Record demand for Total Talent Management drives strong second quarter for StepStone

Q2 2008 Highlights vs. Q2 2007
- Revenue increases 34% to ?30.9m
- EBITDA margin increases to 20% from 15%
- Cash flow from operations of ?5.2m in Q2 and ?12.0m in first half of 2008
- Online recruitment revenue and margins hit new records
- Demand for Solutions broke all previous records with over 100 new customers selecting StepStone in the quarter
- Continued recognition by industry analysts: as the foremost European talent specialist, StepStone is positioned in the Leader's quadrant in Gartner's 2008 E Recruitment Magic Quadrant
- Focus remains revenue growth, profitability, market share and operating cash flow

Summary
Company
StepStone delivered a robust performance in the second quarter across both lines of business. Online delivered another quarter of increased revenue and established a new record EBITDA margin whilst demand for talent management solutions reached record levels.

Revenue for the second quarter of 2008 increased 34% to ?30.9m from ?23.1m in Q2 2007. Underlying organic revenue growth was 30%.

The company's focus remains to deliver profitable revenue growth, and increase market share and operating cash flow.
The company increased its EBITDA to ?6.0m from ?3.4m in Q2 2007. EBITDA margin is 20% for the first time, up from 15% a year ago.

Operations generated ?5.2m of cash. The company has generated ?12.0m of operating cash in the first half of 2008. Cash and bank deposits at 30 June 2008 were ?32.9m.
StepStone has announced a ?40m credit facility agreed with Skandinaviska Enskilda Banken AB (`SEB`). This is a significant new relationship and having the resources of SEB behind StepStone will further broaden the company's business growth options.

As part of the company's strategy to provide a portfolio of best of breed online Talent Communities the company announced on 16 July the acquisition of Les Villages Emploi (LVE), the operator of a number of French online sites. This will complement the company's existing French business. The initial consideration was ?3.6m which has been settled using operating cash flow. A further payment is due in 2009 based on 2008 performance.

Online
Online revenue in Q2 2008 was ?18.4m, 34% higher than the same quarter in 2007. The underlying organic growth rate was 31%.

The Online business continues to show strong year on year growth driven by the on-going structural shift from offline job advertising to online job classifieds. Online operates across multiple geographies and all are delivering year on year growth albeit it with degrees of variation between markets. The strongest markets remain those in Central Europe with the traditional summer seasonality pattern re-emerging in other markets, particularly in the Nordic countries.

EBITDA in the quarter was ?6.1m compared to ?3.8m in Q2 2007. The EBITDA margin was 33%, up from 27% a year ago.

Solutions
Solutions continues to deliver against its 2008 plan of consolidating long term profitability, enhancing operating cash flow and increasing market share.

Demand remains very strong in all markets in which we operate. A record 106 new customers contracted with Solutions during the quarter, up from 87 in Q2 2007, in addition a number of existing customers contracted for further products and services.

Solutions revenue was ?12.6m in Q2 2008, 33% higher than the same quarter in 2007. The underlying organic growth rate was 29%.

Solutions EBITDA was ?1.6m, up from ?1.1m in Q2 2007. Margins increased to 13% compared to 11% in the same quarter of 2007.

Outlook
Worldwide demand for our Online and Talent Management solutions remains robust. Online continues to show strong year on year growth. Demand for Solutions broke all previous records with 106 new customers selecting StepStone during Q2 and the pipeline for future transactions remains very active.

Following the second quarter results StepStone remains on course for year on year revenue growth in the region of 30% and EBITDA growth in the region of 50%. This is being driven by our balanced portfolio of products and services delivered across multiple geographies.

The Board continues to remain positive about the future trading prospects for the company and looks forward to reporting progress over the remaining course of 2008.