TRAINERS' HOUSE PLC INTERIM REPORT APRIL 23,2009 AT 8.30 AM The change in client structure as well as the withdrawal from loss making subcontracting work resulted to the reduction of net sales in the first quarter of 2009. The net sales of Trainers' House for the quarter were down 28.2% year on year, amounting to EUR 8.6 million (EUR 12.0 million). Operating profit before non-recurring items and depreciation resulting from the allocation of the purchase price of Trainers' House Oy was EUR −0.0 million (EUR 2.3 million), and after these items, EUR −2.8 million (EUR 1.5 million). Non-recurring items have been recognized in the financial statements in the amount of -EUR 2.2 million and depreciation resulting from the allocation of the purchase price of Trainers' House Oy in the amount of -0.5 million. Non-recurring items relate to the codetermination negotiations and restructuring program commenced in February. As a result from these actions the company aims to save EUR 9 million annually. Cash flow from operating activities amounted to EUR 2.3 million (EUR 1.3 million). Key figures at the end of the period under review: Liquid assets amounted to EUR 9.8 million (12.2 million). Interest-bearing liabilities amounted to EUR 21.8 million (27.6 million) and interest-bearing net debts amounted to EUR 12.0 million (15.5 million). Net gearing was 20.4% (24.3%). The equity ratio was 62.6% (61.3%). Earnings per share were EUR −0.04 (EUR 0.01). OUTLOOK FOR THE FUTURE The rapid deterioration of the worldwide economic situation turned the development of Trainers' House for the worse in the first quarter. The company predicts that the depression will burden the development of the business to the end of the year at least. After withdrawing from loss-making subcontracting work, the company is able to build its operations on a more solid foundation. The dramatic weakening in the business environment of the customers of the company has forced them to take actions, which also have adversely affected Trainers' House. There are no signs suggesting an end to this unparalleled steep downturn in economic cycle. This fact will continue to have a negative impact on the company's order intake in the near future. The operating profit of Trainers' House is expected to decrease significantly during the current financial year. Nevertheless, the company has been able to cut expenses through restructuring. CEO JARI SARASVUO Recently, I've had a taste of my own medicine. Come, sweet depression? Well, the depression turned out pretty sour. While all periods of transformation represent opportunities for growth, we would have been happy with a slightly smaller challenge. We are currently rethinking our customer base, sharpening our product offering and tightening our belts in a tough race against the gangrene spreading in the markets. So far, the heaviness of the heart in the world has outpaced our efforts to help our customers. Our numbers are unacceptable. Nevertheless the journey would have been even grimmer had we postponed the inevitable. We adjusted our costs to equal the intended client structure. Partly due to strategic choices made, we have accepted the reduction in sales and temporary decrease in profitability. The annual cost savings of 9 million will help us migrate to the next level more safely and faster. There is also some glimmer in the dark. Training is something we can do and our customers buy. This is a conclusion from the fact that training, in this challenging market, reached an astonishing EUR 1.5 million in profit. We are getting better all the time at linking connected services, web and training, as well as training and management systems, to help our customers' every-day work. Training, leveraged by customer financing, is a stimulating idea for our customers in this market situation. The foundation of our promise remains strong - and grows even stronger. Trainers' House is a technology-assisted training company that offers business-critical services to its customers. In addition to training, we utilize marketing, management systems and the financing of customer risks in boosting our customers' cash flow operations. Once we have succeeded in implementing our strategy and have survived the earthquake in the economic world order, we will wake up one day to celebrate our fantastic results. However, that day is not today. For more information, please contact: Jari Sarasvuo, CEO, tel. +358 (0)500 665 666 Mirkka Vikström, CFO, tel. +358 (0)50 376 1115 Press conference: Trainers' House will hold a press and analyst conference regarding the financial statements bulletin on 23 April, at noon-1 pm, at the company's office located at Porkkalankatu 11, Helsinki. Those wishing to participate should contact Vladimira Belik, tel. +358 (0)50 376 1431 or e-mail vladimira.belik@trainershouse.fi. REVIEW OF OPERATIONS Business operations Changes in business operations and corporate structure By the end of February, it became clear that the rapid fall in the export industry would also affect the business operations of Trainers' House. The weakening economic cycle affected in particular the area of high price pressure, subcontracting work, which did not create quantifiable, business-critical value for customers. In this business area, the weakening economic situation resulted in order cancellations and a general weakening of the order book. Subcontracting business is not a part of the strategy of Trainers' House. After the merger of Trainers' House and Satama, subcontracting services have been cut systematically, while additional resources have been allocated in services that create more value for customers and in SaaS product development. The rapid economic downturn hastened the decision to withdraw from the loss-making business area. In order to adjust its resources to correspond to the present market situation, Trainers' House began codetermination negotiations concerning all employees on 4 March 2009. The negotiations were concluded on 24 March and resulted in the dismissal of 57 employees. Furthermore, another 25 employees were expected to leave the company through other arrangements. In connection with the restructuring, Trainers' House decided to close down its Turku office and divest its small, non-strategic international operations in Düsseldorf, Stockholm and St. Petersburg. Strategy Trainers' House is a technology-assisted training company that offers business-critical services to its customers. In addition to training, the company utilizes marketing, management systems and the financing of customer risks. Our mission, helping our customers grow, is relevant in the current period of slow economic growth. While Trainers' House has implemented a significant restructuring program, its strategy has not changed. Subcontracting work had not supported the company's strategy in the past - on the contrary. The new, lighter organization allows the company to better focus on services that are crucial for its strategy. Services Trainers' House provides business-critical growth management services. Our growth management services are based on SaaS (Software as a Service) services, which deliver quantifiable results on productivity growth in marketing, sales and the management of corporate culture and strategy. SaaS services enable our customers to reduce the cost of each extra euro of cash flow and improve the likelihood of success. Sales of our SaaS products have continued to grow. By the end of March 2009, we had sold our SaaS services to over 1,600 users. Our areas of expertise, the gathering and processing of market information, marketing, and training and systems know-how together form an integrated Growth System. The idea of the Growth System is to improve the overall productivity of customers by influencing their chances of success in marketing, sales and the management of customer-oriented work. The offices of Trainers' House are located in Ruoholahti and Hernesaari, Helsinki, and in Tampere. FINANCIAL PERFORMANCE The company's financial performance was weak during the first quarter. The corner stone of company's strategy, training business, performed well again. Other operations suffered from the rapid economic downturn, which led to a low capacity utilization rate. As a result, the company started codetermination negotiations that led to a reduction of nearly one fourth of all employees. This major restructuring compared to the size of the company resulted in the following non-recurring items in financial statements of the first quarter: A provision of EUR 1.4 million was made to cover costs resulting from personnel reductions and the divestment of international operations. This provision is estimated to cover all the costs caused by the restructuring. The Group's goodwill was written down in the amount of EUR 0.8 million, as a result of the divestment of the Group's German operations. The write-down has no effect on cash flow. 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. According to the company's management, these figures provide a more accurate view of the company's productivity. EUR 10.2 million of the acquisition cost has been allocated in intangible assets with a limited useful life. This item is depreciated over a period of five years. At the end of the first quarter, these intangible assets totalled EUR 6.5 million. The following table itemizes the Group's key figures (in thousands of euros): 1-3/2009 1-3/2008 Net sales 8,619 12,009 Expenses Personnel-related expenses −5,457 −6,067 Other expenses −2,970 −3,424 EBITDA 192 2,519 Depreciation of non-current assets −239 −259 Operating profit/loss before depreciation of allocation of acquisition cost −46 2,259 % of net sales −0.5 18.8 Depreciation of allocation of acquisition cost −508 −801 Operating profit/loss before non-recurring items −555 1,458 % of net sales −6.4 12.1 Non-recurring items **) −2,204 EBIT −2,759 1,458 % of net sales -32.0 12.1 Financial income and expenses −295 −538 Profit/loss before tax −3,054 920 Tax *) 119 −499 Profit/loss for the period −2,935 421 % of net sales −34.1 3.5 *) 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 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 2008 (in thousands of euros): Q108 Q208 Q308 Q408 2008 Q109 Net sales 12,009 12,318 8,216 11,694 44,237 8,619 Operating profit before depreciation of acquisition cost *) 2,259 2,192 495 2,363 7,308 −46 Operating profit 1,458 1,390 −307 1,757 4,298 −2,759 *) excluding non-recurring items LONG-TERM OBJECTIVES The restructuring implemented in the first quarter has no effect on the company's following long-term objectives: The company will target 15% annual organic growth and 15% operating profit, and will aim to pay a steady dividend. We expect to achieve these goals once our Growth System concepts have been completed and along with the internationalization of Trainers' House Plc. FINANCING, INVESTMENTS AND SOLVENCY In the first quarter, cash flow from operating activities amounted to EUR 2.3 million (EUR 1.3 million). Cash flow from investments amounted to EUR −0.2 (EUR −0.1) million. There were no items affecting cash flow from financing in the quarter (EUR −6.2 million). Total cash flow amounted to EUR 2.1 million (EUR −5.0 million). On 31 March 2009, the Group's liquid assets amounted to EUR 9.8 million (12.2 million). The equity ratio was 62.6% (61.3%). Net gearing was 20.4% (24.3%). At the end of the period under review, the company had EUR 21.8 million of interest-bearing debt (EUR 27.6 million). In the second quarter, cash flow will be affected negatively by dividends (EUR 3.4 million), semi-annual loan repayments and related interest, as well as non-recurring expenses resulting from restructuring. 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 The financial crisis and the resulting stagnation in economic activity will influence the decisions made by the company's customers and thereby affect the financial position of Trainers' House Plc. The length of sales projects is expected to increase, and more projects are expected to be cancelled than before. Price competition has also intensified. Customers are having more and more difficulty in keeping faith in the future. Risks in the company's operating environment are increasing, business operations are becoming more challenging, and it is becoming more difficult to estimate future developments. The operations of Trainers' House are hindered by the unequivocal cost cuts made by some customers. Impairment Testing Due to the major restructuring, the Group's goodwill as well as the deferred tax asset in the balance sheet were tested for impairment at the end of the first quarter. The goodwill was written down in the amount of EUR 0.8 million, as a result of the divestment of the Group's German operations. The goodwill impairment testing indicated no other need for write-downs. 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 are not easily affected by economic fluctuations. 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 REACHED AT THE ANNUAL GENERAL MEETING The Annual General Meeting of Trainers' House was held on 24 March 2009. As proposed by the Board of Directors, the AGM decided that a per-share dividend of EUR 0.05 be paid. The AGM set the record date for dividend payment as 27 March 2009 and the dividend payment date as 3 April 2009. The AGM decided that the company's Board of Directors shall include four members. Aarne Aktan, Tarja Jussila, Kai Seikku and Matti Vikkula were 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. Authorized Public Accountants Ernst & Young Oy were elected as the company's auditors. The AGM approved the Board's proposal to authorize the Board to decide on the repurchase of the company's own shares. Under the authorization, whether on one or on several occasions, a maximum of 6,500,000 shares, which corresponds to approximately 9.56% of the company's shares, may be acquired. The authorization shall remain in force until 30 June 2010. At the same time the AGM countermanded the earlier comparable authorization. The authorization had not been exercised on 31 March 2009. The Board of Directors is otherwise authorized to decide on all conditions related to the acquisition of own shares, including the manner of acquisition of shares. The authorization does not exclude the right of the Board of Directors to decide on a directed acquisition of own shares as well, if there is significant financial reason for the company to do so. The AGM approved the Board's proposal to authorize the Board to decide on a share issue including the conveyance of own shares, and the issue of special rights. With these authorizations related to share issue and/or issue of special rights, whether on one or on several occasions, a maximum of 13,000,000 new shares may be issued and/or treasury shares may be transferred, which corresponds to approximately 19.11% of the company's shares. The authorization shall remain in force until 30 June 2010. At the same time the AGM countermanded the earlier comparable authorization. The authorization had not been exercised on 31 March 2009. The Board of Directors is otherwise authorized to decide on all terms regarding the share issue and issue of special rights, including the right to also decide on a directed share issue and a directed issue of special rights. Shareholders' pre-emptive subscription rights can be deviated from, provided that there is significant financial reason for the company to do so. PERSONNEL At the end of the period under review, the Group employed 292 (384) people, of whom 292 (374) were located in Finland. 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. In accordance with the decision of the Annual General Meeting, Trainers' House paid a dividend of EUR 0.05 per share on 3 April 2009. The dividend paid totalled EUR 3.4 million, or 251.0% of the profit for 2008. Share performance and trading During the period under review, a total of 2.0 million shares, or 3.0% of the average number of all company shares (16.4 million shares or 24.2%), were traded on the Helsinki Exchanges for a value of EUR 1.3 million (EUR 20.6 million). The period's highest share quotation was EUR 0.71 (EUR 1.44), the lowest EUR 0.55 (EUR 1.12) and the closing price EUR 0.58 (EUR 1.20). The weighted average price was EUR 0.63 (EUR 1.27). At the closing price on 31 March 2009, the company's market capitalization was EUR 39.4 million (EUR 81.6 million). PERSONNEL OPTION PROGRAMMES Trainers' House Plc has one option program for its personnel, included in the personnel's commitment and incentive scheme. The Annual General Meeting held on 29 March 2006 decided to commence an employee option program involving 2,000,000 warrants. Due to the resulting subscriptions, the share capital of Trainers' House Plc may increase by a maximum of EUR 42,046.98 and the number of shares by a maximum of 2,000,000. Half of the warrants are titled 2006A and the other half 2006B. The subscription period for shares converted under the 2006A warrants ran from 1 September 2008 to 28 February 2009. No shares were subscribed under the 2006A warrants. The subscription period for shares converted under the 2006B warrant is to begin on a date determined by the Board of Directors after publication of the interim report for the second quarter of 2009, but not later than on 1 September 2009, and to end on 28 February 2010. The dividend-adjusted subscription price after dividend payment is EUR 1.08 for shares converted under the 2006B warrant. CHANGES IN OWNERSHIP During the period under review, the company became aware of one notice of change in ownership. Information on notices of change in ownership is available on the company's website at www.trainershouse.fi > Investors. Exemption The company's CEO Jari Sarasvuo and his controlled company Isildur Oy currently hold a total of 36.7% of the share capital of Trainers' House Plc. The Finnish Financial Supervision Authority has on 18 December 2008 granted a new exemption until 30 June 2009 to Mr. Sarasvuo and Isildur Oy regarding the obligation to present a mandatory redemption offer concerning the shares of Trainers' House Plc. The combined shareholding of Mr. Sarasvuo and Isildur Oy exceeded 30 percent as the shares, issued in conjunction with the merger of Satama Interactive Plc and Trainers' House Oy, were registered to the Trade Register on 31 December 2007. On 29 August 2007, Trainers' House Plc (then Satama Interactive Plc) published an exemption to Mr. Sarasvuo and Isildur Oy granted by the Finnish Financial Supervision Authority regarding the obligation to present a mandatory redemption offer concerning the company. The terms and conditions of the exemption required that the combined shareholding of Mr. Sarasvuo and Isildur Oy would decline to 30% or under within one (1) year from the date that the new shares were registered to the Trade Register. This exemption expired on 31 December 2008. The terms and conditions of the new exemption require that the combined shareholding of Mr. Sarasvuo and Isildur Oy in Trainers' House will decline to 30% or under by 30 June 2009. Furthermore, the terms and conditions state that during the exemption, Mr. Sarasvuo and Isildur Oy shall not acquire or subscribe more shares or otherwise increase their ownership in the company, and that Mr. Sarasvuo and Isildur Oy, together or separately, shall not in general meetings use voting rights exceeding the amount of votes calculated by deducting the shares owned by Mr. Sarasvuo and Isildur Oy from the total amount of shares issued by the company and multiplying the calculated amount by 3/7. 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 The interim 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 2008 are presented in detail in the Financial Statements for 2008. 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. As of January 1, 2009 the company applies the following new and revised standards: IFRS 8 Operating Segments and IAS 1 Presentation of Financial Statements. In producing this Financial Statements bulletin, Trainers' House has applied the same accounting principles for key figures as in its Financial Statements for 2008. The calculation of key figures is described on page 45 of the Financial Statements included in the Annual Report 2008. The figures given in the interim report are unaudited. INCOME STATEMENT, IFRS (kEUR) Group Group Group 01/01- 01/01- 01/01- 31/03/09 31/03/08 31/12/08 NET SALES 8,619 12,009 44,237 Other income from operations 7 166 214 Costs: Materials and services 1,256 1,269 5,434 Personnel-related expenses 6,107 6,067 22,042 Depreciation 747 1,061 4,061 Impairment 804 Other operating expenses 2,470 2,320 8,617 Operating profit/loss -2,759 1,458 4,298 Financial income and expenses -295 -538 -1,690 Profit/loss before tax -3,054 920 2,607 Tax 119*) -499*) -1,252*) PROFIT/LOSS FOR THE PERIOD -2,935 421 1,355 Other comprehensive income: Exchange differences on translating foreign operations -8 Cash flow hedges -212 -231 Income tax relating to components of other comprehensive income 55 60 Other comprehensive income for the year, net of tax -157 -179 TOTAL COMPREHENSIVE INCOME FOR THE YEAR -3,092 421 1,176 Profit attributable to: Owners of the parent company -2,935 421 1,355 Total comprehensive income attributable to: Owners of the parent company -3,092 421 1,176 Earnings per share: Undiluted earnings/share (EUR) -0.04 0.01 0.02 Diluted earnings/share (EUR) -0.04 0.01 0.02 *) The tax included in the income statement is deferred. BALANCE SHEET, IFRS (kEUR) Group Group Group 31/03/09 31/03/08 31/12/08 ASSETS Non-current assets Property, plant and equipment 732 1,382 781 Goodwill 50,968 51,772 51,772 Other intangible assets 16,731 19,421 17,246 Other financial assets 3 230 3 Other receivables 26 24 26 Deferred tax receivables 7,170 8,417 7,120 Total non-current assets 75,629 81,245 76,947 Current assets Inventories 14 15 14 Accounts receivable and other receivables 8,378 11,611 10,708 Cash and cash equivalents 9,813 12,153 7,664 Total current assets 18,206 23,779 18,386 TOTAL ASSETS 93,835 105,024 95,333 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 -328 -171 Distributable non-restricted equity fund 31,872 31,872 31,872 Translation differences -10 -2 -11 Retained earnings 12,403 17,029 15,339 Total shareholders' equity 58,760 63,722 61,853 Long-term liabilities Deferred tax liabilities 4,196 4,966 4,328 Other long-term liabilities 16,616 27,384 16,639 Accounts payable and other liabilities 14,262 8,952 12,514 Total liabilities 35,075 41,302 33,481 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 93,835 105,024 95,333 CASH FLOW STATEMENT, IFRS (kEUR) Group Group Group 01/01- 01/01- 01/01- 31/03/09 31/03/08 31/12/08 Profit/loss for the period -2,935 421 1,355 Adjustments to profit for the period 2,751 2,810 6,616 Change in working capital 2,505 -1,514 -2,366 Financial items 13 -425 -1,457 Cash flow from operations 2,334 1,291 4,147 Investments in tangible and intangible assets -184 -124 -352 Capital gains on tangible and intangible assets 120 134 Capital gains on other investments 1,199 Change in the additional trade price -99 -99 Cash flow from investments -184 -102 882 Share issue subject to charges 491 491 Dividend distribution -2,721 Increase/decrease in long-term loans -6,628 -12,254 Increase/decrease in short-term loans -19 Increase/decrease in long-term receivables -2 Cash flow from financing -6,156 -14,485 Change in cash and cash equivalents 2,149 -4,967 -9,456 Opening balance of cash and cash equivalents 7,664 17,120 17,120 Closing balance of cash and cash equivalents 9,813 12,153 7,664 CHANGE IN SHAREHOLDERS' EQUITY (kEUR) Equity attributable to equity holders of the parent company Dis- tribu- table Trans- Hed- non-re lation ging stric- dif- Share Share Premium re- ted fe- Retained capital issue fund serve equity rence earning Total Equity 01/01/2008 867 256 13,228 31,348 -2 16,551 62,247 Other comprehensive income 421 421 Stock options used 14 -256 715 473 Share-based payments 58 58 Taxes related to bookings to shareholders' equity 524 524 Equity 31/03/2008 881 13,943 31,872 -2 17,029 63,722 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 PERSONNEL Group Group Group 01/01- 01/01- 01/01- 31/03/09 31/03/08 31/12/08 Average number of personnel 342 389 375 Personnel at the end of the period 292 384 340 COMMITMENTS AND CONTINGENT LIABILITIES (kEUR) Group Group Group 31/03/09 31/03/08 31/12/08 Collaterals and contingent liabilities given for own commitments 2,128 3,669 3,187 Interest rate swaps Fair value -449 -255 Nominal value 17,393 17,393 OTHER KEY FIGURES Group Group Group 31/03/09 31/03/08 31/12/08 Equity-to-assets ratio (%) 62.6 61.3 65.1 Net gearing (%) 20.4 24.3 22.9 Shareholders' equity/share (EUR) 0.86 0.94 0.91 Return on equity (%) -3.3 11.6 2.2 Return on investment (%) 0.5 5.4 5.2 Return on equity and return on investment are based on the previous 12 months. Helsinki, 23 April 2009 TRAINERS' HOUSE PLC BOARD OF DIRECTORS Further information: Jari Sarasvuo, CEO, tel. +358 (0)500 665 666 Mirkka Vikström, CFO, tel. +358 (0)50 376 1115 DISTRIBUTION OMX Nordic Exchange, Helsinki Prominent media sources www.trainershouse.fi - Investors