StepStone ASA announce Q4 report and results for 2002

A year of consolidation and re-focus

Q4 EBITDA loss improves to Ä773,000, down from Ä1.2m in Q3 and Ä18.4m in Q4 2001

StepStone ASA has announced its financial results for 2002 and its Q4 report.

Q4 revenues were Ä5.8m, deferred revenue increases to Ä6.5m. Cash balance stands at Ä14.1m at the end of 2002, with StepStone creating two operating divisions for 2003, an Online Recruitment Division and an Enterprise Solutions Division.

StepStone forms a strategic relationship with Hire.com, the leading US enterprise talent management solutions provider, enabling StepStone to exclusively sell and support Hire.com solutions across Europe.

The past year has been one of significant challenge and progress. In a difficult business environment, the Board and management concentrated on stabilising the business and on preparing the company for a profitable future. This progress is evidenced by losses after tax being drastically reduced from over Ä206m in 2001 to under Ä7m in 2002.

Financial Results
For the first time for nearly eight quarters StepStone saw an increase in quarter on quarter sales. Growth was approximately 15% on the prior quarter and was reflected across all geographies.

Operating costs were further reduced, as forecast in the last quarterly report.

All the regions showed a marked improvement in results in 2002 against 2001. The regional operations, taken as a whole, have been EBITDA positive for each of the last three quarters of 2002. The Central Region turned in another strong performance in Q4 and has been EBITDA positive in every quarter of 2002. Whilst Q4 saw an increase in sales compared to Q3 in both the Nordic and Northern regions, the lower than expected level of sales in Q3, which was commented on in the last quarterly report, adversely impacted Q4 revenue. As a result the Nordic region and the Northern region recorded EBITDA losses.

There was a loss after tax of Ä1.0m for Q4 and a loss after tax of Ä6.8m for 2002 as a whole compared with a loss after tax of Ä206.4m in 2001.

The company has a strong balance sheet and continues to manage its cash prudently. At the end of 2002 StepStone had cash and cash equivalents of just over Ä14m. There are no plans to raise additional finance.

General Developments
In September, Careerportal, an innovative candidate exchange solution for recruitment agencies, already well established in the Netherlands, was acquired. Backed by further technical investment, StepStone Careerportal is now ready to be rolled out into new markets. Initial plans cover Germany and Belgium, where significant interest has already been generated, to be followed by the Nordic region.

The StepStone Network has been launched with agreements announced in Q4 with totaljobs.com in the UK, CVO Group in Central and Eastern Europe, and InfoJobs.net in Spain. The StepStone Network has established itself as the premier source for European-wide online recruitment, already supporting over 2.5 million candidates speaking 19 languages across 22 European countries. Further partnerships will be announced during 2003.

During Q4 we completed agreements with a number of new customers and renegotiated a series of important renewals. These included companies such as Vedior, Vodafone D2, Datev, Microsoft, Kienbaum Consultants International, Schering, Manpower, Bristol-Myers Squibb, Carrefour, Toyota, e-plus, Corus, Saab and Deutsches Elektronen-Synchrotron.

StepStone Market Position
The online recruitment market in Europe continues to consolidate. The market climate has caused a number of competitors in various European countries to radically cut back or indeed close their online recruitment operations. Compared with a year ago StepStoneís market position as Europeís leading online recruitment company has significantly strengthened.

In terms of brand awareness, StepStone remains number 1 in unprompted awareness in Belgium, Denmark, Germany, Italy, Norway and Sweden and a close number 2 in Netherlands, against its European competitors.

Research amongst StepStone's customers carried out by Gallup in October and November 2002 provided valuable market insight. Our customers are closely balanced between those expecting increased hiring in 2003 and those expecting reductions. This represents a significant reversal from similar research conducted in the middle of 2001. Most pessimistic were the Dutch recruiters whilst most optimistic were those in Sweden, Belgium and Italy. The research also indicates that in the depressed market, online recruitment is increasing its market share amongst StepStone customers against offline media, a result that is confirmed across the market in general by other research. Key benefits of online recruitment were consistently stated as its speed and effectiveness, at lower cost than the traditional alternatives.

Outlook
Both StepStone and the recruitment market have been through a major transformation during 2002. The whole business has been reshaped and the reorganisation has impacted every aspect of the company. A key element in implementing these changes has been the involvement of our staff and customers through this transition.

StepStoneís forward strategy is designed to meet both todayís and tomorrowís customer needs for online recruitment and to lead the emerging market for enterprise recruitment solutions in Europe.

The short-term outlook remains challenging. The Board believes though that the combination of an efficient organisation and a clearly focused market strategy positions us strongly for the future.

The company is today in much stronger shape than a year ago and the Board believes that the necessary building blocks for future growth are in place. The Board expects the company to make further significant and positive progress in the current year as the new strategy starts to deliver results.