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Hello, and welcome to the Michael Page half year results. My name is Alex, and I'll be coordinating today's call. [Operator Instructions]

I'll now hand over to Nick Kirk, CEO, to begin. Please go ahead.

Thank you. Good morning, everyone, and welcome to the Michael Page interim results presentation. I'm Nick Kirk, Chief Executive Officer. On the call with me today is Kelvin Stagg, Chief Financial Officer. The group delivered a resilient performance in H1 despite ongoing challenging market conditions. We saw continued growth in Asia Pacific and the Americas as well as a return to growth in Q2 in Southern Europe. In total, around 50% of the group was in growth in H1. However, trading remained more challenging across France, Northern Europe and the U.K.

The progress we're making in productivity, technological innovation, operational efficiency and execution demonstrates that our strategy is working and positions us well for future growth. We continue to harness the power of Page as well as our position as the global leader for specialist management and leadership perm recruitment, placing more senior talent at higher salary levels and at higher fees. This has helped drive our highest level of productivity since our record year in 2022 as well as a record performance for Page Executive. We continue to control the cost base tightly and have undertaken various programs since the launch of our new strategy to manage it in light of the tougher market conditions, which we will cover in more detail later.

I will now hand you over to Kelvin to talk you through our financial review.

Thank you, Nick. Although I will not read it through, I'd just like to make reference to the legal formalities that are covered in the cautionary statement in the appendix to this presentation and which will also be available on our website following the call. Group gross profit for H1 was GBP 385.2 million, down 2.4% in constant currencies. Operating profit in the first half was GBP 9.7 million, up from GBP 2.1 million in H1 2025, conversion rate of 2.5%. Gross profit per fee earner, our measure of productivity, was up 3.7% compared to H1 2025 and is at the highest level we've seen since our record year in 2022.

We continue to balance managing our headcount in markets where conditions are tough, such as France, Northern Europe and the U.K., with reallocating headcount into markets showing the most significant long-term structural opportunities, such as the U.S. and Japan. Earnings per share was 1.2p. We closed the first half with net debt of GBP 7.2 million, in line with expectations, and we are today announcing an interim dividend of 1.46p per share or GBP 4.6 million, which I will cover in more detail later.

I will now take you through the financial review. Overall, we delivered group operating profit of GBP 9.7 million at a conversion rate of 2.5%. Looking at each of our regions and starting with the largest, EMEA, our conversion rate was 7.5%, the highest conversion rate of the group. This was despite the tougher trading conditions in France and Northern Europe. The Americas remained profitable with a conversion rate of 4.2%. However, in Asia Pacific and the U.K., while trading conversion was positive, after central cost allocations and one-off costs, both regions had a negative conversion rate.

We have a flexible cost base through our fee earner headcount, which we align to market conditions. Alongside this, we have undertaken various programs since the launch of our new strategy to reduce our costs in light of the tougher market conditions. These programs included reducing our nonoperational headcount alongside moving these functions to more cost-effective locations, consolidating offices and reducing management layers. Collectively, since the launch of our strategy and excluding savings due to reduction in fee earner headcount, these initiatives have delivered annualized savings of around GBP 40 million. This cost base control has continued in H1 2026, incurring around GBP 2.5 million of net one-off costs in relation to senior exits, which will result in an annualized equivalent savings from 2027.

The effective tax rate continued to be elevated due to the lower profit environment. For the first half, the rate was 41.2%, which is consistent with our expectations for the full year. The elevated tax rate results primarily from nondeductible items such as client entertaining and employee benefits. Going forward, as profitability improves, the impact of these will be reduced, and we expect our tax rate to normalize at around 35%.

The most significant item in our balance sheet was trade and other receivables of GBP 346.6 million. Net debt at the end of June was GBP 7.2 million, in line with expectations. We had borrowings of GBP 30 million under the revolving credit facility and GBP 7.6 million under our U.K. trade debtor discounting facility, partially offset by cash of GBP 30.4 million. Overall, net assets decreased from GBP 217 million in H1 2025 to GBP 211.6 million in H1 2026.

This chart shows the movements in our cash in the first half of 2026. Our H1 EBITDA inflow was GBP 40 million, partially offset by an increase in net working capital of GBP 33.9 million, which I will talk in more detail on the next slide. Tax and net interest payments were GBP 7.3 million. Net capital expenditure was GBP 3.2 million, down from GBP 7.1 million in H1 2025. The lower capital expenditure was driven by sustainably lower spend on software as the majority of our system investments are now Software-as-a-Service and therefore, directly expensed. In addition, the majority of the larger post-pandemic office fit-outs have been completed by the end of 2025.

Payments made in relation to lease liabilities reduced cash by GBP 20.6 million. The group paid out GBP 10 million for the 2025 final dividend in June. Overall, the impact of these cash flows decreased the group's net cash position since year-end by GBP 38.6 million to net debt of GBP 7.2 million at the end of June. We expect to close the year with around GBP 30 million of net cash after the payment of the interim dividend of GBP 4.6 million.

Net working capital reduced cash by GBP 34 million in H1. We paid 2025 annual bonuses to senior staff and Q4 profit share in the first half, albeit at a reduced level of last year, reflecting the performance of the business. Our debtor book remains strong, and we've seen no deterioration in debtor days across either permanent or temporary recruitment. We have also not experienced an increase in debt write-offs. We saw an increase in trade and other debtors as compared to December 2025, and this was due partially to temporary recruitment, which has a greater working capital requirement, being more resilient in the current market uncertainty. We also had an increase of around GBP 11 million in prepayments compared to December due to most of our significant software license renewals being in H1. This will unwind over the second half of the year.

The group aims to run the balance sheet in a position of net cash. We have a clear, well-established capital allocation policy with 3 defined uses of cash. The first is to satisfy the operational investment requirements of the group as well as the hedge liability under the group's share plans. The second is for the payment of ordinary dividends, where our policy is to increase them at the long-term growth rate of the group. And finally, any remaining cash surplus is to be distributed to shareholders by way of a supplementary return.

While reviewing the group's current and future cash position in light of the sustained challenging trading environment and the ongoing unpredictable nature of our markets, the Board believes it's prudent to declare an interim dividend for 2026 of 1.46p per share, a total of GBP 4.6 million. This action balances the group's current level of profitability and affordability with the desire to continue to invest in growth areas. The Board recognizes the importance of dividends to shareholders, and we'll continue to assess the level of dividend payments while considering the group's future outlook. The interim dividend will be paid on the 9th of October to shareholders on the register as at the 28th of August.

I will now hand you over to Nick to take you through our strategic review.

Thank you, Kelvin. Since the launch of our strategy in 2023, we have used 3 key phrases to act as our North Star: less is more, what we are famous for and building on our existing strengths. We look to those same principles when it came to developing our brand structure. Over the past 50 years, we've built a sea of brands and sub-brands to explain what we do. Each of them was created to label different services, specialisms and parts of our business.

In an increasingly noisy world, we need to make it easier for our customers to quickly engage with us. That's why we've simplified and brought everything together under one single identity, Michael Page. People know Michael Page. They recognize us as a global professional recruitment business with scale, reach, expertise and a strong market presence. Where customers previously saw many brands, they will now see one, and the one they know the best, Michael Page.

At the heart of our strategy is our focus on permanent recruitment, where we are the leading player with the most global reach with presence in 34 markets. Despite the tougher trading conditions, which up until recently have favored temporary recruitment, we still generate nearly 3/4 of group gross profit through permanent recruitment. We continue to harness the power of Page and our position as a global leader for specialist management and leadership recruitment. We continue to trade up in line with our strategy, placing more senior talent at higher salary levels and at higher fee rates, which in turn has driven increased levels of fee earner productivity as well as a standout result from our global Executive Search business.

As we brought everything together under Michael Page, we want to give clarity for customers to understand the different things we do. We start with Specialist Recruitment Services, our core business, delivering permanent and nonpermanent recruitment to specialist and management roles. Next is Executive Search, our Page Executive business, offering assessment and advisory alongside search and selection. Over the last 30 years, we've built up strong equity around our capability in Executive Search. So we'll retain the Page Executive brand sitting under the master brand of Michael Page.

And then we have Enterprise Solutions. This business will continue to support our largest global customers with delivery through scaled recruitment and outsourcing capabilities. So when customers ask what Michael Page does, the answer is clear. Instead of navigating multiple brands and sub-brands, they'll experience 3 distinct service areas: Specialist Recruitment Services, Executive Search and Enterprise Solutions.

We continue to make significant strides in our use of AI. Based on feedback from our technology partners, we know we are in a strong position compared to our global competitors. Our implementation and adoption of AI continues to grow, and our smart agents are in use every day across the business, increasing productivity and saving time. We believe for the roles that we recruit, people will remain at the heart of the process. At Michael Page, we specialize in senior-level appointments. And in an AI-enabled world, we strongly believe that the need for human judgment increases rather than decreases. This is due to the criticality of relationships to build trust and credibility, which is a vital part of the process of delivering successful recruitment outcomes.

We have a clear vision of the relationship between AI and our people, the balance between technology and the human. The role of our people remains critical in delivering for our customers, building out principles to create the People AI framework. We deploy this across 3 layers. On the left, what only our people can do: understanding context, judging human potential and leaning into differentiation. On the right, the tasks technology should do: how we drive efficiencies and take away the time spent completing administrative tasks, enabling our people to do what they do best, consulting with our customers. And in the middle sits what our people do better with AI: screening, talent mapping, providing insights and enhancing candidate outreach, driving more consistency and an uplift in performance. Overall, the goal is to use AI to support the human, supercharging the trust we've built in relationships as well as our proprietary data and platforms to deliver our customer promise, connecting talent that makes a difference.

We launched our strategy in 2023 with 3 key strategic goals: delivering operating profit of GBP 400 million, changing 1 million lives and increasing our Net Promoter Score to over 60. Despite the challenging market conditions since we launched the strategy, we continue to position the group to ensure we can maximize opportunities as trading improves. I will expand on the progress made on the implementation of this part of the strategy in the following slides.

Against our social impact objective of changing 1 million lives, we again performed well in the first half of 2026. Overall, we changed over 75,000 lives in H1, which means that since we set our target in 2020, we've changed over 865,000 lives. This puts us well on track to deliver our target of changing 1 million lives by 2030. We've also continued to make strong progress on our customer experience goal of achieving a client Net Promoter Score of over 60. From our pre-strategy baseline of 52, our Net Promoter Score increased to 61 in 2024 and then again to 66 in 2025. In H1, this increased further to 67. This score rates as excellent and is a clear recognition of the work we continue to do at Michael Page to deliver best-in-class service for our customers.

Our strategy is based around 4 key pillars: the Core Business, Technology Recruitment, Page Executive and Enterprise Solutions. Over the last 6 months, we've experienced improved trading conditions in a number of our core markets. We've seen continued growth in Asia Pacific and the Americas as well as a return to growth in Southern Europe in Q2. At a country level, we delivered a record performance in India, and we saw good growth across a number of individual markets, including the U.S., Colombia, Greater China and Japan. That said, in Northern Europe, France and the U.K., we continue to experience challenging, but stable market conditions.

As a result of the mixed performance by region, we continue to review our business operations and reallocate resources into the areas of the business where we see the most significant long-term structural opportunities, such as the U.S. and Japan, the 2 largest recruitment markets in the world. As has been widely reported, the technology sector has been impacted heavily by macro factors. Despite this, technology remains our second largest discipline. We continue to see a highly dynamic sector with demand for skills changing rapidly, and we continue to see a more resilient performance from non-perm. Despite the tough conditions globally, there were some individual markets which delivered good growth in H1, in particular, Spain, Colombia, Japan, Greater China and India.

Page Executive delivered a record performance in H1 with growth of 8% and particularly strong performances from Germany, Southern Europe, Greater China, Southeast Asia and India. A key element of our Page Executive strategy has been to focus on more senior leadership roles and as a result, increase the salary levels at which we operate. It has become increasingly clear that the market gap for Page Executive is a significant opportunity for the group, and we remain confident that we are the best placed global recruiter to exploit it.

Enterprise Solutions supports our largest strategic customers with their often complex international requirements. Our well-established global platform allows us to consult with clients as they look to launch into new markets or expand in existing geographies. Our customer-centric approach, highlighted by our excellent Net Promoter Score, increasingly makes us the partner of choice. Within Enterprise Solutions, our outsourcing business delivered a record H1 with growth of 22%, and we remain focused on winning business that delivers conversion rates in line with our strategy.

I will now finish with a brief summary and outlook. The group delivered a resilient performance in H1 despite ongoing challenging conditions. We saw continued growth in Asia Pacific and the Americas as well as a return to growth in Q2 in Southern Europe. In total, around 50% of the group was in growth in H1. However, trading remained more challenging across France, Northern Europe and the U.K. Against these trading conditions, we've continued to take actions to optimize our cost base, incurring a net one-off charge of GBP 2.5 million in H1. This will deliver an equivalent annualized saving from 2027 onwards.

We have a highly diversified and adaptable business model, strong balance sheet and our cost base is under continuous review. We are announcing today an interim dividend of 1.46p per share or GBP 4.6 million. The Board expects full year operating profit to be in line with company-compiled consensus of GBP 28 million.

Kelvin and I will now be happy to take any questions you may have.

[Operator Instructions] Our first question for today comes from Karl Green of RBC.

I've got one question on Slide 18, which was super interesting in terms of framing how you're thinking about that technology deployment. At one end of the spectrum, you've got human uniqueness and the other, you've got the more sort of tech-enabled dynamics. The sort of question without asking for specific numbers is how far do you think you are along the journey in terms of giving the consultants what they need with the best available technology? Or is this an area where, as we go forward, there is going to be further productivity and efficiency gains to be brought through?

Just thinking again in terms of the consulting capacity, there's clearly a frustration among some of them, the conversion ratios aren't quite where they are. So clearly working very hard. Just thinking about in the future, how many placements per month or per annum do you think that this tech strategy could deliver an uplift of? So just in terms of further consultant productivity. So it's kind of 2 sub questions there [indiscernible].

Yes. Thanks, Karl. It's a really interesting question. It feels like we're right at the start of the journey is the answer to the question at the moment. And I guess, as the technology continues to adapt and change, we'll continue to move along with it. I think that we've often said that we don't really want to be right at the leading edge of technology as it's just coming into the market. It's not being tested. People don't know the implications or risks involved. We want to see that it's being tested, it's robust. It fits within the guidelines of any compliance or governance or legal frameworks in any of the countries that we operate in before we put it into our ecosystem.

As regards to your question around anything that we invest in, whether it's technology or other areas, is always aimed at driving productivity. And we've tried to make it pretty clear in terms of the framework that we're adopting that we see certain areas that really aren't going to change in terms of the way the consultant operates with customers. Areas where we can save consultants' time and therefore, giving them more time in theory means that they spend more time doing the bits that only they can do, which is speaking to customers, which you would logically believe over time will drive up productivity, more conversations, means more jobs, means more interviews, which ultimately should mean more placements.

And then I guess, what everybody is looking for, I think, at the moment, having defined what AI can do well and what the human can do well is where is the sweet spot, where's the augmentation. And I think that's the bit that we will continue to adapt over time. But it just feels like we're right at the beginning. And I guess what we wanted to do by putting the framework out there was just make it very clear that as we put technology in place, we've got really clear categorization in our mind as to where we want to invest, where it's saving time, where it's driving productivity and where we really want to keep the human in front of the customer and not have them driven by technology. Yes, superpowered by it, but not driven by it.

Makes sense. Just a quick follow-up question just on the rebrand. I mean that sea of brands as you put on Slide 14 as well. Have you had any instances whatsoever of clients slightly unsettled by the changes or in any sort of sense there might have been 1 or 2 volume opportunities that have been lost because of the rebranding?

I mean we only rebranded probably 1.5 weeks ago. So there's not really a huge amount to add. I mean it felt like we took over LinkedIn for about a week, which was great. So great to see our brand everywhere. There's a lot of excitement internally, which is lovely. People are excited by the change. I think it makes things a lot clearer for our customers. And I think that in many cases, quite a few of them thought we were called Michael Page already. So it really is just kind of bringing something to the forefront, maybe of a few that already existed.

There's clearly been a long process to get to this point in terms of a very diligent plan that's taken place over 18 months for the countries that were left to transfer across, which was around about 6 that moved from Page Personnel into Michael Page 1.5 weeks ago. And over that time, as you'd imagine, we spent a lot of time consulting with customers, speaking to them about the planned change, making sure they're aware of it, that they're comfortable with it. And overall, I think that it just positions us in a way now that makes it a lot clearer for everybody to understand who we are, what we do, services we provide. And I know internally, everybody is really excited to go forward into H2, working with the new brand and the new positioning. So no, it's good times.

[Operator Instructions] Our next question comes from Abi Bell of UBS.

Just two questions for me. I appreciate tough conditions everywhere, but U.K. and Ireland losses stand out quite a bit. What do you see as the path to return to profitability? And can you share any detail on the shape of the division? Are there any segments that are probably more profitable in their own right today? And which bits do you think you need to come back on?

And then secondly, you highlighted the record performance from Page Executive in H1. Could you give us some sense of the scale of the business today and whether it has the potential to become a more meaningful driver of group profitability in the coming years?

Thanks, Abi. So Page Exec first, to give you an idea, it's about 10% of group profit -- gross profit, sorry. So it's a business that we've really dialed up our investment in since the launch of the new strategy. As I said in the narrative, it's existed as an offering in a number of countries for around about 30 years. So this isn't something that's new to us. But we really drew it out as part of the strategy because there's not only opportunities for the Page Executive brand itself to grow bigger.

But if you think about it, the net impact of putting a new CFO into an organization, someone that you've built a relationship is often that he and she -- he or she goes into the new role, reflect on the finance team that they have in place and perhaps want to make some changes. And the first call that they'll typically make, then it's the consultant in Page Executive that placed them that will refer them to the colleagues in Michael Page and we pick up an assignment or we're putting someone in as a Chief Transformation Officer. And again, they're looking at a role within an organization. They're looking at a piece of transformation they want to do. They're back in touch with us to speak to Enterprise Solutions.

So this referral opportunity that's created by building the Page Exec business shouldn't be just looked at in isolation in terms of 8% to 10% of the group, it's 15%, it's 20% of the group because of the broader impact placing senior leaders makes to an organization like ours for referral into Michael Page or Enterprise Solutions or by geography.

I think then moving on to the U.K. for a moment. I mean it has been tough trading, but I've been really pleased with the decisions that the U.K. leadership team have made over the last 6 months in terms of some restructuring that they've done. They've really focused in on driving productivity. They're starting to see some results from that. And I wouldn't be surprised, it depends a little bit, I suppose, on the political backdrop and the macro backdrop. But based on what we're seeing, I would expect that we'll start to see some certainly improving results in the second half. And who knows, maybe when we get into Q4, into Q1, we might start to see the U.K. back in growth.

And then from there, we want to grow it based on the restructured business, which, as you know, we closed the Page Personnel brand in the U.K. a couple of years ago. So we're trading now very much in that Michael Page, Page Exec space. We're focusing more on interim recruitment than temp recruitment. So not only is the level that we're working at going up, but the productivity is going up dramatically.

And then the core focus then will be based on market conditions, is scaling that model. So a model where we work at more senior levels, on higher salaries, with higher productivity, then let's make it bigger. But that's the bit where we need to be very cautious, careful and make sure that we do it in pace with the market conditions so that we don't draw down on profitability. Because, as you know, Kelvin said it in the presentation is that at a trading level, the U.K. is profitable. It's just that we carry quite a lot of group costs here in the U.K., which have always been gone across to the U.K. business when we announced these results.

So I think that the business itself is trading well. It's trading profitably as a business. But I think that profit will get better as market conditions improve, but also some of the self-help actions that the U.K. leadership have taken come into play, and I feel very confident they will in the second half of the year.

At this time, we currently have no further questions. So I'll hand it back to Nick Kirk, CEO, for any further remarks.

Thank you, and thanks for joining us this morning. Our next update to the market will be our Q3 trading update on the 13th of October. Thank you for joining us.

This concludes today's conference call. Thank you all for joining. You may now disconnect your lines.

Good morning, everyone, and welcome to the PageGroup 2026 Second Quarter Trading Update. I'm Kelvin Stagg, Chief Financial Officer. And on the call with me is Nick Kirk, Chief Executive Officer.

Although I will not read it through, I'd just like to make reference to the legal formalities that are covered in the cautionary statement in the appendix to this presentation and which will also be available on our website following the call.

Despite ongoing challenging market conditions, the group produced a good performance in Q2. Q2 gross profit was GBP 197.6 million, a decline of 0.2% in constant currencies.

For the first half, we delivered gross profit of GBP 385.2 million, a decline of 2.4% in constant currencies. We reduced our fee earner headcount by 80 or 1.6% during Q2, mainly in France and Northern Europe.

Overall, the group ended the quarter with 4,914 fee earners and a total headcount of 6,679. Despite the challenging conditions, gross profit per fee earner, our measure of productivity, remained high and grew 5% versus Q2 2025. In line with expectations and having paid out the 2025 final dividend of around GBP 10 million in June, net debt at the end of June was around GBP 7 million, in line with Q1.

In the first week of July, the cash balance improved to be broadly net flat, and we expect to close the year with around GBP 30 million to GBP 40 million of net cash.

I will now give a brief financial review. We reduced our fee earner headcount by 80 or 1.6% during Q2, mainly in France and Northern Europe. We remain committed to our strategy and continue to reallocate resources into the areas of the business offering the most significant long-term structural opportunities, such as in Asia.

Overall, our focus remains on aligning headcount in all of our markets to activity levels and balancing near-term productivity with ensuring we are well placed to take market share as conditions improve.

We reduced our non-operations headcount by 42 in Q2 or 2.3%. Despite the challenging macroeconomic conditions, productivity remains high and grew 5% versus Q2 2025. We continue to target higher salary level roles and delivered our highest quarterly productivity since 2022. In the markets where we have experienced improved trading, such as in Asia Pacific and our U.S. construction business, this was driven by a normalization of conversion of offers to placements as both candidates and clients became more willing to negotiate and compromise to deliver a successful outcome.

Our business model focuses on white-collar qualified candidates working in specialist management and leadership roles. The supply of this talent remains a key challenge for our clients. And as a result, our permanent fee rates remain at record levels.

I will now present a regional review. Group gross profit declined 0.2% in constant currencies against Q2 2025. Market conditions remain mixed across the group. We delivered a seventh consecutive quarter of growth in the U.S. and a fifth consecutive quarter of growth in Asia.

Page Executive delivered a record quarter with growth of 15% against Q2 2025, demonstrating the success of our strategy, and we returned to growth in Southern Europe in Q2. We also saw challenging but stable conditions in Northern Europe, France and the U.K.

Overall, around 50% of the group was in growth in Q2. In our largest region, Europe, Middle East and Africa, which represented 51% of the group, we declined 4.8% on Q2 2025 with mixed results across the region. Temporary recruitment down 2%, continued to be more resilient than permanent, down 6%. Germany, the group's largest market, which represented 12% of the group, declined by 4% in Q2, albeit against a soft comparator.

We saw strong results from our contracting business and Page Executive, but trading was more challenging in our Michael Page permanent recruitment business due to a combination of renewed energy price shocks, ongoing geopolitical tensions and weak market sentiment.

France, our second largest market, declined 12% due to ongoing political and macroeconomic uncertainty. Reflective of market conditions, temporary recruitment, down 7%, continued to outperform permanent, down 16%, where job acquisition per fee earner remained weak in Q2. As in the previous quarter, clients have become increasingly selective, slower to make decisions and more conservative on salary offers.

As a result, the recruitment process has become more complex and time to hire has increased. Southern Europe, which represented 14% of the group, returned to growth in Q2. Spain continued to deliver the standout performance, up 9%. Italy grew 7%, driven by a particularly strong performance in Page Executive. Trading in Northern and Central Europe remained more challenging in all markets. The Middle East declined 24% as both client and candidate confidence remained subdued amid the regional conflict. In line with the tougher trading conditions in Q2, we reduced our fee earner headcount by 62, mainly in France and the Netherlands.

The Americas, which represented 21% of the group, grew 7.2%. North America was up 5% with the U.S. up 5%, a seventh consecutive quarter of growth and an improvement on the growth of 1% in Q1. Construction, our largest discipline, continued to deliver the standout result, up 12%. In addition, we saw a return to growth in our second largest discipline, Engineering and Manufacturing, up 22% with improving client confidence and high demand for talent, particularly in the aerospace, defense and electronics sectors. However, we are yet to see a broad-based recovery with tough conditions in most other disciplines.

In Latin America, gross profit was up 10%. Mexico, our largest country in the region, grew 7%, an improvement on the 8% decline in Q1, albeit against a softer comparator. We continue to see ongoing tariff-related uncertainty in this market. Brazil was down 6%. Temporary recruitment up 12%, continued to outperform permanent, down 14%. Ahead of the general election in H2, clients are taking a more cautious approach, postponing both hiring and investment decisions.

Colombia, which now represents around 20% of Latin America, was the standout market in the region, delivering a record quarter, up 15%, with another particularly strong performance in our technology-focused consulting business. Elsewhere in Latin America, our remaining countries grew 29% collectively. Fee earner headcount in the region decreased by 33 with the timing of the next intake cohort of fee earners in the U.S. starting in early July.

In Asia Pacific, which represented 17% of the group, Q2 gross profit grew 9.4% on 2025. In Asia, which represented 14% of the group, we grew 11%, our fifth consecutive quarter of growth with 9 out of 11 markets growing. We continue to see improvements in both candidate and client confidence, which is helping to secure placements, particularly for more senior roles.

Greater China was up 17%, an improvement on the growth of 11% in Q1. Mainland China grew 28% due partly to a soft comparator, but with improved trading across both brands. Customer sentiment remains stable with increased willingness to make decisions, resulting in improved offer to placement conversion rates.

Hong Kong was up 2%. Southeast Asia grew 4% with strong trading conditions across most of our markets in this region. In Japan, where we have invested in fee earners due to the size of the market and its strategic importance, we delivered another standout performance, up 18%.

India grew 7%, another record quarter. Australia was flat with stable market conditions. We increased our fee earner headcount by 26 in the quarter, mainly in Japan and India. In the U.K., which represented 11% of the group, gross profit declined 5.3%. The market remains tough but stable with pockets of optimism beginning to appear in Page Executive, Interim and Technology.

Reflective of market uncertainty, temporary recruitment, up 1%, outperformed permanent, down 8%, where we continue to see lower job acquisition levels per fee earner. We reduced our fee earner headcount by 11 in the quarter.

I will now provide a summary of our results. Despite ongoing challenging market conditions, the group produced a good performance in Q2. We saw continued growth in Asia Pacific and the Americas as well as a return to growth in Southern Europe. In total, around 50% of the group was in growth. However, trading remained more challenging across France, Northern Europe and the U.K. In the markets where we experienced improved trading, this was driven by a normalization of conversion of offers to placements as both candidates and clients became more willing to negotiate and compromise to deliver a successful outcome. In the markets where trading remained challenging, we are yet to see any improvement in this metric.

We remain committed to our strategy and continue to reallocate resources into markets where we see an improvement in business confidence and activity levels, such as in Asia. The progress we are making in productivity, technological innovation, operational efficiency and strategic execution demonstrates that our strategy is working and positions us well for future growth. We continue to harness the power of Page and our position as the global leader for specialist management and leadership recruitment, placing more senior talent at higher salary levels and at higher fee rates, which has driven our highest level of productivity since our record year in 2022 and a record quarter for Page Executive.

We have a flexible cost base through our fee earner headcount, which adjusts naturally to market conditions. Alongside this, we continue to control the cost base tightly and have undertaken various programs since the launch of our new strategy to manage it in light of the tougher market conditions. These programs included managing our support headcount, moving our SSCs to more cost-effective locations, closing offices and reducing management layers.

Collectively, excluding savings due to the reduction in fee earner headcount, these initiatives have delivered annualized savings of around GBP 40 million. This cost base control has continued in 2026, incurring some one-off costs, which we will cover in more detail at the interims. Whilst we have seen an improvement and signs of a normalization in trading in a number of our markets, there still remains a high degree of uncertainty in the outlook for the rest of the year. We have a highly diversified and adaptable business model, a strong balance sheet and a cost base that is under continuous review. The Board currently expects 2026 operating profit to be in line with company compiled consensus of around GBP 28 million.

Nick and I will now be happy to take any questions you may have.

[Operator Instructions]We will now take our first question from Andy Grobler from BNP...

Just a couple from me, if I may. Firstly, on the conversion of offers to placements, which you talked to, which areas are seeing improvement?

And are there any areas that are still going backwards on that metric? And kind of broadly across the group, where does that stand versus, I guess, either both the trough and where you would expect it to get to a normalized market?

And then secondly, just on the U.K., some of the market data was better in June and on a 2-year stack, you've made big strides in that region. Are you seeing that improvement through the course of the quarter? And how do you see this pan out through Q3 given changes to government and so forth that are impacting [indiscernible]

Thanks, Andy. I can take those 2. So in terms of conversion of offers to placements, I mean, broadly, where we're seeing improvements in results, that's where we're seeing improvements of the conversion of those offers to placements. So I suppose where it's most embedded is somewhere like the construction business we have in the U.S., where we've seen a seventh consecutive quarter of growth. And that would now be back up to where it would have been at peak as you referred to it, so probably 4 out of 5. So back to normal levels, you still always get turned down because a candidate might get multiple offers and we'll pick another one over your one, et cetera, or you might still get buyback.

But that certainly returned to more normal levels as it has across many parts of Asia now where we've had 5 consecutive quarters of growth, so very much back towards where it would have been. I think in your question, you said, are there any markets where it's going backwards? I don't think there is. I think probably most of the markets where it's tougher, it's stable, but stable at a lower level. So at that level of around 3 out of 5 rather than 4 out of 5, I'm thinking markets like France as an example of that.

So as we start to see kind of more normalization across other markets, we would start to see that rate of conversion improving. And indeed, what we've seen is a kind of shape of recovery, if you like, now that we've been able to analyze the recovery we saw in the U.S. with the recovery we've seen also in the broader Americas region now, across Asia over the last 5 quarters is it tends to be more of a recovery in perm that's driven by conversion and productivity than it is by activity. We haven't seen a huge spike in more jobs, more interviews. It's just the consultants are getting more of a return for the work they're doing. Because more of the processes that they're managing are resulting in successful outcomes.

For somewhere like the U.S. construction business now that is, as we said before, 7 quarters into a recovery, they are now starting to also see top of the funnel gains as well, and we'll react to that by bringing some more fee earner headcount selectively as we move through the second half of the year.

As we come back to then the U.K., yes, we're pleased to see the result in the U.K. It's been tough in the U.K. for quite a period of time. And we're starting to see some pockets of optimism, areas like Page Executive, Interim, Technology, all performed pretty well in Q2. So we're pleased with that. I think it is still relatively fragile is business confidence, and you referred to potentially a change in leadership of the country, and we'll have to wait to see what that means for business. I don't know at this stage because I haven't seen any policies. So we'll wait and see.

But I think what we're doing in the U.K. is very much self-help. We're focusing on the areas where we believe we can operate well. We, as you know, closed our Page Personnel business here back in 2024. So we're now over a year on from that. And we're seeing the results of that. Our productivity in the U.K. was up 11% in Q2. And that's as a result of us trading up and moving more into the Michael Page and Page Exec markets and really putting our resource into those businesses.

So yes, pleased with how the U.K. is going, but still relatively early stages and not back in growth as yet.

We will now take our next question from Karl Green from RBC.

Just a couple for me as well. On the cost base control measures, which you've alluded to in the statement. I know you're going to elaborate on this more at the interim phase. But just kind of any early hints as to the phasing around this in terms of costs going in and then benefits coming out of the other side at this stage?

And then the second question, on Americas, you did reference Mexico having a soft comp year-on-year. That looks like it's pretty soft actually for the next couple of quarters as well. So the question would be, are you confident that we're going to see good levels of like-for-like net fee growth continue in the Americas as you see things at the moment?

Thanks, Karl. Okay. Well, I'll take the Americas question and then pass over to Kelvin for the cost base question. I think, yes, as regards to the Americas, I mean, we saw, what, 9% growth in the LatAm region. And it's really trading in line with expectations.

Mexico is our biggest business there. And as you alluded to, it had a stronger quarter, up 7%. It seems to be a bit more improved confidence. We're still waiting on the outcome of the renegotiation of the NAFTA deal between the U.S. and Mexico, but we hear that, that's kind of anytime now type situation. So that's positive.

And again, what we saw there was growth coming through improved productivity. So this, as I said before, this return to normalization of offers converting into placements and productivity in Mexico was up 24%. So we were delighted with that.

Brazil is still a little bit tougher. We're waiting on the results of the outcome of the upcoming election later in the year. And so that's kind of just put people in a situation where they're holding off on decisions at the moment, but hopefully, that will settle down once the result is known.

Colombia is really the success story for us in the Americas at the moment, another record quarter, over 100 heads and a strong focus on tech consulting. And that was up 15% in Q2, and I don't see any reason why that will soften in the second half of the year.

So no, I think that certainly our performance across the Americas, LatAm region specifically is looking good going into the second half.

Yes, I can pick up the cost question. So I think we, as always, have got various different activities going on to try and streamline the business in terms of the cost base.

This year, it's primarily looking at back-office operations. So as we've mentioned before, we've got a transformation program running in our HR function. We have just gone live in Asia Pacific with SAP SuccessFactors, which is an HR system. And we're in the process of moving the HR function into the shared service centers around the group.

We also have a number of activities ongoing around the location strategy where we, for legacy reasons, have got people in support functions that are in relatively expensive countries, and we continue to move those roles into shared service centers in the lower-cost locations.

So I expect that the one-off costs relating to all of those activities will be mid-single digit and split broadly 50-50 first half and second half. But we will go into a bit more detail about all of that when we get to the interims.

Next, we will take questions from James Rowland Clark from Barclays.

Two short ones, I think. So my first is just on the better conversion rates that you're seeing at the moment or that have been ongoing in the U.S., but have improved elsewhere in the group in certain regions. Is that simply candidate confidence? Or is there something else that's driving that? Is there maybe improved salary offers or anything like that sort of underlying that improvement?

And then secondly, just on operating profit unchanged. With the better top line trends you're seeing, one might have thought that, that would be moving up. Is the one-offs the reason it's not?

Thanks, James. I mean, as regards to improving conversion rates for anyone who's been involved in moving jobs, it's a cocktail of things. It's never one simple outcome. It's not just about offering more money or flexibility or even being that one-sided. It's a client situation and the candidate situation where that chemistry has to work. It's 2 humans in a room. It's about the financials. Of course, it is. It's about selling the story of a future opportunity and career opportunity for the individual. It's also about that individual feeling connected to the culture of the company. And that's why we so strongly feel the role of the consultant, the human in the process is vital as we move forward.

So I don't think it's down to any one thing at the moment. It will be partly due to better offers on the table. It will be partly due to candidates feeling a bit more comfortable about moving. It will be partly due to clients who have order books and commitments with their customers, and they need to fulfill those commitments and therefore, need resource on board. So it's always lots and lots of different things. But clearly, from our perspective, it's pleasing to see some of those elements starting to be more positive than they have been.

Yes. And on the operating profit question, the simple answer is yes, it relates to the one-off costs. We normally expect and we did see about a 70% drop-through from the incremental gross profit, which is essentially the profit share that we'll pay away, 30% is the profit share that we pay to the consultants for the incremental revenue. That will drop through as you would expect from the gross profit in the first half.

But with, as I say, mid-single-digit one-off costs that really offset it. Without that, yes, we would have been moving operating profit up.

The next question is from Steve Woolf from Deutsche Bank.

Just a quick 2 for me. One on Germany and your thoughts on the reforms that are happening there and how that sort of fits in with investment in the business there? And then secondly, your peer on Friday mentioned they've seen some softness in the perm market creeping in. Your statement definitely doesn't suggest that at all. I was wondering whether you would be kind enough to perhaps marry the 2 comments together.

Yes, sure. I can take those. So Germany, I mean, it feels a bit of a mixed picture around the reform, Steve, because I guess when we talk to our team locally, it's probably a little bit like AI headlines is that there's many of them and they're very conflicting. And I guess that's where we are really in Germany is that no one seems to kind of fully know the impact of the investment. Is it just plugging holes in the existing budget or is it genuinely new investment that will create growth and therefore, jobs.

So at the moment, our focus really is around what we're doing. The business there performed, as we said, performed well, but we wanted to make it clear that it was against a soft comparator. Activity levels and sentiment are pretty stable for us in Germany. As you probably know, our business is split about 50% perm and then 50% non-perm. And of that, it's split 10% temp, 40% contracting. And the contracting business is the part that's going particularly well for us. We saw 10% growth there in Q2, focused around finance and technology.

So -- and we also experienced some growth in our number of runners, which speaks well for the second half of the year. So overall, in Germany, no, we were pleased with the results, but I'm not particularly linking that to any elements around the reforms, et cetera, because unless you've read something that I've not read, we haven't actually seen any concrete evidence of that as yet. And we're certainly not getting that feedback from clients saying that they're recruiting ahead of the reform.

So I think it's still a little bit wait and see. As regards to your next question, I mean, probably the 2 health warnings I'll call out because we have them in the statement is that on perm in the U.K., still a little bit tougher and perm in France is still a little bit tougher. But outside of that, though, no, not at all. I mean, we're predominantly perm business. And therefore, if our results are getting better, it's because perm is getting better. So outside of those 2, perm is going well for us.

We will now take our next question from Abi Bell from UBS.

Just a quick 2 for me. You previously touched on this, but in the release, you commented on a few soft comparatives across a few of your markets. Is there anything we should be aware of heading into the Q3 or the next few quarters in terms of soft comparatives? And then secondly, could you give us a bit more color on the Page Executive performance? You commented on that driving a strong 15% growth this quarter. Could you comment on any of the regions or end markets that drove this? And also where are you planning to scale or invest this part of the business by region or vertical?

I don't know off the top of my head if there's any particular soft comparators that we'll be calling out for H2 just immediately, maybe whilst I'm talking about Page Executive, Kelvin can have a think, but there's nothing immediate that's coming to mind.

In Page Executive, let's talk about that for a moment. When we were developing our strategy, it was the area that the Exec Board really kind of came together on and felt very strongly that we have this, I would say, unique opportunity as a global recruiter with a really strong brand to occupy what we refer to as the market gap, which is that space above the level that Michael Page operate, which in GBP would be, say, up to about GBP 100,000, GBP 120,000 basic salary. And then the market below the big global SHREK firms, the Korn Ferry, Spencer Stuart, the Heidrick, et cetera.

So really for them, anything below probably 300,000, 350,000 base salary. So there's a big space up there. And what we found is that there really isn't any established player in the market, certainly not a global player, sort of boutiques locally. But we remain more convinced than ever that the strategy around Page Executive is the right one. It's helping to drive up average fee rates. It's helping to drive up average placement rates, et cetera.

So overall, yes, very happy with the performance. All regions, frankly, Abi, all regions performed strongly. There's not really one that I would pick out. Everywhere performed well in Page Executive. And it's -- as a business, it's 92% perm. So it is very perm heavy. The fees are big. So when they land, they make a big difference at a country level. Clearly, if they don't, they also make a big impact at a country level.

And as regards to headcount, we grow Page Executive very much as we grow the group. We look at activity levels, we look at opportunity and then we hire into those markets, and we hold headcount where we're still waiting for the productivity to catch up. What was nice about Q2 was we were able to grow headcount by 5%, whilst growing productivity by 10%. And that's the perfect mix for us. I mean, if we can be growing headcount and productivity at the same time, it speaks to better market conditions.

In terms of maybe a little bit more color if it helps. I mean our top 3 practices globally are manufacturing, consumer and finance. They're the big 3 for us, albeit that we do operate in others, but they're the biggest 3 in terms of mix. So no, I'm delighted with the performance of Page Exec and hopefully, we'll continue to see that through the remainder of the year.

Yes. Looking at comp, Abi, I don't see there's anything particularly as an outlier in Q3 or Q4. The comps do get tougher, particularly in Q4, which sort of reflects where the business started to recover at the latter end of last year. But there's nothing -- maybe at an individual country level, there might be 1 or 2 relatively small ones, but certainly at a regional level, no. The comps are all fairly steady.

There are no questions waiting at this time. I will pass the conference back over to Kelvin for any further remarks.

Thank you, Sherry. As there are no further questions, thank you all for joining us this morning. Our next update to the market will be our 2026 interim results on the 6th of August 2026. Thank you, and have a good morning.

Good morning, everyone, and thank you for joining us on today's PageGroup Q1 trading update. My name is Drew, and I'll be the operator on the call today. After today's prepared remarks, we will have a Q&A session. [Operator Instructions] With that, it's my pleasure to hand over to Kelvin Stagg, Chief Financial Officer, to begin. Please go ahead.

Thank you, Drew. Good morning, everyone, and welcome to the PageGroup 2026 First Quarter Trading Update. I'm Kelvin Stagg, Chief Financial Officer; and on the call with me is Nick Kirk, Chief Executive Officer. Although I will not read it through, I'd just like to make reference to the legal formalities that are covered in the cautionary statement in the appendix to this presentation and which will also be available on our website following the call.

The group produced another resilient performance despite the heightened geopolitical and macroeconomic uncertainty. Q1 gross profit was GBP 187 million, a decline of 4.9% in constant currencies against 2025. Our fee earner headcount increased by 26 or 0.5%, driven by growth in the Americas and Asia Pacific, partially offset by reductions in EMEA in the U.K. Overall, the group ended the quarter with 4,994 fee earners and a total headcount of 6,801.

Despite the challenging macroeconomic conditions, gross profit per fee earner and measure of productivity remained high and grew 2% versus Q1 2025. We had net debt at the end of March of around GBP 7 million, in line with expectations. This compares to net cash of GBP 31 million at the end of 2025, having paid our annual bonuses and the quarterly profit share in January.

I will now give a brief financial review. We increased our earner headcount by 26 or 0.5% during the quarter. We continue to review our fee on headcount, reallocating resources in line with our strategy in the areas of the business offering the most significant long-term structural opportunities, as well as ensuring it remains aligned to the levels of activity we are seeing in each of our markets.

And this was particularly evident in Q1, where in response to the tough conditions in EMEA in the U.K., we reduced our fee earner headcount by 80 However, in Asia Pacific and the Americas, due to the continued growth and to maximize market share, we added 106 fee earners. We reduced our nonoperations headcount by 45 in Q1.

Despite the challenging macroeconomic conditions, productivity remained high and grew 2% versus Q1 2025, where we have experienced improved trading in parts of Asia Pacific and the U.S. This was driven by a normalization of levels of conversion of offers to placements. In our other countries, where trading remains challenging, we are yet to see any improvement in this metric.

Although our clients' recruitment budgets have tightened in many markets, which extends time to hire, our fee rates remained at record or high levels across all regions. Salary levels remain strong, although the level of increases offered to candidates were not as elevated as they were in 2022 and early 2023. And as a consequence, the conversion offers to placements remain the most significant challenge.

I will now present a regional review. Group gross profit declined 4.9% in constant currencies against Q1 2025. In line with the 3 previous quarters, we saw variable market conditions across the group with ongoing challenging conditions in Europe and the U.K. However, we delivered a sixth consecutive quarter of growth in the U.S. and a fourth in Asia.

In our largest region, Europe, Middle East and Africa, which represented 54% of the group; we declined by 9.2% on Q1 2025. We continue to see tough conditions throughout most of the region with low levels of candidate and client confidence.

Germany, the group's largest market, which represented 13% of the group; declined 7% in the quarter, broadly in line with Q4, with activity levels and business sentiment remaining stable. In line with Q4, our interim business was the most resilient, down 1%, and we continue to see high demand for project-based work, particularly in finance.

France, the group's second largest market, which represented 12% of the group; declined 14% due to the ongoing political and macroeconomic uncertainty, leading to continued high levels of candidate and client caution.

Temporary recruitment down 10%, continued to outperform permanent, down 18, where we saw a 9% reduction in job acquisition per fee earner in Q1. Clients become increasingly selective, slower to make decisions and more conservative on salary offers. As a result, the recruitment process has become more complex and time to hire has increased.

Spain continued to be the strongest performing market in the region, growing 1% with ongoing good levels of candidate and client confidence. Elsewhere in Europe, market conditions remain challenging in all countries.

In the Middle East, where our first and foremost priority is the safety and well-being of our 70 people, we declined 12%, with clients in Canada confidence having deteriorated further due to the regional conflict, which also increases the risks of backouts and hiring freezes. Overall, for the region, our fee earner headcount reduced by 51 in Q1.

The Americas, which represented 19% of the group, grew 1.1% against Q1 2025. The U.S. was up 1%, its sixth consecutive quarter of growth. Our largest discipline of construction continued to deliver the standout results, up 14%. This has been driven by high hiring demand in all markets, notably in commercial, multifamily and health care, where the demand for experienced project managers and superintendents remained high. However, we are yet to see a broad-based recovery with tougher conditions in most other disciplines.

In Latin America, gross profit grew 1%. Mexico, our largest country in the region, declined 8% and an improvement on the 17% decline in Q4, although we continue to see ongoing tariff-related uncertainty. Brazil was down 7%, albeit against a tough comparator. Temporary recruitment up 12%, continued to outperform permanent, down 17.

Colombia, which now represents around 20% of Latin America, delivered the standout performance, up 15% with particularly strong trading in our technology-focused consulting business. Our other 4 countries in the region grew [ 16% ] collectively. Overall fee earner headcount increased by 48 in the quarter, mainly in the U.S.

In Asia Pacific, which represented 16% of the group, Q1 gross profit grew 9.3% on 2025. Asia was up 10%, its fourth consecutive quarter of growth, an improvement on the growth of 7% in Q4.

In Greater China, which represented 4% of the group, we grew 12%, albeit against a soft comparator. We continue to see improvements in both candidate and client confidence, which helped to secure placements, particularly for more senior roles. Mainland China and Hong Kong were up 21% and 4%, respectively.

Southeast Asia grew 5%, with Singapore up 16 and strong trading conditions across most of our markets in this region. India, where we now have over 260 fee earners, was up 10%, its fifth consecutive quarter of double-digit growth. Elsewhere in Japan where we have invested in fee earners due to the size of the market and its strategic importance, we grew 17% and notable improvement on the growth of 3% in Q4.

Australia was up 4%, its second consecutive quarter of growth, supported by good results across most states and particularly strong trading in Victoria. Despite a decline in external job volumes, our consultants delivered strong job acquisition and interview outcomes from a lower headcount, driving improvements in productivity. We increased our fee earner headcount in the region by 58, mainly in Southeast Asia and India.

In the U.K., which represented 11% of the group, gross profit declined 11.4%. The market remains tough, with clients continuing to delay hiring decisions and candidates remaining cautious about accepting offers. Temporary recruitment down 7% outperformed permanent, down 14%, where we saw a 9% reduction in job acquisition per fee earner. Our as earner headcount reduced by 29 in the quarter.

I will now provide a summary of our results. The group produced another resilient performance despite the heightened geopolitical and macroeconomic uncertainty. In line with the previous quarters, we saw variable market conditions across the group. The conversion of offers to placements remain the most significant area of challenge as ongoing macroeconomic uncertainty continued to impact confidence extending time to hire.

We remain committed to our strategy and continue to reallocate resources into the areas of the business where we see the most significant long-term structural opportunities as well as ensuring headcount in all of our markets is aligned to activity levels.

Overall, our focus remains to balance near-term productivity with ensuring we are well placed to take advantage of opportunities as market conditions improve.

Whilst we have seen signs of normalization in trading in some of our markets, increased geopolitical and macroeconomic risks due to the conflict in the Middle East create a heightened degree of uncertainty in the outlook for the rest of the year.

Despite this market outlook, we continue to focus on controlling the controllables and invest in innovation and technology and remain confident in the execution of our strategy. We have a highly diversified and adaptable business model, a strong balance sheet and a cost base that is under continuous review.

Nick and I will now be happy to take any questions you may have.

[Operator Instructions] Our first question today comes from Abi Bell from UBS.

Just two questions from me. Firstly, March is typically a seasonally significant hiring month. So did you observe any notable change in trends as the quarter progressed? Or was activity fairly consistent across the 3 months?

And then secondly, we continue to see a very mixed regional trends with sustained in the Americas and APAC compared with much tougher conditions in Europe. Could you help us unpack what is driving that divergence and whether you view the strength in the Americas and APAC as primarily cyclical or is it more structural? Or is it more so positioning relative to the weakness in Europe?

No problem. I can take those two. So the first question, I mean, we don't comment on month-by-month trading. I mean we already update you every quarter. So we don't really want to be dragged into month-by-month update as well.

As regards to your second question, yes, it is mixed. I think there's quite a lot to talk about in relation to that question. I mean first things first, if you remember back to probably the start of or end of '22, start to '23, we have markets like Asia and the Americas starting to soften in terms of performance earlier than Europe, which probably continued to perform pretty well right through until the end of 2023.

So there's a bit of a timing thing that the Americas and Asia went into the downturn first. And therefore, one could assume that they would come out of it first. I think then even between the two markets, there's variance because if we look at the Americas and more specifically within that, the U.S., what we haven't called over the last 6 quarters is a broad-based recovery, and we're still not seeing on areas like financial services, finance, sales and marketing, legal, still all really tough.

We're just grateful of our strategic positioning into construction, which is 55% of our business. That market is really hot at the moment. We would expect it to continue to be hot throughout this year. And there's a severe lack of talent for the roles that we recruit, which are only 3 job types. We look after estimators, we look after project managers, and we look after site supers. Those are the only 3 that we do.

They are the leadership roles within construction. And as I said, there's talent shortages all over the U.S. for those positions, and we're benefiting from that.

In Asia, we've seen now, what, 4 quarters of growth. It's very pleasing to start to see some of the investments that we've made in markets like Japan, for instance, beginning to pay off. very pleased with the quarter that we have there.

As we are with the recovery that we've seen now in Mainland China, having had a really tough 2 or 3 years, so yes, there's there's a lot of kind of regional variance in the answer to that question. But I think at the moment, what we're seeing in those markets is a recovery, which is very much around a cyclical recovery, i.e. in those markets before they started to recover, the issue that they were experiencing was the conversion of offers to accepted offers.

And we talked about a ratio that in a normal market would be around about 4 and a drop to around about 3. In places like Europe and the U.K., it's still hovering around that 3 figure. In markets like construction in the U.S., it will be back to 4. In other markets in the U.S., it will still be hovering around 3.

And in Asia, very much you could just do a list of company -- countries that are growing. And the ones that's really starting to kind of deliver good growth are the ones where you're starting to see that conversion rate of offers to accepted offers going back towards 4.

Our next question today comes from Remi Grenu from Morgan Stanley.

I've got two. So the first one would be on France specifically, which I think was quite weaker. And looking at some of the data, so indeed job posting, for example, started to get significantly worse from beginning mid-March onwards.

So I was wondering if there is anything happening in this country. I know you're calling the political background, but it's been difficult over the last 12 months. And if anything, it has probably stabilized a little bit over the last 2 quarters. So trying to understand what's happening in this market specifically.

The second one would be on the outlook. So you're calling for a higher level of uncertainty. Just wondering if you start to think about any potential initiative on the cost side? And what are your room of maneuver on that front? I'm just trying to understand a little bit if we think worst-case scenario and lower volume of placement over the next few months, what could be the drop for the negative impact on operating profit?

Yes. Okay. Thanks for your question. I'll take the first one and then pass over to Kelvin for the second one.

Yes. I mean, France is our second largest market. And it's tough. I mean, I take onboard your point there around the fact that it's been tough for a period of time. And one could argue for the past couple of quarters, there's a bit more stability. But stability, having come off the back of -- lost count of how many Prime Ministers France has had over the past 2 or 3 years it's been a very, very uncertain and to some degree, unprecedented period for business in France. We've seen candidates becoming increasingly cautious, especially for permanent roles.

That said, the best candidates are often involved in multiple processes, which just increases the competition to get the very best candidates and increases, therefore, backout rates when a candidate gets 2 or 3 offers.

There is a bit of variety across the sectors. I mean probably not a huge surprise that the best-performing sectors are defense and aerospace. But as we move through the quarter, we've certainly seen some softening in new job acquisition, and we felt that was important to call that out because France is such a big market for us. And we've seen there what round about circa 10% reduction in new jobs per fee earner. So that would be a bit of a concern for us going into Q2.

And the comment that I get consistently when I speak to leadership over in France is that they don't believe that there will be any significant change for the positive anyway until we get through until summer next year when they have the presidential election. So I think we're in for a bit of a tougher item, I'm afraid.

Yes, let me take the one on the outlook and costs. So clearly, as we've highlighted in the statement, the outlook has got more uncertain. I think the war in the Middle East, the possible impact from that on oil prices, and therefore, possibly inflation and interest rates is one that we're fully aware of and monitoring closely.

I think we obviously look at our costs in two different buckets. So we have our operational costs really in terms of the fee earners. And as we always say, we try and align those with the level of job activity we have in the market.

Generally, up until now, certainly, in most cases, we're not seeing a reduction in the number of jobs. We've been seeing a challenge at the bottom of the funnel in terms of the conversion of offers into placements and therefore, the monetization of those offers.

However, in a couple of markets, as I mentioned during the update, we have seen job acquisition come off by 9% in France, 9% in the U.K. I think you may well, therefore, see us realigning the number of fee earners that we have in those markets using natural attrition with the level of jobs that we've got to work, albeit in the U.K., we have had a bit of a restructure in the U.K. and therefore, we are moving people within the U.K. into other disciplines where we're seeing better activity.

When I then look at the nonoperational costs or the global business solution costs, we've got a number of activities either that have just concluded. So the transition of our shared service center out of Singapore in Kuala Lumpur is now complete, and we're working on efficiencies within that new shared service center.

We have the HR transformation program that started about a year ago and will carry on through the rest of this year. which is really about rolling out a new HR system about moving the HR function out of local countries and into our shared service centers, primarily in KL, with both the efficiencies and [ waiver ] arbitrages that, that will deliver.

We've been running location strategy for some time, moving support roles out of more expensive locations, London would be an example, into places like Barcelona, Buenos Aires and Kuala Lumpur. And we will also continue to see where we can streamline activities outside of that.

While we don't have anything to announce at this point, we do have a lot of activities ongoing, looking at those costs, and we may well be able to update you with something a bit more material when we get to Q2.

Our next question today comes from Steven Woolf from Deutsche Bank.

Just one question sort of following up on the headcount side of things. I'm wondering where your thoughts were on the investment of which I presume will continue, were required in the U.S. and in parts of Asia going forward.

With the other parts where you've taken the headcount of the fee earners out, if it's not a question more about the number of jobs, more the number of conversion, is there a point we're reaching where it starts to cut into the muscle a bit if you continue to take parts down. I just wondered how close we are to that point.

Yes. It's a fair question. I mean what we're trying to do in all of our markets, as we previously mentioned, is balanced near-term productivity with retaining the platform. So if you take, for instance, Germany in Q1, productivity was up 5%, headcount was down 8%. So that's kind of what we're trying to do everywhere.

And I think that it's obviously harder in markets where you're seeing significant levels of contraction, so whether that's France or the U.K., and hence, the reason we call that out. And Kelvin just spoke about it a moment ago is that we'll continue to keep an eye on productivity to ensure it's in the right place. I mean, in Q1, it was, I mean, in the U.K., our productivity was up 9%. And in France, it was up 1%. So it was about right.

But yes, that will be the balance as we go. I don't think we're close to a point where we're cutting into muscle. But at the same time, we just have to see how things progress, particularly in relation to the Middle East because that's the big unknown at the moment.

I think if we take that off the table, then I think there's a lot of positives in our results today. But clearly, the outlook is just incredibly uncertain because of what's going on over there and nothing off the table as a result.

[Operator Instructions] Our next question comes from Karl Green from RBC.

A couple of questions from me. Just in terms of a question around offers, are there any areas outside of Asia and the U.S., where you're seeing any inklings of softening of client intransigent around the level of offers being put to candidates? That's clearly been an issue in some verticals in some geographies. Just any kind of areas where you're seeing clients getting a little bit more realistic about the kind of package that is required to get people to move?

And then the second question, just a bit more straightforwardly, just in terms of any latest thoughts on the shape of the balance sheet as the year progresses, please.

Thanks, Karl. Okay, I'll take the first one. I mean, not really. No, I mean the offers conversions improving in the markets that we've already highlighted. But it's a bit more nuanced than that, which I'll try to explain.

So for instance, I spoke a moment ago about France and the fact that over there at the moment, you've got the best candidates involved in multiple positions. I mean clients want the very best candidates, the very best candidates are wanted by most of our clients before they come to the table and they get more than 1 offer. They can only take 1 of those offers.

And if it isn't the 1 that we worked with them on, then we receive no money for the work that we do. It doesn't mean that we didn't have a good candidate at the end. It doesn't mean there wasn't a sensible conversation, and it doesn't mean that the candidate and client weren't interested in trying to make the deal happen. It just happened that they had another offer on the table that was better in some shape or form.

So in all countries that we operate in, even in these conditions, the best candidates when they come to market will find that there'll be a home for them, there will be an offer on the table. That is a case of is it enough? Is it going to get them over the line? And is there a current employee going to make an effort to keep them? And if so, how much of an effort are they going to make?

So I guess, at a top level, just to answer your question, no, the markets where we've seen more sensible conversations happening are in the U.S., but not every market, as I said earlier, specifically in construction, less so in areas like finance, legal, sales and marketing, banking, et cetera, where it still remains difficult.

The markets that are starting to come back online in Asia, that's because, again, we're starting to see more sensible conversations, improving the chance of offers turning to accepted offers.

And in the other markets like Europe and the U.K., there's just a lot of caution. People don't enjoy recruiting. So it's not as if people spend time deciding they'll fill their day by doing interviews, either going to them or actually running interviews. It's a drag for most clients, and candidates don't particularly like doing interviews either.

So if the client is committed to interview, it means that they're committed to hiring. But when it gets to the end of the process, there's just a lot of barriers there, which could be the candidate is not quite good enough. They are a good candidate, but not a great candidate. The candidate looks at the client and goes, yes, it's a good opportunity, but is it that much better than the one that I am in at the moment? Is the offer that much better than the one I have at the moment? Et cetera, et cetera.

So there's just a lot of nuance within the process, which results in this kind of conversion rate figure that we're using. But it often feels quite blunt when we talk about it because there's a lot more subtlety to it than that. And there's so many factors that go into it.

But at a broad level, you're seeing that normalization out in places like Asia, which is what we expected. You're seeing that normalization in places like the U.S. construction sector. But in most of the markets, that is the key challenge that we face, which is that conversion of offers to accepted offers.

Yes. I'll take the one on cash. I guess, just to start out, whilst announcing a net cash number for us at a quarter end or any period end is unusual. It was exactly in line with what we expected when we made the decision on the final dividend, which totaled GBP 10 million at the prelims. It's not unusual for us to drop by about GBP 40 million between the year-end position and the end of Q1.

If you look back to the 2024 year-end where we had GBP 95 million of net cash, that had come down by about GBP 40 million when we got to the end of Q1. At the end of 2025, we had GBP 31 million. And therefore, being at minus 7 is not unusual, and it is very much in line with expectations.

The reason you probably see it as being net cash and historically wouldn't have been is more because we now believe that we can run the business structurally on about GBP 25 million worth of net cash rather than the GBP 50 million that we historically would have needed, and that's to do with good cash flow management.

I still fully expect that by the year-end, we'll be back in a net cash position, subject to trading and subject to decisions on further dividends during the year. But I'd expect us to be GBP 30 million and GBP 40 million.

Given that we're paying GBP 10 million, sorry, out in June for the final dividend, we could well be in roughly the same net debt position of about minus 5, somewhere around there when we get to the half year.

Our next question comes from James Rowland Clark from Barclays.

Just one question, please. I think you mentioned there that potentially in what you said in France that you're down 9% in terms of job acquisition per fee earner and that perhaps they had lots of job offers per candidate on the table, and they were deciding between them. Is that -- is there a greater level of competitive pressure in France?

And then, as you talk about the conversion to accepted offers being the biggest challenge, particularly outside of U.S. construction and Asia Pac, is that -- is it a competitive pressure that is playing a role in the conversion? Do you think there's a little bit more competition perhaps on price, perhaps just activity, more staffers be a bit more aggressive? Is there anything there to speak of in terms of that conversion being a little bit tougher? Thank you.

There are kind of two separate points and apologies if I brought the two together because that wasn't the intention. So just to explain, we've seen new job acquisition on perm roles. So again, specifically permanent roles, not temporary roles. New job acquisition for permanent roles was down 9% in Q1. So what we're calling out there is a bit of softening at the top of the funnel in terms of activity.

So our consultants are just getting -- going down from, say, 10 jobs a quarter to 9 jobs a quarter, in simple numbers. So that's one point and one issue that we have going into Q2 and the remainder of the year if that remains the same.

The separate part to that is then from the candidate side, which is that candidates are remaining cautious, especially for permanent roles. We've talked before about the protection that you have as an employee. If you're going to give up that level of employee protection, then it needs to be for a role that really does excite you or reward you financially for the risk that you're going to take to step away from some of those protections during your probationary period.

What I was calling out, therefore, was that the very best candidates are coming to market, they're finding that there are roles out there because there are. And they're the candidates that are in demand. And therefore, they end up in multiple processes. What does that mean for us? it means that we just have increasing competition to get those candidates converted because they might have 2 offers or 3 offers. Therefore, turndown rates go up. which is another issue at the bottom end of the funnel going back to that point around converting offers into accepted offers.

Do I think there's a change in the competitive landscape? No. In the market that we play, which is white collar recruitment on both the temporary cinema site, we are, by far, the market leader in France. And I don't think -- if anything, competitors are falling away rather than there being more competition. It's more of an issue just around the market confidence, which isn't in a great place.

With that, we have no further questions in the queue at this time. So that concludes the Q&A portion of today's call. I'll now hand back over to Kelvin Stagg for some closing comments.

Thank you, Drew. As there are no further questions, thank you all for joining us this morning. Our next update to the market will be our Q2 2026 trading update on the 30th of July. Thank you for joining.

Good morning. Thank you for attending today's PageGroup full year results. My name is Sarah, and I'll be your moderator today. [Operator Instructions]. I would like to pass the conference over to your host, Nick Kirk, Chief Executive Officer. Please go ahead.

Thank you. Good morning, everyone, and welcome to the PageGroup 2025 Full Year Results presentation. I'm Nick Kirk, Chief Executive Officer. On the call with me is Kelvin Stagg, Chief Financial Officer.

The group produced a resilient performance despite continued market uncertainty. We saw variable market conditions across the regions with ongoing challenging conditions in Continental Europe and the U.K. However, we continue to grow in the U.S., and we saw improved conditions in Asia Pacific, particularly during the second half of the year.

The conversion of interviews to accepted offers remained the most significant area of challenge as ongoing macroeconomic uncertainty continued to impact candidate and client confidence, which extended time to hire. As you know, we've taken robust action to optimize our cost base by simplifying our management structure, reducing our operational leadership team and improving the efficiency of our business support functions. We remain committed to our strategy, and I will update you on our progress later in the presentation.

I will now hand you over to Kelvin to take you through our financial review.

Thank you, Nick. Although I will not read it through, I'd just like to make reference to the legal formalities that are covered in the cautionary statement in the appendix to this presentation and which will also be available on our website following the call. In 2025, the group delivered gross profit of GBP 769.5 million, down 7.6% in constant currencies against 2024. Operating profit in 2025 was GBP 20.9 million, down from GBP 52.4 million, and our conversion rate was 2.7%. Earnings per share was 2.9p, and we ended the year with net cash of GBP 31.4 million. Today, the Board has proposed a final dividend of 3.21p per share. Combined with the interim dividend of 5.36p, this represents a total dividend of 8.57p.

I will now take you through the financial review. Against the ongoing challenging trading conditions, we have taken robust action to optimize our cost base by simplifying our management structure, reducing our operational leadership team and further improving the efficiency of our business support functions. These initiatives incurred a one-off cost of around GBP 15 million in 2025, partially offset by savings of around GBP 5 million. This will deliver annualized savings of around GBP 15 million per year from 2026. Given the distortive effects of these one-off costs at a regional level, we have presented the conversion rates, both including and excluding these costs.

Looking at each of our regions and starting with the largest, EMEA, our underlying conversion rate was 9.6%, down from 13.2% in the prior year. Profitability decreased on 2024 due to the tougher trading conditions seen in 2025. The Americas underlying conversion rate was broadly similar to 2024 at 4.4%. However, in Asia Pacific and the U.K., while our trading conversion was positive, after central cost allocations, both regions had a negative underlying conversion rate of minus 1.4% and minus 8.7%, respectively.

The tax charge for the year was GBP 7.2 million, which represented an effective tax rate of 44.4%. The higher-than-normal tax rate is due primarily to the impact of irrecoverable overseas withholding taxes and permanent differences, which have a disproportionate effect due to the reduction in profits. In 2026, the effective tax rate is expected to be around 35%.

The most significant item on our balance sheet was trade and other receivables of GBP 317 million, which decreased by GBP 11.4 million versus 2024. After returning a total of GBP 53.6 million to shareholders by way of ordinary dividends in 2025, net cash at the end of the year was GBP 31.4 million. Overall, net assets decreased by GBP 47.8 million from GBP 262.4 million to GBP 214.6 million.

This slide shows the key movements in our cash throughout the year. Our EBITDA inflow was GBP 81.8 million, partially offset by an increase in net working capital of GBP 8.1 million. Tax and net interest payments were GBP 23.7 million and net capital expenditure was GBP 11.3 million (sic) [ GBP 11.4 million ], down from GBP 15.8 million in 2024. Payments made in relation to lease liabilities reduced cash by GBP 41.6 million.

The group purchased GBP 8.3 million worth of shares into the Employee Benefit Trust to satisfy future committed obligations under our group share plans. The largest outflow of cash totaling GBP 53.6 million was dividends. The overall impact of these cash flows was to decrease the group's net cash position by GBP 63.9 million to GBP 31.4 million at the end of the year.

The group aims to run the balance sheet in a position of net cash. We have a clear capital allocation strategy with 3 defined and well-established uses of cash. The first is to satisfy the operational and investment requirements of the group as well as the hedge liabilities under the group's share plans. Once the first requirement is met, the second is for payment of ordinary dividends, where our policy is to increase them at the long-term growth rate of the group, subject to affordability.

Finally, any remaining cash surplus is to be distributed to shareholders by way of a supplementary return. While reviewing the group's current and future cash position, in light of the sustained challenging trading environment and the ongoing unpredictable nature of our markets, the Board believes it is prudent to declare a final dividend for 2025 of 3.21p per share. This action balances the group's current level of profitability and affordability with the desire to continue to invest in growth areas. The Board recognizes the importance of dividends to shareholders, and we'll continue to assess the level of dividend payments whilst considering the group's prospects.

I'll now hand you over to Nick to take you through our strategic review.

Thank you, Kelvin. We launched our strategy in September 2023 with 3 key strategic goals: delivering operating profit of GBP 400 million, changing 1 million lives and increasing our Net Promoter Score to over 60. Our primary financial goal is to deliver GBP 400 million of operating profit in the medium term. Despite the tougher market conditions, we have made progress with our strategy. We continue to reallocate resources into the areas of the business where we see the most significant long-term structural opportunities. I will talk about this in more detail later in the presentation.

Against our social impact goal of changing 1 million lives, we performed strongly. Progress in this area is measured by the number of people whose lives we have changed by placing them into work as well as the number of people who access programs we run that support traditionally underrepresented groups accessing employment. In 2025, we changed over 140,000 lives, meaning that in total, we've changed over 790,000 since 2020. As a result of our continued commitment and success in this area, we are well on track to deliver our target by 2030.

We also made excellent progress on our customer experience goal of achieving a client Net Promoter Score of over 60. From our pre-strategy baseline of 52, we saw improvements in 2023 and 2024. And in 2025, our score grew again to 66, rating us as excellent and exceeding our target for the second consecutive year. Our Net Promoter Score reflects the commitment we have to deliver for our customers.

Our strategy prioritizes delivering what we are famous for, building on our existing strengths and leveraging our established global platform. To achieve our strategy, we have 4 pillars of growth: our core business, our technology business, Page Executive and Enterprise Solutions. Our core business is the main driver of group performance. We define our core business as Michael Page and Page Personnel, which covers all disciplines except technology. Technology recruitment is a scale play for the group, enabling us to build a high-volume, high-value business in what for us is already a significant market. Page Executive is a market gap play with a specialization in senior leadership search and recruitment as well as offering executive advisory services. Enterprise Solutions is a partnership play as we build out our capabilities and breadth of offering to create long-term mutual value with our strategic customers.

I will now provide a brief update on the progress we've made within our 4 pillars of growth. Within our core business, despite the tougher market conditions, we've continued to reallocate resources to match activity levels as well as investing into business areas where we see the greatest long-term opportunities. Whilst the macroeconomic uncertainty continues to impact the majority of our geographies, in 2025, we saw a return to growth in our U.S. business and improved conditions in Asia Pacific. As we anticipated, this recovery has been driven almost entirely by an improvement in the conversion rate of offers to placements rather than increasing activity levels.

As a reminder, in permanent recruitment, for every 5 offers a fee earner receives, in a normal trading environment, we would expect 4 to become placements. Over the past couple of years, this has fallen to around 3 out of 5. Reviewing our improved performance in the U.S. and Asia Pacific, what we have seen is a gradual return to a more normal level of conversion of offers to placements. This has been due to clients and candidates being more willing to engage in conversations and negotiations at the latter stages of the recruitment process.

As has been widely reported in recent years, trading conditions in the technology sector have been challenging. Despite this, technology remains our second largest discipline at 12% of group gross profit. Within technology, we continue to see a more resilient performance from nonpermanent recruitment. We are reshaping this business from the pre-pandemic model, increasing our offering within contracting and interim roles. This is particularly evident in markets such as Brazil, Greater China, Colombia and Spain, which is now our second largest technology business after Germany. We've also been rolling out our proven contracting model from Germany into other markets in Northern Europe. Despite the tough conditions globally, we delivered a record performance in India, and we saw good growth across a number of individual markets, including the U.S., Colombia, Greater China and Japan.

Page Executive continues to deliver strong results despite the challenging macro environment with gross profit down just 2% against a record comparator. Within this, our best-performing markets were Spain, Colombia, Greater China and Southeast Asia. A key element of our Page Executive strategy has been to focus on more senior leadership roles and as a result, increase the salary levels at which we place. This strategy continues to prove successful, and we've seen a notable increase in the median placement salary. Alongside this, the track record and the success of our well-tenured consultants in Page Executive has resulted in an increase in our median fee. We continue to believe that the market gap for Page Executive is a significant opportunity for the group and one that we are uniquely placed to exploit.

Despite sector-wide challenges in recruitment outsourcing, Enterprise Solutions, which is our business focused on strategic customers, delivered an encouraging performance in 2025. Our well-established global platform across 34 markets allows us to consult with clients as they look to enter new territories. Our customer-centric approach highlighted by Net Promoter Score continues to make us the partner of choice for companies looking to go global. In 2025, against the backdrop of a difficult macro, we generated 12% more gross profit from our largest 20 clients than we did in our record year in 2022.

Within Enterprise Solutions, our outsourcing business delivered growth of 18% and a record performance. We've also seen a strong increase in our sales pipeline as our strategic commitment to global customers gathers momentum. We remain focused on winning business that delivers conversion rates in line with our strategy.

As many of you will know, I joined PageGroup in 1995. And over the last 31 years, I've seen huge changes in the sector and the technology that surrounds it. In more recent times, the proliferation of social media and 24-hour news has made the business world a very noisy and fragmented place with conflicting headlines, opinions and data points. When it comes to moving jobs or changing careers, it is now more important than ever for candidates to work with an expert who can filter out the noise and guide them through one of the biggest decisions they will make during their working lives. Our industry is built on human relationships, trust, judgment and insight, especially in white-collar professional recruitment. AI and technology will continue to accelerate the process, but it can't replace the conversations, trust and credibility our consultants bring.

When it comes to AI at Page, we've talked before about the importance of building enterprise-wide platforms and having a globally aligned approach to data. We've told you how we've been working closely with major technology partners to build a single integrated data environment ready for AI-enabled products to be deployed quickly across markets. With these solid foundations now in place, we can be confident that we can exploit the wide range of AI that is available. Our strategy is not to replace the human element, but to augment it.

For decisions on AI investment, the question that matters most for us at Page is, does it make money or will it save money? This mindset keeps us focused on tools that genuinely enhance consultant productivity, have a tangible benefit for our clients, and drive efficiencies in our business support functions. Companies that get this balance right will pull ahead of those that don't. Across the group, we put this strategy of augmentative AI into action and are already reaping the rewards. We're delivering qualified client leads through our AI-powered business development hub, which uses internal data and external feeds to help our consultants prioritize their time and focus their effort towards the roles we are most likely to fill.

We are harnessing the power of Copilot with our consultants building the agents they need the most to transform how they research roles, prepare insights and craft follow-ups. We've also used AI to update over 7 million candidate records in 2025, saving our consultants from an otherwise manual task that equates to the equivalent of nearly 2,500 working days. We continue to see the benefits from AI tools we've highlighted to you in the past. Adverts created through our job ad generator delivered 48% more applications per job with double the number of candidates going on to shortlists compared to manually created adverts.

To keep us looking forward, our established data and innovation lab gives us the ability to test and learn quickly, only the use cases that deliver clear commercial value move into production. Whilst AI will play an increasingly important role, we still see that as a supporting one. To repeat what I said earlier, our business is built on human relationships. It's about providing our clients and candidates with the kind of knowledge that comes from great questions and curiosity. Our focus is on using AI where it adds value and keeping people at the center of every meaningful interaction.

I will now finish with a brief outlook. Whilst the market outlook remains uncertain due to the unpredictable economic environment, we will continue to control the controllables. We have a strong balance sheet. Our cost base is under constant review. And given our highly diversified and adaptable business model, we remain confident in the execution of our strategy.

That concludes the formal presentation for this morning. Kelvin and I will now be happy to take any questions you may have.

[Operator Instructions] Our first question is from Karl Green with RBC Capital Markets.

First question just on the dividend. You've laid out a very clear capital allocation policy. But just drilling down into the potential balance over the medium to longer term between ordinary dividends and special dividends. Could you just elaborate on how you potentially see that unfolding, clearly subject to how trading unfolds in the meantime?

And then the second question was just on CapEx. I mean, again, very controlled in the year just gone. Just wondered how you anticipate the CapEx budget developing over '26 and perhaps beyond?

Yes. Certainly, on the dividend, it's really a question for us of affordability. We obviously have a high amount of operational gearing in the business, and we don't want to add financial gearing to that mix. So we're keen to keep the balance sheet with an element of net cash on it. We looked at the, therefore, affordability of a dividend in terms of our cash flow in June and felt that paying what amounts to GBP 10 million worth of dividend in June was the right amount to give us a fair balance of ending the year with enough cash to run the business.

To probably reiterate what I said at the previous trading statement was that whilst we used to say that, that was probably around GBP 50 million of net cash to run the business, we now think we can run it on about GBP 25 million. Such is the efficiency of our cash management and processes nowadays. But I think in paying GBP 10 million, that will bring us in line with that sort of net cash and also allow us to make a decision on the interim dividend when we get to the interims in August.

But I don't see that as a fundamental rebasing of the dividend. I feel that when we get back into affordability, i.e., we generate the cash that we need, we would move hopefully briskly back to the level of the dividends that we had in 2024, and that then would be the position that we would increase at the longer-term rate, which historically has been 4.5% per year. So this isn't a fundamental rebasing down to this level. It's a short-term affordability measure before we hopefully return back to the historical ordinary dividend levels.

On CapEx, yes, well, historically, and by that, I mean, probably during the teens years, our CapEx spend was roughly GBP 24 million. And it would have been split pretty much GBP 12 million on software capitalization and GBP 12 million on leasehold fit-outs for two reasons, one being that largely, we finished all of our big software implementations. Our global finance system has been in place for 10 years now. We've got Salesforce in place, and that's been in place for at least 8 years now. We don't really have a huge amount of software implementation to do, coupled with the fact that now all of the software rollouts we're doing, including the HR system that we're rolling out at the moment, which is a relatively small expense in comparison to the two previous finance and operational implementations, are Software-as-a-Service. And Software-as-a-Service, you can't capitalize. So it's expensed through the P&L.

So last year, 2025, the cost for software was about GBP 2 million. I'd expect that probably to be about the same going forward. We had very little leasehold fit-outs in '21 and '22 coming out of the pandemic as we look to try and better understand the ways of working and therefore, what the office of the future back then was going to look like.

We realized that we didn't really need interview rooms. We interview all of our candidates pretty much online. And therefore, during '23 and '24 primarily, we spent quite a lot on office fit-outs as we moved out of the big offices that we had downsized, but also made them sort of places that people wanted to come to, break-out space, and different fit-out options. That peaked in 2024. Last year, 2025, that was about GBP 10 million. I'd probably expect current year and going forward, that will probably be around GBP 8 million. So my expectations for CapEx in 2026 are probably collectively about GBP 10 million, and I would expect that to go forward.

Our next question is from Remi Grenu with Morgan Stanley.

Just maybe 2 on my side. The first one, can you maybe tell us a bit more about the difference in performance between the brands, Page Personnel and Michael Page. So some kind of update on how the activity has trended within the 2 brands? And maybe an update as well on the progress that you're making in reallocating resources towards Michael Page and away from Page Personnel. I would like also to understand if it's a process that you're accelerating. So the first question on these 2 brands. And then the second one, any additional initiatives you think could be launched to further reduce the cost base? I'm trying to understand if we should think about potentially adding one-off costs to our forecast in 2026?

Okay. Remi, thank you. I'll take the first one and Kelvin will take the second. I mean, your 2 questions are slightly kind of obviously linked, because it's quite hard to necessarily give you a fair view on the 2 brands because of the fact that we are moving business across from Page Personnel into Michael Page, and we're rebranding parts of the business. We're moving out of less profitable areas, maybe in lower level temp, and reassigning consultants into more senior contracting work or interim work. So it is distorted as a result of the work we're doing.

So perhaps maybe it makes more sense to talk about what we are doing, which is as we move through the next few months, we're looking at the final 5 or 6 countries that we have that still run the Page Personnel brand and looking to sunset that brand and focus the business around Michael Page. We feel that, that's the right decision in terms of the job market and future trends around the pressure that you can see and will inevitably probably only grow at that level of admin heavy roles, clerical roles. So we don't want to be in that market. We want to be more focused around the Michael Page and Page Executive brands, which, as you know, are management roles, leadership roles, expert roles.

So that's a very clear strategic decision, hence, the justification of moving towards those brand areas. And at the moment, the reason why it slightly distorts the results between the 2, and therefore, I'm not sure it would really help you in terms of making any particular decisions on those 2 areas.

Yes, I can take the one on cost. I think I probably look at it in 2 different areas. One part of it is in operations. And so that's really about fee earner headcount. The challenge that we have at the moment is the issue in the business, if I frame it that way, is the conversion of offers into placements. So we need to have the fee earners there to work the jobs. If they're not working the jobs, then they don't have a percentage chance of converting it into fee rates. Obviously, if those job numbers come down, and we've seen that in parts of Europe, probably point towards France, you will see our fee earner headcount come down, and therefore, the cost will come down. But in other areas where fee earner headcount has been more static, that reflects the fact that the job numbers are relatively static, and it's the conversion of offers into placements and therefore, revenue that's become the problem. But expect to see fee earner headcount move during the year in line with that expectation.

On the non-fee earner headcount, obviously, we will continue to align our transactional support staff in line with the activity that's going on. And you would see that in things like transactional finance, you'd see that in transactional HR, you'd see it in what we call middle office, which is non-perm administration for temps and contractors and the like.

We have finished now the transition of our shared service center from Singapore into Kuala Lumpur. That's now very stable, but we obviously have the ability to improve the efficiency of that. Whenever we do one of these transitions, we slightly overstaff at the beginning and look to get efficiencies as things progress. We are right in the middle of the HR transformation, which is the implementation of an HR system, as I mentioned earlier, but it's also the transition of the HR transactional people from the local countries into primarily our shared service center in Kuala Lumpur.

Whilst that will have a one-off cost, a small one-off cost, a couple of million in the current year, which is already accounted for in terms of where we are in consensus, that will deliver about a GBP 5 million annual saving kicking in partly during this year, but fully from next year. So yes, there are some strategic activity we've got at this point, I'm not going to announce any sort of large restructuring charge, but we'll continue to actively manage the cost base as we have done over the last few years.

Understood. And one follow-up, if I may. Any trends or insights to take away from the first 2 months of trading in 2026? I mean, I appreciate these are smaller months, but anything to take away from that?

Yes. No, you're right. They are smaller months. And I think on the basis that we're out again, Remi in about 5 weeks with our Q1 update, we'd rather see the big month of the quarter, which is March to get a complete picture. So that's what we decided to do.

Our next question is from James Rowland Clark with Barclays.

Two questions, please. I was just curious as to the sort of operational practical difficulties of moving your recruiters from Page Personnel to Michael Page and moving upmarket into different sectors. Is there a sort of time lag to delivering full productivity for those individuals? And is that impacting the business today? And then also, how does that impact traction with clients as well, as you move different personnel into that relationship?

And then secondly, on cash, I appreciate that GBP 25 million is now a level you're happy to run at. Are you comfortable to dip below that, I guess, as bonuses are paid out? Can you maybe elaborate on where you are with cash right now following sort of bonuses being paid out at the year-end? And how we should think about the sort of shape of that if market conditions remain as they are through the year?

Thanks, James. As regard to your first question, I think your approach needs to be, with any significant change, to be very thoughtful, to be very careful, and to be patient. So we do it step by step, stage by stage. We've already been through this process in Asia, where we look to transition people across from Page Personnel to Michael Page. We've been through this process in the U.K., where we did exactly the same. So we've learned a lot of lessons from it. What you're likely to see is initially just a rebranding of operations from Page Personnel into Michael Page.

And then steadily and slowly, we will move people upwards into more senior work, because the last thing we want to do clearly is disrupt relationships with clients, disrupt relationships with candidates, and just as importantly, disrupt the fee earners and their ability to earn and deliver for themselves and the company. So it's a process. It's not something that happens overnight where you come in one day and the working brand that you operate under has changed and your client base has changed and your candidates have changed and you've got a new market, that would be a ridiculous way of going about it.

So as I say, it's something that's very intentional. It's very thoughtful. We're applying lessons that we've learned in other markets where we've done it already. We'll do it step by step, and we'll be careful to ensure that client relationships aren't impacted as a result, and the consultants' ability to earn remain. But the actual process of moving upwards into more senior work is actually a very normal one.

I mean I think back to my time as a consultant. I mean, if you think about it, you start as, in my case, a 23-year-old, you're working on relatively junior jobs, entry-level jobs with candidates that are a similar age to you and you grow up with your candidates and your candidates become clients and you recruit them as clients and they become candidates again. So you move through a life cycle with them. And that happens to every single consultant. So this will actually enable us to more effectively do life cycle management of our candidates as they start to become more senior, because Michael Page obviously has that greater scope through those levels of roles. So yes, I mean, it's something I am very, very aware of, the team is very aware of, and we will be very thoughtful and intentional about the way we go about it.

Yes, James, talking to cash. I mean, we operate with a philosophy of having net cash on the balance sheet. That's not a rule that we adhere to on a day-to-day basis. I mean, we have a number of facilities available to us, including an GBP 80 million revolving credit facility, we have a GBP 50 million invoice discount facility, and we have a GBP 20 million overdraft. So with a number of temp and non-perm businesses around the world, we need to be able to fund those. And we will and do dip into those facilities from time to time to fund working capital requirements for non-perm as well as dividends when we pay them out.

So I'm not strictly adhering to having GBP 25 million in June for the dividend payment. I'm comfortable that we would dip into those for a short period of time. Our current cash balance would be less than GBP 25 million. But we're comfortable that we're forecasting to end the year without structural debt, and that's really the philosophy that we're trying to adhere to.

Our next question is from Steve Woolf from Deutsche Bank.

Just you mentioned earlier, Nick, about the level of median fees going up. Could I flip it to sort of fee rates if you look on a like-for-like basis year-over-year? How have you found those? Are they still at the record high levels you were speaking of before? Or has there been any sort of weakening in that over the past 12 months, I guess?

No, I did that -- well, firstly, good morning, Steve. No, I did that assessment very recently actually just to compare '25 to '24. And no, they're pretty much flat. There might be the odd movement within a country where a country goes from, say, 30% to 29%, but that's offset by another country that goes from 25% to 26%. So the increase that we saw was within Page Executive, and that's really more through the levels that we're working at more senior roles, and also the ability to negotiate higher fee rates based on having well-tenured experienced consultants in a market where candidates are in high demand. So the fees naturally can be pushed up a little bit because clients need access to these individuals. But overall, to your question, no '24, '25, fees remain at record levels, little movements within countries, but as an overall figure, still at that same high level.

[Operator Instructions] There are no questions waiting at this time. So I'll turn the conference back over to Kelvin Stagg, Chief Financial Officer, for the further remarks.

Thank you, Sarah. As there are no further questions, thank you all for joining us this morning. Our next update will be our first quarter trading update on the 14th of April. Thank you very much.

Thank you. That concludes PageGroup full year results. Thank you for your participation. You may now disconnect your lines.

Good morning, everyone. Welcome to today's PageGroup Q4 trading update call. My name is Seb, and I'll be the operator for your call today. [Operator Instructions]

I'll now hand you over to Kelvin Stagg, CFO, to begin the call. Please go ahead.

Thanks, Seb. Good morning, everyone, and welcome to the PageGroup 2025 Fourth Quarter and Full Year Trading Update. I'm Kelvin Stagg, Chief Financial Officer; and on the call with me is Nick Kirk, Chief Executive Officer.

Although I will not read it through, I'd just like to make reference to the legal formalities that are covered in the cautionary statement in the appendix of this presentation and which will also be available on our website following the call.

The group delivered gross profit of GBP 190.7 million in the quarter, a decline of 4.6% in constant currencies against Q4 2024. Gross profit for the full year was GBP 768.2 million, a decline of 7.8% against 2024. The group produced a resilient performance despite the ongoing market uncertainty, which is characterized by continued subdued levels of client and candidate confidence. Our fee earner headcount reduced by 75 or 1.5% in the quarter with reductions primarily in Europe.

Despite the challenging macroeconomic conditions, gross profit per fee earner, our measure of productivity, grew 3% compared to Q4 2024. Net cash at the end of December was around GBP 31 million. This was down from GBP 38 million at the end of Q3, having paid out the interim dividend of GBP 16.7 million on the 10th of October. Receipts in the first week of January have led to net cash of GBP 40 million as at the 9th of January.

I will now give a brief financial review. Our fee earner headcount reduced by 75 or 1.5% during the quarter due mainly to attrition in December when we typically hire fewer new consultants with the reductions primarily in Europe. And nonoperations headcount decreased by 8% in the quarter. Overall, the group had 4,968 fee earners and a total headcount of 6,820.

We remain committed to our strategy and continue to reallocate resources into the areas of the business offering the most significant long-term structural opportunities. Concurrently, we continue to ensure headcount in all our markets is aligned to activity levels. Overall, our focus remains to balance near-term productivity with ensuring we are well placed to take advantage of opportunities when market conditions improve.

Despite the tough macroeconomic conditions, gross profit per fee earner increased 3% compared to Q4 2024. Our fee rates remained at high levels. However, as clients recruitment budgets have tightened, they've become more risk averse, which has continued to slow the recruitment process, impacting time to hire. Although salary levels remain strong, the level of increases offered to candidates were not as elevated as they were in 2022 and early 2023 and, as a consequence, the conversion of offers to placements remains the most significant challenge.

Where we experienced improved trading in Asia and the U.S., this was driven by the conversion of office to placements normalizing at a higher level. In our other countries where trading remains challenging, we are yet to see any improvement in this metric.

I will now present a brief regional review. Group gross profit declined 4.6% in constant currencies against Q4 2024. In line with the 2 previous quarters, we saw variable market conditions across the group with ongoing challenging conditions in Continental Europe and the U.K. However, we saw a fifth consecutive quarter of growth in the U.S. and a third in Asia, where Greater China delivered its first quarter of growth since 2022.

In our largest region, Europe, Middle East and Africa, which represented 53% of the group, we declined by 8.9% on Q4 2024. We continue to see tough trading conditions with low levels of candidate and client confidence. France, the group's largest market, which represented 13% of the group, declined 17% with sentiment and activity levels softening through the quarter. Temporary recruitment, down 11%, continued to outperform permanent, down 22%.

Germany, representing 12% of the group, declined 5%, an improvement on the decline of 11% in Q3. We continue to see tough conditions in Michael Page and Page Personnel, down 13% and 11%, respectively. However, our Interim business was the most resilient and delivered growth of 1%. Spain continued to deliver the standout result in the region, up 10%, with good levels of candidate and client confidence. Elsewhere in Europe, market conditions remain challenging in all countries. Overall for the region, our fee earner headcount reduced by 72 in Q4.

The Americas, which represented 19% of the group, and excluding Argentina due to hyperinflation, grew 2.4% against Q4 2022. The U.S. grew 5%, its fifth consecutive quarter of growth. We saw good levels of activity and trading with continued strong results particularly in our largest discipline of construction. In Latin America, excluding Argentina, gross profit grew 1%, albeit against a soft comparator. Brazil, our largest country in the region, grew 6% driven by our temporary recruitment business, which grew almost 30%.

Mexico declined 17% due to the ongoing tariff uncertainty. Elsewhere in Latin America, our remaining countries grew 17% collectively with improved conditions across most of the region. Colombia delivered a standout performance, up 22%, with particularly strong trading in our technology-focused Page Consulting business. Across the region, fee earner headcount increased by 10 in the quarter.

In Asia Pacific, which represented 16% of the group, Q4 gross profit grew 6.4% on 2024. Asia was up 7%, its third consecutive quarter of growth, an improvement on the growth of 1% in Q3. Southeast Asia grew 8% with continued strong trading conditions across most of our markets in this region. Greater China grew 5%, delivering its first quarter of growth since Q1 2022. Mainland China was up 10%, a significant improvement on the decline of 20% in Q3 with greater conviction from both candidates and clients to close placements than there was 12 months ago.

In Japan, an area of strategic focus for the group, we grew 3%, an improvement on the decline of 2% in Q3. India, where we now have over 250 fee earners, was up 17%, its fourth consecutive quarter of double-digit growth. Australia was flat, the first quarter with no decline since 2022. Overall, our fee earner headcount in the region remained stable.

In the U.K., which represented 12% of the group, gross profit declined 10.1%. The market remains tough with clients continuing to delay hiring decisions and candidates remaining cautious about accepting offers. Operational activity per fee earner was broadly in line with 2024 averages except new job acquisition, which was down slightly on 2024. Our fee earner headcount reduced by 13 in Q4.

I will now give a brief summary of our results. In line with the 2 previous quarters, we saw variable market conditions across the group. The conversion of office placements remain the most significant area of challenge as ongoing macroeconomic uncertainty continued to impact confidence, extending time to hire.

We remain committed to our strategy and continue to reallocate resources into the areas of the business where we see the most significant long-term structural opportunities. Concurrently, we continue to ensure headcount in all our markets is aligned to activity levels. Overall, our focus remains to balance near-term productivity with ensuring we are well placed to take advantage of opportunities as market conditions improve.

While the market outlook remains uncertain due to the unpredictable economic environment, we will continue to control the controllables. And we remain confident in the execution of our strategy given our highly diversified and adaptable business model, strong balance sheet and our cost base that is under continuous review. We expect 2025 full year operating profit to be broadly in line with current market consensus of GBP 21.1 million.

Nick and I will now be happy to take any questions you may have.

[Operator Instructions] Our first question on the line is from Abi Bell with UBS.

Just two questions, please. Firstly, I know December is a small month so trends are kind of hard to call out. But can you comment anyhow how hiring trends developed over the last 3 months? Are there any more clients than usual discussing hiring freezes or reevaluating hiring budgets into the new year?

And then secondly, can you talk about the ups and downs for the FY '26 profit bridge? The H2 '25 run rate of GBP 20 million plus the GBP 10 million of annualized savings gets you to roughly GBP 50 million. But are there any other headwinds from cost inflation that we need to be aware of?

Thanks, Abi. Okay. I'll take the first question, and I'll hand over to Kelvin for the second one. So as regards to the quarter, it was relatively even through the quarter. There wasn't any particular increasing conversations about hiring freezes, et cetera. To be fair, what tends to happen at the end of the year is that most organizations are looking to close out existing recruitment processes, and that's really what they're talking to us about rather than plans for the new year.

Those conversations start to really come to pass about now. So we'll probably have a better idea of what clients are saying about outlook for the year by maybe the prelims but certainly the end of Q1 because those kind of conversations don't really take place in the final 3 months of the year. That's more about just closing out the year, wrapping up any processes that are in play.

Yes. On the profit bridge, if you take forward the broadly GBP 20 million that we're expecting for 2025, you can add back the GBP 15 million of one-off restructuring charges that we took during the year. There's a further GBP 5 million of savings because we had GBP 5 million of savings last year, there's GBP 5 million of additional savings this year and a further GBP 5 million next year. So the GBP 15 million plus the GBP 5 million then takes you to GBP 40 million.

We've got about GBP 10 million of wage inflation and third-party cost inflation that we're expecting to go in there. But we are expecting profits to be slightly higher this year. So I don't know where consensus is going to land, but I think both of the brokers are now on about GBP 40 million, which is probably therefore an incremental profit to offset that wage inflation and third-party cost inflation.

Our next question is from Zach Al-Qaryooti from Morgan Stanley.

Kelvin, Nick, just two questions, please. Maybe to start on France. Could you maybe just unpack a little bit further the deterioration there? Would you say it was all market weakness you were seeing? Or was there any impact from resource reallocation away from the Page Personnel brand? Because I know France has quite a high exposure to that brand.

And then secondly, just on the cost base. After the successful actions this year, it sounds like you're planning some more for 2026. So I was just wondering where, what sort of areas of focus that will be on? Will there be any maybe AI efficiencies? And more generally, do you think headcount is now appropriately sized for the year ahead?

Okay. Thank you, Zach. I'll take the question around France. Yes, it's tough. It's been tough throughout the year, as you can see from the numbers. We were down 17% in Q1, down 20% in Q2, down 16% in Q3, down 17% in Q4. It's a tough market to trade in right now, and we definitely did see some deterioration in confidence through the quarter.

I think that was largely due to the government's draft finance bill which, as you probably know, aims to introduce additional taxes and is perceived to be less business-friendly than perhaps the environment has been which, again, just really drags down sentiment, it drags down confidence, which plays on recruitment from a client and a candidate perspective. And we saw some clients deciding really to postpone recruitment as they wait, get a bit more certainty on this finance bill to see if it would change as it went through parliament, et cetera.

We saw job acquisition deteriorate through the quarter. It was down around about 7%. So that's certainly one to watch. I think that the job acquisition was down because of the reason that I said. So maybe we start to see some improvement on that figure this quarter. But again, it just adds to the general sense of it being very difficult over there.

From a public sector perspective, which is relatively small for us, it only accounts for around about 6% of our business, that was down about 29% in Q4. So that's definitely been impacted by some of the uncertainty that exists around the situation of government in France. Non-perm, as you know, continues to perform better for us, which again is typically an indicator of the fact that there is some flight towards flexibility and away from the certainty of perm. So yes, it's tough in France right now.

To link back to the other part of your question, I don't think anything in these numbers is linked at all to any changes in PP because we haven't done any changes around PP. It's something that we'll look at as we go through the next year or 2, but it isn't something we're looking at right now in France.

Yes. I think when you look at cost savings, we're not intending to run a big restructuring program this year as we did last year. The lion's share of last year's cost savings was really about rightsizing the management team in Europe. Europe had been much later into the downturn. We had a record in a number of countries in Europe in the first half of 2023. But it's also very expensive to adjust the management team in Europe, and that's how we felt that we needed to have a proper restructuring plan to right size that.

That was GBP 10 million out of the GBP 15 million last year. The other GBP 5 million relates to an HR transformation program. We are right in the middle of deploying a new HR system with SAP SuccessFactors. And then we'll go through a process of moving our transactional activities in that area into our shared service centers, where they currently aren't. It's the only function that we haven't completed that piece of work. And primarily, they will go into our shared service center in Malaysia in Kuala Lumpur.

In terms of the AI process, as Nick says, we haven't really done much with PP. But certainly, when we look at AI, and we look at it in three different areas: one of them will be the impact on jobs generally externally from a recruitment perspective, one would be about cost savings through driving efficiencies and the other one would be about driving productivity in the operational side of the business.

Certainly, one of the reasons that we feel we should be moving out of Page Personnel up into Michael Page is because, I think, if there is an area that is likely to be open for disintermediation, it is probably the more low-level repetitive jobs that tend to be in places like Page Personnel, whether that be in areas of finance or paralegal or whatever it happens to be. I mean, to be clear, we haven't really seen much of that at the moment, but we also make much better margins in Michael Page. So it's a relatively straightforward decision, albeit the execution of it is not without its challenges.

When we look at cost savings, yes, I mean, we use quite a lot of AI already. So whether that's in terms of expenses management, so checking expense receipts against policies, making sure it's booked in the right places, invoice matching, revenue compliance, CV formatting, job ad generation, so all of those are areas that we would or have already introduced AI to work on. So each of those areas, we have either fully deployed across the business or we have it actually coming out of the lab and will be in production in the first half of the year.

Outside of that, we use it to drive productivity in our operational business with things like time in role that will be able to tell us how often people stay in a job in a particular sector and job description and location. We use it across business development areas and other areas. So I think what I'd probably say is whilst we're hoping to drive further efficiencies, particularly into our global business solutions area, so the operational back office of the business, we tend to be replacing relatively low-level roles that nowadays will be in our shared service centers. So it will bring efficiencies, but I don't think it's going to bring massive cost savings.

And the final part of your question around headcount. In terms of headcount, we've been consistent really in what we've said over the past 24 months, which is that we're linking the headcount to activity levels, as we've mentioned on a few occasions. If you have jobs that you don't have the headcount to resource, then ultimately, you're definitely not going to make any money out of those positions.

So we have to make sure the headcount is at a level where, with the work that we're getting incoming or generating ourselves, has a consultant available to work on it, to supply candidates, to manage the client, manage the candidates, arrange interviews, et cetera, to give you the opportunity of turning that into a fee. And I think we've done a really, really good job of that.

And I think if you look probably through the quarter, headcount probably was relatively flat across October, November. It fell off a bit in December. Hence, you saw the reduction of about 75. And that would have been because we don't really start new consultants in December. So it wouldn't surprise me if we saw an inflow of new consultants in January. So if you looked at it across that December, January period, I'd assume it may be relatively flat.

I think we're about the right level at a total number. But we are still reallocating resources within the group, moving headcount into markets where we're seeing growth, whether that's within APAC or within the Americas, and taking out of markets that is more challenging. But as an overall figure at a group level, it's around about the right level.

Our next question comes from Steve Woolf at Deutsche Bank.

Two for me, if I may, please. Firstly, thoughts on the pickup in China, roles and where that might have come from and then just your exposure to German recovery, if the planned spending comes through at some point this year. I saw the Interim business is obviously up. Just again, where else might we see your roles come through over time?

Thanks, Steve. So in terms of Greater China, probably a word of caution. We're pleased, of course, we are that we've seen a quarter of growth for the first time in 3 years or so. But at the same time, it is just 1 quarter. So I'd like to see maybe at least one more, if not 2, before we start to see any -- or call it as any form of recovery. I think we saw a little bit of improved confidence. There was just a greater level of conviction from both parties, whether it was clients or candidates, to get the deal over the line.

And interestingly, that's probably what we were saying 12, 15 months ago about the start of the recovery in the U.S., just more sensible recruitment conversations that happen at the end of the process rather than this binary outcome where a client offers this kind of an increase, the candidate turns it down and the client says, let's start the process again. Negotiation, a desire to get the deal over the line and, as I say, conviction from both parties to make that happen. So that's encouraging. It is just 1 quarter. I'd like to see a bit more of it.

In terms of disciplines, the better performing two were finance and technology from both the perm and contracting perspective. They were the stronger areas for us in Q4. And also maybe within client mix, we're definitely benefiting from our focus on domestic clients. They certainly are delivering more positive results than international clients at the moment. So that's where we are in China. As I said, it is just 1 quarter.

It's very pleasing, of course, having had 2, 3 years of really tricky conditions. So it's nice for our leadership team over there to actually see some results from the efforts that they've made to get the business back into the right place. But it is just 1 quarter, and let's see where we are in 3 months' time.

As regards to Germany, it was again a better performance in Germany in Q4, I think probably a resilient performance, to use the narrative there on that one. Activity levels are stable. Business sentiment, relatively stable. There's still a lot of talk about the investment program, but I think our sense is that, that won't come until the second half of the year.

Our business is split 50% perm, 35% contracting, 15% temp. Perm remained more challenging, was down about 12% in the quarter as clients really still continue to be more cautious. And as you pointed out, Steve, contracting was up for the quarter. Finance continues to perform better than technology within that, but those are the 2 areas that our contracting business focuses on. And as we've said over the last couple of quarters, the finance area is doing better because we're seeing increased demand for regulatory roles within finance due to increased regulation as well as finance transformation roles.

In terms of exposure, we're not massively exposed in Germany into the defense sector, if that's the question. But we have broader kind of supply chain exposure with clients in the engineering and manufacturing field, and we'll also benefit from the general improvement in sentiment as and when it happens. So we keep our fingers crossed at this stage, Steve.

Next question is from Andy Grobler from BNP Paribas.

Just a couple from me as well, if I may. Firstly, on Australia, looked to be doing a bit better. Can you just talk through what's changed there?

And then secondly, just on thoughts around the dividend for '25, '26 given where earnings are at this point, and consensus expectations look quite high on that basis. If you could just talk us through your expectations, that would be great.

Thanks, Andy. Okay. I'll do Australia. Australia as a market for us is, these days, relatively small in the bigger scheme of things. I think it's about 3% of the overall business. That said, we were pleased for them more than anything, for our leadership team, for our consultants over there that, again, probably a little bit like China, having had a really tough run. A lot of the efforts that they're making to get the business back to a point where it can start to grow again are working.

So there's no real change in market conditions. I just think that the team themselves are really doubling down on front-end activity and focusing hard to turn the business around. But I think probably as a word of caution, it's stable but at a relatively low level. So yes, I hope that we can continue the curve as we go into Q1, Q2. But clearly, it was the first time this year that it was anything other than double-digit negative growth. So good to see, early stages, team are working really hard. Let's hope it continues to work out for them over the next 6 to 12 months.

Yes. Andy, on the dividend, I think we obviously turned the year at GBP 31 million. But as at the end of last week, we were actually up at GBP 40 million of cash. I think we will have an outflow of cash, which relates to sort of annual bonuses and Q4 profit share, which we expect to be somewhere between GBP 20 million and GBP 25 million during January. So it probably means that we're going to end January between GBP 15 million and GBP 20 million.

I think historically, we would have said that we want to hold a minimum of GBP 50 million in net cash. I don't know whether they're on the treasury team. But actually, they've done an excellent job in terms of trying to optimize our liquidity structure. We can probably run at closer to GBP 25 million today. So that would be the minimum I'd want to hold. We therefore need to work backwards from June, which is when the payment would go out. And last year, our final dividend was GBP 38 million.

So once we get to the end of February, beginning of March, when we get to the prelims, we'll be trying to estimate and forecast where our cash flow is likely to be by the time that we get to June off a base of about GBP 25 million. I don't want to try and second guess that today. But I think while we paid uncovered dividends for the last couple of years, and obviously, our cash balance has come down as a consequence, I'm not minded to fund dividends out of debt. So we'll be looking at what surplus cash we've got over and above that GBP 25 million. And forecasting that, we'll come back to you at the prelims.

Our next question is from Karl Green with RBC.

A couple of questions from me, please. Just firstly on Page Executive, just any updates on the pipeline and what you're seeing at that end of the market. And it's obviously been a good performer for you in recent quarters. So an update there would be helpful.

And then a second question as well, just comments you made in the past about that pickup in activity in the U.S., which has been a lot of sort of determined activity by yourselves to target the right client. But I think you've also mentioned there that you've seen normalization of offer to acceptances. So are you seeing that normalization in any other of those better performing markets? And sort of more broadly would you expect that normalization to eventually hand across the wider group, please?

Thanks, Karl. Yes. Well, I'll answer them in reverse order actually because the second question was probably a bit more detailed than the Page Executive one. It's easier to just go off the top of my head. So yes, I think it's important to call that out. 15 months ago, when we saw our first quarter of growth in the U.S., we were talking about the fact that we haven't seen increases in activity levels in terms of new jobs, more interviews, et cetera.

It was more a case that for the activity that was taking place, more of it was converting because people were getting around the table at the end of a process and saying, we need to make this deal happen because we need the person on board within 8 weeks. And that's really continued in the U.S. Now as we've stressed, the recovery we've seen there isn't broad-based. We're not seeing that kind of improvement across sectors like financial services or finance or legal. We're seeing it within our two largest disciplines, which are construction and manufacturing.

So yes, very, what I would call sensible recruitment conversations where people invest a lot of time to find the right candidate, and then at the end of the process, want to get the deal over the line and don't want to see it fall down for the sake of $500, $1,000, $2,000, whatever the figure would be. So that's kind of what's happened in the U.S. And as we've started to see other markets come online, that's exactly what's happened in those markets as well.

I got the question earlier on China from Steve, and I was commenting there what happened in Greater China in Q4 to trigger the improvement in results. It was very similar to what happened in the U.S. in terms of just greater conviction from both parties to get the deal over the line. Not an increase in activity, not more jobs, not more interviews, just more output for the work that's gone in. And we throughout last year, throughout 2025, were saying that, that's how we saw the shape of any kind of recovery when it comes.

So the market is very much behaving as we thought it would in the markets where things are improving. That said, clearly, we've got large parts of the markets that aren't particularly in Europe.

Your second question around Page Executive, yes, another really good year. If you remember, 2024 was a record year for Page Executive. Q4, for us, therefore was flat year-on-year, so flat on a record year overall. The real stars of the show within Page Executive in terms of a regional basis were APAC, Europe and LatAm. I mean APAC in particular did a standout performance. It was up 19%. It was tougher in the U.K. and the U.S. And the reason for that is we have greater exposure in our Page Executive business in those 2 geographies to financial services.

So that has been a bit of a drag on the overall performance in those 2 markets. But overall, from a more strategic perspective, we're aiming to move that business up the value chain further away from the level that Michael Page trade at. And we've had another good year from that perspective. So the average placement salary that we place on was up 14% and the average perm fee that we make in Page Executive was up 14%.

So everything is heading in the right direction. And all of this is being achieved in a market that's ultimately subdued. So we're just excited to see how it starts to perform in markets where we get some better trading conditions.

Our next question is from Bruce Hubbard from Lancaster Investment Management.

Just a quick question or clarification, if I may. You refer to collectively APAC, U.S. being 35% of group and being in growth. If I missed it on the call, apologies. But I didn't actually hear you say what percentage of the group is in growth on a country-by-country basis. You've obviously got puts and takes from Spain, Mexico, Hong Kong, et cetera, within those samples.

Bruce, yes, I don't actually have that figure for you. And you are right to call out because, I guess, we look at the regional makeup of the Americas and APAC combined. Because we report regionally, we're adding those 2 regions together to get 35%.

What's quite right in your question there is that there will be countries within APAC and within the Americas that aren't growing, but there will be countries like Spain that sit outside those 2 regions that are growing. The reason we felt it would be easier to report and give the update on regions is because that's what we always do. But we can easily pull a country figure together for you if necessary.

Sorry, it's about 38% is the aggregate. We're down a bit in Mexico. We were down a bit in Chile. As Nick said, we were up a bit in Spain. Japan was broadly flat. So it's about 38% on an individual basis.

Okay. That's interesting because that's quite a material step up from Q3. So there is clearly objectively a broadening of stabilization sort of improvement going on.

I think it's broader across Asia. Obviously, Australia was flat in the quarter so that helps. Spain moved on a bit. Mexico was down in Q3. I think Chile was probably flat in Q3. So there's a few moving parts. But broadly with Asia moving from 1% to 7%, more of the countries in Asia are now in growth.

The next question is from James Rowland Clark from Barclays.

Two questions, please. Just on Asia. You flagged in China the strength you were seeing was particularly driven by finance and tech. The rest of Asia was also very strong. So would you mind just sharing or shining a little light on the markets that drove the improvement or the sort of client types, if that make sense?

And then secondly, on cash, thanks for the color on the operating profit bridge for 2026, which sounds like it will improve driven by cost savings and a bit of productivity improvement as well. When thinking about cash flows, the bridge for cash flow through the year, are there any levers you think you can lean on to improve cash flows when you're thinking about that dividend payment and that GBP 25 million liquidity requirement for the business?

Thanks, James. Okay. I'll take the Asia question. As you know, and you kind of implied it in your question, it's a very diverse collection of countries. If we were to look at Southeast Asia, a collection of relatively small countries, but you add them together and they add up to something meaningful. It's really just probably repeating what I said about China is that the improvement that we've seen is relatively across the board and driven by this conviction from clients and candidates to get the deal done.

What I will do, though, maybe is just call out a couple of the bigger countries in Asia just to give you a bit more detail because that was the question that you asked because there's different stories in each.

So Japan, as an example, where we saw 3% growth in Q4 is a strategic investment market for us. We've always had a good business in Japan. But it's the second largest recruitment market in the world, and our intention is to build a great business in Japan. And to do that, we really need to crack the domestic market. We've always had a good business servicing the international market, the Gaishikei market, but we really want to become more of a presence within the Nikkei market.

And so we've invested in headcount. Our headcount, I think, is up 11% in Q4 year-on-year. Various other times through the year, it was up substantially more than that. And the investment that we're making is into that Nikkei business. And that produced a record Q4. So that was really pleasing. It was up 23% year-on-year. So it's working. But at the same time, it's not an easy market right now. I would say that the sentiment is relatively stable, but there's definitely more opportunity we feel in the medium and long term to build out that domestic business, and that's our intention.

So what's going on there in Japan is very intentional from our perspective. We're really trying to drive into a market that we believe is very attractive for the group, high fees, candidate short, so somewhere where we feel we can scale something that will be very profitable for us in the medium, long term.

Then if we kind of skip across Asia and go to, say, something like India, and as Kelvin said in the trading statement, it was another strong quarter of double-digit growth, 17% up. We have 250 fee earners there across 3 offices. The economy is resilient. We got high infrastructure spending creating some good consumer confidence. In terms of disciplines, financial services, technology and finance certainly remain our strongest areas. Engineering and manufacturing has been a bit tougher in the second half of the year as it's been impacted by the U.S.-India tariff dispute.

We operate at good salary levels. 30% of our revenue comes from placements with salaries over GBP 90,000. So we're placing very senior people within the market. And we intend to keep growing headcount there, keeping one eye on productivity, of course, as we always do. But Q4 was that perfect balance where we grew headcount up 9% year-on-year but productivity was also up 7%. And so if we can continue that, we'll continue to scale that business. And it's got a huge opportunity for us because even at 250, we're just scratching the surface.

Yes. Coming on to cash, a few of the other moving parts that are within that. So our CapEx level nowadays is actually relatively low. I think if you look back into the teen years, we probably averaged about GBP 24 million of CapEx every year. And that was split broadly GBP 12 million in software capitalization and GBP 12 million into leasehold improvements. We don't really capitalize much software nowadays. Most of it is Software as a Service and therefore can't be capitalized. So I think that number going forward is probably nearer about two.

But I think the leasehold improvements now is settled down post pandemic. So we obviously didn't move offices in the pandemic in 2000, but we moved very few offices in '21 and '22 while we were trying to get a feel around ways of working and what we did and didn't need with regards to our office network. We then moved quite a lot of offices in '23 and '24 to realize the savings because previously, 30% to 40% of our office space was interview rooms. And we very infrequently interview anybody face to face nowadays. Most of what we do tends to be done over Teams, and then the clients meet them face-to-face.

So we had quite a spike in leasehold fit-out over '23, '24. That's settled down into 2025. I expect CapEx in '25 to have been about GBP 12 million. And I think that's probably GBP 10 million to GBP 12 million is about the right number going forward. So that number has come down a bit. The tax rate looks like it's going to be about 35% for '25. I think with profit still relatively low for '26, somewhere 25, 24 -- 35%, sorry, 35%, 34% is probably the right number.

The big two other parts of it. One, I mentioned earlier. We think that probably our low point for cash can now move to about GBP 25 million rather than GBP 50 million historically. And that really is just about having to optimize our cash management, which we've managed to achieve. We have some cash that's onshore in India and China. We're able to essentially borrow against that and use that liquidity that previously we couldn't. So I think GBP 25 million is the low point.

The slightly unknown is working capital, particularly on temp. So you will have seen in the statement and in the speech that in Brazil, we grew our temp business by 30% in the quarter. That's fantastic for profitability. It's a bit of a drain on cash. So our working capital on temp is about 5x what it would be on perm and therefore that drags on to it. If markets recover and perm recovers and temp pulls back a bit, we'll see an unwinding of that cash. But that's not something we can particularly forecast in advance. So I think we'll optimize what we can and then we'll have to try and forecast the rest.

[Operator Instructions] So we have no other questions on the call at this time. I will hand the floor back to Kelvin for any closing comments.

Thanks, Seb. As there's no further questions, thank you all for joining us this morning. Our next update to the market will be our full year 2025 trading update on the 5th of March. Thank you all for your time.

This concludes today's conference. Thank you all very much for joining, and you may now disconnect.

Hello, everyone. Welcome to today's PageGroup Q3 Trading Update Call. My name is Seb, and I'll be the operator for your call today. [Operator Instructions] I will now hand you over to Kelvin Stagg to begin the call. Please go ahead.

Good morning, everyone, and welcome to the PageGroup 2025 Third Quarter Trading Update. I'm Kelvin Stagg, Chief Financial Officer, and on the call with me is Nick Kirk, Chief Executive Officer. Although I will not read it through, I'd just like to make reference to the legal formalities that are covered in the cautionary statement the appendix to this presentation and which will also be available on our website following the call.

The group delivered gross profit of GBP 187.8 million in the quarter, a decline of 6.7% in constant currencies. In line with Q2, we saw variable market conditions across the group. We continue to experience subdued levels of sentiment and confidence in Europe, particularly in our two largest markets, France and Germany as well as in the U.K. However, we delivered the fourth consecutive quarter of growth in the U.S., our fourth largest market and a second consecutive quarter of growth in Asia. Collectively, these two markets represent 1/4 of the group.

We reduced our fee earner headcount by 120 or 2.3% during the quarter, mainly in Europe. Productivity measured as gross profit per fee earner grew 1% versus Q3 2024 despite the tough macroeconomic conditions. Net cash at the end of September was around GBP 38 million. This compares to GBP 11 million at the end of Q2 and is before the recent interim dividend payment paid on the 10th of October totaling GBP 16.7 million.

I will now give a brief financial review. We reduced our fee earner headcount by 120 or 2.3% during Q3, with reductions mainly in Europe. And nonoperations headcount decreased by 11 in the quarter. Overall, the group had 5,043 fee earners and a total headcount of 6,903. We remain committed to our strategy and continue to reallocate resources into the areas of the business where we see the most significant long-term structural opportunities. Concurrently, we will continue to ensure headcount in all our markets is aligned to activity levels. Overall, our focus remains to balance near-term productivity with ensuring we are well placed to take advantage of opportunities when market conditions improve.

Despite the tough macroeconomic conditions, gross profit per fee earner increased 1% compared to Q3 2024 as we continue to carefully balance customer demand with fee earner resource. Where we experienced improved trading in Asia and the U.S., this was driven by higher levels of conversion of offers to placements. In our other countries where trading remains challenging, we are yet to see any improvement in this metric. However, our fee rates remain at record levels.

I will now present a regional review. Group gross profit declined 6.7% in constant currencies against Q3 2024. In line with Q2, we saw variable market conditions across the group with ongoing challenging conditions in Continental Europe and the U.K. However, we saw growth continue in Asia and the U.S. In our largest region, Europe, Middle East and Africa, which represented 52% of the group, we declined 10.2%. We continue to see tough trading conditions with low levels of candidate and client confidence.

Germany, the group's largest market in Q3 represented 13% of the group, declined by 11%, an improvement on the decline of 21% in Q2. The market remains challenging but stable with companies continuing to limit and delay hiring decisions due to macroeconomic uncertainty. Our contracting business was the most resilient, down 5%. However, tough conditions continued in our temp and perm businesses, which were down 13% and 9%, respectively.

France, the group's second largest market, declined 16%. Temporary recruitment down 4%, outperformed permanent, down 26%, indicative of the ongoing uncertainty in the market. Spain grew 3%, with particularly strong results in Page Executive. Elsewhere in Europe, we saw challenging market conditions in all countries. In response, we reduced our fee earner headcount by 79, mainly in Germany and France. Excluding the impact of hyperinflation in Argentina, the Americas, which represented 19% of the group, grew 3.5% against Q3 2024.

North America grew 10%, with the U.S. up 10%, its fourth consecutive quarter of growth. We saw good levels of activity in trading, which continued strong results particularly in manufacturing and construction. In Latin America, excluding Argentina, gross profit was down 4%. Mexico, our largest country in the region, was down 12% due to ongoing tariff uncertainty. Brazil was flat with challenging conditions in permanent recruitment, but a strong performance in temporary. Our remaining countries in Latin America grew 1% collectively. Overall, fee earner headcount decreased by 16% in the quarter, mainly in Brazil, partially offset by additions in the U.S.

In Asia Pacific, which represented 17% of the group, Q3 gross profit declined 1.2%. We continue to see improved trading conditions in the second quarter of growth in Asia, up 1%. Southeast Asia grew 5% against Q3 2024, with improved conditions across most of our markets in this region. Conditions remained tough in Greater China, down 7% on Q3. Mainland China declined 20%, but Hong Kong grew 8%, driven by another particularly strong performance in Page Executive. Japan declined 2%.

India, where we now have almost 250 fee earners, grew 11% with continued strong trading conditions. Australia declined 12% with the market particularly challenging in New South Wales. Our fee earner headcount in the region decreased by 9% in the quarter.

In the U.K., which represented 12% of the group, gross profit declined 14.3%, in line with Q2. We continue to see clients deferring hiring decisions and candidates cautious about accepting offers. Permanent recruitment declined 12% against 2024. We're temporary down 19% due to the closure and reallocation of resources from our U.K. Page Personnel business to Michael Page this year. Fee earner headcount reduced by 16 in Q3.

I will now provide a summary of our results. In line with the previous quarter, in Q3, we saw variable market conditions across the group. The conversion of offers to placements remain the most significant area of challenge as ongoing macroeconomic uncertainty continue to impact confidence, which extended time to hire. We remain committed to our strategy and continue to reallocate resources into the areas of the business where we see the most significant long-term structural opportunities. Concurrently, we continue to ensure headcount in all our markets is aligned to activity levels. Overall, our focus remains to balance near-term productivity with ensuring we are well placed to take advantage of opportunities when market conditions improve. We have made good progress on our cost optimization program during the year, which are on track to deliver annualized savings of around GBP 15 million from 2026.

Despite the uncertain outlook due to the unpredictable economic environment, we remain confident in the execution of our strategy given our highly diversified and adaptable business model, strong balance sheet and our cost base that is under continuous review. The Board expects full year operating profit to be broadly in line with current consensus of GBP 21.5 million. Nick and I are now happy to take any questions you may have.

[Operator Instructions] The first question is from Andrew Grobler at BNP Paribas.

Just a couple from me, if I may. Firstly, on cash -- net cash in the period, sort of relatively low at this point. Can you just talk through some of the drivers working capital and so forth, and also what that means for the dividend? And then secondly, just in terms of run rates through September and into October, what are your thoughts on headcount for the remainder of the year?

Thanks, Andy. Okay. I'll take the second question first. So in terms of run rate on headcount, we'd expect to see probably in Q4 something similar to what we've seen over Q1, Q2 and Q3, which is probably a drift in Europe, particularly where markets remain a bit more challenging, offset by some additions into the markets where we're seeing some growth. So if you take the run rate through this year, our fee earner headcount has come down by somewhere around 100, 120 per quarter. I would expect that, that would happen again probably in Q4. Cash, Kelvin?

Yes. The cash at GBP 38 million at the end of September before the dividend of just under GBP 17 million, therefore, currently stands just above GBP 20 million. That's where we were expecting it to be. Our current forecast for the year-end is that we would be at about GBP 40 million. We're not expecting to have any borrowings under our RCF facility at the year-end. And whilst that's a little lower than we'd normally want it to be, I expect the bonus payment for the senior staff and for the Q4 profit share will be lower than usual as well. So whilst it would normally be 30, I'm expecting it to be nearer 25.

Our current ability to run the business on cash is somewhat improved, and that's largely about the improvements we've made to our cash management structures over the recent years. And therefore, where it used to be near 50, it's now currently just under 30. So I don't have any concerns about running the business with this sort of level of cash. The decision on the dividend is one for the prelims, and we've got another 5 months' worth to go before we get there. We tend to be highly cash generative in the last part of the year. There aren't any big payments after the interim dividend. So we'll leave it for the Board to to make that consideration in early March. But as I say, we'll have had 5 more months' worth of cash generation and also a much better idea on what the outlook looks like as we come into next year.

The next question is from Remi Grenu at Morgan Stanley.

A few questions, if I may. So the first one is on the U.S. First, I'd like to have your view on whether you are seeing a broad permanent recruitment market recovery in the country or if you would attribute the stronger performance over the last 4 quarters to a company-specific contract win market share gains or business mix exposure to specific sector? And in your discussion with clients in the U.S., what do you think has been the most significant driver to gradually unlock the situation over this last 4 quarters? So trying to understand what we should look out for in Europe in your view? That's first question on the U.S.

The second one is on pricing and salary. So can you update us on the average level of salary at which you're placing candidates and how it has evolved recently, obviously, kind of combining the impact of inflation receding, but maybe any of the initiatives on your side to continue to actively position the business? Also adding the question on fee rates in there. The last one, and maybe it's me being picky, but net fees come in GBP 2 million to GBP 3 million ahead of consensus. The operating profit guidance is down GBP 0.5 million, I mean, broadly stable or slightly down. So I just wanted to ask if you can provide more details on the bridge here, whether there's been a mix impact, a change in the temp gross margin or some phasing on the operating cost savings that has changed versus 3 or 4 months ago that would explain a slightly higher net fee but guidance on operating profit broadly stable or slightly down.

Okay. No problem. Thanks, Remi. Okay. I'll take the first two questions, and then I'll let Kelvin answer the third one. So in terms of the U.S., have we seen a broad perm market recovery? No, I don't think we have. When you look across our business, we obviously operate in multiple disciplines and sectors where we're seeing growth is where we've positioned the business. So around about 50% of our operation is in construction, and that is performing very, very well. A lot of the contracts we have now have shifted away from traditionally what would have been, say, residential work towards data centers. And that, as you know, is a very, very hot market to be in right now and we're benefiting from that positioning. So that's great. .

And then the second area where we're seeing a lot of growth, I mean, considerable growth is manufacturing. And manufacturing as a discipline for us is twice the size of the next largest discipline, which would be financial services. And that's been growing for the last 12 months, double digit. And we're just seeing lots of success in that area, driven slightly by the political policy of bringing manufacturing back onshore. Now clearly, organizations aren't in a position to bring full manufacturing facilities back from offshore locations in the space of 9 months, but what they are able to do is make decisions around leadership hiring and doing that into the U.S. in anticipation of the return of manufacturing to the U.S. rather than doing it in another country outside of that jurisdiction. So we're benefiting from that, but I wouldn't say it's a broad-based perm market recovery because we're not seeing in areas like finance or financial services our success, as I say, is driven by those two areas where we position the business, it's about 65%, 70% of our business is in construction and manufacturing, and they're going great. So we're happy with that.

And I think you asked something else around the U.S., which is what a client is saying. I think what our clients are saying is that because they have order books that are filling up, particularly if we take that construction example, which is if they want to go out and bid for and then win a contract, they need to have the supply of talent to then execute on that contract. So therefore, it drives a lot more sensible conversations around landing candidates because they know they have the work, they know what the price of that work is, they know what their margin on that work is, and then they can make a decision around what salaries they want to offer to get the talent on board. So very sensible, I would almost say, normal recruitment conversations what are happening in that market.

It's nothing extreme like we saw post-COVID, where we had those 2 years where the market was moving just at a slightly strange pace. It's something that's very recognizable in pre-pandemic recruitment markets, sensible conversations between clients and candidates to get the deal done and to make the appointment happen. So that's really what's happening from a client and candidate perspective in the U.S.

As regards pricing, our fee rates remain at record levels and salary levels are up on last year, not significantly. I think in Q3, they were around about 3% up on where they were. So for me, that's more kind of an annual review increase. What we have seen though more significantly is in Q3, a 7% increase in our average perm fee. And that's been driven by a few things. That's driven by the fact we've got record fee rates. It's driven a little bit by what we said there about the perm salaries going up a little bit as well. But it's also being driven by the positioning of the business as part of our strategy, which is to move upwards. Therefore, a higher ratio of Page Exec revenue, more Michael Page revenue, less Page Personnel revenue. So that is a very confirming piece of data for us that the business is moving up into those leadership and specialist roles that we intended as part of this strategy, and that will continue. So is very much -- I think your question was, are we actively positioning the business? Yes, we are, and that's the results of that.

Yes, I can talk to your last question, which is really about an improvement against the consensus of GBP 2 million on the GP line, but down GBP 0.5 million on the operating profit line. I mean, I don't think that's necessarily outside of what we were expecting in all honesty, but probably stems from a few things. I mean, one of which is we are holding on to our more senior fee earners. We want to hold on to that management headcount in order to support the business for when it recovers, and we can pin more junior fee earners underneath them. And so the average cost of a fee earner is now increasing, not dramatically, but certainly in certain markets, it will be up a bit. I think the the impact in Europe, which has always been one of our most profitable regions, has been hard and is now one of our most hard-hit regions. And therefore, that's impacted profitability as well. But I don't think, looking forward, we would expect the drop-through to have materially changed for the incremental GP that we get coming out.

Our next question is from Rowland Clark at Barclays.

James Rowland Clark from Barclays. I've got two, please. So your net guidance -- sorry, net cash guidance for the end of this year is now EUR 40 million. I think, Kelvin, you said at the Q2 results call that it was a big guess, but you were thinking of GBP 60 million to GBP 70 million. So I just wondered if you could give some color on maybe what's changed versus your admittedly -- obviously a big prediction at that point, but what's changed since then? And then secondly, just on productivity, I noticed you're now growing in terms of net fees per headcount from a decline. So you sort of elaborated on why that's happened in your last comment. But if you look versus your sort of key peer, you're underperforming on that metric. So can you provide any color as to why that's happened? And then to the second part of that would be, given your shift to the business to the sort of in higher end, and you mentioned the U.S. in particular, does that mean that we should see further growth in the productivity sort of metric that you're reporting?

Okay. Let me talk about the productivity because I think it's a really important point to get across to you. If you look across some of our peers and you look at the headcount reductions that they've made year-on-year in Q3, you've got numbers like 15%, 17%, 16%. We have very intentionally not done that. We've started to bring our headcount down before our peer group did when we started to see the slide in the market in late '22, early '23, and that has enabled us to do it more steadily and in a more controlled manner, which means that when we look at our headcount reduction year-on-year in Q3, it's only 8%. So half of what some of the peers have done. And that's very intentional because we are aiming to balance near-term productivity with our recovery. We want to maintain the platform. And therefore, the art, if you like, it's not a science, it's an art is to try and hold productivity around the level it's at, which I would also remind you is above where we were pre-pandemic. So these are good levels of productivity. But that's the balance that we're trying to strike. And sometimes, it will be minus 1 as it was in Q1. And sometimes, it will be plus 1 as it is in Q3. But we're trying to balance it around that number. And as I say, that because we've got one eye on the near term, but also one eye on the long term. And that involves maintaining the platform in a perm-driven business that sometimes means that you'll have movements slightly down, but other times, the perm revenue comes through in the quarter, it will move slightly up. So you'll see us continuing to do that. We're not measuring ourselves on near-term productivity.

Part two of your question on productivity was around the U.S. And I think that's a fair comment really is that if we continue to see the U.S. grow as a proportion of the total, it is a market where we have higher salaries than anywhere else in the world, and it's our third highest average fee rate. So you would assume that if that's a broader proportion of the total, that, that will impact our productivity. Now at the end of the day, it is still only around about 10% of the group. So it won't have significant impact in the overall productivity and will be offset if we're seeing decreases in markets like France and Germany that are bigger than the U.S. But yes, I mean, that's the aim. That's what we're trying to do. So hold productivity at these levels that are well above where they were pre-pandemic and keep one eye on recovery and add headcount where we see some of that recovery.

Yes. And I can talk to net cash. I think partly that's one of the challenges if you make a rather large guess too early in the year. But I don't think anything has materially changed from that estimate of 60 to 70 a while back, apart from really working capital. I think we're seeing temp books continue to be robust and hold up, particularly in places like Latin America, which have slightly longer working capital DSO. So I think the additional cash has really gone into supporting the temp payrolls around the world. I don't see anything really materially in terms of bad debt or anything that's untoward. And overall, our DSO remains in a pretty sensible place. But it is being funneled into supporting temp payrolls and contracting statement of work businesses around the world.

Our next question is from Karl Green at RBC.

A couple of interrelated questions remaining from me. You did mention already that you're seeing improved conversion of offers to placements in Asia and the U.S. And I think at the Q2 stage you referenced the U.S. gradually moving up from around 3 in 5 hit rate towards 4 in 5. Really just to get a sense as to whether that has continued in the U.S. and how it's tracking in parts of Asia? And I guess also linked to that, in terms of the drivers of that improved conversion rates. Are you seeing the kind of salary offer increases you referenced in Asia continuing? And are there any other sort of glimmers of positivity elsewhere in the world on the perm side, please.

Yes, sure. I can answer that one. So I would say that in the U.S., now we are back to what I would consider more normal trading, which is, as you've alluded to there, on average, consultants who land 5 offers, turning 4 of them into revenue. So that's always how I felt market dynamics worked in a perm business all around the world, pre-pandemic. We then have that strange period after the pandemic, a strange period since. So I find it very reassuring to see the U.S. now return to something that is very, very recognizable. Are we there yet in Asia? No. We're not back at 4 out of 5 landing. Are we moving in that direction? Yes, we are. But we're not back there yet. So if that continues to improve in Asia, the results then that will be driven, I would imagine, by that return back to 4 out of 5 offers turning into revenue.

Your second part of the question was what are the drivers? It's not that suddenly everybody has got their checkbooks out in the U.S. and are offering big salaries to every single candidate. As I said to one of the earlier questions, we're not seeing a broad-based recovery in perm in the U.S. There are just areas of the market that we are positioned in that happen to be very hot right now. And if you are in a hot market with a limited supply of talent and you want to land the candidates, then there's always a cocktail of elements that will be put on the table, but part of that will be salary. So you might be getting an extra couple of percentage points. We're certainly not going back to the world of '21, '22, where it was 15%, 20%. But might it creep up to 10% increases in some cases? Yes. If I've landed a contract and I need to deliver and the data center, the kind of initial spades are going into the ground in 2 weeks' time, and I need to land the candidate ready for that, then I'm going to do what I need to do. But to me, I think probably what I feel is that what's happened in the U.S. isn't a return to some -- a move towards something that is unrecognizable. It's a return to something that's very, very normal. So if anything, I think what we should be looking at with the U.S. is that we're seeing a recruitment market where -- when market conditions return to as they were probably pre-pandemic and you have a level of positive sentiment, you have markets where there are shortages of supply of talent, how do they behave? And they behaved like -- they're behaving like they've always done. And to me, I find that very reassuring.

Our next question is from Rory McKenzie at UBS.

Two questions, please. Firstly, I know September is the main month for Q3 anyway. So trends are kind of hard to call out, but it does kind of set the tone for the rest of the year. So what can you say about how the KPIs rebuilt after the summer holidays? Are there any more clients than usual talking about hiring freezes for the rest of the year? Or do you think there's still plans to try and spend budgets that are in place? And then secondly, in the U.K. where you've closed Page Personnel, can you just outline the thinking there? Is that a market you just don't think will rebound well? Or is it more structural? How you're seeing that end of the market evolve? And can you just help us understand how big it is in terms of a drag on the region?

Yes, sure. I can take both of those. Okay. So in terms of KPIs, are we seeing any hiring freezes? No. Activity built as we would have expected coming out of Q3 was -- as it always is a bit slow in July and August, you never quite know what you're going to get. And then September, activity built very nicely. So we go into Q4 with the expected level of momentum that we've planned for, really.

What are the signals can I give you? I mean, our Enterprise Solutions business has got a pipeline that's the biggest it's ever been. So we won't clearly win all of the business that's in the pipeline, but it's great to see so much in there RFI, RFP stage, and we will win a proportion of it. So that's got to be a positive. So no, I mean, if anything, I think the overall summary of KPIs fall really around the headline of our statement, which is that if you're in Europe right now, it's pretty challenging. And if you're in Asia and the U.S., it's starting to look a bit more positive and you've got some growth, and that's really reflective of the trends and the KPIs that we're seeing.

As regards to PP in the U.K., yes, I mean, for us in the U.K., it was a decision really around about the strategy of the organization. We felt that it's a market that is threatened by disintermediation, particularly by the rise of generative and agentic AI. And we had an opportunity to look at the U.K. business model, and we made a decision that we wanted to move more of our resource up into the Michael Page business, and make a clean break in the U.K.'s case away from that Page Personnel market, which, as a reminder, was more junior clerical graduate entry roles, which I think we've seen in the press have been affected by AI, and I guess, will continue to be so. We wanted to focus more on the Michael Page and Page Exec markets. Our Page Exec business in the U.K. is our biggest in the world. So we'd rather see more resource going into those areas where we get higher fees, better fee rates, et cetera, et cetera. So it was a very deliberate decision as part of the strategy, and we also closed Page Personnel in Latin America and also in Asia.

As regards the drag, yes, I mean there is a drag in the U.K. at the moment. And to explain as to why. In simple terms, if you're a successful Page Personnel consultant, we're asking you now to move to Michael Page level. Your clients as they were in Page Personnel are now your candidates and you now need to go out and find a whole new set of clients to work with. And that doesn't happen overnight. There is a lag, 6, 9, 12 months for a consultant to transition to become as productive as they were before. And we need to support them through that. We can't ask them to make that move and then not reward them through that period. So we are doing. But ultimately, what it will mean is that as we go into next year, we'll have a business that is more focused around the Michael Page level, the area that we want to trade in. And I think it will put us in better shape to be more productive in the U.K. market when the conditions improve.

And obviously, that all fits with your strategy repositioning, which has been a theme of this call. But can I just come back on those comments around the risks you see around generative AI for those roles. Is this about anticipating job displacement in the economy overall? Or do you think that firms will be looking to fill those jobs through different providers, platforms or channels?

How long have you got, Rory? It's a big topic. I mean, I probably read the same articles that you do. And I look at the -- and I speak to CEOs of other organizations, but I also look at our own business, and I look at the opportunities that we have to utilize AI within some of our shared service centers, for instance. And I think the balance at the moment is that there's organizations that are very openly going out to use AI to save on headcount. And there are other organizations, many I've spoken to they are talking about it as an augmentation tool where they can take away repetitive tasks, admin-heavy tasks and then get the headcount to do the high touch, white glove service that they want them to do. And I don't know the answer as to what the overall trend will be over the next few years, but there's certainly going to be some disruption around that level, whether the jobs will disappear, whether there'll be less jobs, whether the jobs will change, I'd just be guessing. And I think what we've learned on this call is that guessing can probably make things a bit tricky when you have a follow-up question in 3 months' time. So I'm not going to do that.

At this time, we have no further questions on the call. So I will hand back to Kelvin to wrap up.

Yes. Thank you, Seb. As there are no further questions, thank you all for joining us this morning. Our next update to the market will be our fourth quarter trading update on the 13th of January 2026. Thank you all.

This concludes today's conference call. Thank you all very much for joining, and you may now disconnect.