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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Stepstone Ord | LSE:STPS | London | Ordinary Share | NO0010010473 | ORD NOK 0.40 (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 96.25 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number : 1961B
StepStone ASA
22 October 2009
StepStone ASA
Report 3rd Quarter 2009
StepStone ASA
StepStone reports strongly increased demand for Solutions products and signs of
recovery for Online products; underlying EBITDA of EUR2.6m (before one time costs)
and EUR1.3m cash generated from operations.
Highlights
* First sequential increase in new customer software contracts for a year; record
number of increased customer commitments
* Launch of new web-based product combining strengths of Online and Solutions
* Online invoiced sales at similar levels to previous quarter, halting decline
* Revenue of EUR24.1m (Q2 09: EUR24.7m) in traditionally slow summer quarter
* Recurring revenue from Solutions up by 15% year on year; customer churn remains
under 1%
* Online business delivering 27% EBITDA margin;
* Underlying EBITDA of EUR2.6m (Q2 09: EUR2.9m); 11% margin
* EUR1.3m cash generated from operations
* Continued improvements to operational efficiency - on target to further reduce
cost base to EUR21m by end of Q1 10.
Results for the quarter
StepStone has reported a solid third quarter in 2009, despite the summer quarter
being a historically weak period, thanks to growing sales in its SaaS
(software-as-a-service) business combined with clear signs of stabilisation in
its Online business. StepStone continues to increase its market share and, based
on key indicators, believes that the market has bottomed and it is set to report
improving results in 2010.
The company contracted with 71 new customers for its Solutions products,
compared to 55 in the second quarter - a nearly 30% sequential increase, and the
first increase in over a year. In addition, a new record of 110 existing
customers extended their commitments during the quarter. Customer cancellations
during the quarter remain minimal at under 1%. Revenue for Solutions was EUR12.5m
(Q2 2009: EUR12.3m).
The company sold EUR9.1m of Online products in the third quarter (Q2 2009: EUR9.3m)
slightly ahead of management expectations. The summer quarter is traditionally
the quietest trading period for the Online job market and delivering sales that
are essentially flat on the prior quarter is very encouraging. The Company
expects Q4 2009 to be the first time since Q1 2008 that it will be able to
report quarter on quarter growth in sales of Online products.
On 7 September 2009 StepStone announced the launch of Candidate Tracker, a new
product that delivers e-recruitment functionality to individual job listings. In
the first month over 150 Candidate Tracker units were sold by the existing
Online sales team, adding useful incremental revenue to Online sales.
Total revenue in Q3 2009 was EUR24.1m, only slightly down on the EUR24.7m reported
for Q2 2009. In Q3 2009, the company delivered underlying adjusted EBITDA of
EUR2.6m (Q2 2009: EUR2.9m) and generated cash from operations of EUR1.3m.
The company's balance sheet remains robust. Cash balances at 30 September 2009
were EUR30.6m, compared to EUR30.7m at 30 June 2009. This was after repaying a
further EUR0.5m of debt and investing EUR1.3m in assets. Borrowings are limited to
EUR2.9m of Loan Notes, repayable in late 2010, and a net EUR9.4m drawn down on the
revolving credit facility, repayable in 2011. The undrawn portion of the
revolving credit facility is over EUR20m.
During the quarter Axel Springer AG, the company's largest shareholder and one
of Europe's leading media businesses, announced a mandatory offer for the
company after acquiring shares that brought its total holding to over 53%. The
offer was announced on 11 September at NOK 8.60 per share and, following
extensive discussion between Axel Springer and StepStone management, increased
to NOK 9.00 per share on 5 October 2009. This represents a 32% premium to the
pre-Offer price. The Offer closes on 23 October 2009. The impact of the offer on
the company is detailed in the Q3 2009 Quarterly Financial Statements.
The increased investment by Axel Springer, one of Europe's leading media
businesses, underlines the company's potential and also makes StepStone one of
the most strongly backed companies in the talent management space.
Outlook
Q3 2009 has brought real evidence that the rapid decline in our Online business,
driven by the economic environment, has come to an end. Current sales forecasts
indicate that the Online business is set to show some quarter on quarter revenue
growth in 2010. The Solutions business has had a strong quarter, with a sharp
increase in new customer contracts and a continuing increase in recurring
revenues.
The Company has taken the opportunity, during what has been a very sharp global
economic downturn, to strengthen its market position and improve its efficiency
ahead of an expected upturn in market conditions. During this challenging period
it has remained cash generative, well financed and profitable, and the Board
looks forward to continued progress into 2010.
The Board
22 October 2009
Operating Results
Online
Demand for Online products appears to have stabilised with EUR9.1m of invoiced
sales in Q3 2009 (Q2 2009: EUR9.3m). This is very encouraging given that in Q3
2008 invoiced sales of Online products were 11% lower than Q2 2008, a normal
pattern in the summer. At the same time, the company believes it continues to
increase market share in its largest markets.
The company has also seen a shift in demand away from larger annual contracts
towards smaller shorter contracts as customers seek to manage their costs in
what remain challenging global economic conditions. From StepStone's perspective
this resulted in an acceleration of the conversion of invoiced sales to
recognised revenue.
Revenue from Online products in Q3 2009 was EUR11.6m and EBITDA was EUR3.2m.
Costs continued to be carefully managed through the third quarter and as a
result Online continues to be a very profitable business, generating an EBITDA
margin of 27% - the same as Q2 2009 and only 6% below the peak profitability
levels of early 2008.
Online operating statistics reflect the impact of the rapid decline in global
economic conditions: the number of listings carried on StepStone's websites
amounted to 45,517. This was 31% lower than on the same day in 2008. Vacancies
decreased by 26% to 59,264 at 30 September 2009 from 79,658 at 30 September
2008. User sessions were 22.7m in the quarter, 12% higher than in Q3 2008.
The company is planning to increase investment in Online from the fourth quarter
to position itself for the expected increase in demand for Online products in
2010.
In September 2009 the company launched Candidate Tracker, a product that
leverages the Online and Solutions businesses. Candidate Tracker brings
web-based e-recruitment functionality to our Online customers, being sold via
the existing Online sales teams and thus adding an attractive incremental
revenue opportunity. Candidate Tracker customers also have the option of a
seamless upgrade to the full e-recruitment product, opening up a large potential
customer base to the Solutions business. Over 150 units of Candidate Tracker
were sold in the first few weeks of launch.
The Online business continues to gain significant traction in enterprise
clients, frequently displacing major competitors as their key supplier. For
example, the German online business recently signed important deals with three
large, global engineering brands, using StepStone's market leadership in traffic
volumes and its strong focus on senior managerial and specialist technical roles
to convince clients to transfer their recruiting business to StepStone.
The roll out of the latest version of the StepStone Online recruitment platform
has continued, bringing substantial new functionality to jobseekers and
employers alike, including improved job matching, an enhanced user interface,
and advanced search engine optimisation. Following successful roll outs into
France, Italy and the Netherlands; Norway, Sweden and Denmark went live in Q3
2009 and Belgium, Germany and Austria are expected to follow.
Solutions
The company experienced substantially increased demand for its Solutions
products for the first time since Q3 2008. A total of 71 new customers
contracted with StepStone during the quarter, compared to 55 in the previous
quarter, an almost 30% increase. In addition, the trend of an increasing level
of up-sells continued, with a new record of 110 existing customers expanding
their commitments. We believe that StepStone's on-demand Software-as-a-Service
model is increasingly attractive to enterprise customers looking to both
simplify their technology architectures and to reduce costs.
Solutions revenue was EUR12.5m in the quarter, EUR0.2m above the previous quarter.
However, underneath the headline figure the company continues to build its
recurring revenue base in preference to less valuable one-time licence fees and
professional services. In Q3 2009 recurring revenue represented 60% of revenue,
up from 50% in Q3 2008. Further Solutions revenue analysis between recurring,
professional services and one-time licence is provided on a currency neutral
basis.
Solutions EBITDA was EUR1.1m, flat on Q2 2009. EBITDA margin remained at 9%.
Demand for one time licences, all of which relate to ETWeb, appears to have
settled at around EUR0.7m per quarter with EUR0.7m in Q3 2009 and EUR0.8m in Q2 2009.
This is down from EUR1.3m in Q3 2008 with an increasing proportion of ETWeb
customers electing for our subscription offering.
The decrease in demand for professional services, from EUR5.2m in Q4 2008 to EUR4.0m
in Q2 2009 has also come to an end. Professional services revenues for Q3 2009
were up slightly at EUR4.3m and are currently forecast to around that level in Q4
2009.
The company contracted during the quarter with new customers located in Austria,
Belgium, China, Denmark, France, Germany, Hungary, Italy, Mexico, the
Netherlands, Norway, Malaysia, Singapore, Spain, Sweden, Switzerland, UK and the
US.
Customer announcements during the quarter included cabling giant Nexans; RWE,
one of Europe's largest energy utilities; sporting goods manufacturer Puma;
speciality chemicals company AlzChem; travel giant, TUI Travel; and global
broadcaster MTV. Other notable successes recently include the completion of the
first stages of a major project with a South African retail group; three
substantial deals in Switzerland in the pharmaceutical and entertainment sectors
won against major software industry players; five new customers won in
manufacturing and professional services businesses in Denmark; an important deal
with a major energy company; and a sizeable contract in the US in the
construction sector.
Earlier in 2009 the Company launched a free, research-based, benchmarking tool
(www.talentstrategyassessment.com) aimed at demystifying talent management for
public and private sector organisations wanting a health check in the
discipline. During Q3 we launched additional French, German and Chinese versions
of the tool, and now almost 700 companies in 40 countries have completed
assessments.
In September StepStone announced its inclusion on Software Magazine's Software
500 ranking of the world's largest software and service providers. StepStone was
ranked sixth in the world in the list of Software-as-a-Service (SaaS) providers,
making it the top ranked European SaaS company in the list. StepStone was also
ranked the second largest specialist supplier of talent management solutions
worldwide. StepStone climbed to 167th place in the 500 ranking for 2009.
Group Results
Income statement
Revenue for the quarter was EUR24.1m, a decrease of 24% compared to revenue of
EUR31.8m in Q3 2008.
Total underlying operating expenses in Q3 2009, before one off costs, were
EUR21.4m, down 17% from EUR25.7m a year ago.
Underlying EBITDA was EUR2.6m compared to EUR6.1m a year ago. Underlying EBITDA
margin was 11% compared to 19% in Q3 2008.
The Company also incurred a number of one time charges in Q3 2009.
As a result of a restructuring of its Solutions business there was a EUR0.6m
charge being salary related costs.
The company was also, on 2 September 2009, the subject of an unsolicited offer
by Axel Springer AG to acquire all of its issued share capital (the "Offer"). As
a direct result of the Offer a substantial amount of unplanned and unbudgeted
cost has been incurred in Q3 2009 and will continue to be incurred in Q4 2009.
These costs include an estimated EUR2.6m in respect of professional advisors (of
which EUR1.7m has been recorded in Q3 2009), EUR2.4m stock option costs primarily
resulting from accelerated vesting of options triggered by a change of control
(all recorded in Q3 2009) and an estimated EUR5m cost resulting from the purchase
of vested stock options that were excluded from the Axel Springer offer (to be
recorded in Q4 2009).
In addition, as a result of the change of control the company has lost EUR1.5m of
German tax losses which is expected to result in additional taxes payable in
2009 of EUR0.5m.
Deferred revenue was EUR20.9m at the end of Q3 2009 compared to EUR27.4m at the end
of Q3 2008.
The Group share option charge was EUR2.4m in the quarter, including a one off
charge in respect of the accelerated vesting of options triggered by the Offer.
This compares to a charge of EUR0.8m in Q3 2008.
Depreciation and amortisation for Q3 2009 comprised EUR1.1m in respect of
depreciation of assets at historic cost (compared to EUR0.9m in Q3 2008) and EUR0.3m
in respect of amortisation of intangible assets arising on acquisition (EUR0.6m in
Q3 2008).
The company reviewed the carrying value of its goodwill and other intangible
assets for the 2008 annual report and updated that review for Q3 2009. It does
not consider that there has been any impairment during Q3 2009.
A charge of EUR0.1m was incurred in respect of EUR2.9m of Loan Notes 2010 and EUR10m
drawn on the Revolving Credit Facility 2011. This compares to EUR0.3m in the same
quarter last year.
The tax charge for the quarter was EUR1.7m. This relates almost entirely to the
German Online business where all deferred tax assets have now been written off
and EUR3m has been provided for cash based tax so far in 2009.
The company in the year to date has not recognised any increase in its deferred
asset arising from tax losses in excess of EUR150m held by StepStone ASA. This
will be reviewed again in Q4 2009.
The loss after tax for the quarter was EUR5.5m, compared to a profit after tax of
EUR3.2m in Q3 2008.
After taking account of the credit to reserves of EUR1.6m in respect of share
options, a foreign currency translation gain of EUR2.9m and an increase in
minority interest of EUR0.7m, the company has reported a decrease in Total Equity
for Q3 2009 of EUR1.0m.
Financial position
The company continues to be prudent in the management of its financial position.
In the third quarter StepStone generated EUR1.3m from operations. This compares to
EUR5.0m in Q3 2008.
Also in the quarter the company repurchased EUR0.5m of its Loan Notes 2010 leaving
a balance of EUR2.9m outstanding and repayable in Q3 2010.
During the quarter the company invested EUR1.3m in fixed assets.
At the end of September the company had EUR30.6m of cash at bank. Borrowings were
limited to EUR2.9m of Loan Notes, repayable in late 2010, and a net EUR9.4m drawn
down on the revolving credit facility, repayable in 2011. The undrawn portion of
the revolving credit facility is over EUR20m.
The costs incurred as a result of the unsolicited offer from Axel Springer are
expected to be settled in Q4 2009 resulting in a reduction in cash. The expected
costs to be settled include EUR2.6m of professional fees and the EUR5m cost of
repurchasing options.
Trend data
+--------------------------------+------------+-------------+------------+-------------+-------------+
| EUR 000 | Q3 | Q2 | Q1 | Q4 | Q3 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| By Line of Business | 2009 | 2009 | 2009 | 2008 | 2008 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| | | | | | |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Online | | | | | |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Revenue | 11,603 | 12,350 | 14,098 | 17,364 | 18,514 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Operating expenses | 8,445 | 8,981 | 9,532 | 12,279 | 12,687 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Online EBITDA5 | 3,158 | 3,369 | 4,566 | 5,085 | 5,827 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| | | | | | |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Solutions | | | | | |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Revenue | 12,454 | 12,310 | 12,773 | 13,677 | 13,241 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Operating expenses | 11,373 | 11,209 | 11,485 | 12,045 | 11,171 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Solutions EBITDA5 | 1,081 | 1,101 | 1,288 | 1,632 | 2,070 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| | | | | | |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Corporate and Other | | | | | |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Operating expenses | 1,611 | 1,620 | 1,610 | 2,136 | 1,822 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Reorganisation costs3 | 599 | - | - | 2,106 | - |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Mandatory offer costs6 | 1,741 | | | | |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Group share option charge | 2,359 | 918 | 1,605 | 1,049 | 846 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Corporate EBITDA | (6,310) | (2,538) | (3,215) | (5,291) | (2,668) |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| | | | | | |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Total Group | Q3 | Q2 | Q1 | Q4 | Q3 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| | 2009 | 2009 | 2009 | 2008 | 2008 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| | | | | | |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Total revenue | 24,057 | 24,660 | 26,871 | 31,041 | 31,755 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Total operating expenses | 21,429 | 21,810 | 22,627 | 26,460 | 25,680 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Operating profit before | 2,628 | 2,850 | 4,244 | 4,581 | 6,075 |
| Reorganisation costs; | | | | | |
| Mandatory offer costs; Group | | | | | |
| share option charges; and | | | | | |
| Depreciation and amortisation | | | | | |
| ("Underlying EBITDA") | | | | | |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Reorganisation costs3 | 599 | - | - | 2,106 | - |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Mandatory offer costs6 | 1,741 | - | - | - | - |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Operating profit before Group | 288 | 2,850 | 4,244 | 2,475 | 6,075 |
| share option charges and | | | | | |
| Depreciation and amortisation | | | | | |
| ("Adjusted EBITDA") | | | | | |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Group share option charge | 2,359 | 918 | 1,605 | 1,049 | 846 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Total EBITDA | (2,071) | 1,932 | 2,639 | 1,426 | 5,229 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Depreciation and amortisation | 1,421 | 1,403 | 1,361 | 1,467 | 1,448 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Operating profit ("EBIT") | (3,492) | 529 | 1,278 | (41) | 3,781 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| | | | | | |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| StepStone Online Operational | Q3 | Q2 | Q1 | Q4 | Q3 |
| Statistics | | | | | |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| | 2009 | 2009 | 2009 | 2008 | 2008 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Listings (End of quarter) | 45,517 | 46,111 | 51,460 | 52,631 | 65,869 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| Vacancies (End of quarter) | 59,264 | 56,564 | 63,919 | 56,042 | 79,658 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| CVs - Total (End of quarter) | 1,682,460 | 1,649,552 | 1,655,547 | 1,604,799 | 1,598,001 |
+--------------------------------+------------+-------------+------------+-------------+-------------+
| User Sessions (Quarterly | 22,725,379 | 22,548,323 | 24,537,162 | 21,809,813 | 20,210,416 |
| numbers)6 | | | | | |
+--------------------------------+------------+-------------+------------+-------------+-------------+
Notes to trend data
1 - The trend data is not part of the quarterly financial statements and is
unaudited.
2 - Adjusted EBITDA is EBITDA before Group share option charges. Adjusted
EBITDA is not defined under IFRS and has been shown as the directors consider
this to be helpful for a better understanding of the performance of the group's
underlying business. It may not be comparable with similarly titled profit
measurements reported by other companies and is not intended to be a substitute
for, or superior to, IFRS measures of profit.
3 - Reorganisation costs are the costs of downsizing the business in response
to the significant change in global economic conditions that occurred in that
quarter. Online was downsized in Q4 2008 and Solutions in Q3 and Q4 2009. They
have been shown as a single line item in the trend data in order to better allow
the reader to understand the underlying trends in Operating expenses, Online
EBITDA and Solutions EBITDA. In the IAS 34 Quarterly Statements they have been
allocated to Online and Solutions.
4 - Share options are awarded by the Board and managed within StepStone as a
Corporate cost. Group share option charge comprises the cost of equity-settled
share-based payment transactions calculated in accordance with IFRS 2 (including
the impact of the accelerated vesting triggered by Axel Springer AG acquiring
over 50% of the outstanding shares) and the group's potential tax liability on
vested but unexercised share option at the balance sheet date, for all employees
in all divisions. For the purposes of this Trend data, Group share option
charges are considered to be a Corporate expense
5 - In this Trend data, Online EBITDA and Solutions EBITDA include only the
tax charge in respect of vested and exercised share options of employees in
those divisions.
6 - Mandatory Offer costs comprise the costs directly associated with the
Mandatory Offer from Axel Springer AG dated 12 October 2009.
7 - From Q4 2008 the user sessions data excludes Borsen traffic. Q3 2008 has
been restated.
StepStone ASA
Q3 2009 Quarterly Financial Statements
We confirm, to the best of our knowledge, that the condensed set of financial
statements for the period 1 January to 30 September 2009 has been prepared in
accordance with IAS 34 - Interim Financial Reporting, and gives a true and fair
view of the Group's assets, liabilities, financial position and profit or loss
as a whole. We also confirm, to the best of our knowledge, that the interim
management report includes a fair review of important events that have occurred
during the first nine months of the financial year and their impact on the
condensed set of financial statements, a description of the principal risks and
uncertainties for the remaining three months of the financial year, and major
related parties transactions.
The Board
Oslo, 22 October 2009
Consolidated condensed statement of comprehensive income
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| EUR000 | | 3rd Quarter | 1 January to 30 | Full |
| | | | September | Year |
+-----------------------------------+------+-------------------+-------------------+----------+
| | |Note | 2009 | 2008 | 2009 | 2008 | 2008 |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| | | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| Revenue | | 24,057 | 31,755 | 75,588 | 92,478 | 123,519 |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| | | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| Personnel costs | | 16,766 | 17,141 | 48,612 | 50,357 | 69,912 |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| Other operating expenses | | 9,362 | 9,385 | 24,476 | 27,852 | 37,912 |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| Depreciation and amortisation | 2 | 1,421 | 1,448 | 4,185 | 3,820 | 5,287 |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| Total operating expenses | | 27,549 | 27,974 | 77,273 | 82,029 | 113,111 |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| | | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| Operating profit | | (3,492) | 3,781 | (1,685) | 10,449 | 10,408 |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| | | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| | Analysis of Operating profit: | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| | Operating profit before: | | 2,628 | 6,075 | 9,722 | 17,824 | 22,405 |
| | Re-organisation costs; Group | | | | | | |
| | share option charges; and | | | | | | |
| | Depreciation and amortisation | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| | Re-organisation costs | | (599) | - | (599) | - | (2,106) |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| | Mandatory offer costs | | (1,741) | - | (1,741) | - | - |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| | Operating profit before: Group | | 288 | 6,075 | 7,382 | 17,824 | 20,299 |
| | share option charges; and | | | | | | |
| | Depreciation and amortisation | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| | Group share option charge | 3 | (2,359) | (846) | (4,882) | (3,555) | (4,604) |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| | Depreciation and amortisation | 2 | (1,421) | (1,448) | (4,185) | (3,820) | (5,287) |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| | Operating profit | | (3,492) | 3,781 | (1,685) | 10,449 | 10,408 |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| | | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| Financial income | | 17 | 138 | 97 | 458 | 1,527 |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| | | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| | Fair value adjustment of | | - | (223) | - | (223) | (423) |
| | subordinated loan | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| | Imputed interest on | | - | (95) | - | (445) | (541) |
| | subordinated loan | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| | Imputed interest on deferred | | (58) | (55) | (238) | (350) | (487) |
| | consideration | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| | Notes payable | | (122) | (326) | (482) | (897) | (1,125) |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| | Other financial expenses | | (206) | 66 | (398) | 47 | (259) |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| Financial expenses | | (386) | (633) | (1,118) | (1,868) | (2,835) |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| | | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| Profit before tax | | (3,861) | 3,286 | (2,706) | 9,039 | 9,100 |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| | | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| Tax | | (1,650) | (103) | (3,446) | (146) | (3,718) |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| | | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| Profit (loss) for the period | | (5,511) | 3,183 | (6,152) | 8,893 | 5,382 |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| | | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| Other comprehensive income: | | | | | | |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| | Exchange differences on translating | 2,916 | (2,454) | 7,449 | (4,002) | (14,730) |
| | foreign operations | | | | | |
+--+---------------------------------------+---------+---------+---------+---------+----------+
| Other comprehensive income for | | 2,916 | (2,454) | 7,449 | (4,002) | (14,730) |
| the period, net of tax | | | | | | |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| | | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| Total comprehensive income for | | (2,595) | 729 | 1,297 | 4,891 | (9,348) |
| the period | | | | | | |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| | | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| Allocations of profit for the | | | | | | |
| period1 | | | | | | |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| | | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| Attributable to equity holders of | | (6,206) | 3,183 | (9,633) | 8,893 | 2,678 |
| the parent | | | | | | |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| Attributable to minority | | 695 | - | 3,481 | - | 2,704 |
| interests | | | | | | |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| | | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| Profit (loss) for the period | | (5,511) | 3,183 | (6,152) | 8,893 | 5,382 |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| | | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| Allocations of comprehensive income for | | | | | |
| the period1 | | | | | |
+------------------------------------------+---------+---------+---------+---------+----------+
| | | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| Attributable to equity holders of | | (3,290) | 729 | (2,184) | 4,891 | (12,052) |
| the parent | | | | | | |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| Attributable to minority | | 695 | - | 3,481 | - | 2,704 |
| interests | | | | | | |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| | | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| Total comprehensive income for | | (2,595) | 729 | 1,297 | 4,891 | (9,348) |
| the period | | | | | | |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| | | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| Earnings per share | | | | | | |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| | | | | | | | |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
| Basic earnings per share | | (0.05) | 0.03 | (0.08) | 0.07 | 0.02 |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| Diluted earnings per share | 8 | (0.05) | 0.02 | (0.08) | 0.06 | 0.02 |
+-----------------------------------+------+---------+---------+---------+---------+----------+
| |
+---------------------------------------------------------------------------------------------+
| 1 - The statement of changes in equity has further details regarding the minority |
| interest and allocations of profit |
+--+--------------------------------+------+---------+---------+---------+---------+----------+
The quarterly numbers are unaudited
Consolidated condensed statement of financial position
+--+--------------------------------+------+-----------+-----------+----------+
| EUR000 | | 30 | 30 | 31 |
| | |September |September |December |
+-----------------------------------+------+-----------+-----------+----------+
| | |Note | 2009 | 2008 | 2008 |
+--+--------------------------------+------+-----------+-----------+----------+
| | | | | | |
+--+--------------------------------+------+-----------+-----------+----------+
| Non - current assets | | | | |
+-----------------------------------+------+-----------+-----------+----------+
| Property, plant & equipment | | 4,083 | 4,037 | 3,675 |
+-----------------------------------+------+-----------+-----------+----------+
| Intangible assets | 4 | 67,112 | 70,116 | 60,489 |
+-----------------------------------+------+-----------+-----------+----------+
| Deferred income tax assets | 6 | 10,493 | 12,600 | 10,749 |
+-----------------------------------+------+-----------+-----------+----------+
| Long term receivables | | 387 | 379 | 391 |
+-----------------------------------+------+-----------+-----------+----------+
| Total non - current assets | | 82,075 | 87,132 | 75,304 |
+-----------------------------------+------+-----------+-----------+----------+
| | | | | |
+-----------------------------------+------+-----------+-----------+----------+
| Current assets | | | | |
+-----------------------------------+------+-----------+-----------+----------+
| Trade receivables | | 22,950 | 33,462 | 34,810 |
+-----------------------------------+------+-----------+-----------+----------+
| Other current assets | | 3,798 | 5,141 | 3,936 |
+-----------------------------------+------+-----------+-----------+----------+
| Cash and bank deposits | 7 | 30,575 | 23,711 | 29,690 |
+-----------------------------------+------+-----------+-----------+----------+
| Total current assets | | 57,323 | 62,314 | 68,436 |
+-----------------------------------+------+-----------+-----------+----------+
| | | | | |
+-----------------------------------+------+-----------+-----------+----------+
| Total assets | | 139,398 | 149,446 | 143,740 |
+-----------------------------------+------+-----------+-----------+----------+
| | | | | |
+-----------------------------------+------+-----------+-----------+----------+
| | | | | |
+-----------------------------------+------+-----------+-----------+----------+
| Equity and Liabilities | | | | |
+-----------------------------------+------+-----------+-----------+----------+
| Shareholders' equity | | | | |
+-----------------------------------+------+-----------+-----------+----------+
| Share capital | 8 | 6,406 | 6,344 | 6,355 |
+-----------------------------------+------+-----------+-----------+----------+
| Share premium reserve | | 36,173 | 35,283 | 35,623 |
+-----------------------------------+------+-----------+-----------+----------+
| Accumulated profits | | 29,973 | 40,152 | 35,451 |
+-----------------------------------+------+-----------+-----------+----------+
| Foreign currency translation | | 720 | 4,421 | (6,729) |
| differences | | | | |
+-----------------------------------+------+-----------+-----------+----------+
| Other reserves | | - | - | - |
+-----------------------------------+------+-----------+-----------+----------+
| Total shareholders' equity | | 73,272 | 86,200 | 70,700 |
+-----------------------------------+------+-----------+-----------+----------+
| Minority interest1 | | 6,185 | - | 2,704 |
+-----------------------------------+------+-----------+-----------+----------+
| Total equity | | 79,457 | 86,200 | 73,404 |
+-----------------------------------+------+-----------+-----------+----------+
| | | | | |
+-----------------------------------+------+-----------+-----------+----------+
| | | | | |
+-----------------------------------+------+-----------+-----------+----------+
| Non current liabilities | 9 | 9,847 | 11,016 | 15,520 |
+-----------------------------------+------+-----------+-----------+----------+
| | | | | |
+-----------------------------------+------+-----------+-----------+----------+
| Current liabilities | | | | |
+-----------------------------------+------+-----------+-----------+----------+
| Trade payables | | 3,095 | 3,963 | 3,678 |
+-----------------------------------+------+-----------+-----------+----------+
| Current deferred and invoiced | 10 | 20,500 | 26,848 | 27,081 |
| revenue | | | | |
+-----------------------------------+------+-----------+-----------+----------+
| Other current liabilities and | 11 | 26,499 | 21,419 | 24,057 |
| provisions | | | | |
+-----------------------------------+------+-----------+-----------+----------+
| Total current liabilities | | 50,094 | 52,230 | 54,816 |
+-----------------------------------+------+-----------+-----------+----------+
| | | | | |
+-----------------------------------+------+-----------+-----------+----------+
| Total equity and liabilities | | 139,398 | 149,446 | 143,740 |
+-----------------------------------+------+-----------+-----------+----------+
| | | | | | |
+--+--------------------------------+------+-----------+-----------+----------+
| 1 - The statement of changes in equity has further details regarding the |
| minority interest and allocations of profit |
+-----------------------------------------------------------------------------+
| | | | | | |
+--+--------------------------------+------+-----------+-----------+----------+
| | | | | | |
+--+--------------------------------+------+-----------+-----------+----------+
The quarterly numbers are unaudited
Consolidated condensed statement of cash flows
+--+--------------------------------+------+---------+---------+---------+----------+----------+
| EUR000 | | 3rd Quarter | 1 January to 30 | Full |
| | | | September | year |
+-----------------------------------+------+-------------------+--------------------+----------+
| | | Note | 2009 | 2008 | 2009 | 2008 | 2008 |
+--+--------------------------------+------+---------+---------+---------+----------+----------+
| | | | | | | | |
+--+--------------------------------+------+---------+---------+---------+----------+----------+
| Cash flow from operating | | | | | | |
| activities | | | | | | |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Profit (loss) for period | | (5,511) | 3,183 | (6,152) | 8,893 | 5,382 |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Adjustments for: | | | | | | |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Depreciation and amortisation | 2 | 1,421 | 1,448 | 4,185 | 3,820 | 5,287 |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Share based compensation | 3 | 2,359 | 1,419 | 4,882 | 4,945 | 6,037 |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Foreign exchange loss (gain) | | 83 | - | (213) | (55) | (582) |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Interest income | | - | - | - | - | (945) |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Interest expense | | 58 | 373 | 238 | 1,018 | 2,835 |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Tax | | 1,437 | 147 | 2,367 | 147 | 3,718 |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| | | (153) | 6,570 | 5,307 | 18,768 | 21,732 |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Changes in working capital and | | 1,436 | (1,567) | 3,054 | (1,735) | (47) |
| other adjustments | | | | | | |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Cash generated from operating | | 1,283 | 5,003 | 8,361 | 17,033 | 21,685 |
| activities | | | | | | |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| | | | | | | |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Cash flow from investing | | | | | | |
| activities | | | | | | |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Acquisition of subsidiaries, net | | - | (3,192) | (2,730) | (9,719) | (9,719) |
| of cash acquired | | | | | | |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Purchase of intangible assets | | (716) | (650) | (2,255) | (1,840) | (2,750) |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Purchase of plant, property and | | (605) | (529) | (2,609) | (1,977) | (2,376) |
| equipment | | | | | | |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Net cash used in investing | | (1,321) | (4,371) | (7,594) | (13,536) | (14,845) |
| activities | | | | | | |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| | | | | | | |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Cash flow from financing | | | | | | |
| activities | | | | | | |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Proceeds from issuance of share | | (9) | - | (10) | 3 | 3 |
| capital | | | | | | |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Repayment of subordinated loan | | - | (3,750) | - | (3,750) | (7,491) |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Repayment of loan notes | | (528) | (4,704) | (1,687) | (4,704) | (4,807) |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Payment of SEB facility fee and | | - | (908) | - | (908) | (908) |
| associated costs | | | | | | |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Draw down of SEB facility | | - | - | - | - | 10,000 |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Other financing activities | | (230) | 7 | (237) | (24) | (225) |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Net cash from financing | | (767) | (9,355) | (1,934) | (9,383) | (3,428) |
| activities | | | | | | |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| | | | | | | |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Net increase (decrease) in cash | | (805) | (8,723) | (1,167) | (5,886) | 1,028 |
| and cash equivalents | | | | | | |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| | | | | | | |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Cash and cash equivalents at | | 29,657 | 31,944 | 28,677 | 29,087 | 29,087 |
| beginning of period | | | | | | |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Effect of exchange rates on cash | | 710 | (481) | 2,052 | (461) | (1,438) |
| and cash equivalents | | | | | | |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| Cash and cash equivalents at end | | 29,562 | 22,740 | 29,562 | 22,740 | 28,677 |
| of period1 | | | | | | |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| | | | | | | |
+-----------------------------------+------+---------+---------+---------+----------+----------+
| 1 - Excludes restricted cash of EUR1,013 as of 30 September 2009 (EUR971 as of 30 |
| September 2008 ) |
+--+--------------------------------+------+---------+---------+---------+----------+----------+
The quarterly numbers are unaudited.
Consolidated statement of changes in equity
+--------+--------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| EUR000 | Share | Share | Accumulated | Foreign | Other | Total | Minority | Total |
| | capital | premium | | currency | Reserves1 | shareholders | | equity |
| | | | profits | translation | | | interests | |
| | | | attributable | | | equity | | |
| | | | to | differences | | | | |
| | | | shareholders | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| | | | | | | | | | |
+--------+--------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| 01 January 2008 | 6,272 | 34,587 | 22,005 | 8,435 | 4,423 | 75,722 | - | 75,722 |
| | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| | | | | | | | | | |
+--------+--------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| Total | 48 | 78 | 2,986 | (15,164) | - | (12,052) | 2,704 | (9,348) |
| comprehensive | | | | | | | | |
| income for the | | | | | | | | |
| year | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| | | | | | | | | | |
+--------+--------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| Receipt of | | | 6,037 | | | 6,037 | | 6,037 |
| services for | | | | | | | | |
| share options3 | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| | Change | | | 9,023 | | | | | |
| | in | | | | | | | | |
| | accumulated | | | | | | | | |
| | profits | | | | | | | | |
| | attributable | | | | | | | | |
| | to | | | | | | | | |
| | shareholders | | | | | | | | |
| | from normal | | | | | | | | |
| | activities4 | | | | | | | | |
+--------+--------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| Transfer of | | | 4,423 | | (4,423) | - | | - |
| other reserves | | | | | | | | |
| to accumulated | | | | | | | | |
| profits2 | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| Issuance of | 35 | 980 | | | | 1,015 | | 1,015 |
| share capital | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| Cost of issuing | | (22) | | | | (22) | | (22) |
| new share | | | | | | | | |
| capital | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| 31 December | 6,355 | 35,623 | 35,451 | (6,729) | - | 70,700 | 2,704 | 73,404 |
| 2008 | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| | | | | | | | | | |
+--------+--------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| Total | - | - | (1,819) | 4,411 | - | 2,592 | 1,165 | 3,757 |
| comprehensive | | | | | | | | |
| income for the | | | | | | | | |
| period | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| | | | | | | | | | |
+--------+--------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| Receipt of | | | 1,605 | | | 1,605 | | 1,605 |
| services for | | | | | | | | |
| share options3 | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| | Change | | | (214) | | | | | |
| | in | | | | | | | | |
| | accumulated | | | | | | | | |
| | profits | | | | | | | | |
| | attributable | | | | | | | | |
| | to | | | | | | | | |
| | shareholders | | | | | | | | |
| | from normal | | | | | | | | |
| | activities4 | | | | | | | | |
+--------+--------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| Issuance of | 51 | 560 | | | | 611 | | 611 |
| share capital | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| Cost of issuing | | | | | | - | | - |
| new share | | | | | | | | |
| capital | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| 31 March 2009 | 6,406 | 36,183 | 35,237 | (2,318) | - | 75,508 | 3,869 | 79,377 |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| | | | | | | | | | |
+--------+--------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| Total | | | (1,605) | 122 | | (1,483) | 1,620 | 137 |
| comprehensive | | | | | | | | |
| income for the | | | | | | | | |
| period | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| Rounding | | | (2) | | | (2) | 1 | (1) |
| differences | | | | | | | | |
| between SoCI | | | | | | | | |
| and SoFP | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| Receipt of | | | 918 | | | 918 | | 918 |
| services for | | | | | | | | |
| share options3 | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| | Change | | | (689) | | | | | |
| | in | | | | | | | | |
| | accumulated | | | | | | | | |
| | profits | | | | | | | | |
| | attributable | | | | | | | | |
| | to | | | | | | | | |
| | shareholders | | | | | | | | |
| | from normal | | | | | | | | |
| | activities4 | | | | | | | | |
+--------+--------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| Issuance of | | | | | | - | | - |
| share capital | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| Cost of issuing | | (1) | | | | (1) | | (1) |
| new share | | | | | | | | |
| capital | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| 30 June 2009 | 6,406 | 36,182 | 34,548 | (2,196) | - | 74,940 | 5,490 | 80,430 |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| Total | | | (6,206) | 2,916 | | (3,290) | 695 | (2,595) |
| comprehensive | | | | | | | | |
| income for the | | | | | | | | |
| period | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| | | | | | | | | | |
+--------+--------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| Receipt of | | | 1,631 | | | 1,631 | | 1,631 |
| services for | | | | | | | | |
| share options3 | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| | Change | | | (4,575) | | | | | |
| | in | | | | | | | | |
| | accumulated | | | | | | | | |
| | profits | | | | | | | | |
| | attributable | | | | | | | | |
| | to | | | | | | | | |
| | shareholders | | | | | | | | |
| | from normal | | | | | | | | |
| | activities4 | | | | | | | | |
+--------+--------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| Issuance of | | | | | | | | |
| share capital | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| Cost of issuing | | (9) | | | | (9) | | (9) |
| new share | | | | | | | | |
| capital | | | | | | | | |
+-----------------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
| 30 September | 6,406 | 36,173 | 29,973 | 720 | - | 73,272 | 6,185 | 79,457 |
| 2009 | | | | | | | | |
+--------+--------------+---------+---------+--------------+-------------+-----------+--------------+-----------+---------+
1 - Other reserves is credit to reserves in respect of share based
compensation charge in the Statement of Comprehensive Income ("SoCI").
2 - In Q2 2008, in order to better reflect the distributable nature of the
reserve, other reserves in respect of share option costs were transferred to
accumulated profits.
3 - The debit in respect of the IFRS 2 element of the share option charge on
the face of the SoCI is not a deduction from distributable reserves and is
therefore credited back to accumulated profits in the Statement of Financial
Position ("SoFP") and on the face of the Statement of Changes in Equity.
4 - Non-GAAP measure to show the final profits attributable to shareholders
of the parent after the add back of IFRS 2 costs.
The quarterly numbers are unaudited.
Note 1 - Basis of preparation, summary of significant accounting policies and
other information
Basis of preparation
These quarterly financial statements are prepared in accordance with the Interim
Financial Reporting Standard (IAS 34) issued by the International Accounting
Standards Board using the same accounting policies and principles as those
stated in the 2008 Annual Report, except that the Group has applied IAS 1
(revised), Presentation Of Financial Statements which became effective from 1
January 2009. All comparatives have been restated in line with the Standard.
The full year to 31 December 2008 figures are audited. All quarterly figures are
unaudited.
Principal activities
The activities of StepStone ASA and its subsidiaries (together "StepStone Group"
or the "Group") are the provision of software and services for the Human Capital
Management ("HCM") sector. StepStone ASA, the parent company (the "Company"), is
a corporation and is legally domiciled in Norway with its legal address at
Thunes vei 2, N-0274 Oslo. The Company has its listing on Oslo Børs (Oslo Stock
Exchange - OSE) "Main list" in Oslo, Norway. The Company also has a secondary
listing on the main list on the London Stock Exchange.
Other information
A description of the principle risks and uncertainties related to the company is
set out on pages 5 to 7 of the Registration Document filed by the company on 13
May 2008. This document is available from
http://www.stepstone.com/documents/StepStone%20ASA%20-%20Registration%20Documen
%20080509.pdf
The principle risks and uncertainties remain business risks, market and strategy
risks, operational and technology risks, financial risks and legal uncertainty
and risk factors relating to the shares.
Note 2 - Depreciation and amortisation
+--+--------------------------------+--------+--------+--------+--------+--------+
| EUR000 | 3rd Quarter |1 January to 30 | Full |
| | | September | year |
+-----------------------------------+-----------------+-----------------+--------+
| | | 2009 | 2008 | 2009 | 2008 | 2008 |
+--+--------------------------------+--------+--------+--------+--------+--------+
| | | | | | | |
+--+--------------------------------+--------+--------+--------+--------+--------+
| Depreciation of purchased | 1,099 | 869 | 3,133 | 2,573 | 3,639 |
| tangible and intangible assets | | | | | |
+-----------------------------------+--------+--------+--------+--------+--------+
| Amortisation of intangible assets | 322 | 579 | 1,052 | 1,247 | 1,648 |
| arising on acquisition | | | | | |
+-----------------------------------+--------+--------+--------+--------+--------+
| | 1,421 | 1,448 | 4,185 | 3,820 | 5,287 |
+--+--------------------------------+--------+--------+--------+--------+--------+
IFRS requires the Company to attribute fair values to intangible assets of
acquired companies. The excess of the purchase price over the net tangible and
identifiable intangible assets is recorded as goodwill. A preliminary allocation
of the purchase price between tangible, intangible assets and goodwill is
undertaken after acquisition but subject to review and change over the next
twelve months.
When performing the preliminary purchase price allocation the company considers,
among other factors, the intention for future use of acquired assets, analyses
of historical financial performance and estimates of future performance of the
acquired company's products. The fair value of intangible assets may also be
based, in part, on valuations by independent professional values. Such
valuations require the company to make significant estimates and assumptions,
especially with respect to intangible assets.
The intangibles that the Company has recognised on recent acquisitions have been
regarding the value of the Intellectual Property Rights (IPR) associated with
software and platforms of the acquired entities and also the long term value of
the customer relationships (Customers) that the acquired entity has built up.
These intangibles are being amortised over 3-5 years for IPR and 5-8 years for
Customers. See also Note 4.
Note 3 - Group share option charge
+--+--------------------------------+--------+--------+--------+---------+---------+
| EUR000 | 3rd Quarter | 1 January to 30 | Full |
| | | September | year |
+-----------------------------------+-----------------+------------------+---------+
| | | 2009 | 2008 | 2009 | 2008 | 2008 |
+--+--------------------------------+--------+--------+--------+---------+---------+
| | | | | | | |
+--+--------------------------------+--------+--------+--------+---------+---------+
| Group share option charge - fair | 1,631 | 1,419 | 4,154 | 4,945 | 6,037 |
| value of option grants | | | | | |
+-----------------------------------+--------+--------+--------+---------+---------+
| Group share option charge - tax | 728 | (573) | 728 | (1,390) | (1,433) |
| on vested but not yet exercised | | | | | |
| options | | | | | |
+-----------------------------------+--------+--------+--------+---------+---------+
| | 2,359 | 846 | 4,882 | 3,555 | 4,604 |
+--+--------------------------------+--------+--------+--------+---------+---------+
The Group offers share options, without payment, to employees. The options vest
over a period of 1 to 4 years, depending on the number granted. Initial grants
to employees normally vest over 4 years. Most additional grants ("Evergreen
grants") vest over 3 years. Once vested, they are generally exercisable once a
quarter. Each option will expire 10 years from the date of grant except for the
options granted to the CEO and CFO which expire 4 years from the date of
vesting. On leaving the company, an employee has a period of 6 months to
exercise any options that have vested up to the date employment terminated. The
fair value of the share options granted is calculated using the Black-Scholes
model. This is the indicative cost to the Company of each option issued,
calculated in accordance with IFRS 2 (Share-based compensation). The significant
input variables in the model are the share price at grant date, exercise price,
standard deviation of expected share price, expected option life (1 year after
vesting date) and risk free rate (daily NIBOR rates from the Norwegian Bank).
Expected volatility is based on statistical analysis of historical daily share
prices modified where identifiable factors may indicate that unadjusted
historical experience is a relatively poor predictor of future experience.
Effective 1 January 2009, staff were granted the right to surrender existing
options in return for a reduced number of new options and effective the same
date, a redistribution of options amongst the Executive Leadership Team
occurred. The new options were issued at the closing price of the day before the
Board approved the changes, being NOK 3.51.
The new options will carry the same vesting rights as the options being
surrendered except that the vesting period has been extended to 4 years. The
majority of the options being surrendered vest over 3 years.
The IFRS 2 charge in 2009 consists of the fair value of the surrendered options
spread over the original vesting period, plus the incremental fair value of the
replacement options spread over the new vesting period. The fundamental approach
is in accordance with IFRS 2 and has been agreed with the auditors. The detailed
calculations of the incremental fair value were reviewed in Q2 and there have
been no adjustments to the Q1 values.
On 2 September 2009 Axel Springer AG increased its interest in StepStone ASA
from 33% to 52%. As a result the 6,340,381 options that, until that point had
been partly vested, became fully vested as a result of change of control
clauses. This accelerated vesting accounted for the majority of the increase in
the IFRS 2 charge between Q2 2009 and Q3 2009.
At 30 September 2009 the company had granted 14,273,875 options of which
9,060,440 were fully vested.
Note 4 - Intangible assets
+----------------------------------+------+----------+------------+-------------+------------+
| EUR000 | | Goodwill | Purchased | Intangible | Total |
| | | | intangible | assets | intangible |
| | | | assets | arising on | assets |
| | | | | acquisition | |
+----------------------------------+------+----------+------------+-------------+------------+
| 01 January 2008 | | 54,451 | 2,818 | 5,335 | 62,604 |
+----------------------------------+------+----------+------------+-------------+------------+
| | | | | | |
+----------------------------------+------+----------+------------+-------------+------------+
| Related to Webjobb | | 1,358 | | 142 | 1,500 |
+----------------------------------+------+----------+------------+-------------+------------+
| Related to Level 4 | | 972 | | 100 | 1,072 |
+----------------------------------+------+----------+------------+-------------+------------+
| Related to Sourcea | | 2,904 | | 320 | 3,224 |
+----------------------------------+------+----------+------------+-------------+------------+
| Related to LVE | | 4,292 | 17 | 500 | 4,809 |
+----------------------------------+------+----------+------------+-------------+------------+
| Additions | | | 2,785 | 107 | 2,892 |
+----------------------------------+------+----------+------------+-------------+------------+
| Amortisation | | | (1,681) | (1,603) | (3,284) |
+----------------------------------+------+----------+------------+-------------+------------+
| Currency translation differences | | (11,832) | (643) | 147 | (12,328) |
+----------------------------------+------+----------+------------+-------------+------------+
| 31 December 2008 | | 52,145 | 3,296 | 5,048 | 60,489 |
+----------------------------------+------+----------+------------+-------------+------------+
| | | | | | |
+----------------------------------+------+----------+------------+-------------+------------+
| Related to Level 4 | | 272 | | | 272 |
+----------------------------------+------+----------+------------+-------------+------------+
| Additions | | | 845 | | 845 |
+----------------------------------+------+----------+------------+-------------+------------+
| Amortisation | | | (583) | (365) | (948) |
+----------------------------------+------+----------+------------+-------------+------------+
| Currency translation differences | | 4,203 | 296 | 32 | 4,531 |
+----------------------------------+------+----------+------------+-------------+------------+
| 31 March 2009 | | 56,620 | 3,854 | 4,715 | 65,189 |
+----------------------------------+------+----------+------------+-------------+------------+
| | | | | | |
+----------------------------------+------+----------+------------+-------------+------------+
| Additions | | | 694 | | 694 |
+----------------------------------+------+----------+------------+-------------+------------+
| Amortisation | | | (452) | (363) | (815) |
+----------------------------------+------+----------+------------+-------------+------------+
| Currency translation differences | | (52) | (66) | (5) | (123) |
+----------------------------------+------+----------+------------+-------------+------------+
| 30 June 2009 | | 56,568 | 4,030 | 4,347 | 64,945 |
+----------------------------------+------+----------+------------+-------------+------------+
| | | | | | |
+----------------------------------+------+----------+------------+-------------+------------+
| Additions | | | 716 | | 716 |
+----------------------------------+------+----------+------------+-------------+------------+
| Amortisation | | | (512) | (322) | (834) |
+----------------------------------+------+----------+------------+-------------+------------+
| Currency translation differences | | 2,038 | 234 | 13 | 2,285 |
+----------------------------------+------+----------+------------+-------------+------------+
| 30 September 2009 | | 58,606 | 4,468 | 4,038 | 67,112 |
+----------------------------------+------+----------+------------+-------------+------------+
| | | | | | |
+----------------------------------+------+----------+------------+-------------+------------+
The initial accounting for a business combination is determined provisionally in
the quarter in which the combination is effected because the fair values to be
assigned to the acquiree's identifiable assets, liabilities or contingent
liabilities and the cost of the combination can be determined only
provisionally. The company takes time to carefully assess the identifiable
assets, liabilities or contingent liabilities acquired. The Company recognises
any adjustments to those provisional values as a result of completing the
initial accounting within 12 months following the acquisition date.
Note 5 - Acquisitions
Level 4
On 17 March 2008, the Company announced an agreement to acquire LEVEL4
Performance Consulting Limited, a Hong Kong company and its subsidiary in
mainland China (together "LEVEL4"). The initial consideration was EUR0.8 m,
settled in cash, for 70% of the issued share capital. There was a put and call
option over the remaining 30% with the price dependent on future financial
performance. The options were exercisable from 2011 to 2012. The minority
shareholder retained their right to share in profits until the option was
exercised.
On 8 January 2009, StepStone announced that it had increased its stake in Level4
to 100% through the acquisition of the 30% minority interest. StepStone had an
option to acquire the remaining 30% in 2011 for a price that was dependent upon
results between 2008 and 2011 but agreement was reached to accelerate the
acquisition. The purchase price of EUR0.2m was paid in cash in January 2009.
+-------------------------------------+------+---------+
| The balance sheet of Level 4 at | | EUR 000 |
| acquisition comprised: | | |
+-------------------------------------+------+---------+
| | | |
+-------------------------------------+------+---------+
| Non current assets | | 64 |
+-------------------------------------+------+---------+
| Current assets | | 338 |
+-------------------------------------+------+---------+
| Cash | | 110 |
+-------------------------------------+------+---------+
| Equity | | 124 |
+-------------------------------------+------+---------+
| Current liabilities | | (636) |
+-------------------------------------+------+---------+
| | | |
+-------------------------------------+------+---------+
| | | |
+-------------------------------------+------+---------+
Note 5 - Acquisitions (continued)
The Company is undertaking a process of assessing the accounting policies and
procedures and identifying any intangible assets of the acquisitions. For Level4
EUR0.1m has been ascribed to customer relationships and this asset is being
amortised over 8 years.
Recruiter
In Q1 2008, the Company settled its final liabilities to the former shareholders
of Recruiter. The liabilities were settled by issuing EUR611 of shares at an
agreed price of NOK 4.80 per share and by payment of EUR68 in cash.
Les Villages Emploi
On 7 April 2009 the company paid EUR900 cash in final settlement to the former
shareholders of Les Villages Emploi.
Sourcea
On 27 May 2009 the company paid EUR1,490 cash in final settlement to the former
shareholders of Sourcea.
Note 6 - Deferred tax asset
In Q4 2007 the German deferred tax asset was decreased from EUR7,000 to EUR5,500 to
reflect the utilisation in 2007. At the same time an asset of EUR6,500 was
recognised in StepStone ASA, which was due to an increased expectation that some
of the Norwegian tax losses will be realised in the foreseeable future.
Additionally smaller assets have been recognised in the UK, Swedish and Danish
operations.
The movement in the deferred tax in Q1, Q2 and Q3 2008 was due to the
revaluation of local currency balance sheets to Euro.
In Q4 2008 the German deferred tax asset was reduced by EUR4,000 to EUR1,500 to
reflect the expected utilisation in 2008. At the same time the asset in
StepStone ASA was increased by EUR2,000 to EUR8,500 on the expectation that further
tax losses will be realised in Norway.
In Q1 2009 the German deferred tax asset was reduced by EUR400 to EUR1,100 to
reflect the expected utilisation in 2009. All other movements are due to the
revaluation of local currency balance sheets to Euro.
In Q2 2009 the German deferred tax asset was reduced by EUR400 to EUR700 to reflect
the expected utilisation in 2009. All other movements are due to the revaluation
of local currency balance sheets to Euro.
In Q3 2009 the German deferred tax asset was reduced by EUR700 to nil to reflect
the expected utilisation, including forfeiture of losses on change of control,
in 2009. All other movements are due to the revaluation of local currency
balance sheets to Euro.
Note 7 - Cash and bank deposits
+----------------------------------+-------+------------+------------+-----------+
| EUR000 | | 30 | 30 | 31 |
| | | September | September | December |
| | | 2009 | 2008 | 2008 |
+----------------------------------+-------+------------+------------+-----------+
| | | | | |
+----------------------------------+-------+------------+------------+-----------+
| Cash and cash equivalents | | 29,562 | 22,740 | 28,677 |
+----------------------------------+-------+------------+------------+-----------+
| Restricted bank deposits | | 1,013 | 971 | 1,013 |
+----------------------------------+-------+------------+------------+-----------+
| | | 30,575 | 23,711 | 29,690 |
+----------------------------------+-------+------------+------------+-----------+
Cash and cash equivalents includes EUR14,355 (EUR9,972 at 30 September 2008 and
EUR6,640 at 31 December 2008) held by StepStone Deutschland AG.
In the Shareholder Agreement entered into by StepStone ASA and Axel Springer AG
in 2004, approval of the annual financial statements and use of results requires
the decision making and the consent of a majority of 75% of the votes cast at a
general meeting of shareholders regardless of any additional consent obligations
stipulated by law or the Articles of Association. StepStone ASA holds 50.1% of
the shares of StepStone Deutschland AG.
Note 8 - Share capital
+----------------------------------+------+---------+---------+-----------+---------+
| Number of shares in 1 000, | | | | Ordinary Shares |
| values in EUR 000 | | | | |
+----------------------------------+------+---------+---------+---------------------+
| | | | | Number | Issued |
| | | | | | and |
| | | | | | fully |
| | | | | | paid |
+----------------------------------+------+---------+---------+-----------+---------+
| 01 January 2008 | | | | 127,076 | 6,272 |
+----------------------------------+------+---------+---------+-----------+---------+
| | | | | | |
+----------------------------------+------+---------+---------+-----------+---------+
| Correction to historic exchange | | | | | 48 |
| rates | | | | | |
+----------------------------------+------+---------+---------+-----------+---------+
| Issuance of new shares for | | | | 268 | 13 |
| financing | | | | | |
+----------------------------------+------+---------+---------+-----------+---------+
| Issuance of new shares in | | | | 449 | 22 |
| business combinations | | | | | |
+----------------------------------+------+---------+---------+-----------+---------+
| 31 December 2008 | | | | 127,793 | 6,355 |
+----------------------------------+------+---------+---------+-----------+---------+
| | | | | | |
+----------------------------------+------+---------+---------+-----------+---------+
| Issuance of new shares in | | | | 1,125 | 51 |
| business combinations | | | | | |
+----------------------------------+------+---------+---------+-----------+---------+
| 31 March 2009 | | | | 128,918 | 6,406 |
+----------------------------------+------+---------+---------+-----------+---------+
| | | | | | |
+----------------------------------+------+---------+---------+-----------+---------+
| 30 June 2009 | | | | 128,918 | 6,406 |
+----------------------------------+------+---------+---------+-----------+---------+
| | | | | | |
+----------------------------------+------+---------+---------+-----------+---------+
| 30 September 2009 | | | | 128,918 | 6,406 |
+----------------------------------+------+---------+---------+-----------+---------+
Q1 2009
On 25 March 2009 the Company issued 1,125,000 shares at an agreed price of NOK
4.80 as part of the purchase price paid to acquire Recruiter.
On 31 March 2009 the Company had in issue 128,917,985 shares of NOK 0.40 each
and a registered share capital of NOK 51,567,194.00. There were 13,995,664
options outstanding with a weighted average exercise price of NOK 5.44 of which
2,781,796 were exercisable with a weighted average exercise price of NOK 9.03.
Q2 2009
On 30 June 2009 the Company had in issue 128,917,985 shares of NOK 0.40 each and
a registered share capital of NOK 51,567,194.00. There were 14,154,564 options
outstanding with a weighted average exercise price of NOK 5.32 of which
2,874,904 were exercisable with a weighted average exercise price of NOK 9.20.
Q3 2009
On 30 June 2009 the Company had in issue 128,917,985 shares of NOK 0.40 each and
a registered share capital of NOK 51,567,194.00. There were 14,273,875 options
outstanding with a weighted average exercise price of NOK 5.30 of which
9,060,440 were exercisable with a weighted average exercise price of NOK 5.34.
+----------------------------------+------+---------------+--------------+--------------+
| Earnings per share | | | Basic | Diluted |
+----------------------------------+------+---------------+--------------+--------------+
| | | | | |
+----------------------------------+------+---------------+--------------+--------------+
| Weighted average number of shares for 9 months to 30 | 128,574,695 | 142,676,681 |
| September 2009 | | |
+----------------------------------+------+---------------+--------------+--------------+
Note that when earnings per share are negative the diluted loss is the same as
the basic loss.
Note 9 - Non current liabilities
+----------------------------------+-------+------------+-----------+-----------+
| EUR000 | | 30 | 30 | 31 |
| | | September | September | December |
| | | 2009 | 2008 | 2008 |
+----------------------------------+-------+------------+-----------+-----------+
| | | | | |
+----------------------------------+-------+------------+-----------+-----------+
| Notes payable | | - | 4,908 | 4,080 |
+----------------------------------+-------+------------+-----------+-----------+
| Revolving credit facility | | 9,401 | - | 9,285 |
+----------------------------------+-------+------------+-----------+-----------+
| Subordinated loan | | - | 3,445 | - |
+----------------------------------+-------+------------+-----------+-----------+
| Non current deferred and | | 446 | 504 | 316 |
| invoiced revenue (Note 10) | | | | |
+----------------------------------+-------+------------+-----------+-----------+
| Non current finance lease | | - | 1 | - |
| liabilities | | | | |
+----------------------------------+-------+------------+-----------+-----------+
| Deferred consideration | | - | 2,158 | 1,839 |
+----------------------------------+-------+------------+-----------+-----------+
| Other non current liabilities | | - | - | - |
+----------------------------------+-------+------------+-----------+-----------+
| | | 9,847 | 11,016 | 15,520 |
+----------------------------------+-------+------------+-----------+-----------+
Notes payable
On 25 September 2006 the Company launched a NOK 150,000,000 program of senior
unsecured floating rate notes. These Notes payable carry a margin of 4.75% above
3-month NIBOR and are repayable on 27 September 2010. Interest is payable
quarterly. The company has given a limited number of covenants to note holders
the most significant of which are that dividend payments shall not exceed 50% of
profits after tax and total book equity shall exceed 40% of capital employed.
The Company issued NOK 100 million of notes. At the same time the Company
purchased NOK 20 million of the notes. During Q3 2008, the Company purchased NOK
39 million of the notes in the open market, a further NOK 1.0m in Q4 2008, a
further NOK 1.2m in Q1 2009 and a further NOK 4.5m in Q3 2009. Net Notes payable
outstanding at 30 September 2009 amounted to NOK 25.0 million which are included
in Current liabilities.
Credit facilities
In June 2008 the Company entered into an agreement with Skandinaviska Enskilda
Banken ("SEB") that included provision of a revolving credit facility ("RCF") of
up to EUR30m and a term loan ("Term Loan") of up to EUR10m. The Term Loan is
available until October 2010 and the RCF until July 2011. Provided the Company
does not breach the agreement, amounts drawn down are not repayable, except at
discretion of the Company, until the relevant facility expires.
Subordinated loan
+----------------------------------+------+---------+---------+---------+---------+
| EUR000 | | | | | |
+----------------------------------+------+---------+---------+---------+---------+
| | | | | | |
+----------------------------------+------+---------+---------+---------+---------+
| 01 January 2008 | | | | | (6,527) |
+----------------------------------+------+---------+---------+---------+---------+
| | | | | | |
+----------------------------------+------+---------+---------+---------+---------+
| Repayment | | | | | 7,491 |
+----------------------------------+------+---------+---------+---------+---------+
| Fair value adjustment | | | | | (423) |
+----------------------------------+------+---------+---------+---------+---------+
| Financing cost | | | | | (541) |
+----------------------------------+------+---------+---------+---------+---------+
| 31 December 2008 | | | | | - |
+----------------------------------+------+---------+---------+---------+---------+
Axel Springer, as part of the transaction to acquire 49.9% of the shares of
StepStone Deutschland AG in 2004, acquired a Subordinated loan in that company
with a face value of EUR15.0m. StepStone ASA also held a Subordinated loan of
EUR15.0m.
These loans were issued between 1997 and 2001 to fund EUR30m of losses of
StepStone Deutschland AG and subordinated on 1 January 2002. To avoid over
indebtedness, repayments of both Subordinated loans were only payable from
future profits. Neither Subordinated loan holder had an automatic right to
repayment.
Both Subordinated loans were accounted for in accordance with International
Financial Reporting Standards (IAS 39). IFRS requires that each subordinated
loan acquired was, on initial recognition, recorded as a financial liability at
fair value. On the basis that there was no history of sustained profits in
StepStone Deutschland AG the fair value in 2004 of each EUR15m Subordinated loan
was estimated to be EUR2.5m. In accordance with IFRS the difference between this
amount and the face value of the Subordinated loan held by Axel Springer AG was
charged to the income statement as a Financial expense over the period it took
StepStone Deutschland AG to generate EUR30m of profits.
In Q4 2008 the final balance was paid to each subordinated loan holder. From the
date of final repayment, the interest of Axel Springer AG in StepStone
Deutschland AG is being accounted for as minority interest.
Note 9 - Non current liabilities (continued)
The historic revenues and net liabilities of StepStone Deutschland AG have
been:-
StepStone Deutschland AG
+----------------------------------+------+---------+---------+---------+----------+
| EUR000 | | 2005 | 2006 | 2007 | 2008 |
+----------------------------------+------+---------+---------+---------+----------+
| | | | | | |
+----------------------------------+------+---------+---------+---------+----------+
| Revenue | | 10,981 | 15,095 | 24,112 | 33,668 |
+----------------------------------+------+---------+---------+---------+----------+
| | | | | | |
+----------------------------------+------+---------+---------+---------+----------+
| Opening Net Liabilities | | 27,826 | 22,572 | 13,351 | 5,473 |
| [Negative Equity] | | | | | |
+----------------------------------+------+---------+---------+---------+----------+
| Retained Profits | | (2,654) | (4,821) | (9,378) | (14,751) |
+----------------------------------+------+---------+---------+---------+----------+
| Movement on Deferred Tax Asset | | (2,600) | (4,400) | 1,500 | 4,000 |
+----------------------------------+------+---------+---------+---------+----------+
| Closing Net Liabilities (Assets) | | 22,572 | 13,351 | 5,473 | (5,278) |
+----------------------------------+------+---------+---------+---------+----------+
The tax losses of StepStone Deutschland AG have sheltered profits from 2004 to
date. However, these losses were substantially utilised by the end of 2008,
resulting in expected tax charges in 2009. On change of control the remainder of
the tax losses were forfeited.
Note 10 - Deferred and invoiced revenue
+----------------------------------+------+------------+------------+------------+
| EUR000 | | 30 | 30 | 31 |
| | | September | September | December |
| | | 2009 | 2008 | 2008 |
+----------------------------------+------+------------+------------+------------+
| | | | | |
+----------------------------------+------+------------+------------+------------+
| Balance to be recognised within | | 20,500 | 26,903 | 27,081 |
| one year | | | | |
+----------------------------------+------+------------+------------+------------+
| Balance to be recognised after | | 446 | 504 | 316 |
| one year | | | | |
+----------------------------------+------+------------+------------+------------+
| | | 20,946 | 27,407 | 27,397 |
+----------------------------------+------+------------+------------+------------+
| | | | | |
+----------------------------------+------+------------+------------+------------+
| Segmental analysis of deferred | | | | |
| revenue | | | | |
+----------------------------------+------+------------+------------+------------+
| | | | | |
+----------------------------------+------+------------+------------+------------+
| EUR000 | | | Online | Solutions |
+----------------------------------+------+------------+------------+------------+
| | | | | |
+----------------------------------+------+------------+------------+------------+
| Q3 2008 | | | 20,103 | 7,304 |
+----------------------------------+------+------------+------------+------------+
| Q4 2008 | | | 19,780 | 7,617 |
+----------------------------------+------+------------+------------+------------+
| Q1 2009 | | | 17,660 | 8,836 |
+----------------------------------+------+------------+------------+------------+
| Q2 2009 | | | 14,644 | 8,872 |
+----------------------------------+------+------------+------------+------------+
| Q3 2009 | | | 12,205 | 8,741 |
+----------------------------------+------+------------+------------+------------+
Note 11 - Other current liabilities
+----------------------------------+------+------------+------------+------------+
| EUR000 | | 30 | 30 | 31 |
| | | September | September | December |
| | | 2009 | 2008 | 2008 |
+----------------------------------+------+------------+------------+------------+
| | | | | |
+----------------------------------+------+------------+------------+------------+
| Loan notes | | 2,909 | - | - |
+----------------------------------+------+------------+------------+------------+
| Deferred consideration | | 2,639 | 4,049 | 3,794 |
+----------------------------------+------+------------+------------+------------+
| Public duties payable | | 6,809 | 5,917 | 6,685 |
+----------------------------------+------+------------+------------+------------+
| Other current liabilities | | 12,976 | 10,520 | 13,578 |
+----------------------------------+------+------------+------------+------------+
| Other short term debt | | 1,166 | 936 | - |
+----------------------------------+------+------------+------------+------------+
| | | 26,499 | 21,419 | 24,057 |
+----------------------------------+------+------------+------------+------------+
Notes payable
See Note 9 for description. In Q3 2009 the liability became due within 1 year
and was transferred form non-current liabilities to current liabilities.
Deferred consideration
The current deferred consideration is the estimated amount payable within 12
months of the balance sheet date to the former ExecuTRACK shareholders. The
amounts to ExecuTRACK are payable in shares of StepStone ASA.
Note 12 - Mandatory offer
On 2 September 2009, Axel Springer announced that it had secured a majority
interest in StepStone by acquisition of approximately 19.3 percent of the shares
and that it held 52.27 percent of StepStone's equity. Furthermore, Axel Springer
announced its intention to extend a public takeover offer to all shareholders
for a price of NOK 8.60 per share.
On 3 September 2009, the Board of StepStone noted that Axel Springer entered
into agreements on Wednesday, 2 September 2009, to acquire shares in StepStone
that increased their holding to an interest of about 52%. Furthermore, the Board
noted that Axel Springer would proceed with a mandatory offer for the remaining
shares in StepStone. The Board also announced that it would actively consider
and pursue all available options that could contribute to maximising shareholder
value and to ensuring equal treatment of shareholders. In addition, the Board
stated that the value of the individual parts exceeds the value of the Offer and
that StepStone had received an indication of interest in a part of StepStone's
business that supported this view.
On 10 September 2009, the Board of StepStone announced the appointment of Morgan
Stanley & Co. Limited and ABG Sundal Collier Norge ASA as joint financial
advisers in connection with the offer by Axel Springer. The purpose of these
appointments was: to provide the Board with the necessary expertise, and
independent advice on the fair value of the business, in the limited time
available; and also to enable it to fully and properly explore all reasonable
alternatives that could contribute to maximising value. Of prime importance was
to ensure equal treatment of shareholders. The Board reiterated that it believed
that the intended offer, indicated by Axel Springer to be for NOK 8.60 per
share, did not reflect the full value of the business.
On 11 September 2009, Axel Springer published the public takeover offer to the
shareholders of StepStone ASA that was announced on September 2, 2009. The Offer
comprised all 60,892,610 shares currently issued and outstanding in StepStone
not owned by Axel Springer. The offer period started on September 14, 2009, and
was set to close on October 12, 2009 (subject to extension). The offer price was
NOK 8.60 per share. The Offer excluded any shares authorised and issued after
the date of the offer, such as any shares issued as a result of exercise of
9,075,546 vested options held by employees.
Since the intended Offer was announced, the Board, with the assistance of senior
management, Morgan Stanley & Co. Limited, ABG Sundal Collier Norge ASA and its
legal advisers have vigorously been exploring all legally permissible options
including seeking interest from financial and strategic parties, potential
capital issuances and legal and technical alternatives. In addition, StepStone
and its advisers have been in dialogue with current public minority shareholders
and potential new shareholders.
The Chairman and CEO of StepStone held discussions with senior executives of
Axel Springer with the objective to agree an improved offer that could be
recommended by the Board. However, these discussions did not result in a
recommendable improved offer.
Subsequently on 2 October 2009 StepStone was approached by Axel Springer with a
revised offer of NOK 9.00, which was conditional on i) receiving a neutral Board
response statement, ii) stopping of all defence measures and iii) senior
management confirming its intention to remain in their currently held positions
with StepStone at least another three years subject to adequate incentivisation.
On 5 October 2009 a transaction agreement was entered into with Axel Springer
and announced.
The company incurred a substantial amount of one-off costs ("Mandatory offer
costs") in actively considering and pursuing all available options that could
contribute to maximising shareholder value and to ensuring equal treatment of
shareholders. These were incurred between notification of change of control on 2
September 2009 and the announcement of an agreement to increase the offer price
on 5 October 2009. The company estimates that these Mandatory Offer costs to be
EUR2.6m of which EUR1.7m relates to and has been recorded in Q3 2009. Mandatory
offer costs exclude any costs related to the acceleration of employee stock
options triggered by Axel Springer AG increasing its holding to above 50% in
Note 3 and the costs of the cash compensation in respect of vested options in
Note 13.
Note 13 - Post balance sheet events
The Mandatory offer issued by Axel Springer AG stated "The Offeror is offering
to acquire all Shares in the Company which are issued and outstanding as of the
date of this Offer Document (being 128,917,985 Shares, each Share with a par
value of NOK 0.40) and not already owned by the Offeror (being 60,892,610 shares
as of the rate of this Offer Document). Consequently, new shares in the Company
registered with the Norwegian Registry of Business Enterprises (Nw.
Foretaksregisteret) (the "Registry"), subsequent to the date of this Offer
Document are not comprised by the Offer".
Having considered the manner in which the offer was structured, StepStone's
obligations to employees and having taken legal advice, the Board resolved on 1
October 2009, in accordance with its rights under the share option plan rules
that were established in 2000, to disburse cash compensation to those employees
who choose not to retain their vested options post closing of the Mandatory
offer.
There were 8.1 million vested stock options that had exercise prices below the
revised Mandatory Offer price of NOK 9.00 with an aggregate unrealised gain of
NOK 40.0 million. The relevant employees were all offered the opportunity to
accept a cash compensation equivalent to their unrealised gain at the revised
Mandatory Offer price of NOK 9.00. This offer was accepted by holders of
7,743,796 vested options that had between them a gain of NOK 38.8m. The cost
will be accounted for in Q4 2009.
Note 14 - Segment information by quarter
+--------------------------------+---------+---------+---------+---------+---------+
| EUR 000 | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| | Q3 | Q2 | Q1 | Q2 | Q3 |
+--------------------------------+---------+---------+---------+---------+---------+
| | 2009 | 2009 | 2009 | 2008 | 2008 |
+--------------------------------+---------+---------+---------+---------+---------+
| | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Segment revenues (see below | | | | | |
| for analysis by geography) | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Online | 11,603 | 12,350 | 14,098 | 17,364 | 18,514 |
+--------------------------------+---------+---------+---------+---------+---------+
| Solutions | 12,454 | 12,310 | 12,773 | 13,677 | 13,241 |
+--------------------------------+---------+---------+---------+---------+---------+
| | 24,057 | 24,660 | 26,871 | 31,041 | 31,755 |
+--------------------------------+---------+---------+---------+---------+---------+
| | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Segment personnel costs and | | | | | |
| other operating expenses | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Online | 8,445 | 8,981 | 9,532 | 13,585 | 12,687 |
+--------------------------------+---------+---------+---------+---------+---------+
| Solutions | 11,907 | 11,209 | 11,485 | 12,123 | 11,171 |
+--------------------------------+---------+---------+---------+---------+---------+
| | 20,352 | 20,190 | 21,017 | 25,708 | 23,858 |
+--------------------------------+---------+---------+---------+---------+---------+
| | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Profit / (loss) from operating | | | | | |
| divisions before depreciation | | | | | |
| and amortisation and share | | | | | |
| option charge | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Online | 3,158 | 3,369 | 4,846 | 3,779 | 5,827 |
+--------------------------------+---------+---------+---------+---------+---------+
| Solutions | 547 | 1,101 | 1,008 | 1,554 | 2,070 |
+--------------------------------+---------+---------+---------+---------+---------+
| | 3,705 | 4,470 | 5,854 | 5,333 | 7,897 |
+--------------------------------+---------+---------+---------+---------+---------+
| | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Segment share option charge | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Online | 263 | 185 | 551 | 220 | (248) |
+--------------------------------+---------+---------+---------+---------+---------+
| Solutions | 300 | 210 | 362 | 168 | 7 |
+--------------------------------+---------+---------+---------+---------+---------+
| | 563 | 395 | 913 | 388 | (241) |
+--------------------------------+---------+---------+---------+---------+---------+
| | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Segment depreciation, | | | | | |
| amortisation and impairments | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Online | 487 | 491 | 487 | 558 | 562 |
+--------------------------------+---------+---------+---------+---------+---------+
| Solutions | 612 | 579 | 549 | 586 | 553 |
+--------------------------------+---------+---------+---------+---------+---------+
| | 1,099 | 1,070 | 1,036 | 1,144 | 1,115 |
+--------------------------------+---------+---------+---------+---------+---------+
| | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Profit / (loss) from operating | | | | | |
| divisions after depreciation | | | | | |
| and amortisation and share | | | | | |
| option charge | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Online | 2,408 | 2,693 | 3,808 | 3,001 | 5,513 |
+--------------------------------+---------+---------+---------+---------+---------+
| Solutions | (365) | 312 | 97 | 800 | 1,510 |
+--------------------------------+---------+---------+---------+---------+---------+
| | 2,043 | 3,005 | 3,905 | 3,801 | 7,023 |
+--------------------------------+---------+---------+---------+---------+---------+
| | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Enterprise level expenses | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Depreciation, amortisation and | 322 | 333 | 325 | 321 | 333 |
| impairments | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Share option charge | 1,796 | 523 | 692 | 661 | 1,088 |
+--------------------------------+---------+---------+---------+---------+---------+
| Personnel costs and other | 3,417 | 1,620 | 1,610 | 2,858 | 1,822 |
| operating expenses | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| | 5,535 | 2,476 | 2,627 | 3,840 | 3,243 |
+--------------------------------+---------+---------+---------+---------+---------+
| | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Operating profit / (loss) | (3,492) | 529 | 1,278 | (39) | 3,780 |
| ("EBIT") | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Note | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Group share option charge | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Online | 263 | 185 | 551 | 220 | (248) |
+--------------------------------+---------+---------+---------+---------+---------+
| Solutions | 300 | 210 | 362 | 168 | 7 |
+--------------------------------+---------+---------+---------+---------+---------+
| Enterprise level | 1,796 | 523 | 692 | 661 | 1,088 |
+--------------------------------+---------+---------+---------+---------+---------+
| | 2,359 | 918 | 1,605 | 1,049 | 847 |
+--------------------------------+---------+---------+---------+---------+---------+
| | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Geographic segments | Q3 | Q2 | Q1 | Q4 | Q3 |
+--------------------------------+---------+---------+---------+---------+---------+
| EUR 000 | 2009 | 2009 | 2009 | 2008 | 2008 |
+--------------------------------+---------+---------+---------+---------+---------+
| | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Revenues | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| Nordic & UK | 8,377 | 8,858 | 9,064 | 10,222 | 11,956 |
+--------------------------------+---------+---------+---------+---------+---------+
| Northern | 5,638 | 4,750 | 5,277 | 6,109 | 6,032 |
+--------------------------------+---------+---------+---------+---------+---------+
| Central | 10,050 | 11,052 | 12,530 | 14,710 | 13,767 |
+--------------------------------+---------+---------+---------+---------+---------+
| | 24,065 | 24,660 | 26,871 | 31,041 | 31,755 |
+--------------------------------+---------+---------+---------+---------+---------+
| | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
| The quarterly numbers are | | | | | |
| unaudited | | | | | |
+--------------------------------+---------+---------+---------+---------+---------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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