StepStone ASA - Results for the Quarter ended 30 September 2006

StepStone is continuing to deliver strong progress across the group with positive momentum maintained through the summer period

Highlights

50% year on year revenue growth
Online increased 48% and Solutions increased 56% year on year
Record EBITDA of Ä1.1m.
Ä1.8m operating cash generated in the quarter: Ä5m year to date
Successfully completed Ä10m unsecured debt to fund continued expansion
Q3 2006 compared with Q3 2005:
Revenues Ä13.4m up 50%
EBITDA Ä1.1m against breakeven
Deferred Revenue Ä12.1m up 61%
Cash Ä30.7m up Ä18.5m

StepStone Online, the companyís business focused on online recruitment advertising, had its strongest ever Q3. The move of classified recruiting advertising online continues at pace in all geographies. During what is traditionally the quieter trading summer quarter we experienced increased momentum on Q2.

Quarterly revenue increased by 48% year on year; EBITDA for the quarter exceeded Ä2m; EBITDA margin improved 4 percentage points in the quarter to 24% and the Division continued to deliver strong cash flows.

StepStone Solutions, On Demand e-recruitment solutions, also accelerated its progress during Q3. Revenue increased organically by 56% year on year. The company continued to expand its sales and customer service capacity during the summer quarter whilst also improving EBITDA margin. A further 42 new customers were added during July, August and September and existing customers continued to upgrade and expand their use of the companyís products
EBITDA for the group was a record Ä1.1m in the quarter - up by 63% on the preceding quarter. The group also generated Ä1.8m of operating cash flows bringing the 2006 year to date total to over Ä5m. This continues the trend of successive positive operating cash flow quarters and as we enter what are traditionally the companyís strongest quarters, positions us very well for increasing cash generation in 2007.

In July, in a move that complemented the focus on industry channels and demonstrated the increasing consolidation in the online recruitment market, StepStone acquired Denmarkís largest IT job portal IT-Jobbank. This acquisition positioned StepStone as the clear e-recruitment market leader in the fast growing Danish IT recruitment market.

The initial consideration for 100% of IT-Jobbank was Ä2m in shares. Further consideration will be payable in 2007 and 2008 dependant upon achievement of certain financial targets.

The company took another major step forward in September 2006 with the successful placement of its first bond issue. The company issued unsecured floating rate notes redeemable in 2010. The initial issue was NOK 100 million - the proceeds of which will be used for continued expansion of the business The group ended Q3 2006 with Ä31m of cash.

Divisional Results

StepStone Online
StepStone Online operates one of Europeís largest online recruitment advertising businesses.

The division has grown its revenues by 48% year on year. Revenues for Q3 2006 were Ä9.0m compared to Ä6.1m in Q3 2005. The division has been steadily expanding sales resources and increasing expenditure on marketing programs throughout 2006 and this is expected to continue into the last quarter of the year. As a result, operating costs increased to Ä6.9m from Ä6.6m in the previous quarter. EBITDA increased 68% to Ä2.1m compared to Ä1.3m a year ago and the division increased its Q3 EBITDA margin to 24%.

The operational statistics reflect the growth in the business. User sessions were 18m in the quarter, 29% higher than in Q3 2005. The number of listings carried on our websites continued to show steady growth and at 30 September 2006 amounted to 43,401. This was 51% higher than at the same date last year. Vacancies increased by 32% to 56,979 at 30 September 2006 from 43,083 at 30 September 2005.

StepStone Solutions
StepStone Solutions offers On Demand hosted and managed e-recruitment solutions and continues to strengthen its position as the clear European market leader. The Divisionís main product offerings are i-GRasp and EasyCruit.

Highlights of the quarter included:

22 new clients in the Nordic region including SAS, Alfa Laval, Deloitte and Velux.

The selection by the UK`s leading outsourcing company Capita of i-GRasp to power the BBCís global recruitment strategy.

11 new UK based clients including Lloyds of London and Enfield Council.

The fastest international deployment of i-GRasp - Party Gaming.com within 2 weeks of contract signature.

The successful launch of EasyCruit in France where i-GRasp is already well established.

The selection of StepStoneís solutions by PwC in The Netherlands, Deloitte in Germany and Dolly Dimple and DHL in Norway.

Significant new hires in sales, delivery and management to deliver greater penetration in key European and global markets.

Revenue for StepStone Solutions in Q3 was Ä4.4m, an increase of 56% from Ä2.8m in Q3 2005. Operating costs in Q3 2006 were Ä3.9m compared to Ä2.7m in Q2 2006. EBITDA in Q3 2006 was Ä0.5m compared to Ä0.1m a year ago and positive for the fifth successive quarter. EBITDA margin increased to 11%.

Group Results
Group revenue increased 50% to Ä13.4m compared with the same quarter last year.

Over the same period total operating expenses were Ä12.3m. As a result, EBITDA for Q3 2006 increased significantly to Ä1.1m compared to breakeven a year ago.

Depreciation for Q3 2006 was Ä0.6m, an increase of Ä0.2m on the corresponding period in 2005. This is primarily attributable to assets of acquired companies and amortization of intangibles. EBIT for Q3 2006 was Ä0.5m, an improvement of Ä0.9m from the loss of Ä0.4m in Q3 2005.

The group significantly increased its cash balances during the quarter generating Ä1.8m compared with usage a year ago of Ä1.7m. To facilitate continued expansion of its business the company also launched an unsecured floating rate commercial paper program generating Ä9.6m additional cash. Cash at the end of Q3 2006 was Ä31m.

Outlook
The company has maintained its momentum during what has traditionally been the quieter summer trading period. It has also continued to invest in country specific sales, marketing and infrastructure projects, grow revenues and deliver increased profitability.

The Board believes that the momentum and growth achieved in the first three quarters of the year is expected to continue, leaving the company in a strong position to move the business forward over the remainder of 2006 and into 2007.