Jenny Ruth: In a hole, but looking to a bright future ...

This stock doesn't even have penny dreadful status. It trades in fractions of a cent.

The company has never made a profit and its result for the six months to September was a $364,000 net loss, up from a $197,000 loss for the same period a year earlier.

Cashflow from operations was negative $666,000, down from negative $711,000.

At the end of its latest first half, it had negative shareholders' equity of $654,000.

So it wasn't surprising that it issued a prospectus in early December, seeking to raise up to $1.225 million at an issue price of 0.0009 cents a share. The shares traded yesterday at 0.1 cents.

The company raised only $156,000, not nearly enough to repair the balance sheet, let alone finance its growth aspirations.

But the one thing Training Solutions Plus, formerly E-cademy, does have is a supportive major shareholder.

Paul Choiselat's Australia-based Beconwood Securities bought into the company in 2001, about a year after it was floated, and owns 35 per cent. Choiselat, who is also Training Solutions managing director, estimates he's ploughed about $1.5 million into the company through top-ups of capital to keep it afloat.

The last annual report made it clear that Training Solutions' status as a going concern depended entirely on Beconwood's continued support.

He said the company didn't expect to raise the full amount sought, but that the timing of the prospectus meant the result was disappointing. He had expected to raise between two and three times as much.

The prospectus was supposed to have been issued several weeks before its December 3 issue date.

But it was delayed by compliance issues and New Zealand law meant it couldn't remain open more than nine months after the last audited accounts so it had to close at the end of December.

"It's always difficult to do issues over the Christmas period," said Choiselat.

But the company is working on placing the remaining shares to wealthy individuals. It has placed two million shares, raising another $180,000.

He was confident of placing all the shares by the end of next month.

Training Solutions Plus has four businesses in New Zealand and Australia which provide corporate training, focusing particularly on "soft skills" such as sales, service and motivation.

About the most impressive aspect of the company is its blue-chip client list.

Customers include Baycorp, Carter Holt Harvey, Telecom, Ernst and Young, Sanitarium, British Airways, Fisher and Paykel Healthcare and the Wellington City Council.

Clearly, it provides services that its customers want.

Its customers are all companies or Government agencies, rather than individuals. It targets organisations with more than 100 employees.

Choiselat said the company spent 2004 rationalising its four businesses into a single company and positioning it for future growth.

Once the current capital raising has been completed, it will increase its sales force by 10 people, bringing the total to 30.

Money raised in the issue will pay for that as well as repairing the balance sheet.

Much of the effect of that will probably not be seen in the 2006 year but should be reflected in the 2007 year when Choiselat says the company should be cashflow positive and making profits.

He doesn't rule out more acquisitions, but says he doesn't want management distracted from the task of getting the company to profitability.

The transtasman training industry is large.

Training Solutions chief executive Georgia Aikman says Australia spends A$4 billion a year on employee training.

New Zealand spends about $600 million but it is characterised by small training companies.

Aikman thinks that gives Training Solutions a lot of potential.

"Government departments don't want to deal with mums and dads as suppliers. It's the same with big corporates," she says.

The other thing to inspire confidence in Training Solutions' future is Beconwood's track record.

Choiselat describes Beconwood's business as investing in small companies where it can get a significant enough shareholding to allow it to influence each company's direction.

"We, therefore, look for companies that are distressed in some way. Sometimes it's just lack of financial resources, sometimes it's lack of strategy."

Beconwood supplies capital and management capability.

It has investments in three other listed companies, all in Australia, as well as other undisclosed interests.

One, Jumbuck Entertainment - founded about four years ago - provides content such as games, chat sites, messaging and dating applications to 39 mobile telephone companies around the world.

Beconwood became involved in its parent company, Q, about 3 1/2 years ago and Jumbuck became a separately listed company last August.

In late January, it announced its second-quarter sales were up 112.4 per cent, bringing its first-half sales increase to 104.5 per cent.

It has a market capitalisation of A$7.7 million ($8.4 million).

Choiselat said Jumbuck's revenue rose from nothing to A$2.9 million in the year to last June, when net profit was just under A$900,000.

"It's unusual for small technology companies to be able to make A$900,000 on A$3 million revenue so early in its career," he says.

He describes the parent company as a failed dot.com, "a real basket case", when Beconwood bought into it.

Of its eight businesses, six have been sold or closed and, since Jumbuck's float, it has only a printing business left.

Beconwood is now looking for related businesses to rebuild the company.

Q has a market capitalisation of just over A$1 million.

The other public company Beconwood is involved in is Healthscope.

Choiselat said its market capitalisation when Beconwood became involved five years ago was A$20 million.

Yesterday, its shares were trading at A$4.24, making its market capitalisation A$675.3 million.

"The company incurred a large loss in the previous financial year but it has been operating profitably ever since," Choiselat said.

Another of Beconwood's investments was earmarked for a float but "we were offered more money than we thought it was worth" so it was sold privately.

"Success often means putting the time in to make it happen. This [Training Solutions] took a little bit longer than we would have liked," Choiselat says.

One obvious move Training Solutions could take to improve its share's image is a capital consolidation.

If all the shares are placed, it will have more than 4383 billion shares on issue and another 1517 billion options.

Choiselat said that would be considered once the capital raising had been completed.

The company, the money, the people

Training Solutions Plus HQ: Level 5, 11 Bank Place, Melbourne, Australia.

Profile: The company was floated in New Zealand as E-cademy in April 2000 and has since acquired three other corporate training businesses. It gives corporate training services in Melbourne, Sydney, Brisbane, Auckland, Wellington and Christchurch.

Financial statistics: The company has never made a profit and reported a $364,000 net loss for the six months ended September 30, negative shareholders' funds of $654,000 and negative cashflow of $666,000.

Market capitalisation: $3.4 million.

Main shareholder: Beconwood with 35 per cent.

Top executives: Managing director Paul Choiselat and chief executive Georgia Aikman, who is also part of the Beconwood executive management team.