TRAINERS' HOUSE'S FINANCIAL STATEMENTS BULLETIN FOR 1 JANUARY - 31 DECEMBER 2011

Espoo, 2012-02-16 07:30 CET (GLOBE NEWSWIRE) -- TRAINERS' HOUSE PLC, FINANCIAL STATEMENTS BULLETIN, 16 FEBRUARY 2012 AT 8:30

Trainers’ House operating profit showed a year-on-year improvement.

January – December 2011 in brief (the figures are figures for the company’s continuing operations)

• net sales came to EUR 15.7 million (EUR 15.6 million)
• operating profit (EBIT) before non-recurring items and depreciation resulting from the allocation of acquisition cost was EUR 1.6 million (EUR 1.1 million), or 10.1% of net sales (7.1%)
• the operating result after these items was EUR -16.7 million (EUR -15.8 million), or -106.8% of net sales (-101.5%)
• cash flow from operating activities was EUR 0.9 million (EUR -1.5 million)
• earnings per share were EUR -0.28 (EUR -0.24)

October – December 2011 in brief (the figures are figures for the company’s continuing operations)

• net sales EUR 3.8 million (EUR 4.4 million)
• operating profit (EBIT) before non-recurring items and depreciation resulting from the allocation of acquisition cost was EUR 0.2 million (EUR 0.1 million), or 4.4% of net sales (2.7%)
• a non-recurring write-down totalling EUR 17.6 million was entered for the last quarter of 2011 in the Group’s goodwill and in deferred tax assets recognised in the balance sheet
• operating result after these items was EUR -16.9 million (EUR -14.7 million), or -446.3% of net sales (-334.8%)
• cash flow from operating activities was EUR 0.3 million (EUR 0.9 million)
• earnings per share were EUR -0.27 (EUR -0.22)

Key figures at the end of 2011

• liquid assets totalled EUR 3.3 million (EUR 3.7 million)
• interest-bearing liabilities amounted to EUR 8.7 million (EUR 9.9 million), and interest-bearing net debt totalled EUR 5.4 million (EUR 6.2 million)
• net gearing was 32.4% (17.7%)
• the equity ratio was 53.6% (66.8%)

OUTLOOK FOR 2012

The company expects net sales to remain at the current level and operating profit after depreciation resulting from the allocation of acquisition cost to improve year-on-year.


REPORT OF VESA HONKANEN, CEO

The general economic uncertainty has been reflected in the buying behaviour of Trainers’ House’s customers since summer 2011. This contributed to the last quarter's net sales falling below the previous year's level. The operating profit after depreciation resulting from the allocation of acquisition cost improved slightly in the last quarter in comparison to the corresponding period in 2010. The strengthening of sales management during the autumn increased the accumulation of new orders toward the end of the year.

The net sales for 2011 were the same as in 2010. Due to the efficiency enhancing measures implemented in the company, operating profit after depreciation resulting from the allocation of acquisition costs improved compared to 2010. The company recognised a write-down of EUR 16.7 million in the Group’s goodwill in the financial statements. The write-down does not have an effect on cash flow.

Work capacity management services raised extensive interest among our customers, and several significant customer relationships were gained. In an increasing number of customer relationships, there is a strong link between auditing the current situation and management systems, which are used to ensure that changes in the customer’s practices take root and thus, the desired results are achieved. Trainers’ House’s intensive presence in the customer’s everyday work brings better customer results faster.

Continuous improvement of operations and strengthening competence through recruitment give the company a good basis for success in 2012 despite the uncertainty possibly prevailing in the general operating environment.

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



REVIEW OF OPERATIONS

Trainer's House helps its customers grow by supporting their everyday leadership.

This task is executed by offering customers business-critical training and consultancy 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.


FINANCIAL PERFORMANCE

Net sales development in the last quarter of the financial year was weaker than expected. Operating profit before non-recurring items and depreciation resulting from the allocation of acquisition costs improved year-on-year. The profitability of operations improved significantly from the previous year.

Net sales from continuing operations in the period under review came to EUR 15.7 million (EUR 15.6 million). Operating profit from continuing operations before depreciation resulting from the allocation of the acquisition cost of Trainers’ House Oy was EUR 1.6 million, or 10.1% of net sales (EUR 1.1 million, or 7.1% of net sales). Profit for the period was EUR -18.4 million, or -117.3% of net sales (EUR -16.2 million, or -104.1%).

Non-recurring items

On 17 January 2012, the Board of Directors of Trainers’ House decided to lower the estimates on the profitability and growth of net sales in the training business used in impairment testing. As a result, the Board of Directors resolved that a total of EUR 16.7 million of the Group's goodwill will be written down. After this write-down, the Group balance sheet has approximately EUR 9.1 million of goodwill.

Trainers' House Plc's balance sheet included deferred tax assets of EUR 1.5 million. In its meeting held on 17 January 2012, the company’s Board of Directors has reviewed the principles used in recognising deferred tax assets and decided to make a non-recurring write-down of EUR 0.9 million on the deferred tax assets recognised in the consolidated financial statements. The write-down is based on a revised estimate of the company’s taxable income in 2012–2014. The write-down has no effect on operating profit or cash flow.

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 costs related to the acquisition of Trainers’ House Oy and non-recurring items (i.e., operating profit, EBIT).

The following table itemises the Group’s key figures (in thousands of euros unless otherwise noted):

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

**) Non-recurring items in 2011 include a write-down in the Group's goodwill in the amount of EUR 16.7 million. Non-recurring items in 2010 include a restructuring provision in the amount of EUR 0.5 million, and a write-down in the Group’s goodwill in the amount of EUR 14.4 million.

***) The tax included in the income statement is deferred. Taxes recognised in the income statement have no effect on cash flow. On 31 December 2011, the company’s balance sheet included deferred tax assets from losses carried forward in the amount of EUR 0.6 million. Of the deferred tax assets, EUR 0.1 million will expire in 2012 and the remaining EUR 0.4 million in 2019. Write-down in deferred tax assets of EUR 0.9 million has been recognised in the result for 2011.

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


The following table itemises distribution of net sales from continuing operations and shows the quarterly profit/loss from the start 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

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 third quarter of the financial year, the company had loans related to this loan agreement in an amount of EUR 9.2 million. The company negotiated a new agreement concerning this amount with the bank. At the end of the reporting period, the company had loans related to this new loan agreement in an amount of EUR 8.3 million.

Hybrid bond

On 15 January 2010, Trainers' House Plc issued a EUR 5.0 million domestic hybrid bond. Interest of EUR 1.0 million related to the hybrid bond was recognised in shareholders' equity. 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.

Cash flow and financing

Cash from operating activities before financial items for the period under review totalled EUR 2.0 million (EUR -0.3 million), and after financial items EUR 0.9 million (EUR -1.5 million).

There were no investments in the reporting period (EUR 6.1 million). Cash flow from financing came to EUR -1.3 million (EUR -2.8 million).

Total cash flow amounted to EUR -0.4 million (EUR 1.8 million).

On 31 December 2011, the Group’s liquid assets totalled EUR 3.3 million (EUR 3.7 million). The equity ratio was 53.6% (66.8%). Net gearing was 32.4% (17.7%). At the end of the reporting period, the Group had interest-bearing liabilities in the amount of EUR 8.7 million (EUR 9.9 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.


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.

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 fourth quarter. Based on the results of this impairment testing, the goodwill values were EUR 16.7 million lower than the book value, resulting in a goodwill write-off in the financial statements. After having reviewed the principles used in recognising deferred tax assets on the basis of the tests, the company’s Board of Directors decided to make a non-recurring write-down totalling EUR 0.9 million in deferred tax assets in the financial statements for 2011.

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 0.6 million. Of the deferred tax assets, EUR 0.1 million will expire in 2012 and the remaining EUR 0.4 million in 2019.

If the Group’s taxable income for 2012 does not reach approximately EUR 0.4 million, there is a risk that some of the deferred tax assets recognised in the consolidated balance sheet cannot be utilised and therefore will have to be written down.

The company’s new loan agreement, under which there were loans in an amount of EUR 8.3 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 would be a risk of the company being unable to fulfil the covenants, which would increase financial expenses.

Risks are described in more detail in the annual report and on the company's website at: www.trainershouse.fi > Investors.


PERSONNEL

At the end of 2011, the Group employed 125 (133) 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 reporting period, 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, 9.5 million shares in total, or 14.0% of the average number of all company shares (16.0 million shares, or 23.6%), were traded on the Helsinki stock exchange, for a value of EUR 2.6 million (EUR 6.8 million). The period’s highest share quotation was EUR 0.36 (EUR 0.53), the lowest EUR 0.17 (EUR 0.33) and the closing price EUR 0.18 (EUR 0.36). The weighted average price was EUR 0.27 (EUR 0.42). With the closing price for 31 December 2011, the company’s market capitalisation was EUR 12.2 million (EUR 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 at 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 EUR 0.46 and for the 2010B warrant, EUR 0.29. 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. No shares have been subscribed under the warrants.

The total number of warrants granted to the personnel is 1.8 million.  A total cost of EUR 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. This financial statements bulletin has been prepared in accordance with the IFRS standards and interpretations adopted in the EU, valid on 31 December 2011.

In producing this financial statements bulletin, 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 full-year figures given in the financial statements bulletin are audited.


INCOME STATEMENT, IFRS (kEUR)

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)

CASH FLOW STATEMENT, IFRS (kEUR)

CHANGE IN SHAREHOLDERS’ EQUITY (kEUR)
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 (kEUR)

The results of a discontinued operations are as follows:
 

Impact on Group’s financial position:

Helsinki, 16 February 2012

TRAINERS’ HOUSE PLC


BOARD OF DIRECTORS

For more information, please contact

Vesa Honkanen, CEO, at tel. +358 500 432 993
Mirkka Vikström, CFO, at tel. +358 50 376 1115

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