•Sales up 30% on corresponding quarter last year - the third consecutive quarter of year on year growth
•Revenue up for third successive quarter
•Contracted Backlog from StepStone Solutions exceeds €1m for first time
•Cost reduction programme on track
•Axel Springer agreement signed - benefits expected from Q2 2005 onwards
As has been previously reported we had an encouraging start to the year, with Q1 and Q2 2004 Sales (being Invoiced Sales of OLR and Contracted Sales of StepStone Solutions) exceeding those of the corresponding periods in 2003. Traditionally the third quarter, which includes the summer holiday season, is our quietest trading period. It is therefore particularly encouraging that the sales momentum has been maintained in this quarter.
Online Recruitment Division
Revenue in OLR has now risen for three successive quarters. In Q3 2004 revenue amounted to €4.4m, slightly ahead of both Q2 2004 and Q3 2003. This is the first year-on-year increase in quarterly revenue for over 3 years and supports our view that there is a gradual improvement in recruitment sentiment across Europe.
OLR operating costs, before a one-off charge related to the cost reduction programme, remain flat at €4.1m. As a result the division was able to report an increased EBITDA of €0.3m.
We signed a number of new client agreements and continued to renew important annual contracts during the quarter. These included: Accenture, Deutsche Post, Fiat Bank, Deutsche Telekom, Robert Bosch, Schering, Kelly Services, Semler Gruppen, Danfoss, Retention Group, Michael Page, Microsoft, Ringnes, Intel International, KLM, Maersk, Van den Boogaart, Ordina, Electrabel, La Poste/de Post, Nestlé, ING, Sitel, Citibank, Agfa Gevaert and Creyf’s.
On 21 September we announced a ground-breaking partnership with Axel Springer AG to jointly deliver a range of new and unique recruitment services to the German market. As part of this long-term commercial relationship Axel Springer will invest €7m in cash and a further €7m in media (at list price) to acquire a minority stake of 49.9% in StepStone Deutschland AG. This transaction will become final as soon as we have received ratification from the German regulatory authorities. We are excited at the prospects created by this transaction, linking StepStone with one of the world’s leading media organisations, and are confident that together StepStone and Axel Springer will significantly expand their share of German recruitment media.
StepStone Solutions continues to make progress with two major contracts for the Hire.com product and four new contracts for the OneStep recruitment solution. Total contracts in the quarter were worth in excess of €0.75m.
We were awarded a four year contract with Canon Europe for their recruitment solutions across EMEA. This covers multiple operating companies across Europe supporting 10 languages and is to date the most significant contract we have signed for the Hire.com product. We were also awarded our first contract for the Hire.com product in Germany with a four year agreement with the recruiting services organisation specialist HRblue.
The OneStep solution secured four contracts in the quarter. In Belgium we were selected by the recruitment agency HR2, which went live 8 days after the contract was signed as the 23rd site to be delivered. Janssen-Cilag, who first adopted OneStep in 2003, has signed a new contract for a further term. In Denmark we signed two OneStep contracts with Semler Gruppen, the Volkswagen/Audi distributor, and the recruitment agency Copenhagen Executive.
On 30th September, we announced the launch of the Gemstone Alliance through which StepStone Solutions products will be recommended and delivered by a network of experienced partners across Europe. The programme has already proved successful in attracting 11 partners across Germany, Belgium, The Netherlands, Italy, Denmark and the UK. We believe that our partners in the Gemstone Alliance will accelerate the adoption of StepStone Solutions products in the market.
We enter Q4 with considerable optimism.
The Sales and revenue trends within the majority of country operations are positive. Costs are being reduced and we expect losses to decrease steadily as we move towards profitability.
The Company is now well funded and the imminent ratification of the Axel Springer agreement will significantly strengthen our business.
For further information, please contact:
Tel: +44 (0)1276 675571
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