2010-04-22 07:30:00 CEST
2010-04-22 07:30:03 CEST
REGULATED INFORMATION
Trainer's House Oyj - Interim report (Q1 and Q3)
TRAINERS' HOUSE GROUP'S INTERIM REPORT 1 JANUARY - 31 MARCH 2010
TRAINERS' HOUSE PLC STOCK EXCHANGE RELEASE 22 APRIL 2010 AT 8:30
The profitability of Trainers' House increased in the first quarter.
Operating profit (EBIT) before non-recurring items and depreciation resulting
from the allocation of acquisition cost was EUR 0.7 million, or 11.0% of net
sales (EUR -0.0 million, or -0.5% of net sales), and after these items, EUR 0.2
million, or 3.0% of net sales (EUR -2.8 million, or -32.0% of net sales). The
result for 2009 was weakened by a non-recurring restructuring cost of EUR 2.2
million.
January-March
Net sales amounted to EUR 6.3 million (EUR 8.6 million).
Operating profit (EBIT) before non-recurring items and depreciation resulting
from the allocation of acquisition cost was EUR 0.7 million (EUR -0.0 million).
Operating result after these items was EUR 0.2 million (EUR -2.8 million), or
3.0% of net sales (-32.0%).
Cash flow from operating activities amounted to EUR 0.3 million (EUR 2.3
million).
Earnings per share were EUR -0.00 (EUR -0.04).
Key figures at the end of the period under review:
Liquid assets totalled EUR 7.0 million (EUR 9.8 million).
Interest-bearing liabilities amounted to EUR 16.7 million (21.8 million) and
interest-bearing net debts totalled EUR 9.7 million (12.0 million).
Net gearing was 17.3% (20.4%).
The equity ratio was 68.6% (62.6%).
FUTURE OUTLOOK
Trainers' House maintains the estimate presented in the financial statements
for 2009:
The company's business environment is expected to remain challenging and
difficult to predict due to the post-cyclical nature of the company's
operations. In the first half of 2010, net sales are expected to fall
year-on-year due to structural reasons. As a result of cost savings and the
restructuring carried out in 2009, the operating profit for the first half of
2010, before non-recurring items and depreciation resulting from the allocation
of acquisition cost, is expected to improve.
CEO JARI SARASVUO
The company is making more profit at a higher margin and a lower risk than a
year ago. In fact, we are making profit using a strategy that supports our
story.
After suffering from the restructuring of its customer base and business model,
our IT business has managed to get a grip on the future, which is already
visible in its performance.
Despite the challenging economic situation, our training business remained very
profitable. Last year's 40% profitability has been replaced by 34%
profitability. The training business made a profit of EUR 1.0 million (EUR 1.6
million). The good performance results from our product offering and changes in
the market situation and in the way our customers purchase training services.
In the period under review, new business sales developed favourably.The IT
business acquired new customers and more value added orders than before.
Altogether, the IT business order book increased by 46% in terms of euros. The
performance of our training business salespeople, +24% in the first quarter, is
another sign of better times ahead.
Thanks to SaaS, the nature of our training projects is changing from one-off
payments into steady, long-term invoicing. The delay between sales and invoiced
net sales results from a change in our business model.
We are integrating our growth ERP systems, our SaaS products, more and more
closely into our customers' change management and into our training business.
We are acquiring new customers and new users for our services. The number of
SaaS users have already exceeded eight thousand.
For more information, please contact:
Mirkka Vikström, CFO, tel. +358 50 376 1115
BUSINESS REVIEW
Last year Finland experienced the steepest ever collapse in Gross National
Product during peacetime. This fact radically changed the customer market.
Currently the clients buy services for the needs of the business rather than
organization. The company's strategy, also shown in the figures of the first
quarter, is based on this change in the market.
The company's structure has changed from the previous year. During 2009,
Trainers' House terminated its loss-making subcontracting work, and
consequently the number of employees has decreased from 292 to 232 year on
year.
The result of the first quarter improved year on year. In some business areas,
operations still remain unprofitable. As a result, the company announced on 29
March 2009 that it will start codetermination negotiations at the company's
Tampere unit and in Group administration.
Currently, the Tampere unit of Trainers' House has 19 employees. The
loss-making unit focuses on digital marketing production. The cost saving
measures in Group administration mainly result from rescaling of the Group's
business. The codetermination negotiations have only covered the Tampere office
and Group administration.
Trainers' House is seeking annual cost savings in the amount of approximately
EUR 1.5 million. According to an initial estimate, the adjustments in Group
administration and the reorganization of production are expected to result in
the reduction of no more than 25 employees. The objective of codetermination
negotiations is to find constructive alternatives to dismissals, and to seek
alternative cost savings and measures that might reduce the need for personnel
reductions and their consequences to employees.
Any non-recurring expenses potentially arising at the end of the
codetermination negotiations will be recognized in full in the result for the
second quarter.
New SaaS-contracts made during the first quarter will raise the number of Saas
users to over 8000. During the first quarter, a total of EUR 0.4 million was
invested in the development of SaaS products. These investments have been
recognized as expenses.
FINANCIAL PERFORMANCE
Net sales for the first quarter amounted to EUR 6.3 million (EUR 8.6 million).
Operating profit (EBIT) before depreciation resulting from the allocation of
the purchase price of Trainers' House Oy amounted to EUR 0.7 million, or 11.0%
of net sales (EUR -0.0 million, or -0.5%). Cash flow from operating activities
amounted to EUR 0.3 million (EUR 2.3 million).
The training business continues to be profitable. Its operating profit (EBIT)
totalled EUR 1.0 million. Excluding SaaS development costs, the company's other
business operations broke even. In March, IT operations were clearly in the
black.
In the first quarter of 2009, a restructuring provision of EUR 1.4 million was
made to cover costs resulting from personnel reductions and the divestment of
international operations. EUR 0.9 million of the restructuring provision has
been used to cover actual expenses, while EUR 0.2 million was dissolved and
recognized as income during the second and third quarters of 2009. On 31 March
2010, EUR 0.3 million of the provision remained unused. The unused provision is
expected to cover the remaining costs resulting from the restructuring.
EUR 10.2 million of the purchase price of Trainers' House Oy has been allocated
in intangible assets with a limited useful life. This item is depreciated over
a period of five years. During the first quarter, a total of EUR 0.5 million
was depreciated. At the end of the period under review, these intangible assets
totalled EUR 4.5 million. The total portion of this item to be depreciated in
2010 is EUR 2.0 million, while the portions to be depreciated in 2011 and 2012
are EUR 1.6 million and 1.4 million, respectively.
On 31 March 2010, the company's balance sheet contained deferred tax assets
from losses carried forward in the amount of EUR 3.3 million. Tax loss
carry-forwards must be utilized within 10 years from their recognition. About
one third of the company's tax loss carry-forwards will expire in 2011, and the
rest in 2012.
The comparative figures used for reporting operating profit include the
reported operating profit as well as operating profit before depreciation of
allocated acquisition cost related to the acquisition of Trainers' House Oy and
non-recurring items (=operating profit, EBIT). According to the company's
management, these figures provide a more accurate view of the company's
productivity.
The following table itemizes the Group's key figures (in thousands of euros):
1-3/2010 1-3/2009
Net sales 6,348 8,619
Expenses
Personnel-related
expenses -3,293 -5,457
Other expenses -2,229 -2,970
EBITDA 826 192
Depreciation of
non-current assets -128 -239
Operating profit before
depreciation of
allocation of acquisition cost 698 -46
% of net sales 11.0 -0.5
Depreciation of allocation
of acquisition cost -508 -508
Operating profit/loss before
non-recurring items 190 -555
% of net sales 3.0 -6.4
Non-recurring items **) -2,204
EBIT 190 -2,759
% of net sales 3.0 -32.0
Financial income and expenses -320 -295
Profit/loss before tax -130 -3,054
Tax *) 57 119
Profit/loss for the period -73 -2,935
% of net sales -1.1 -34.1
*) The tax included in the income statement is deferred. Taxes recognized in
the income statement have no effect on cash flow, because the company's balance
sheet contains deferred tax assets from losses carried forward.
**) Non-recurring items in 2009 include a restructuring provision in the amount
of EUR 1.4 million, and a write-down in the Group's goodwill in the amount of
EUR 0.8 million.
The following table itemizes the distribution of net sales and shows the
quarterly profit/loss from the beginning of 2009 (in thousands of euros):
Q109 Q209 Q309 Q409 2009 Q110
Net sales 8,619 6,916 5,180 6,932 27,647 6,348
Operating profit
before depreciation
of acquisition cost *) -46 253 190 921 1,318 698
Operating profit -2,759 -156 -193 413 -2,695 190
*) excluding non-recurring items
LONG-TERM OBJECTIVES
The long-term objectives of Trainers' House remain unchanged:
The company will target 15% annual organic growth and 15% operating profit, and
will aim to pay a steady dividend.
Taking the recent restructuring into consideration, we expect to achieve these
goals using our Growth System concept and along with the internationalization
of Trainers' House.
FINANCING, INVESTMENTS AND SOLVENCY
Hybrid bond
On 15 January 2010, Trainers' House Plc published a stock exchange release
stating that company is issuing a EUR 5 million domestic hybrid bond. No
interest expense caused by the hybrid bond has been booked in the company's
profit and loss account.
EUR 1 million of the bond was subscribed by domestic investors and EUR 4
million by major shareholders of Trainers' House Plc based on their
underwriting commitments. The coupon rate of the bond is 10.00% per annum. The
bond has no maturity but the company may call the bond after three years.
The hybrid bond will strengthen Trainers' House Plc's capital structure and
enhance its financial position. The arrangement will also enhance the ratio of
net debt to EBITDA. At the end of the period, the net gearing was 17.3 %.
Excluding the effect of the hybrid bond the net gearing would have been 28.6 %.
A hybrid bond is an instrument which is subordinated to the company's other
debt obligations and which is treated as equity in the IFRS financial
statements. Hybrid bonds do not confer to their holders the right to vote at
shareholder meetings and do not dilute the holdings of the current
shareholders.
Cash flow and financing
Cash flow before financial items totalled EUR 0.4 million (EUR 2.3 million) and
cash flow after financial items was EUR 0.3 million (EUR 2.3 million).
Cash flow from investments totalled EUR -0.1 million (EUR -0.2 million).
Cash flow from financing was EUR 4.9 million (EUR 0.0 million), due to the
issuing of the hybrid bond. Total cash flow amounted to EUR 5.1 million (EUR
2.1 million).
On 31 March 2010, the Group's liquid assets totalled EUR 7.0 million (9.8
million). The equity ratio was 68.6% (62.6%). Net gearing was 17.3% (20.4%). At
the end of the period under review, the company had EUR 16.7 million of
interest-bearing debt (EUR 21.8 million).
Financial risks
Currency risks are insignificant, because Trainers' House operates principally
in the euro zone. Interest rate risk is managed by covering part 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.
SHORT-TERM BUSINESS RISKS AND FACTORS OF UNCERTAINTY
Risks in the company's operating environment have remained the same in the
first quarter. In 2009, business operations became more challenging, and it
became more difficult to estimate future developments. While the situation has
improved somewhat in the first quarter, the long-term future outlook remains
weak.
Short-term risks
The Group's goodwill and deferred tax assets recognized in the balance sheet
were retested for impairment at the end of the first quarter. No goodwill
write-downs were made based on the results of the impairment testing.
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. However, any such write-down would not affect the
company's cash flow.
At the end of the first quarter, the balance sheet of Trainers' House Plc
contained deferred tax assets from losses carried forward in the amount of EUR
3.3 million.
If the company's taxable income does not reach approximately EUR 13 million in
2010-2012, there is a risk that some of the EUR 3.3 million in deferred tax
assets recognized in the balance sheet of Trainers' House Plc cannot be
utilized and may have to be written down. However, any such write-down would
not affect the company's cash flow.
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
balance sheet date, the company had loans related to this loan agreement in the
amount of EUR 16.5 million. The loan agreement contains standard covenants,
including one concerning the ratio of net debt to EBITDA.
In order to ensure that it will fulfil the financial covenant in the loan
agreement concerning the ratio of net debt to EBITDA, the company issued a
hybrid capital bond in the amount of EUR 5.0 million on 15 January 2010.
If the company's profitability should fail to develop as predicted, there is a
risk that the company might not be able to fulfil the covenants, which would
increase the company's financing costs.
About risks
Trainers' House is an expert organization. Market and business risks are part
of regular business operations, and their extent is difficult to define.
Typical risks in this field are associated with, for example, general economic
development, distribution of the clientele, technology choices and development
of the competitive situation and personnel expenses. Risks are managed through
the efficient planning and regular monitoring of sales, human resources and
business costs, enabling a quick response to changes in the operating
environment.
Furthermore, Trainers' House aims to improve its risk tolerance by designing
services that generate steady cash flow and are not as easily affected by
economic fluctuations as services based on a one-off payment.
The success of Trainers' House as an expert organization also depends on its
ability to attract and retain skilled employees. Personnel risks are managed
with competitive salaries and incentive schemes as well as investments in
employee training, career opportunities and general job satisfaction.
Risks are discussed in more detail in the annual report and on the company's
website at: www.trainershouse.fi > Investors.
DECISIONS OF THE ANNUAL GENERAL MEETING
The Annual General Meeting of Trainers' House Plc was held in Helsinki on 25
March 2010.
As proposed by the Board of Directors, the AGM decided that no dividend be paid
for 2009.
The AGM adopted the company's financial statements, including the consolidated
financial statements, for 2009, and discharged the members of the CEO and the
Board of Directors from liability for the financial year 1 January - 31
December 2009.
The AGM confirmed that the company's Board of Directors shall have four (4)
members. Aarne Aktan, Tarja Jussila, Kai Seikku and Matti Vikkula were
re-elected as Board members. In its assembly meeting held after the AGM, the
Board of Directors elected Aarne Aktan as the Chairman of the Board. The AGM
decided that Board members be entitled to a monthly emolument of EUR 1,500 and
the Chairman of the Board to a monthly emolument of EUR 3,500.
Authorized Public Accountants Ernst & Young Oy were elected as the company's
auditors. Auditor's fees will be paid against an invoice.
As proposed by the Board of Directors, the AGM decided to grant option rights
to key employees of 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 no more than 5,000,000 new shares or treasury shares
in total. The subscription price for shares converted under the option rights
shall be based on the market price of the share of Trainers' House Plc on
NASDAQ OMX Helsinki Ltd in March 2010 (2010A warrants) and March 2011 (2010B
warrants). The subscription period for shares converted under the warrant 2010A
is from 1 September 2011 to 31 December 2012, and for shares converted under
the warrant 2010B from 1 September 2012 to 31 December 2013.
As proposed by the Board of Directors, the AGM decided to amend sections 7 and
8 of the Articles of Association, and to add a new section (section 12)
therein. After the amendments, an invitation to the AGM shall be made available
to shareholders on the company's website three months before the AGM at the
earliest and three (3) weeks before at the latest. Furthermore, the invitation
to the AGM shall be published at least nine (9) days before the record date of
the AGM. In accordance with the new section 12 of the Articles of Association,
the AGM shall be held at a location in Helsinki or Espoo, as determined by the
Board of Directors.
PERSONNEL
At the end of the period under review, the Group employed 232 (292) people.
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 under review, 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
During the period under review, a total of 6.2 million shares, or 9.1% of the
average number of all company shares (2.0 million shares or 3.0%), were traded
on the Helsinki Exchanges for a value of EUR 2.8 million (EUR 1.3 million). The
period's highest share quotation was EUR 0.53 (EUR 0.71), the lowest EUR 0.43
(EUR 0.55) and the closing price EUR 0.47 (EUR 0.58). The weighted average
price was EUR 0.46 (EUR 0.63). At the closing price on 31 March 2010, the
company's market capitalization was EUR 32.0 million (EUR 39.4 million).
PERSONNEL OPTION PROGRAMMES
Trainers' House Plc has one option programme for its personnel, included in the
personnel's commitment and incentive scheme.
The AGM held on 25 March 2010 decided to commence an employee option programme
for key employees of 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 no more than 5,000,000 new
shares or treasury shares in total. The subscription price for shares converted
under the option rights shall be based on the market price of the share of
Trainers' House Plc on NASDAQ OMX Helsinki Ltd in March 2010 (2010A warrants)
and March 2011 (2010B warrants). The subscription period for shares converted
under the warrant 2010A is from 1 September 2011 to 31 December 2012, and for
shares converted under the warrant 2010B from 1 September 2012 to 31 December
2013.
CHANGES IN OWNERSHIP
During the period under review, the company did not become aware of any notice
of change in ownership exceeding the disclosure threshold.
Information on the company's ownership structure and major shareholders is
available on the company's website at www.trainershouse.fi > Investors.
CONDENSED FINANCIAL STATEMENTS AND NOTES
This report was compiled in accordance with the IAS 34 standard.
Amendments to and interpretations of published standards, as well as the new
standards effective as of 1 January 2009 are presented in detail in the
Financial Statements for 2009. Adoption of the standards did not cause any such
impact on the accounting principles applied to the financial statements that
would have called for retroactive changes to previous years' figures.
In producing this interim report, Trainers' House has applied the same
accounting principles for key figures as in its Financial Statements for 2009.
The calculation of key figures is described on page 56 of the Financial
Statements included in the Annual Report 2009.
The figures given in the interim report are unaudited.
INCOME STATEMENT, IFRS (kEUR)
Group Group Group
01/01- 01/01- 01/01-
31/03/10 31/03/09 31/12/09
NET SALES 6,348 8,619 27,647
Other income from operations 21 7 101
Costs:
Materials and services 636 1,256 3,726
Personnel-related
expenses 3,293 6,107 16,022
Depreciation 636 747 2,818
Impairment 804 804
Other operating expenses 1,614 2,470 7,073
Operating profit/loss 190 -2,759 -2,695
Financial income and expenses -320 -295 -1,155
Profit/loss before tax -130 -3,054 -3,850
Tax 57*) 119*) -3,167*)
PROFIT/LOSS FOR THE PERIOD -73 -2,935 -7,016
Other comprehensive income:
Exchange differences on translating
foreign operations 11
Cash flow hedges -8 -212 -121
Income tax relating to components
of other comprehensive income 2 55 31
Other comprehensive income
for the year, net of tax -6 -157 -79
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR -79 -3,092 -7,095
Profit attributable to:
Owners of the parent company -73 -2,935 -7,016
Total comprehensive income attributable to:
Owners of the parent company -79 -3,092 -7,095
Earnings per share:
Undiluted earnings/share (EUR) -0.00 -0.04 -0.10
Diluted earnings/share (EUR) -0.00 -0.04 -0.10
*) The tax included in the income statement is deferred.
BALANCE SHEET, IFRS (kEUR) Group Group Group
31/03/10 31/03/09 31/12/09
ASSETS
Non-current assets
Property, plant and equipment 478 732 506
Goodwill 50,968 50,968 50,968
Other intangible assets 14,470 16,731 15,028
Other financial assets 3 3 3
Other receivables 589 26 513
Deferred tax receivables 3,397 7,170 3,458
Total non-current assets 69,906 75,629 70,477
Current assets
Inventories 12 14 12
Accounts receivable and
other receivables 5,130 8,378 4,862
Cash and cash equivalents 6,977 9,813 1,858
Total current assets 12,119 18,206 6,733
TOTAL ASSETS 82,025 93,835 77,209
SHAREHOLDERS' EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent company
Share capital 881 881 881
Premium fund 13,943 13,943 13,943
Hedging reserve -267 -328 -260
Distributable non-restricted
equity fund 31,872 31,872 31,872
Other equity fund 4,962
Translation differences -10
Retained earnings 4,849 12,403 4,921
Total shareholders' equity 56,240 58,760 51,357
Long-term liabilities
Deferred tax liabilities 3,668 4,196 3,800
Other long-term liabilities 15,331 16,616 15,336
Accounts payable and
other liabilities 6,787 14,262 6,717
Total liabilities 25,785 35,075 25,853
TOTAL SHAREHOLDERS' EQUITY AND
LIABILITIES 82,025 93,835 77,209
CASH FLOW STATEMENT, IFRS (kEUR)
Group Group Group
01/01- 01/01- 01/01-
31/03/10 31/03/09 31/12/09
Profit/loss for the period -73 -2,935 -7,016
Adjustments to profit for the period 889 2,751 8,051
Change in working capital -452 2,505 3,670
Financial items -59 13 -1,166
Cash flow from operations 305 2,334 3,539
Investments in tangible and
intangible assets -50 -184 -335
Cash flow from investments -50 -184 -335
Dividend distribution -3,401
Increase/decrease in long-term loans 4,940 -1,371
Increase/decrease in short-term loans -3,750
Increase/decrease in long-term
receivables -76 -487
Cash flow from financing 4,864 -9,009
Change in cash and cash equivalents 5,119 2,149 -5,806
Opening balance of cash
and cash equivalents 1,858 7,664 7,664
Closing balance of cash
and cash equivalents 6,977 9,813 1,858
CHANGE IN SHAREHOLDERS' EQUITY (kEUR)
Equity attributable to equity holders of the parent company
Dis-
tribu-
table Trans-
Hed- non-re- lation
ging stric- Other dif-
Share Premium re- ted equity fe- Retained
capital fund serve equity fund rences earnings Total
Equity
01/01/2009 881 13,943 -171 31,872 -11 15,339 61,853
Other comprehensive income -157 -2,935 -3,092
Equity
31/03/2009 881 13,943 -328 31,872 -10 12,403 58,760
Equity
01/01/2010 881 13,943 -260 31,872 4,921 51,357
Other comprehensive income -6 -73 -79
Hybrid bond 4,962 4,962
Equity
31/03/2010 881 13,943 -267 31,872 4,962 4,849 56,240
RESTRUCTURING PROVISION (kEUR) Group Group Group
01/01- 01/01- 01/01-
31/03/10 31/03/09 31/12/09
Provisions 1 January 346 0 0
Provisions increase 1,400 1,400
Provisions used -32 -1,054
Provisions 31 March/31 December 314 1,400 346
PERSONNEL Group Group Group
01/01- 01/01- 01/01-
31/03/10 31/03/09 31/12/09
Average number of personnel 224 342 281
Personnel at the end of the period 232 292 227
COMMITMENTS AND CONTINGENT LIABILITIES (kEUR)
Group Group Group
31/03/10 31/03/09 31/12/09
Collaterals and contingent liabilities
given for own commitments 16,131 2,128 15,877
Interest rate swaps
Fair value -359 -449 -349
Nominal value 15,926 17,393 15,926
OTHER KEY FIGURES Group Group Group
31/03/10 31/03/09 31/12/09
Equity-to-assets ratio (%) 68.6 62.6 66.5
Net gearing (%) 17.3 20.4 28.9
Shareholders' equity/share (EUR) 0.83 0.86 0.76
Return on equity (%) -7.2 -3.3 -12.4
Return on investment (%) 0.4 0.5 -3.4
Return on equity and return on investment have been calculated for the previous
12 months.
Helsinki, 22 April 2010
TRAINERS' HOUSE PLC
BOARD OF DIRECTORS
For more information, please contact:
Mirkka Vikström, CFO, tel. 358 50 376 1115
DISTRIBUTION
OMX Nordic Exchange, Helsinki
Main media
www.trainershouse.fi > Investors
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