
Personnel at the end of 81 94 82
the period
COMMITMENTS AND CONTINGENT Group Group Group
LIABILITIES (kEUR) 31/03/14 31/03/13 31/12/13
Collaterals and contingent 8,860 10,317 9,213
liabilities given for
own commitments
OTHER KEY FIGURES Group Group Group
31/03/14 31/03/13 31/12/13
Equity-to-assets ratio (%) 34.4 62.1 35.4
Net gearing (%) 92.0 15.6 87.4
Shareholders' equity/share (eur) 0.09 0.24 0.10
Return on equity (%) -60.1 -1.9 -41.1
Return on investment (%) -34.4 0.3 -22.1
Return on equity and return on investment have been calculated for the previous
12 months.
Espoo, 24 April 2014
TRAINERS' HOUSE PLC
BOARD OF DIRECTORS
For more information, please contact:
Arto Heimonen, CEO, +358 40 412 3456
Mirkka Vikström, CFO, +358 50 376 1115
DISTRIBUTION
OMX Nordic Exchange, Helsinki
Key media
www.trainershouse.fi > Investors
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