TRAINERS' HOUSE GROUP'S INTERIM REPORT 1 JANUARY - 30 JUNE 2011

Espoo, Finland, 2011-08-04 07:30 CEST (GLOBE NEWSWIRE) --  TRAINERS' HOUSE PLC, INTERIM REPORT, 4 AUGUST 2011 AT 8:30

Trainers’ House’s profit improved further.

January-June 2011 in brief (figures are for continuing operations)

• Net sales came to €9.1 million (comparative: €8.3 million).
• Operating profit (EBIT) before non-recurring items and depreciation resulting from the allocation of acquisition cost was €1.5 million (€1.1 million), or 17.0% of net sales (12.8%).
• Operating result after these items was €0.7 million (-€0.5 million), or 7.9% of net sales (-5.9%).
• Cash flow from operating activities was €0.6 million (-€1.0 million).
• Earnings per share totalled €0.00 (-€0.01).

April-June 2011 in brief (figures are for continuing operations)

• Net sales came to €4.6 million (comparative: €4.2 million).
• Operating profit (EBIT) before non-recurring items and depreciation resulting from the allocation of the acquisition cost was €0.9 million (€0.5 million), or 19.1% of net sales (11.6%).
• Operating result after these items was €0.5 million (-€0.6 million), or 10.2% of net sales (-13.8%).
• Cash flow from operating activities was €0.8 million (-€1.3 million).
• Earnings per share totalled €0.00 (-€0.01).

Key figures at the end of the second quarter of 2011

• Liquid assets totalled €4.1 million (comparative: €5.7 million).
• Interest-bearing liabilities amounted to €9.7 million (€17.3 million), and interest-bearing net debt totalled €5.6 million (€11.7 million).
• Net gearing was 15.8% (21.0%).
• The equity ratio was 69.1% (67.9%).

OUTLOOK FOR 2011

The company expects net sales to grow and operating profit after depreciation resulting from the allocation of acquisition cost to improve in comparison to 2010.


REPORT OF VESA HONKANEN, CEO

During the second quarter, the company’s result improved compared to the first quarter of 2011 and the equivalent period last year.
New orders focused increasingly on the entire Trainers’ House service portfolio, indicating that the company strategy is working well. New orders also included orders for projects related to work capacity management.

More professionals have been recruited during the second quarter, and the company will strengthen resources also during the remainder of the year to ensure continued positive development.





For more information, please contact:
Vesa Honkanen, CEO, tel. +358 500 432 993
Mirkka Vikström, CFO, tel. +358 50 376 1115



REVIEW OF OPERATIONS

Trainers’ House is a training and marketing company that helps its customers grow by supporting their everyday leadership.

This task is executed by offering customers business-critical training based on the utilisation of marketing systems (Ignis) and management systems (SaaS).

Trainers’ House projects are 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.

The results of customer projects are verified by auditing customers’ everyday work and by bringing in management systems to help monitor the activities.

Trainers’ House implements some 600 bespoke customer projects each year, in close co-operation with the customers. In addition, the company coaches hundreds of its customers’ representatives each year in personal management training programmes.

The 2010 financial year was a time of significant structural changes for the company.

The signs of recovery in the business environment at the end of 2010 have not yet manifested themselves in a concrete increase in order intake; the value of company’s order intake during the second quarter fell slightly short of the level in the equivalent period of last year.


FINANCIAL PERFORMANCE

Trainers’ House net sales and operating profit showed a year-on-year improvement in the first half of 2011. The structural changes and savings measures previously implemented also resulted in improvement of the operations’ profitability in comparison to 2010.

Net sales from continuing operations in the period under review came to €9.1 million (comparative: €8.3 million). Operating profit from continuing operations before depreciation resulting from the allocation of the acquisition cost of Trainers’ House Oy was €1.5 million, or 17.0% of net sales (€1.1 million, or 12.8%). Profit for the period was €0.3 million, or 3.4% of net sales (-€0.9 million, or -10.9%).


Result

The comparative figures used for reporting on operating profit include the operating profit reported as well as operating profit before depreciation of allocated acquisition cost related to the acquisition of Trainers’ House Oy and 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):

*) Of the purchase price for Trainers’ House Oy in 2007, €10.2 million has been allocated to intangible assets with a limited useful life. This item is depreciated over five years. The total remaining portion of this item will be depreciated as follows: €1.6 million in 2011 and €1.4 million in 2012.

**) The tax included in the income statement is deferred. Taxes recognised in the income statement have no effect on cash flow. On 30 June 2011, the company’s balance sheet included deferred tax assets from losses carried forward in the amount of €1.3 million. Tax loss carry-forwards must be utilised within 10 years from their recognition. Of the deferred tax assets, €0.8 million will expire in 2011–2012 and the remaining €0.5 million in 2019.

***) Discontinued operations are specified in the notes.



The following table itemises the distribution of net sales from continuing operations and shows the quarterly profit/loss from the beginning of 2010 (in thousands of euros).
 

*) excluding non-recurring items

 

LONG-TERM OBJECTIVES

The company’s long-term objective is profitable growth.


FINANCING, INVESTMENTS AND SOLVENCY

Hybrid bond

On 15 January 2010, Trainers' House Plc issued a €5.0 million domestic hybrid bond. Interest in the amount of €0.5 million has been paid on the hybrid bond to the subscribers in the first quarter. The interest paid reduces the non-restricted equity and is not recognised as income.

Cash flow and financing

Cash flow from operating activities before financial items totalled €1.4 million (-€0.3 million), and after financial items €0.6 million (-€1.0 million).

There were no investments in the reporting period (-€0.1 million). Cash flow from financing came to -€0.2 million (€4.8 million).

Total cash flow amounted to €0.4 million (€3.8 million).

On 30 June 2011, the Group’s liquid assets totalled €4.1 million (€5.7 million). The equity ratio was 69.1% (67.9%). Net gearing was 15.8% (21.0%). At the end of the period under review, the company had €9.7 million of interest-bearing debt (€17.3 million).

Financial risks

Currency risks are insignificant, because Trainers’ House operates principally in the euro area. 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.


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. The situation has improved due to the overall economic recovery, but long-term visibility remains weak.

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. No goodwill write-downs were judged necessary from the results of this 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. 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 form losses carried forward in the amount of €1.3 million. If the Group’s taxable income does not reach approximately €3.1 million for 2011–2012, there is a risk of some of the deferred tax assets recognised in the consolidated balance sheet being unable to be utilised and therefore having to be written down. Of the deferred tax assets, €0.8 million will expire in 2011-2012 and the remaining €0.5 million in 2019. 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 €40 million. At the end of the period under review, the company had loans related to this loan agreement in an amount of €9.2 million. The loan agreement 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 would be a risk of the company being unable to fulfil the covenants, which would increase financial expenses.

Risks are discussed in more detail in the annual report and on the company’s Web site, at www.trainershouse.fi > Investors.


PERSONNEL

At the end of June 2011, the Group employed 139 (166) 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 €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, a total of 5.1 million shares, or 7.6% of the average number of all company shares (10.2 million shares, or 15.0%), were traded on the Helsinki stock exchange, for a value of €1.6 million (€4.6 million). The period’s highest share quotation was €0.36 (€0.53) and the lowest €0.26 (€0.35); the closing price was €0.28 (€0.36). The weighted average price was €0.31 (€0.45). With the closing price for 30 June 2011, the company’s market capitalisation was €19.0 million (€24.5 million).


PERSONNEL OPTION PROGRAMMES

Trainers’ House Plc has one option programme for its personnel, included in the personnel’s commitment and incentive scheme.

The Annual General Meeting held on 25 March 2010 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. The subscription price for the 2010A warrant is €0.46 and for the 2010B warrant €0.29. The subscription period for shares converted under the 2010A warrant runs from 1 September 2011 to 31 December 2012, and that for shares converted under the 2010B warrant is 1 September 2012 to 31 December 2013.

The total number of warrants granted to the personnel is 1.8 million. A total cost of €0.1 million has been expensed for the 2011 financial year.


CONDENSED FINANCIAL STATEMENTS AND NOTES

The Group divested its IT project business in August 2010, and the comparative figures for 2010 have been adjusted to correspond to the structure of the continuing and divested operations.

This report was compiled in accordance with the IAS 34 standard.

Amendments to and interpretations of published standards, as well as the new standards in effect as of 1 January 2011, are presented in detail in the financial statements for 2010. Adoption of the standards did not cause any impact on the accounting principles applied for 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 2010 financial statements. The calculation of key figures is described on page 50 of the financial statements included in the Annual Report 2010.

The figures given in the interim report are unaudited.


INCOME STATEMENT, IFRS (in thousands of euros)

Diluted earnings per share are the same as undiluted earning per share.

*) The tax included in the income statement is deferred.


BALANCE SHEET IFRS (in thousands of euros)

CASH FLOW STATEMENT, IFRS (in thousands of euros)

CHANGE IN SHAREHOLDERS’ EQUITY (in thousands of euros)
Equity attributable to equity holders of the parent company

A. Share capital
B. Premium fund
C. Hedging reserve
D. Distributable non-restricted equity
E. Other equity fund
F. Retained earnings
G. Total
 

DISCONTINUED OPERATIONS (in thousands of euros)

The results of a discontinued operations are as follows:
 

Impact on Group’s financial position:

Return on equity and return on investment have been calculated for the previous 12 months.

Helsinki, 4 August 2011

TRAINERS’ HOUSE PLC

BOARD OF DIRECTORS


For more information, please contact:
Vesa Honkanen, CEO, tel. +358 500 432 993
Mirkka Vikström, CFO, tel. +358 50 376 1115

DISTRIBUTION
OMX Nordic Exchange, Helsinki
Main media
www.trainershouse.fi > Investors