TRAINERS' HOUSE GROUP'S INTERIM REPORT FOR 1 JANUARY - 31 MARCH 2008,
24 APRIL 2008 AT 08:30AM
Trainers' House Plc's good start
-In its current form Trainers' House Plc started its operations on 1 January
2008.
-Net sales increased by 48.8%, amounting to EUR 12.0 million (EUR 8.1 million).
-Operating profit before depreciation resulting from the allocation of the
purchase price of Trainers' House Oy amounted to EUR 2.3 million, or 18.8% of
net sales.
-Operating profit increased by 261.6%, amounting to EUR 1.5 million, or 12.1%
of net sales (EUR 0.4 million, or 5.0% of net sales).
-Earnings per share were EUR 0.01 (EUR 0.01).
Key figures
-At the end of the period, interest-bearing liabilities totalled EUR 27.6
million (EUR 0.2 million), cash and cash equivalents EUR 12.2 million (EUR 1.2
million),and net liabilities EUR 15.5 million (EUR -1.0 million). During the
period under review, long-term interest-bearing debt was paid off in the amount
of EUR 6.6
million.
-Net gearing was 24.3% (-4.4%). At the end of 2007, net gearing was 27.6%.
-At the end of the period, the equity ratio was 61.3% (74.3%). At the end of
2007, the equity ratio was 56.0%.
OUTLOOK FOR THE FUTURE
The company renews the financial forecast presented in the financial statements,
according to which the like-for-like operating profit for 2008 is expected to
exceed that of the previous year.
The like-for-like pro forma operating profit (= EBITDA - operative
depreciations, before the depreciation resulting from the allocation of the
acquisition cost of Trainers' House Oy),for total year 2007 was EUR 7.3 million,
or 15.6% of net sales.
The estimate is based on the actual results, current order book as well as the
historical profit making ability of the merged companies.
CEO JARI SARASVUO ON THE FINANCIAL REPORT
“We made a nice result. When comparing our achievements to previous year, in
terms of EBITDA, this year has begun nearly five times more profitably than
2007. We have also been working nearly fifty per cent better than last year, at
least if indicated by invoicing. The company has a mission and a strategy.
Nevertheless, we have started to shake off all childish ideas about one's
abilities and how easy a job this would be. When you're in the process of
changing the name, values, culture, strategy, product offering, goals, work
distribution and working methods of a company, it's understandable to get out of
breath every once in a while.
The cornerstones of our strategy - internationalization, SaaS operations and the
Growth System concept - are all making progress, but too slowly. On the other
hand, the path on our treasure map and the steps required to get to our goal are
becoming clearer each day.
The ongoing change is not easy. There is plenty of learning to do, for everyone.
Critical elements for success exist. We have enough time, customers, talent and
resources to succeed, as long as we keep our eye on the ball for the next few
years.”
Further information:
Jari Sarasvuo, CEO, tel. +358 (0)500 665 666
Mirkka Vikström, CFO, tel. +358 (0)050 376 1115
Press conference:
Trainers' House will hold a press and analyst conference regarding the financial
statements bulletin on 24 April, at noon-1 pm, at the company's office located
at Porkkalankatu 11, Helsinki. Those wishing to participate should contact Mia
Luostarinen, tel. 040 755 6146 or e-mail mia.luostarinen@trainershouse.fi.
A live webcast from the conference will be available at www.trainershouse.fi -
Investors starting at noon on 24 April 2008.
TRAINERS' HOUSE GROUP'S INTERIM REPORT FOR 1 JANUARY - 31 MARCH 2008
REVIEW OF OPERATIONS
Trainers' House Plc is a Growth System Company formed when Satama Interactive
Plc acquired the entire share capital of Trainers' House Oy in 2007 and the
companies merged on 31 December 2007. In connection with the merger, the
combined company adopted the name Trainers' House Plc.
The company provides its services through offices located in Ruoholahti and
Hernesaari in Helsinki, in Tampere and Turku. The international offices are
located in Düsseldorf, Stockholm and St Petersburg.
Management
After the merger, the members of Satama Interactive Plc's Board of Directors
continued on the Board of Trainers' House Plc except for Jari Sarasvuo, who was
appointed as the company's CEO on 31 December 2007. In accordance with the
decision of an Extraordinary General Meeting, Kai Seikku became an independent
member of the company's Board of Directors on 31 December 2007.
The previous CEO of Satama Interactive Plc, Jarmo Lönnfors, and the previous CEO
of Trainers' House Oy, Vesa Honkanen, continue as Senior Vice Presidents in the
new company.
In the Annual General Meeting held on 1 April 2008, Aarne Aktan, Timo Everi,
Petteri Terho, Kai Seikku and Matti Vikkula were re-elected as members of the
Board of Directors. Tarja Jussila was elected as a new independent member of the
Board. In its assembly meeting, the Board of Directors re-elected Aarne Aktan as
the Chairman of the Board.
Corporate structure and comparative figures
The first quarter of 2008 is the combined company's first reporting period. The
comparative figures presented are Satama Interactive Plc's actual figures for
the first quarter of 2007. Satama divested its Dutch operations in 2007, and the
comparative figures have been adjusted to correspond to the structure of the
continuing and discontinued operations. Pro forma figures are not presented in
this report, because Trainers' House Oy did not present an IFRS-compliant
financial report for the first quarter of 2007.
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, this figure provides a more accurate view of the company's
productivity. The company uses the adjusted operating profit as comparative data
in presenting forecasts on future development.
Trainers' House aims to integrate the company's business operations into a
single entity that helps customers to grow. The company's areas of expertise,
marketing and communications, training and management systems are developed into
a growth system in which each component serves the whole. The growth system is
comprised of an operating model and a BLARP management system based on the
Software as a Service (SaaS) model. As a result, the figures on the business
operations of Trainers' House are reported as a single entity.
Divestments
In the period under review, Trainers' House sold its mobile technology unit to
Nice-business Solutions Finland Oy. In connection with the divestment, 19
employees were transferred to Nice-business Solutions. The divestment has not
had any significant impact on the company's result in the first quarter.
Business operations
Net sales increased by 48.8% from the previous year, amounting to EUR 12.0
million (EUR 8.1 million).
The profitability of operations improved significantly from the previous year.
Operating profit before depreciation resulting from the allocation of
acquisition cost amounted to EUR 2.3 million, or 18.8% of net sales (EUR 0.4
million, or 5.0% of net sales).
A total of EUR 10.2 million of the purchase price of Trainers' House Oy was
allocated in intangible assets with a limited useful life. Depreciation
resulting from the allocation totalled EUR 0.8 million in the period under
review. The total portion of depreciation for 2008 is EUR 3.0 million. In total
these assets are depreciated over a period of five years. Operating profit after
depreciation was EUR 1.5 million, or 12.1% of net sales.
The following table itemizes the Group's key figures (in thousands of euros):
1-3/2008 1-3/2007
Net sales 12,009 8,070
Expenses
Employee benefits expense -6,067 -5,267
Other expenses -3,424 -2,238
EBITDA 2,519 565
Depreciation of non-current
assets -259 -162
Operating profit before
depreciation of allocation
of acquisition cost 2,259
% of net sales 18.8
Depreciation of allocation
of acquisition cost -801
EBIT 1,458 403
% of net sales 12.1 5.0
Financial income and expenses -538 -5
Profit before taxes 920 398
Income taxes -499 -127
Profit for the period from
continuing operations 421 271
Discontinued operations 132
Profit for the period 421 403
% of net sales 3.5 5.0
The result for the period includes deferred taxes for the period. Recognized
taxes have no impact on cash flow, because the company's balance sheet contains
deferred tax assets from losses carried forward. On 31 March 2008, deferred tax
assets on the balance sheet totalled EUR 8.4 million.
The following table itemizes the distribution of net sales for continuing
operations and shows the quarterly profits or losses from the beginning of 2007
(in thousands of euros). In the table, net sales and operating profit for 2007
are adjusted to reflect the company's continuing operations.
Q107 Q207 Q307 Q407 2007 Q108
Net sales 8070 7812 5945 8161 29989 12009
Operating profit
before depreciation of
acquisition cost 403 705 287 724 2119 2259
Operating profit 403 705 287 724 2119 1458
LONG-TERM OBJECTIVES
Trainers' House Plc's Board of Directors has set the following long-term
financial objectives for the company:
The company will target 15% annual organic growth and 15% operating profit, and
will aim to pay 30-50% of its annual profit as a 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
Cash flow from operations amounted to EUR 1.3 million (EUR 0.9 million). Cash
flow from investments totalled EUR -0.1 million (EUR -0.3 million) and cash flow
from financing was EUR -6.2 million (EUR 0.0 million).
Cash flow from operations was negatively affected by a decrease of EUR 1.6
million in current liabilities. These liabilities included, for example,
consultancy fees and other non-recurring expenses related to the acquisition of
Trainers' House Oy, which were paid in 2008.
Cash flow from financing was affected positively in the amount of EUR 0.5
million by subscriptions made under warrant 2003C, for which the subscription
period ended on 1 February 2008, and negatively in the amount of EUR 6.6 million
by the early repayment of a loan related to the acquisition of Trainers' House
Oy. The repayment was made using capital gained from the divestment of the
company's Dutch operations.
On 31 March 2008, the Group's liquid assets totalled EUR 12.2 million (1.2
million). The equity ratio was 61.3% (74.3%) and net gearing 24.3% (-4.4%). At
the end of the period under review, the company had EUR 27.6 million of
interest-bearing debt (EUR 0.2 million). The balance sheet ratios have improved
since the merger completed at the end of 2007. On 31 December 2007, the equity
ratio was 56.0% and net gearing 27.6%.
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 general outlook in the company's operating environment remains uncertain,
which may influence the purchase decisions made by the company's customers and
thereby affect the financial position of Trainers' House Plc. Other than this
factor, Trainers' House Plc is not aware of any extraordinary risks that could
have a significant negative impact on the company's growth and profitability.
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.
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.
MARKET AND INDUSTRY REVIEW
Growth management systems play a key role in the company's future growth and
success. Growth management systems are software products sold to customers as
continuous services. Initially, the continuous SaaS services will have a minor
role in the company's net sales. In customer deliveries, traditional project
work is still the delivery model in use. However, the share of continuous
services is expected to increase rapidly in the future.
The markets have welcomed our first continuous service product, the growth
management system BLARP (Business Live Action Role Play). We have already signed
the first customer agreements and are currently starting the first deliveries.
Commercialization and proof of concept take place under customer guidance.
The demand for the company's services is affected by the general economic
climate as well as the need to strengthen the role of sales and marketing in
customer organizations. This development need does not depend much on economic
cycles. To succeed, companies must invest in sales and marketing in both good
and bad times.
Our key strengths include a strong cash flow, unique product offering, highly
skilled personnel, broad distribution of sales responsibilities across the
organization, systematic management of sales and the ability to change the
internal and external operating environment of customer organizations through
our services.
Trainers' House is an established operator in Finland, but we aim to grow also
internationally through organic growth and acquisitions.
RESOLUTIONS OF THE ANNUAL GENERAL MEETING
Trainers' House Plc's Annual General Meeting was held on 1 April 2008.
As proposed by the Board of Directors, the AGM decided that a per-share dividend
of EUR 0.04 be paid. The AGM set the record date for dividend payment as 4 April
2008 and the dividend payment date as 11 April 2008.
Aarne Aktan, Timo Everi, Kai Seikku, Petteri Terho and Matti Vikkula were
re-elected as members of the Board of Directors. Tarja Jussila was elected as a
new independent member of the Board. Authorized Public Accountants Ernst & Young
Oy was elected as the company's auditors. In its assembly meeting held after the
AGM, the Board of Directors elected Aarne Aktan as the Chairman of the Board.
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 9.62% of the company's shares, may be acquired. The authorization
shall remain in force until 30 June 2009. At the same time the AGM countermanded
the earlier comparable authorization.
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 19.24% of the company's shares. The authorization
shall remain in force until 30 June 2009. At the same time the AGM countermanded
the earlier comparable authorization.
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 384 people (370), of
whom 374 (316) were located in Finland.
SHARES AND SHARE CAPITAL
The company's shares have been listed on the OMX Nordic Exchange since 2000.
Until 28 December 2007, the company's shares were listed under the name Satama
Interactive Plc (SAI1V) and as of 31 December 2007 under the name Trainers'
House Plc (TRH1V).
At the beginning of the period under review, Trainers' House Plc had issued
74,577,375 shares and the company's registered share capital amounted to EUR
866,941.67.
The company's share capital was increased by a total of EUR 13,801.92 during the
period under review, as a result of subscriptions made on account of the 2003C
warrants issued under the personnel's option programme. The total number of new
shares subscribed for was 656,500.
A total of 7,217,171 treasury shares acquired by Trainers' House Plc in the
merger of Satama Interactive Plc and Trainers' House Oy were invalidated during
the period under review. The invalidation did not affect the company's share
capital. The change in the number of shares was registered in the trade register
on 7 March 2008. At the end of the period under review, the company did not
possess any treasury shares.
At the end of the period, the share capital of Trainer's House Plc totalled
EUR 880,743.59. The number of shares totalled 68,016,704.
Share performance
A total of 16.4 million shares were traded on the Helsinki Exchanges during the
review period for a value of EUR 20.6 million (14.5 million shares and EUR 16.2
million, respectively). The period's highest share quotation was EUR 1.44
(EUR 1.24), the lowest EUR 1.12 (EUR 1.00) and the closing price EUR 1.20
(EUR 1.14). The weighted average price was EUR 1.27 (EUR 1.12). At the closing
price on 31 March 2008, the company's market capitalization was EUR 81.6 million
(EUR 47.0 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 29 March 2006 decided to commence an employee
option programme 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 warrant is to begin
on a date determined by the Board of Directors after publication of the interim
report for the second quarter of 2008, but not later than on 1 September 2008,
and to end on 28 February 2009. The subscription period for the 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 end on 28 February 2010. The
subscription price for shares converted under the 2006A warrant is EUR 1.02, and
for shares converted under the 2006B warrant EUR 1.17.
CHANGES IN OWNERSHIP
During the period under review, the company became aware of seven notices of
change in ownership passing the disclosure threshold. Information on notices of
change in ownership is available on the company's website at
www.trainershouse.fi - Investors.
The merger of Trainers' House Oy affected the company's shareholder base
significantly. More than half of the company's shares are currently owned by its
employees.
The company's CEO Jari Sarasvuo and his controlled company Isildur Oy currently
hold a total of 35.5% of the share capital of Trainers' House Plc. The Finnish
Financial Supervision Authority has granted an exemption to Jari Sarasvuo and
Isildur Oy regarding the obligation to present a mandatory redemption offer
concerning the company. The terms and conditions of the exemption require that
the combined shareholding of Mr. Sarasvuo and Isildur Oy in Trainers' House will
decline to 30% or under within one (1) year from the date that the new shares
have been registered.
Information on the company's ownership structure and major shareholders is
available on the company's website at www.trainershouse.fi - Investors.
EVENTS AFTER THE REVIEW PERIOD
In accordance with the decision of the Annual General Meeting, Trainers' House
paid a dividend of EUR 0.04 per share on 11 April 2008. The dividend paid
totalled EUR 2.7 million, or 31.4% of the profit for 2007.
NOTES REGARDING THE FIGURES
The financial statements bulletin was compiled in accordance with the revenue
recognition and valuation principles of the International Financial Reporting
Standards. The Group divested its Dutch operations in 2007, and the comparative
figures for 2007 have been adjusted to correspond to the structure of the
continuing and discontinued operations. The financial statements bulletin does
not fully comply with IAS 34, because the tables are condensed.
Amendments to and interpretations of published standards, as well as the new
standards effective as of 1 January 2007 are presented in detail in the
Financial Statements for 2007. 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 2008, the Group will adopt all the new and amended standards and
interpretations published by the IASB entered into force on 1 January 2008.
The Group estimates that these new interpretations will not affect the
consolidated financial statements.
In producing this interim report, Trainers' House has applied the same
accounting principles for key figures as in its Financial Statements for 2007.
The calculation of key figures is described on page 45 of the Financial
Statements included in the Annual Report 2007.
The figures given in the financial statements bulletin are unaudited.
INCOME STATEMENT, IFRS (kEUR)
Group Group Group
01/01/- 01/01- 01/01-
31/03/08 31/03/07 31/12/07
CONTINUING OPERATIONS
Net sales 12,009 8,070 29,989
Other income from operations 166 4 61
Costs:
Materials and services 1,269 949 3,437
Personnel-related
expenses 6,067 5,267 18,663
Depreciation 1,061 162 713
Other operating expenses 2,320 1,293 5,116
Operating profit 1,458 403 2,119
Financial income and expenses -538 -5 -259
Share from profit/loss of
associated companies -103
Profit/loss before tax 920 398 1,758
Tax -499*) -127*) 3,082*)
Profit for the period
Continuing operations 421 271 4,839
Discontinued operations 132 3,822
Profit/loss for the period 421 403 8,661
Attributable to equity holders
of the parent company 421 403 8,661
Earnings per share as calculated from the profit attributable to shareholders of
the parent company:
Undiluted earnings/share (EUR),
Continuing operations 0.01 0.01 0.12
Discontinued operations 0.00 0.09
Diluted earnings/share (EUR),
Continuing operations 0.01 0.01 0.12
Discontinued operations 0.00 0.09
*) The tax included in the income statement is deferred.
BALANCE SHEET, IFRS (kEUR)
Group Group Group
31/03/08 31/03/07 31/12/07
ASSETS
Non-current assets
Property, plant and equipment 1,382 1,536 1,706
Goodwill 51,772 10,020 52,467
Other intangible assets 19,421 240 20,162
Other financial assets 230 37 230
Other receivables 24 99 24
Deferred tax receivables 8,417 5,565 9,149
Total non-current assets 81,245 17,497 83,738
Current assets
Inventories 15 15
Accounts receivable and
other receivables 11,611 11,202 11,690
Cash and cash equivalents 12,153 1,191 17,120
Total current assets 23,779 12,393 28,824
Total assets 105,024 29,890 112,562
SHAREHOLDERS' EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent company
Share capital 881 867 867
Share issue 256
Premium fund 13,943 13,228 13,228
Translation differences -2 -2 -2
Distributable non-restricted
equity fund 31,872 31,348
Retained earnings 17,029 8,115 16,551
Total shareholders' equity 63,722 22,208 62,247
Long-term liabilities
Deferred tax liabilities 4,966 5,739
Other long-term liabilities 27,384 221 34,012
Accounts payable and other liabilities 8,952 7,461 10,563
Total liabilities 41,302 7,682 50,314
Total shareholders' equity and
liabilities 105,024 29,890 112,562
CASH FLOW STATEMENT, IFRS (kEUR)
Group Group Group
01/01- 01/01- 01/01-
31/03/08 31/03/07 31/12/07
Profit/loss for the period 421 403 8,661
Adjustments to profit for the period 2,810 274 -5,854
Change in working capital -1,514 245 -366
Financial items -425 -2 -315
Cash flow from operations 1,291 921 2,127
Acquisition of subsidiaries -26,858
Divestment of subsidiaries 7,857
Investments in tangible and
intangible assets -124 -253 -751
Capital gains on tangible and
intangible assets 120
Capital gains on other investments -187
Change in the additional trade price -98 -67
Cash flow from investments -102 -320 -19,939
Share issue subject to charges 491 135 391
Increase/decrease in long-term loans -6,628 33,639
Increase/decrease in short-term loans -19 61 219
Increase/decrease in long-term receivables -152 136
Cash flow from financing -6,156 44 34,385
Change in cash and cash equivalents -4,967 644 16,573
Opening balance of cash and
cash equivalents 17,120 547 547
Closing balance of cash and
cash equivalents 12,153 1,191 17,120
CHANGE IN SHAREHOLDERS' EQUITY (kEUR)
Equity attributable to equity holders of the parent company
Distribu-
Trans- table
lation non-re-
Share Share Premium diffe- stricted Retained
capital issue fund rence equity earnings Total
Equity 01/01/2007 859 13,101 -1 7,704 21,663
Translation differences -1 -1
Stock options used 8 127 135
Share-based
payments 8 8
Profit/loss for the period 403 403
Equity 31/03/2007 867 13,228 -2 8,115 22,208
Equity 01/01/2008 867 256 13,228 -2 31,348 16,551 62,247
Stock options used 14 -256 715 473
Share-based
payments 58 58
Taxes related to bookings
to shareholders' equity 524 524
Profit/loss for the period 421 421
Equity 31/03/2008 881 13,943 -2 31,872 17,029 63,722
PERSONNEL Group Group Group
01/01- 01/01- 01/01-
31/03/08 31/03/07 31/12/07
Average number of personnel 389 369 369
Personnel at the end of the period 384 370 400
COMMITMENTS AND CONTINGENT LIABILITIES (kEUR)
Group Group Group
31/03/08 31/03/07 31/12/07
Collaterals and contingent liabilities
given for own commitments 3,669 5,285 4,144
OTHER KEY FIGURES Group Group Group
31/03/08 31/03/07 31/12/07
Equity-to-assets ratio (%) 61.3 74.3 56.0
Net gearing 24.3 -4.4 27.6
Shareholders' equity/share (EUR) 0.94 0.54 0.92
Helsinki, 24 April 2008
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