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StepStone shuts UK operation - 11/2001

3rd quarter results show 525 jobs cut.

The Board has commenced a major reorganization of the StepStone business with the objective of accelerating the company's move to profitability and cash generation. Over the last two years the company has built a strong pan European brand and established itself in 17 countries across Europe and at the end of Q3 had a headcount of 876. Whilst a number of these country units are now EBITDA positive losses and cash deficits are being incurred in other countries. The company's cash position, together with the current status of the financial and business markets, have lead the Board to decide that the company cannot sustain the current level of investment across Europe. Therefore it has decided to reorganize the business around the best performing countries, exit a number of markets in which it continues to be loss making or require substantial continued investment to achieve profitability. The company will also be substantially reducing its headquarters functions and moving to a regionally based business model. As a result of this plan, the intention is that the headcount will be reduced to less than 350.

StepStone will continue to be based out of Norway. However its business operations will be centred around its three most successful markets, Germany, Belgium and Denmark. Operations will be maintained to grow its businesses in Norway, Sweden, Finland, Netherlands & Luxembourg. However it is looking at options to reduce the operating losses being incurred in other countries.

It has also informed its subsidiary in the UK that it will not continue to provide it with financial support.

The Board is delighted that Colin Tenwick has accepted their invitation to join the company as
Chief Executive Officer.

At 30 September 2001 the company had cash or cash equivalents of EUR22.5 million (Q2 EUR 46.9 million). It is the Board's opinion today that the actions taken to date will ensure that the current cash and cash equivalent balance is sufficient to allow the company to complete the planned fund raising process and continue to trade as a going concern during that process. However, if sufficient funds are not forthcoming within the planned timescale the Company will be unable to continue trading as a going concern.

The results for Q3 were mixed. The company performed well in certain markets - Belgium, Denmark and Germany all produced positive EBITDA. However performance in other markets, particularly the UK, France and Italy was disappointing.

Revenue for Q3 declined to EUR13.4 million (Q2: EUR17.1 million). This was some 21 per cent lower than in Q2 and a decline of 5 per cent on a year on year basis. In the first nine months of the current financial year total revenues have reached EUR48.6 million compared with EUR32.4 million in the corresponding period of the previous year and a total of EUR52.2 million for the whole of 2000.