Robert Walters Stock

Hello, and welcome to the Robert Walters Half Year 2026 Financial Results Presentation. [Operator Instructions]

I would now like to hand the call over to Toby Fowlston. Please go ahead.

Good morning, everyone, and welcome to our 2026 half year results presentation webcast. I'm Toby Fowlston, Chief Executive of Robert Walters, and I'm joined here in London by Jonathan Solesbury, Interim Chief Financial Officer.

We're pleased to have delivered a first half financial performance in line with our expectations, a good outcome, particularly given the increased uncertainty we have seen so far in 2026. The steps that we've been taking over the last 3 years to unlock more of the potential of Robert Walters has frequently required many of our people to go above and beyond. So it's right to recognize that and say a very big thank you.

The execution of our strategy has been sharpened around cost, cash and growth actions over the last 9 months. The actions we have taken continue to give us confidence in the opportunity we have ahead and in the value this business can deliver for our clients, for our shareholders and for our people.

In terms of our agenda today, I'll hand over to Jonathan shortly for a review of our first half financials and an update on our cost and cash actions. I'll then return to update you on the growth actions that we've been taking in the business and the positive impact that they are driving. We'll then leave time at the end to open up for questions.

So let me firstly highlight our key messages for today. Whilst markets have, of course, been tougher than almost everyone in the industry anticipated in the 2 years since we presented our refreshed strategy at CMD, we remain confident in our plan. That said, tough markets have, of course, prompted us to further sharpen how we're executing the plan. We are further focused on cost, cash and growth actions, the 3 of which are fundamentally linked. Secondly, on costs and cash, we have made substantial progress. Our annual cost base has reduced on an annualized basis by GBP 83 million since 2023, and we're very clear on the actions ahead to deliver the cost base that is right for the current market. Meanwhile, we have made solid progress in optimizing cash levels across the group to support execution of our strategy. And thirdly, we continue to take focused growth actions to position the business strongly for the structural opportunities we see ahead.

We are confident in returning our specialist recruitment business to growth quicker than the broader market. We have a larger addressable market today than 3 years ago, and we are increasingly well positioned in attractive areas where our total talent solutions offering will continue to resonate with clients over the long term.

So with that said, I'll hand over to Jonathan now for a review of our first half financial performance and an update on our cost and cash actions.

Thank you, Toby. Good morning, everybody. Turning first to the summary of our first half financial performance. As Toby said, we're pleased to have delivered trading in line with our expectations in what remains a volatile global backdrop. Net fees of GBP 135 million in H1 were down 3% year-on-year in constant currency, a clear sequential improvement from the 2025 trend.

In terms of the shape of our first half, given the Asia Pacific weighting of the business, net fees in the second quarter were larger than the first quarter. Comparing the 4% year-on-year decline in the second quarter net fees to the 2% year-on-year decline in the first quarter, what we are seeing is a consequence of the tougher second quarter comparator with fees bigger by GBP 5 million.

Operating costs of GBP 139 were reduced by 6% on the prior year. Within this, there was a net charge of around GBP 1 million of one-off items taken above the line during the first half, thereby giving an underlying cost base of GBP 138 million. After interest costs and the impact of foreign exchange, the first half result was a GBP 6.8 million loss before tax, reduced on the prior year. As we continue to take actions to ensure a strong balance sheet to enable the business to execute its operational and strategic objectives, the Board is not declaring an interim dividend.

As Toby has already made clear, we are focused on the costs across the business. Let me first turn to a review of the H1 operating costs before updating you on our cost actions more widely. The average group headcount was down 11% on the prior year in H1, driving a GBP 4.5 million reduction in staff costs. We continued to manage non-staff costs very tightly during the first half with a GBP 4 million reduction year-on-year. We are being selective in investing spend in those client relationships that best support good-quality business development, and all our teams are focused on ensuring spend is directly fee-generating, ultimately cost-reducing or ensures regulatory compliance. Our tight cost management during the first half was part of the longer-running cost initiatives that underpin our strategy and medium-term targets. Let's now turn to that.

Over the last few years, the business has taken considerable action to reduce the cost base. As you can see from the chart on the left-hand side, since 2023 and on an underlying annualized basis, around GBP 83 million of cost has been removed. Investors are rightly keen to know what that can assure that the cost actions being taken isn't damaging the muscle of the business, which we clear, it hasn't. We gauge this by tracking the average tenure of our fee earners, which you can see on the chart in the middle of the slide. All else equal, we know that higher fee earner experience levels are associated with greater levels of productivity. As such, we've made the necessary reductions in the cost base by retaining many of our most experienced fee earners. Fee earner average tenure at the end of H1 was up nearly 1/4 versus the end of 2021 when the hiring market was showing signs of overheating.

The other significant part of our cost reduction program relates to reducing the structural costs within the business. You will recall that we're targeting delivery at least GBP 12 million of annual structural cost savings against the 2023 base with the full benefit of that being seen in the P&L in 2027. For reference, we've included detail on the slide of how that program has unfolded over time with a little over half of the reduction being delivered this year, which now at just over the halfway mark, we remain on track to do. Putting the cyclical element of the cost base required for current market conditions, together with the structural savings being secured, we have developed a line of sight to an underlying cost base -- monthly cost base that will exit in 2026 at around GBP 22 million.

Turning now to the cash profile during the first half and our recent [ cash actions ]. In the first half, we saw a reduced outflow on a free cash basis compared to the prior year, underpinned by our control of costs. Regarding working capital, we saw a GBP 6.3 million outflow during the period. Receivable days decreased year-on-year. However, the working capital inflow associated with that was more than offset by the rebuild in temp volumes, particularly reflective of the growth in Australia and New Zealand, and timing effects of period-end cutoff where revenue has been earned but not yet invoiced.

Now, moving on to our wider actions. At the full year results in March, we outlined the focus throughout the business on further optimizing cash. You may recall that whilst the cash resources across the group remains solid, we've historically operated with a consistent net debt position in the U.K. compared to our overseas markets, which retain positive cash reserves. That financing structure did not give [ the capability ] to our international business mix, and we had to [ obtain sufficient ] cash overseas reserves to fully fund the local working capital requirements across our international markets rather than repatriating that cash to the U.K. During the first half, we made good progress in improving this. Specifically, we have upweighted our day-to-day cash management actions, including more robust forecasting processes, led by an upskilled treasury function. This has enabled us to forecast cash with more precision, resulting in lower cash reserves to fund local working capital requirements. We continue to see [indiscernible] for the business in having access to financing facilities locally in certain of our non-U.K. markets, and steps to realize this are in advanced stage.

In summary, we have made substantial progress with our cost and cash actions, and they will continue to support the delivery of our growth strategy.

Before handing back to Toby, let me touch on our full year guidance. The key takeaway is that we expect to deliver our financial results for the year towards the upper end of current market expectations. With regard to net fees, we remain mindful that hiring markets across the globe continue to move at different speeds with a volatile backdrop being managed with agility. As such, we continue to expect 2026 group net fees to be slightly below 2025.

In specialist recruitment, we see a blend of continued growth in certain of our larger hiring markets, whilst we anticipate conditions in Northern Europe to remain relatively tougher but stable. In recruitment outsourcing, we anticipate the growth in net fees in the first half to be broadly sustained in H2. With regard to costs, we expect further reduction in the underlying cost base over the second half of the year, and we continue to envisage net cash at the end of 2026 to be broadly stable on the closing level in 2025.

And with that said, I will now hand you back to Toby.

Thanks, Jonathan. We've sharpened execution regarding cost and cash to help fund the investment into the growth actions that we are taking in the business. So before we turn to look at those growth actions in more detail, let me take a moment just to remind you and put them in the context of our group strategy.

As you can see from the slide, our strategy focuses on 2 levers of organic growth. Geographic penetration is about scaling in key markets. Our strong market position in Japan is a good example of what we're focused on extending and replicating. Service line diversification, such as we are focused on through interim management, consultancy and outsourcing grows our addressable market. We first set out this strategy at the Capital Markets Day in September 2024. Clearly, the cycle downturn has been tougher, and the AI-driven debate about the future of professional work more contested than perhaps anyone could have anticipated back then. All that said, though, we remain confident in our plan but clearly have been adaptive over the last couple of years.

Let me talk more on what continues to guide our thinking given the structural debate on the sector. On the hotly debated impact AI will have on the world of professional work, we first set out our view back in March. Whilst much, of course, remains uncertain, we have confidence in 2 core beliefs. The first is that the change in the world of professional work will present opportunities for our relationship-based business model. The chart that you can see on the left-hand side of the slide is one we first shared at our preliminary results in March. It shows the proportion of job adverts on the Indeed platform mentioning AI in the description. We think this is a useful way to track the speed at which this new technology is reshaping existing jobs and creating completely new types of jobs.

The clear trend continues to be upwards, though at different rates across the major hiring markets. Many people who know their stuff on these matters are coming to a similar conclusion [ to us ]. On the slide, we've included a quote from the Chair of the U.K. government's AI Economics Institute. As seen previously in history with computers, the Internet, we agree it's much more likely that there will be net new job creation from AI, and we think the emerging evidence is starting to bear this out.

Our second core belief is that human skills become more, not less important in an AI-enabled future professional work. We hear this from our own clients who consistently tell us that finding the right people have been validated by a trusted human source remains a top priority for them. We also see it more widely across a whole range of professional job types. And this theme was brought out well by PwC in their recent global AI jobs barometer, which analyzed over 1 billion job adverts across 6 continents. Their finding is that for the white-collar work that is our specialism, AI is changing those roles by automating away routine tasks and raising the importance of human expertise, judgment and creativity. Right now, that is most clearly seen in the entry-level jobs.

And as you can see on the chart on the right-hand side, PwC's finding is that for the entry-level roles, which are highly exposed to AI, that's the bar on the left, just over half of the new skills required for these roles are distinctly human ones that simply aren't going to be taken by an AI agent anytime soon, so things like motivational leadership, strategic decision-making, team building. Now, perhaps those strike you as a bit intangible, but if you look at the organizations where those skills are in abundance, they're likely to be the ones leading in their sectors. So the key point seems to be this, the more that AI is deployed into professional work, the more we'll need distinctly human skills to truly leverage all of its benefits. And whilst you know that entry-level roles is not where we play, we think this is an instructive finding about what is happening now. And we suspect that roles at more mid to senior levels will also need to further seniorize to demonstrate these skills.

Let's now turn to the growth actions that we've been focused on in the business, consistent with our 2 key levers of geographic penetration and service line diversification. Specialist recruitment remains the engine of the group. We're focused on returning it to profitable growth as soon as possible, and we're clear on how we want to do that. Across our footprint, there is increasingly better execution of our commercial playbook. And this is well illustrated when you consider that broadly, half of our portfolio was in growth during the first half, as you can see from the chart on the left-hand side. This is well up from just 1/10 in the first half of last year. Importantly, we believe that in many cases, this growth is due to our market share gains.

To help you see that more clearly, we've included a couple of other charts on the slide. The middle chart shows our hiring demand has trended in the U.K., Spain and New Zealand, using our preferred measure of job adverts from external sources. As you can see, it's been a relatively stable picture so far in 2026 compared to the prior year. We think this is important when you consider the chart on the right-hand side, which shows how our top line trading has trended in those same 3 markets. The clear takeaway is that our performance seems to have inflected. We believe this comes back to clients and candidates continuing to respond to our differentiated relationship-based offering and high-quality service.

But don't take it just from me because it's much more powerful coming directly from the clients that we serve. And on the bottom of the slide, we've included some direct feedback collected as part of our NPS program from clients in our U.K. specialist recruitment business. What stands out for me is the value and our ability to provide really quality candidates and quickly demonstrate a good understanding of the clients' needs. When you consistently create the conditions for that sort of quality service to be repeated day in, day out in both supportive and challenging markets, you have real barriers to entry and the sort of relationship property that market share gains are built on.

So half of our specialist recruitment portfolio was in growth in the first half. And clearly, we're not satisfied with just that. Whilst we can't detach ourselves from the reality that hiring markets globally are moving at different speeds, we're focused on outperforming the market. To deliver this, our playbook remains our 4-box model, and I'll bring to life what that really means in practice.

In the top right of our portfolio, we have country businesses in markets where there are strong structural tailwinds and where we are, on the whole, executing well. The key action here is to invest to strengthen our platform. Platform strengthening can either be focused on the top line, i.e. net fees, or the bottom line, operating profit, with the real sweet spot clearly being both. Malaysia and Japan are great examples where we're focusing actions to strengthen both top line and bottom line, respectively.

In Malaysia, our largest market in Southeast Asia, we've invested to develop our executive search offering, expanding the suite of solutions we can help our clients with. This helped drive a 6% increase in our average perm fee during the first half, particularly pleasing to see in a business where the conversion rate is already in line with the medium-term target for the group as a whole.

In Japan, our single largest specialist recruitment market, our recent actions have been particularly focused on further strengthening profitability with volume productivity in perm, which is to say perm placements per perm fee earner, a key focus. Here, we're more actively managing the sales funnel to get even more from our existing fee earner headcount. Now, there's more we have to do, and a more competitive market environment for the best consultants is something we're watching closely. But the early evidence gives encouragement with volume productivity rising 12% year-on-year during the first half.

Let me also say a quick word on our European interim management business, where we place senior professionals, often at C-suite level, into organizations going through a critical event such as an acquisition or large-scale transformation. Our platforming strengthening actions here have been focused on going into different segments of the interim market. For instance, in France, we saw an opportunity to access the mid-management level as a complement to the C-suite positioning that our business there is well known for.

Now, whilst market conditions in Northern Europe remain tougher than other key markets, we continue to be excited about Interim as a key engine of future growth. And it was really encouraging to see our interim volumes in France exceed prior year levels during the second quarter for the first time since early 2025.

Moving to the top left quadrant. The structural market tailwinds remain strong, but our execution needs to be better. And so, here, our focus is on improving execution before looking to grow the platform. Our specialist recruitment offering in the U.S. is a prime example. And you may recall that we consolidated our footprint last year to focus on 2 key hubs, one on the East Coast and the other in Texas. In addition, we've also narrowed our segment presence as well, whereby we envisage the majority of our activity being the placement of senior talent.

In the bottom right, we have markets where, perhaps due to maturity, the structural tailwinds are less pronounced. However, we are executing well. Our focus then is to keep doing that to a high level to outperform competitors and take market share. The U.K. is a good example here. And as you can see from the chart, whilst our average perm fee earner headcount was broadly flat year-on-year during H1, we saw an 18% increase in perm placement volumes. Our platform, in terms of the market experience our fee earners have, is as strong as ever, and that is supporting authority and trust in the marketplace, which is a real differentiator.

Lastly then, in the bottom left quadrant has weaker structural market tailwinds, whilst our execution has historically required improvement. Here, we challenge ourselves and whether a path to a more competitive position exists. During the first half, we continue to review markets in this quadrant, albeit now against stricter criteria, whereby we're asking ourselves whether we remain the best owner of these businesses. And we anticipate concluding that review later this year. However, we are clear that our objective is to optimize value for the group.

So I hope that's helpful in demonstrating the growth actions that we're taking in specialist recruitment. As we move now to consider our growth actions elsewhere in the business, it's helpful to place these in the context of our addressable market.

We showed a version of this slide for the first time in our 2025 full year results in March. Outside of specialist recruitment, our growth actions can be summarized under the banner of investing to expand our future addressable market. We've included some detail on the slide in terms of how we've gone about that since '23. And this has mainly been about addressing the talent challenges that larger enterprise businesses have, often distinct from those faced by the small and medium-sized businesses that are often our clients in the specialist recruitment market.

So let me now turn to update you on our growth actions in enterprise talent solutions. We've historically provided the enterprise talent solutions that our clients need through our recruitment outsourcing business. That business has been turned around over the last 3 years. Under new leadership, we focused our range of solutions, become more competitive at tender and developed new offerings, which have real commercial traction. The business now consists of 3 main elements, as you can see on the bottom left of the slide.

Firstly, you have the RPO offering, which is basically doing perm hiring at scale for larger enterprises, and this delivered about 2/3 of the net fees for the outsourcing as a whole during the first half of the year. Then you have the MSP offering, which is doing non-perm hiring at scale for larger enterprises. These 2 offerings have historically been the bedrock of our enterprise talent solutions offering. And when I say that the outsourcing business has been turned around over the last 3 years, it's really here that those turnaround actions needed to be focused. Thirdly, you have the consultancy offering. This is a much newer business. We launched it from a standing start in late '22, but it's already grown to comprise around 1/6 of outsourcing net fees in the first half, or about GBP 4 million. And I'll say more on that later.

Before that, let's take more closely a look at the RPO and MSP offerings. We're really starting to see the impact of the turnaround actions I mentioned in our financial performance. RPO and MSP combined returned to net fee income growth during the first half of the year, as you can see on the chart at the top right of the slide. Furthermore, the book now largely comprises only retained clients, as you can see on the chart on the bottom right of the slide. This has removed the headwind from clients with whom we parted ways and where it run off. The turnaround actions have also enabled us to show up more confidently in the marketplace. And you'll recall, we secured a significant expansion of a perm volume hiring partnership with a major financial institution, namely MUFG, in the fourth quarter of last year. Looking ahead, our pipeline of opportunities, particularly in RPO, is something we're encouraged by.

Turning to consultancy, we're excited by the structural growth opportunity. Here, we're specifically focused on the IT space. When we first launched the business, we supplied those larger enterprises needing IT talent on a non-perm basis at scale, but we wanted a different model to the MSP. In the consultancy model, Robert Walters directly employs the IT talent, and we then deploy the talent into our clients, typically the 6-month assignments, but with high rates of renewal and very low bench costs. More recently -- and this is what has unlocked the incremental GBP 5 billion addressable market opportunity you saw a couple of slides ago -- we had gone into the [ statement of workspace ], where the key value-add is not just supplying the worker, but an end-to-end solution for clients with often large complex technology projects.

A great case study of that is our work with the U.K. government department responsible for setting and delivering digital services. They needed to scale specialist capability quickly to hit their project milestones. In the tender process, our conversations with them focused first on solution outcomes rather than resource requests and help them with governance, risks and operational requirements. We now have teams responsible for delivering outcomes for our clients across both the IT infrastructure platform, as well as the end user data platform. And this relationship has made a strong contribution to the 41% year-on-year growth in net fees in our consultancy business during the first half.

And on the slide, we've included a visual of how we're now showing up in the marketplace across our 4 key practice areas. So I hope that provides helpful detail on the focused growth actions we've been taking right across our business.

So in conclusion then, we delivered a first half trading performance in line with our expectations. My thanks go to all of our people for the contribution they have made in making that happen. Three years on, from the beginning of our work to unlock more of the potential of Robert Walters, we're seeing good strategic progress focused on cost, cash and growth actions. We've begun the second half of the year with good trading momentum in a number of our markets, accelerating progress on the cost base and better execution capability of our growth actions. And as such, we expect to deliver a financial result for the year towards the upper end of current market expectations.

We remain focused and confident in how we can deliver for our clients, for our talent, for our shareholders and for our people. So thank you for listening. And Jonathan and I are now happy to take any questions.

[Operator Instructions] Our first question today comes from Thomas Callan from Investec.

Two questions from me, please. So firstly, on productivity. So Japan delivered 12% growth in perm productivity. U.K. placement volumes picked up as well on broadly flat consultant numbers. That's great. But how repeatable do you think those gains are moving forward?

And then secondly, on the outsourcing piece, great that RPO and MSP returned to growth. Where do you see the medium-term margin profile with respect to enterprise talent? And how does that potentially change the group's overall conversion margin once that mix has potentially shifted?

Tom, it's Toby here. I'll take both those questions. So, on your first question, I mean, look, we've exited quarter 2 with our volume productivity at 0.88. Historically, we've seen a very steady state sort of mid-cycle healthy position about 1. So we know we've got at least another sort of 10% to 15% capacity there. Now, some markets are already north of 1. Obviously, clearly, with others, there's still a way to go. So we're confident that there is still capacity to absorb more activity in that specialist recruitment space.

On your second question, RPO and MSP, so pleased to see RPO and MSP obviously back to growth, very much underpinned by those turnaround actions that we referenced during the presentation. When we did the CMD -- and investors will understand, RPO and MSP margins are structurally lower, obviously, than the specialist recruitment business. So in RPO, it's typically low-double digit. Probably, more single-digit for MSP. Consultancy, a lot better. However, clearly, we're seeing now less cyclicality there against the cost base, so some fairly solid financial rationale and also a key part of the total talent solutions mix in terms of helping us solve our clients' problems. So I'd say, a consistent view margins-wise, as we set out in the CMD. We haven't determined -- we don't have a predetermined view of what the group net fee income mix looks like 2 to 3 years out. We're still very much focused on that 16% to 19% dropdown as a medium-term target. So yes, we're obviously focused on getting to that.

Our next question is from Sanjay Vidyarthi from Panmure Liberum.

Two for me as well. First, on Japan, you referenced a more competitive environment. And we can see that from what some of the peers have been saying as well, all trying to make inroads into that market. Can you talk -- obviously, you have a very strong position in that market and long established. But can you talk a little bit about how that competitive dynamic is changing?

And second question is on France, where I think there's a new management team in place. Can you talk about some of the initiatives, some of the changes that you're making in, obviously, what is a very tough macro environment there? But what you're trying to do there to take market share?

Yes, certainly. I'll take both. So, on Japan, yes, I touched on the presentation, clearly, we have really laser-focused into productivity and specifically profitability. So we've been very disciplined around headcount. We recognize an opportunity to improve productivity. And obviously, as you can see, we've made really good progress on there. So I'm very happy to see that. That said, we know that we have opportunities to continue to build in additional headcount, so -- particularly in our technology business, which is performing very well. Competition, it's always been there in Japan. It continues to be there as well. And we are very focused on doing more on specifically that candidate engine, given obviously the scarcity of talent there. But I'm happy with the progress we're making in Japan. There's always more to do, and we know where we need to do it.

France, you're right, we had some new leadership there. Well, probably 2 actually. We had a new MD that came in over 12 months ago. I think that individual has landed very well, has bought some good discipline to that business. And specifically, where we saw -- we touched on the presentation, obviously, we started to see, in quarter 2, some growth in the interim business, which we haven't seen since the beginning of '25. That is a big engine room for us in France. So happy to see that. Where we perhaps didn't feel that we were performing as well as we could have been was in that, what I call, the temp business, which is the more junior end of that market. And we made a recent hire from one of our competitors, and very happy with how that individual is driving our performance in France. It still remains challenging. I was happy with the performance in the first half. And France for us is on plan, but clearly always more to do.

[Operator Instructions] At this time, there are no further questions. I would like to hand back over to the management team for any closing remarks.

I'll Just say thanks, everybody, for your time this morning, and look forward to seeing some of you during the coming days on the road show. All the best.

Good morning, everyone, and thanks for joining our first quarter trading update call. I'm Toby Fowlston, Chief Executive of Robert Walters. Since our full year results in March, we announced the departure of David Bower as CFO. David made a great contribution in his 3 years with the business, and I know many others at Robert Walters will join me in wishing him well in his retirement.

I'm joined today in London by Jonathan Solesbury on our new Interim CFO. This is just day 11 for Jonathan, but he's already begun to make a very valuable contribution drawing on his considerable experience leading finance functions in international businesses. So on that note, I'll hand over to Jonathan now, who will make a few remarks regarding performance at the group level before I return to touch on trading in our service lines and the wider market backdrop as we exited the first quarter.

Thank you very much, Toby, and good morning, everybody. I've received a really warm welcome in my first couple of weeks with the business, and the strength of the culture has really been evident from day 1. Let's turn to group trading during the first quarter, where, as you're accustomed to, and unless otherwise stated, all percentage movements in net fees are in constant currency terms. Group net fees in quarter 1 were 2% down year-on-year, in line with the Board's expectations, and a clear sequential improvement versus the trend seen throughout 2025. Whilst elements of our specialist recruitment portfolio do remain tough, we saw a notable step-up in the proportion of the specialist recruitment portfolio in growth during the first quarter, with the countries in growth representing half of specialist recruitment net fees, which was up from fifth in the second half of 2025. Furthermore, it was great to see our recruitment outsourcing business return to growth for the first time since late 2022.

Turning to productivity, headcount and costs. We saw a third consecutive quarter of growth in the critical metric of perm placements per perm fee earner per month, which grew 6% on the prior year. Within this, it was particularly pleasing to see certain markets drive higher perm placements year-on-year despite a lower fee earner headcount. Consistent with our aim, as mentioned, at the full year results last month of improving the quality of growth. And the headcount continued to be closely managed and was up 3% on the prior quarter. Meanwhile, total headcount was flat quarter-on-quarter. With respect to operating costs, we saw further progress during the quarter with the underlying cost rate per month below GBP 23.5 million.

Turning to the balance sheet. Period-end net cash was over GBP 20 million, in line with the Board's expectations. The first quarter outflow reflected the typical seasonal profile, driven by the payment of fee earner annual bonuses. And for reference, I note the quantum of outflow at GBP 6 million compared to the GBP 11 million outflow in the first quarter of the prior year. You will note from the full year results in March that measures to optimize cash levels in the group continue to be a key focus, and I'm looking forward to further progressing these very clear plans at pace.

Let me hand you back to Toby, who will take you through trading in our service lines as well as the wider market backdrop.

Thanks, Jonathan. Let's look at our specialist recruitment business across each of our 4 geographic regions before turning to recruitment outsourcing. Asia Pacific specialist recruitment net fees were up 4% year-on-year in quarter 1. Japan, our single largest market, returned to growth in the quarter, up 13% with a better performance seen in perm driven by higher productivity. You'll recall, we implemented actions in Japan towards the back end of last year to improve our perm performance. And it's pleasing to see these beginning to bear fruit and disciplined focus will, of course, continue.

In Australia and New Zealand, there was further momentum in temp volumes, and indeed quarter 1 finished with volumes at the highest level since quarter 1 '24 and quarter 2 '24, respectively. This drove growth in net fees of 12% in New Zealand, whilst the softer perm performance in Australia, where it is a larger proportion of the mix, meant fees were down 7% on prior year. Fees were up 2% in Greater China, whilst a 7% decline in Southeast Asia, which was a blend of mixed performance at the country level.

Turning to Europe. Net fees were down 16% in the first quarter. And it's fair to say Northern Europe, in particular, remains the region of our global business where hiring market conditions are still comparatively tough. As a reminder, the backdrop in Northern Europe of late has been one where a mix of regulatory and macro factors have contributed to uncertainty for hiring organizations. In France, quarter 1 net fees were down 21%, sequentially stable against the second half of 2025. Meanwhile, there was sequential improvement in the Netherlands with fees down 10%, driven by a notably better performance in perm. However, in Belgium, our first quarter performance was weaker than expected, with fees down 36%, and we have work to do there. In Spain, where we saw growth emerge through the second half of 2025, there was further momentum with fees up 13%. And for reference, our Spanish business is over 90% perm.

Turning briefly to the U.K., net fees were up 1% in the first quarter. And at our full year results last month, we noted how external indicators of labor demand in the U.K., notably job vacancies have been stabilizing month-to-month for a little while, and we've seen this continue. In the rest of the world segment, net fees were down 16%. However, excluding Brazil, Canada and the U.S. West Coast, all offices which we closed last year, net fees were down just 3% on a like-for-like basis. In the Middle East, where fees declined 15%, our performance clearly came against the backdrop of geopolitical tension, albeit it was a more moderate rate of decline as seen in the fourth quarter of 2025. Meanwhile, in the Americas, which comprises our U.S., Mexico and Chile operations, fees were up 11%.

Turning then to our recruitment outsourcing business. Fees were up 13% in the first quarter with that business returning to growth for the first time since late 2022. Performance with retained clients, which comprise well over 90% of the book was again resilient. And we also saw a very good contribution from a perm volume hiring contract expansion, which we announced late last year. Our consultancy offering also saw continued momentum in the quarter, driven by public sector clients. So a good start to the year for our outsourcing business and testament to all the hard work our people there have put in over the last few years.

Turning then to consider the market backdrop and how we're looking out over the rest of the year. As Jonathan mentioned a few moments ago, our first quarter trading was in line with our expectations. We remain encouraged that the momentum that we saw in the second half of last year in the U.K., Spain and New Zealand continued into the first quarter. And of course, it was great to see Japan, our largest market, return to growth, meaning that 4 out of our top 8 markets were in growth during the first quarter. More widely, with 50% now of our specialist recruitment portfolio in growth during the first quarter, growth clearly broadened out compared to the second half of last year, where just 20% of the portfolio was in growth.

Now it's important to say we haven't really witnessed a material uptick in new job flow year-on-year, but we do see some 4 years now since the peak of the post-COVID job surge, a bit of incrementally greater resolve among both clients and candidates to get recruitment processes over the line. We continue to remain laser-focused on working our sales funnel smartly and giving great service to our clients and candidates, and we believe this is seeing us take share in certain markets. The growth we've seen in some markets is clearly not yet universal, with Northern Europe, in particular, remaining tough.

And whilst the hiring market in the Middle East conflict appears to remain at this point, limited to the region itself, we do remain mindful of potential macro impacts down the line should the tensions become retracted. So taking all that into account, our guidance for 2026 group net fees remains unchanged. We will continue to remain focused on those factors in our control, and we feel the group is increasingly well positioned to take advantage of the opportunities we have ahead, given the total talent solutions offering we are building out.

So with that said, Jonathan and I would be happy to take any of your questions.

[Operator Instructions] We will now take our first question from Tom Callan of Investec.

Just one from me. So clearly, an encouraging uptick there in placement volumes year-on-year. I just wondered if you could remind us as to the sort of economic impact behind that in a steady market, i.e., what that increase potentially means in the context of incremental NFI and maybe also EBIT, if you assume a typical drop-through?

Yes, I'll take that question. Thanks, Tom. Yes, obviously, really pleasing to see the volume productivity has gone up. That's now our third consecutive quarter. And obviously, it's good to see certain markets driving that placement growth as well, particularly in most cases with fewer fee earners. So perm placement, if we just go back last year, perm placements per fee earner per month in 2025, we're tracking around 0.84. And again, just as a reference point, that sits against an average pre-COVID of about 1.0. And then as you may recall, we did see it sort of tick up to about 1.2 during the post-COVID surge.

So I think as we step back from all of that, we recognize that we still have headroom capacity to grow from where we are today. I think if we looked at a 10% uplift in that volume productivity metric alone, and again, just to be clear, that is just perm in specialist recruitment, that would drive probably north of GBP 10 million worth of net fees. Now clearly, there is a larger benefit if that uplift is also reflected in temp, and you might recall when we did the CMD, we talked about both the impact of perm and temp benefits. So hence, it was a larger number we discussed then. So I think in terms of EBIT, look, on the basis that headcount remains flat, then there's no reason why we shouldn't see a drop-through of around 70% to 80%.

And we'll now take our next question from Steven Woolf of Deutsche Bank.

A couple from me. I'm interested in the comments that you said there about this greater result for client and candidates to get deals done, which obviously is slightly contrary to what we've been hearing from -- certainly from some of your peers, which said that the time to hire has become more protracted, more interviews, less confidence in decision-making, a wait-and-see approach. So just any sort of info you can give around there is number one.

Secondly, the U.K., again, you're clearly going against the trend in the strong performance there. So any improvements? And then to your comment about external indicators being sort of either holding their own as it were, the job vacancies number has continued to drop a little bit over the last 3 months. So just thoughts on that one. And then finally, on the headcount, you put a little bit extra there on fee earners at this point. So just wondering managing that natural attrition and selective investment, where that might have gone into.

That's right. Okay. So I'll start with the fee earners firstly. I mean we are very focused clearly on productivity gains. If I go back to the point I made on the placements per head per fee earner, we know we've got capacity. Now clearly, that performance differs in different markets. So in some markets, we're tracking well over one placement ahead. And selectively, we are going to be looking and have looked at where we can build in headcount when we feel we're at capacity. Other markets, clearly, we're tracking well behind that. So we are very, very focused on where we can maximize that capacity and productivity gains.

U.K. itself, as you know, we made a change in leadership a couple of years ago. I think the team have done a very good job. The reality is that, obviously, there are still challenges in that market in the U.K. But if we step back, we took some decisions to rationalize our office footprint. We operate really in 3 core cities down in the U.K. And I think we are consciously really focused on those disciplines and sectors that we believe there is -- there are gains to be had. So specifically legal, accountancy and technology are obviously 3 of those. And it just goes back to real discipline on sales funnel, proximity to clients and candidates. I appreciate, obviously, AI, automation, et cetera. But again, relationships and the ability to influence is so critical. And despite the job volumes, and I appreciate some of the numbers that have come out, we believe that there is still opportunity in the U.K. So we're going to continue to really focus on that.

In terms of greater resolve, look, I think it's probably anecdotally, what we're seeing at the moment is -- and again, it is very different in different markets. And there's no question perhaps in Northern Europe, for example, there is a little bit more pain there, perhaps in other markets. But equally, I get a sense in some of our markets now that candidates do -- they're starting to want to make the move now. And I think a lot of this is driven, as we all know, by candidate churn and candidate movements. And if we just step back, there are a lot of people who entered into the job market in that sort of post-COVID surge, which is now 3, coming up 4 years ago. So they've been through that 3-, 4-year cycle in their roles.

And equally, the markets in which we tend to operate, and again, it is at that more sort of mid- to senior level, and it is in those core white-collar professional service areas. So I believe there is increasingly a bit more of an appetite now for candidates to start to move. And I don't have the data yet to support this, but also in some markets, the U.K. being a good one with the cost of living increasing, that in itself may well, in turn, mean that people need to look at a higher base salary to accommodate that, which, of course, means moving jobs potentially.

[Operator Instructions] There are currently no further questions in the queue.

Okay. Thank you very much, everybody. Thanks for all your time, and look forward to seeing you all soon. All the best.

Good morning, and welcome to Robert Walters' Full Year Results 2025 presentation. [Operator Instructions] And I'd like to hand over to Toby Fowlston. Please go ahead.

Good morning, everyone, and welcome to our full year results presentation webcast. I'm Toby Fowlston, Chief Executive, Robert Walters, and I'm joined here in London today by David Bower, our CFO.

This is the third set of full year results Dave and I are delivering as a management team, and there's no question that 2025 was another challenging year. It's demanded a lot from people right across our business, but as a management team, we are clear that our people have responded well to that challenge. You will leave today's presentation with a clearer sense of how we've continued to implement self-help measures and also how we focused on ensuring balance sheet strength. Along with the market opportunity that remains significant and early signs of recovery in select markets, we continue to have high conviction in the opportunity ahead of us.

Now turning to the agenda today, I'll hand over to David shortly to walk through the 2025 financials and an update on our actions regarding the balance sheet. I will then share more of our thinking on why, despite the tough backdrop over the last few years, we continue to be encouraged about the market opportunity ahead of us and also cautiously optimistic about the early signs of recovery in certain markets during the second half of 2025. I will then update you with more detail on why we believe we have an operationally stronger business today, before I offer an insight into how we're thinking about the changing world of work. We'll be sure to leave time at the end to open up for questions.

But as we begin, let me highlight our key messages for today. Firstly, Robert Walters continues to play in a significant market with long-term growth drivers, and we have positioned the business over the last 2 years, in particular, to serve these markets as well as possible. Secondly, markets have, of course, been challenging for much of the last 3 years. We, therefore, continue to enact self-help measures on our cost base and apply a sharp focus on balance sheet strength to position us robustly in the face of still overall volatile markets.

Thirdly, whilst our markets are cyclical in nature, there is growing evidence that certain hiring markets are in the early stages of recovery. Fourthly, we've made good progress becoming operationally stronger over the last 2 years. We are organized into 4 service lines that cater for the full suite of solutions needed by hiring organizations and we remain obsessively focused on the key drivers of business performance that are critical to delivering our medium-term targets.

And lastly, whilst the pace of change in the world of work will likely continue to accelerate, not least due to artificial intelligence, we feel positive about the opportunities that will present for our fundamentally relationship-based technology-enabled model, and particularly in the mid- to senior salary range in which we operate.

So I'll hand over to David now for a review of our 2025 financial performance and an update on balance sheet actions.

Thanks, Toby, and good morning, everyone. I'll turn first to a summary of our 2025 financial performance. For the turbulent backdrop for global trade policy, particularly at the start of Q2, with geopolitical tensions and still relatively tight monetary policy, some 2-plus years to [ address ] peak to the top of the previous timing cycle, client and candidate sentiment remained cautious throughout 2025. This impacted our net fee income, which declined 14% year-on-year in constant currency terms, a reduction of GBP 47 million.

The continued focus we have applied to all elements of our cost base as well as progress on our initiatives to achieve material annualized structural cost savings to fully benefit the P&L in 2027, saw us offset over half of that fee income impact. However, we continue to be mindful of ensuring our core fee earning platform remains strong, and hence, not all of the fee income reduction was offset. Included in operating costs were redundancy costs of GBP 4.4 million taken above the line and relates to actions which will help further position the business to execute to a higher level.

In summary, therefore, we reported an operating loss for the year of GBP 14.9 million and a loss before tax of GBP 19.6 million. The Board was unanimously of the view not to propose a final dividend further to its decision earlier in the year not to declare interim dividend, and showing as a stronger balance sheet as possible to enable the group to execute its operational and strategic objectives in the near term was top of mind. And the Board's view was it was best supported by a nil distribution.

So let's now turn to consider our cost actions in 2025. As you can see, 3/4 of our operating cost base relates to people in 2025 and efficiencies here drove the majority of the GBP 27 million reduction in operating costs. The average group headcount reduced by 15% year-on-year. This mostly drove the GBP 21 million reduction in fixed staff costs, whilst we also saw cost reductions from structural actions across our business partner functions. We again saw lower variable compensation, consistent with the trading result, but we're pleased to still appropriately reward those of our fee earning teams that met or indeed exceeded their team-based targets for the year.

We continue to control non-staff costs tightly through 2025, with this portion of the cost base falling by GBP 4 million. In the early months of 2026, we've continued to apply scrutiny in this area with all our teams focused on ensuring spend is either directly fee-generating, ultimately cost reducing or ensures our regulatory compliance. Our 2025 actions meant we exited the year with a monthly cost base run rate below GBP 24 million. And so far in 2026, we've seen this trend lower still.

Let's turn now to look at the profile of cash in 2025 and our balance sheet actions more widely. There was negative free cash flow of GBP 14.6 million over the year. When combined with the payment of 2024's final dividend in May 2025, this meant net cash broadly halving versus the 2024 closing position. So well below the GBP 50 million target of our capital allocation policy. I would note the following.

Firstly, our GBP 50 million target was chosen with the top of the cycle in mind. With a downturn that has now been 3 years in duration, the efficacy of that is brought out with the balance sheet remaining in a supportive position for the business. Secondly, and a related point, the 2025 closing net cash position remains sufficient to run the business with, for instance, the working capital required on the temp book not at the peak level seen in the post-COVID surge. That said, and with the precise timing when the majority of hiring markets will move back into growth still uncertain, there has been a real focus throughout the business while further optimizing cash.

In particular, whilst the sufficiency of our cash resources across the group remains solid, one perhaps less well understood element of our capital structure is that we operate with a consistent net debt position in the U.K. compared to our overseas markets, which retained positive cash reserves. Some of the key drivers of this U.K. position are brought out in the two charts on the bottom of the slide.

Firstly, with the U.K. states, our corporate center contributing to losses in recent years, as shown on the left-hand chart, and secondly, the fact that the group invoiced discount facility could only be accessed by the U.K. businesses, and has therefore never been more than 50% utilized at the year-end date, as shown on the right-hand chart. Clearly, this financing does not give the flexibility required for our international business mix, where, in essence, we had to retain sufficient overseas cash reserves to fully fund the local working capital requirements across our international markets. We're therefore working on the introduction of local financing facilities in certain markets which will reduce the reliance on the U.K. to provide funding across the whole group.

And in addition, we are also stepping up our internal measures to optimize our cash holdings. As a Board, we remain mindful of the importance of a strong balance sheet that enables the execution of the group's priorities, both the near-term operational priorities and also the medium-term strategic objectives, where the opportunity set we have ahead of us remain significant.

So I'll now hand you back to Toby to update you on how we view these.

Thanks, David. Next month, we'll mark 3 years with me serving the role of Chief Executive. Now the group today looks very different to back then. We have reorganized our business to better serve our markets with the appropriate solutions and we are clearer than ever that this market opportunity remains significant. Now we bring that out on this slide.

In aggregate, we size our addressable market at over GBP 60 billion in net fee income terms. We, of course, as you know, have a strong track record in perm specialist recruitment, which remains our single largest market opportunity. In addition, though, we have been developing Outsourcing and launched Consultancy and Talent Advisory to enable us to go to market as a total talent solutions provider. We've been focused about the segments of the Talent Solutions market in which we want to play and where we have a right to win.

Now we set out the key evidence on how we think about capturing the market opportunity on this slide, thinking first about that opportunity in perm. And whilst we believe the direction of travel for many hiring organizations will be towards greater flexibility and therefore, possibly a little less perm in their overall workforce mix, it will likely continue to be the key engine of our group for years to come. The global market for hiring professionals on a permanent basis is highly fragmented, with staffing industry analysts quantifying just a 7% share for the top 10 players, of which we are a part.

Though the medium-term outlook for the market overall remains cyclical, we see a clear opportunity to grow share in perm given the highly fragmented landscape. In terms of our Specialist Recruitment business as a whole, comprising both perm and temp, over 70% of net fees are derived from 8 hiring markets, which are shown on the slide. Whilst we continue to be excited about the long-term opportunities we have in many markets globally, we're naturally focusing resource and attention on these 8.

Now thinking about our future addressable market, our initial estimate is that an additional market opportunity of at least GBP 10 billion exists in Consultancy and Talent Advisory, broadly evenly split between the two. And I just want to share a few words on both of these. Firstly, Talent Advisory. We launched this business 2 years ago. It is in the early stages of development, but the relevance to clients has been proven, not least seen in 2025 net fees almost doubling on the prior year. We're currently focused on improving operating model here, such as the business can be scaled as efficiently as possible, and I'll share more detail on that shortly.

Secondly, we have our Consultancy offering. This was launched in 2022, solely in the U.K. and solely to clients of our Recruitment Outsourcing business. Given the international reach of our client base, we see a clear opportunity to grow the U.K. and offer Consultancy in markets outside of the U.K. as well. So our market opportunity is significant, and we have a clear and focused strategy we are following to deliver it. And that strategy is summarized on this slide, and it really comes down to two organic growth features and the five building blocks of operational improvement and margin rebuild and four core strategic enablers, which are in blue at the bottom of the slide.

I'll leave you to study it in more detail later on. However, you will become very familiar with it as we'll keep returning to it every 6 months to update you on how we're progressing the delivery. At the beginning of the presentation, I mentioned that we feel cautiously optimistic about the early signs of recovery in certain hiring markets, particularly over the second half of 2025. So let's turn to look at that now.

You'll remember the list of 8 specialist recruitment markets where we're focusing resource and attention given their materiality to our business. In three of those, the U.K., Spain and New Zealand, we feel the evidence points to market recovery being on an increasingly firmer footing. First, consider the very recent performance in the long-run context, as shown on the top row of charts on the slide.

Here, for the specialist recruitment businesses in each of those three markets, we've shown our own long-run trading performance trends, benchmarked to the 12-month period ending June 2019. This gives a baseline free from the COVID trough and the post-COVID surge. In the context of persistent decline since peaking in the 2022 calendar year, stabilization and inflection in our trading performance recently looks meaningful. This potential inflection compared to history is, of course, also showed up in our nearer-term performance trends, as you can see in the charts on the bottom row, with these markets returning to positive year-on-year net fees growth territory as the second half of 2025 progressed.

It has also been pleasing to see growth trends continuing in these three markets over the first 2 months of 2026. It's important to say that we believe the green shoots of stabilization and recovery are apparent at the whole industry level in these markets also, as brought out on this slide. Our view is that whilst not a completely perfect indicator, job vacancies are the best proxy for labor demand.

The charts on the top row show how job vacancies have trended in each of the U.K., Spain, New Zealand. And again, that theme of stabilization is well brought out. Now these signs of inflection also underscore our view that whilst much longer than any downturn really seen before, the causes of the weaker hiring market for the last 3 years remain largely cyclical in nature. And as a fund manager put it just a few weeks ago following our quarter 4 trading update, if something structural was the overwhelming course, you'd expect the broad shape and quantum of trading performance to be more or less the same everywhere, but it is not.

And you see that clearly in the chart on the bottom left, where for comparison, we show our trading performance for our three most material Northern European markets sat at the end of 2025 versus the pre-COVID baseline, and stabilization has not yet shown up here.

So just taking a step back to consider how our broad growth is becoming in the Specialist Recruitment portfolio overall, 2025 saw an improvement in the second half compared to the first, with 1/5 of the portfolio in growth in the second half, double the level of the first half. Again, encouragingly, we've seen this broaden out a little more in the first 2 months of 2026. So what does all this mean for the year ahead?

As noted in our results statement, trading over the first 2 months of the year has been in line with the Board's expectations, albeit in what tends to be the seasonally lighter part of the year. We are cautiously optimistic that recovery is increasingly well trenched in the U.K., Spain and New Zealand. However, this still represents a minority of the portfolio with conditions in Northern Europe, in particular, remaining comparatively muted.

Overall, we are mindful of the backdrop for hiring markets globally, which remains volatile. Therefore, the Board's planning assumption remains for 2026 group net fees to be slightly below 2025 as guided at the time of our quarter 4 trading update in January. And on this slide, we've also summarized various points of more technical guidance, which I trust are clear.

Now many of our strategic actions over the last couple of years have been about ensuring that as the market becomes more supportive, we have an operationally strengthened business able to capitalize as much as possible. And we absolutely believe we've made good progress on this over the last year with the business today more consistently executing at the level required. So let's now turn to look at that in a bit more detail.

Following our action midway through 2024, where we consolidated all our services behind the single Robert Walters brand, those services are now easier for our clients to access. So let me explain why I believe the business is stronger today, spotlighting each of our four businesses. Starting with Recruitment Outsourcing, which is on a much sounder operational and commercial footing today than it was 3 years ago. Our key actions over the last few years have been to reduce our cost to serve, focused our product set in the areas where we have truly differentiated expertise and adopt a more robust stance on pricing at renewal. All of this as an underpin for returning the business to profitability.

With regards to the latter, essentially tougher negotiating of renewal on contracts that weren't working for us, that has necessarily meant some client contracts have not been renewed. And that dynamic was a key driver of our 2025 headline trading performance, with net fees down 15% in reported terms. But this approach has enabled us to focus more on our core profitable return clients, and the trading performance with these clients was much more resilient with net fees down just 5%. And with the business exiting 2025 with 95% of net fees derived from these retained clients, that gives a further base than we've had in recent years.

Importantly, though, the actions we've taken have enabled us to start competing strongly for new business, and it was really encouraging to see the fruit of that towards the latter part of the year in an expanded perm volume hiring partnership with a large enterprise Asian financial institution. Historically, we've been supporting that client with their perm hiring needs in the Asia region only, but the expansion of the contract will mean servicing their hiring needs globally, tripling annual contractual hiring volumes to go from hundreds each year to thousands.

And whilst we continue to see the annualized impact of lost clients, particularly through the first half, the team have a good pipeline of opportunities they are going after with energy.

I want to turn now to our less -- two less mature service lines Insolvency and Talent Advisory. Firstly, Talent Advisory. So as a reminder, this service line supports the growth of organizations through provision of talent market intelligence, talent development and future of work consultancy. As I mentioned earlier, we are refining the operating model so that we can scale the business as efficiently as possible. And a really clear example of this is in lead flow management.

As you can see from the chart on the left-hand side, we generate brand new leads for our Talent Advisory offering through three main sources: Firstly, internal referrals from other service lines in the group; secondly, our own marketing, predominantly by our digital channels; and thirdly, direct sales by our regional client engagement lease. The balance of other reflects clients currently on subscriptions and therefore, not brand-new in the same way. And the most valuable source of leads in terms of net fees continues to be internal referrals and particularly those in the Specialist Recruitment business.

Our recruiters are talking every day to the thousands of clients we work with, continually uncovering their talent challenges. This clearly highlights the rationale for being a total talent solutions provider. That said, though, we were finding the range of quality of those leads could be quite broad, meaning some inefficiencies for Talent Advisory colleagues in having to triage leads more than was optimal. So to remedy this, we focus on how to improve the lead qualification process, essentially all the necessary steps to making sure we're focused on the highest quality opportunities.

A big part of getting it right begins at the top of the funnel. And this looks like making sure that colleagues in other areas of the business have a sufficiently clear understanding of the Talent Advisory service offering, so that they can recognize the key buying signals in conversations with clients and then help their Talent Advisory colleagues make an assessment of buying intent.

A recent highlight here was our Global Collaboration Day last month, which saw our people connect with over 4,000 clients on one day, securing over 1,500 future client meetings in the process. And hopefully, the photo on the slide of our colleagues in Shanghai on the day helps give you a sense of how our teams really came together in service of our clients. Now of course, we have more to do to perfect the Talent Advisory operating model, but we've learned a huge amount over the last year. And as you can see from the slide, our efforts continue to support good performance in the conversion of client proposals to contracted projects.

Turning to our Consultancy offering, which meets the flexible hiring needs of our clients, often in technology, by deploying our own permanently employed skilled consultants into their organizations. Our actions have continued to drive positive momentum in all the key metrics for this business. 2025 saw a 25% year-on-year increase in average consultant volumes. Bench costs already low in '24, fell further in '25. Our consultants became more embedded with clients with the average assignment tenure more than doubling year-on-year. And putting all of this together and with trading strong, net fees overall were up 20% and net fees per consultant grew by 12%.

So as commented earlier when speaking about the market opportunity, since launch, we have operated Consultancy solely in the U.K., but there was a clear opportunity to offer in other markets, not least because our clients with their global footprint are asking for it. The necessary first step is increasing awareness of the Consultancy offering and hence, we've broken it out more formally as a full service line in our marketing.

Now Consultancy accounted for around 2% of group net fees in '25, but it is growing well, and it taps into some of the key megatrends such as talent shortages that will continue to shape the world of professional work for many years yet.

Now let's complete our view of our strength in total talent solutions offering by looking at Specialist Recruitment. This was 83% of group net fees in 2025, and therefore, our operational improvements here will likely move the needle the most for the group as a whole over the short term.

Moving to fee earner productivity. As you can see from the chart, volume productivity represented by perm placements per perm fee and per month has begun trending positively year-on-year. And this is clearly where we need to be. However, given placement volumes fell for a third year in a row in 2025, the improved volume productivity in the second half was really about keeping the decline in placement volumes at a level slightly better than the decline in fee earner headcount.

And as we move through 2026, with fewer headcount across the group broadly in the right place, we're seeking to improve the quality of that volume productivity growth, driving positive growth in placement volumes on the existing headcount. And we have markets that are already doing this, with year-on-year growth in quarter 4 volume productivity, underpinned by placement volume growth in the U.K. and Spain for instance.

The improved position on volume productivity was also helped by rationalization of the number of low billing senior managers. The message is very clear. Those who aspire to lead teams of fee earners must lead by example when it comes to billing. The second area to touch on where we're executing on a higher level than a year ago is our portfolio management. Now as a reminder, we use our 4-box model, which you can see on the right-hand side of the slide, to drive how we think and act about 28 countries in which we offer specialist recruitment.

In 2025, our portfolio actions were focused on the left-hand side of the grid. And at the bottom left, we concluded that a rational path to a more competitive position was not open to us in Brazil and Canada and hence, we closed our operations in those countries. In the top left, a couple of examples to give a bit more flavor. In the U.S.A., we consolidated our footprint around two hubs, the East Coast and Texas in order to further optimize our internal controllables and accelerate that business towards profitability.

In Spain, the leader there, externally recruited to head up our Southern European region, and the second half of '24 has refocused performance around the recruitment sales funnel. And this has begun to drive a more detailed and rigorous approach by our fee earners on the levels of activity required at each stage of the funnel in order to attain our targeted volume productivity. The overall market in Spain is definitely supportive, but our controllables are also much improved to ensure we're taking advantage.

And it's worth noting that from time to time, we will, of course, need to show up in our internal controllables in markets that have historically sat in the top right box. A good example here is Japan, where as we noted at our quarter 4 trading update, we've implemented actions to improve our performance in perm. This clearly remains a key area of focus with slightly better trading in January and February, albeit still early in the year.

So with the time we have left, I just want to turn to look at how we're thinking about technologically driven change in the world of work. The length of the downturn in hiring markets witnessed over the last 3 years has more recently given rise to a debate about whether it's due to structural or cyclical factors. Our view, clearly informed by much of what we've shared already today, is that the downturn remains largely a cyclical one. That said, we are not complacent about the likely pace of change in how professional work is done in the future. And we're also engaging with the subject of how hiring for professional work may need to evolve as a result.

Now of course, AI is the key driver of change right now with some of the very recent advances in the capability of agentic tools, in particular, underlining this. And whilst much has already been said by others on the topic, we just wanted to very briefly set out how we're approaching this whole area with the changing world of work.

On speaking to clients regularly, our view is that though the pace of change in the world of work continues to accelerate, we feel positive about the opportunities that will present for our relationship-based technology-enabled business model. And why do I say that? Well, I say it because we believe the professional work will ultimately continue to have human relationships at its core, and that's what we're hearing from our clients. The AI revolution, whatever that looks like precisely will need AI conversant people with crucially uniquely human skills to deliver it.

This is also reflected in objections of organizations like the World Economic Forum who estimate that by 2030, there will be net job creation of 78 million roles due to AI. And we're also beginning to see it in the data right now, with Indeed recording a marked increase in the proportion of roles on their platform mentioning AI in the job description, as you can see from the chart on the middle of the slide.

So whilst from a low base, it is very noticeable in the context of the last 6 years, and as an example, if you've not heard, of a forward deployed engineer [ before ], and you're interested in how AI adoption in the world of work might unfold, it's to be successful, I'm fairly certain that by the end of this year, you almost certainly will have heard of that [indiscernible].

So our belief is that professional work will ultimately continue to have human relationships at its core and that's become even more true, the further along the seniority spectrum you go. The ability here to communicate with impact and lead with clarity and empathy and collaborate with others as well as share resilience and adaptability of what truly sets the best talent apart. Skills that at least for now and probably forever, can't be reduced just to hard and fast rules that a machine can learn.

Our market position, particularly the mid- to senior end of the spectrum, where we operate, will continue to mean we have a vital role to play in organizations finding the professional talent they need to thrive. Now salary levels are obviously a good guide for that and looking at our U.K. recruitment business, in 2025, the average salary for all of our perm placements was GBP 71,000 and this rises to GBP 85,000, if looking at just London, which is almost 60% of our U.K. recruitment business.

So we are not complacent about the likely pace of change in the world of professional work, and we are also engaging with the subject of our hiring for professional work may need to evolve as a result. Now we do not pretend to know the future with certainty. We suspect a wider range of outcomes as possible than is often acknowledged. As an example and certainly what we hear from clients regularly is that AI has clearly enabled an incredible boom in volume, particularly on the candidate side of hiring markets in the form of a huge increase in job applications for vacancy, which many hiring organizations are now having to deal with.

And what we continue to hear is that clients have a desire to shift towards reintroducing more rather than less human input into the process to better get at the real truth. On the candidate side and perhaps more certainly entry level of professional work where we don't particularly play, we sense a similar desire. Now admittedly, how that plays out remains a matter of debate, and what we're more sure of, though, is that nonautomated human skills generally become more, not less important, in an AI-enabled future for professional work. And we're sure the best way to test those unique human skills for organizational fit remains trusted advisers who really and deeply know their clients and their candidates, human relationships and deep trust.

Now AI will continue to benefit us as an organization, has already been since 2023, where we began experimenting and validating use cases for large language models. And this scaled more widely across the business in '24 and freed up over 10,000 hours of fee earners' time in the quicker generation job adverts as well as a prompt library to support everybody's activities such as candidate outreach.

So looking ahead, we are proceeding with a thoughtful, open mind, critically guided by the lens of what supports quality relationships for our fee earners with their clients and candidates. So in conclusion, 2025 was another challenging year, but it was a year in which we focused our strategy, took difficult decisions and moved to execute with greater consistency than before. In the face of the third year of tough trading conditions, we enacted self-help measures and took actions with balance sheet strength in mind. The market opportunity that remains ahead of us is significant with our total talent solutions offering, placing us strongly to convert this opportunity over the medium term.

And though we continue to anticipate near-term caution in our markets, growth is becoming more broad-based, and the long-term outlook remains attractive.

Thanks to everybody for listening. And David and I'm are happy now to take any of your questions.

[Operator Instructions] Our first question this morning is coming from Thomas Callan of Investec.

Just two questions for me, please. So firstly, just on Outsourcing. You're clearly -- encouraging that you're moving away from lower return contracts, such as the FS 1 in APAC that didn't renew during the year. I just wondered if you could give us a bit of color as to the shape and the extent of the pipeline of opportunities you have in that specific division as things currently stand? And then just on volume productivity as well. Clearly, the U.K. delivered a strong performance there in '25, placements up 11%. I just wondered what lessons, if any, can be learned from that sales funnel focus with respect to parts of Europe and APAC, where volumes are still currently in negative territory?

Thanks, Tom. I'll answer both of those. So just on the outsourcing question, yes, look, we feel good about state of the pipeline. There's plenty of activity happening. It's a mix really of brand-new opportunities but then some good potential expansions as well, which, as I referenced before, is what we launched in quarter 4 with the large Asian financial institution as well. So overall, good pipeline.

I mean, we're thinking in terms of holding the top line broadly flat in 2026 for Outsourcing versus '25 given we still have, as I've touched on those nonrenewing contracts and the annualization of that playing through. So continue to remain absolutely focused on returning Outsourcing to profitable growth.

Just on the PPH, the placements per fee earner per month in the U.K. and the sales funnel. I mean, basically, I think the lesson we've learned is unsurprisingly is the sales funnel focus absolutely works. It's something that we have really got behind in the business, really driving those productivity improvements that are absolutely critical to our model in the right way, of course. Notwithstanding, we know macro remains volatile. We know, obviously, there's continued caution with some of the clients.

I think certainly in the U.K., people -- my sense is that people are sort of starting potentially to move on, cost of living has gone up. People recognize this might need a slightly higher salary. So we are starting to see some of that movement. You saw the REC figures recently as well, and they came out this week. So just much more focused conversations, much more focused around the right productivity -- sorry, the right activity leading to obviously the right outcomes. So really happy to see that in the U.K. and obviously, we continue to push that in other parts of the business as well.

We'll now go to Sanjay Vidyarthi of Panmure Liberum.

Just following up on the U.K. I mean it feels like even if the market is stabilizing that you're probably outperforming the market quite significantly, taking account of what some of the peers have been saying as well. I mean how much of that is about sectoral exposure and any shifts you've made there? And do you think you are taking market share? Or are you seeing some capacity maybe putting out of the market?

Yes, I'll take that. I think it's a little bit of market and a little bit of self-help. I think on the self-help side, sort of what I touched on a minute ago to Tom's question and that sales funnel. I think on the market side, I mean, we had growth year-on-year, quarter 3, quarter 4. We've got obviously a good team in the U.K. It's well managed. I think U.K. labor demand has definitely been stabilizing since late spring '25. We've had obviously the REC data out this week. I think perm placements index is at the lowest rate of contraction since March '23.

So despite of the headlines, there are some signs of positivity, also I think there's been a bit of consolidation. I think there's -- the really change into the recruitment market is not a hard one, but the ability to scale is obviously a lot more challenging. And I think my sense is that talking to people, obviously, things have changed in the U.K. I think this year alone, I was reading there's about 1.8 million mortgage holders. They were due to roll off fixed rate products in 2026.

So if you think about that, the majority of those are rolling off a 5-year fixed rate, which when secured in '21 would have been when interest rates were at rock bottom. So I get a sense people are sort of not going to sit around and they're going to make moves now, particularly if they're anticipating a greater sort of living costs as well. So I think it's -- as I said, it's a mixture of things, a bit of market and a bit of self-help.

Okay. Understood. And just following up on Japan, where I guess perhaps you've been underperforming the market slightly and the self-help is starting to come through. Can you talk a little bit exactly how that sales funnel is kind of manifesting itself? Are you looking to broaden out your client base? Or is this about pushing harder with the existing clients?

It's a bit of both. I'd break Japan into two parts. So our temp business is performing very, very well in Japan. As you heard from us in our quarter 4 trading performance, perm is where we perhaps had a bit more of a challenge. Now I think we're directionally and it is early days, a bit more positivity going to this year, but we've had to step back and recognize as more competition, candidate scarcity is increased in Japan. So that ability isn't really a job flow issue. It's more the ability to have the strength of relationship with clients and candidates in a market where most candidates are getting 4 or 5 job offers.

And the number of job vacancies is about 1.7, 1.8 per candidate in Japan. So that's probably one of the highest levels we've seen. So yes, we've got a broad range of clients. We're going to continue to do more of those clients, always looking to bring in new client mixes. And that sales funnel is really looking at the core components which, if done properly, ends up in a better conversion of interviews to placements.

[Operator Instructions] We will now go to Steve Woolf of Deutsche Bank.

Thanks for the detail in the pack today. It's really a -- description is really helpful. Just a couple for me on my side, just to delve a little bit more deeper into the Consultancy business and what the services they're offering there. Is it sort of construction of your companies, your labor force maybe needs over the next sort of 4 to 5 years, is that the element that they're going from? Secondly, just a return to that, the U.K. and the strength of those recovery and those indicators. Are there -- have the roles changed, particularly at all with that? I'm obviously conscious of London being such a financial district, so just any thoughts you can add to the U.K. recovery.

And then thirdly, you've exited a couple of the rest of world markets. I wonder whether there were any others that might be on the cusp or in your thoughts at this point? Are there any thoughts you can give around that? And then finally, just regarding the AI and the tech and the augmented human relationships, et cetera. Where are you, tech-wise within the business? I have noticed, obviously, CapEx is down this year. So just to get a sense of where your investment is at this point for that CapEx.

No problem. Steve, I'll take the Consultancy and U.K. question. I'll let David say a few words on Rest of World and the AI tech point and CapEx. So on Consultancy, I mean, look, really, it's about greater choice to clients. I think clients -- what we're hearing from clients at the moment is their challenges are far more complicated, right, than they've been in years gone by. We're seeing clearly skill shortages particularly with the AI advent and an acceleration of technology. So that service essentially enables us to go into, and I touched on the U.K. really, we used our outsourcing clients as our -- sort of our entry point in because we're sat on site with those clients. We really know them well. We understand their challenges.

And we found an opportunity to sit with them and say, "Look, we think we might have a more suitable solution for you". And that was really how we started to scale Consultancy. And that's just really started to gather pace because I think right now, clients, what we're hearing from many clients is, we don't necessarily want to make permanent hires. We don't want to hire in permanent project teams. We want the flexibility of resource. And we manage that bench risk ourselves. And as you heard what I said earlier, obviously, we've reduced that risk as well. So we're really happy and confident, and we believe that Consultancy opportunity is going to continue to grow and not just in the U.K.

Specifically on the U.K. itself, we -- no, not really. I mean, we fundamentally -- I mean, our tech business last year in the U.K. performed very well. And actually as much as there is a lot of legitimate noise around AI replacing jobs perhaps at the more repetitive junior level, we're also seeing that creation of jobs. And that's playing nicely into what we do in terms of recruitment within that technology sector. Our Legal business has performed well. So we haven't -- we've just really doubled down the areas that we know, and there continues to be demand in those areas. So really, accountancy, legal and technology.

Steve, it's David. So taking your third question, the market exit. So look, we've got a 4-box model. We continually sort of look -- use that to assess the current and future prospects for various markets. It wouldn't be right to sort of say who's -- is there anybody -- any market in the bottom left and at risk, but this is something we will continue to look at. We will retain that discipline. And if we don't see a strong attractive market where we can control the controllables and take share, then we will take the action like we took in 2024 and '25, since we introduced it, around either exiting a market completely or consolidating our footprint within a market to try and get some more competitive advantage.

And then in terms of AI as, obviously, talked about before. We have our own secure environment that we use, our consultants use, which are effectively helping them become more operationally efficient and effective. And as Toby took on in his prepared remarks, really freeing up their time to have more human interaction with the client, with the candidate. So that's how we've been using the AI so far.

In terms of CapEx, we've obviously finished the deployment of our new CRM system during the course of 2025. So that's now scaling down in terms of CapEx requirements. So I would see a significantly lower CapEx number going forward off the back of the completion of our existing technology stack.

[Operator Instructions] Okay, we do have a follow-up question. This one is coming from Steve Woolf of Deutsche Bank.

Sorry, just another one. Just in terms of restructuring charges, David, as you pursue the forward-looking cost savings, I think it's GBP 4.4 million in this year. Are you expecting any big numbers in this year just to get a feel for what might be in our estimates?

Yes. So look, we're not expecting any significant amount in the current year. Obviously, I think given where we're seeing markets generally, we're planning on having a broadly stable sort of fee earner headcount base. We are going through the transformation programs that will inevitably have some element of restructuring cost around it, that will be not as significant as 2025. And I'd say with market conditions where we're seeing them, we'd probably see a relatively stable headcount and therefore, wouldn't expect too many restructuring elements in the coming year.

As we have no further questions at this time, I will turn the call back over to Toby Fowlston for any additional or closing remarks. Thank you.

Thanks, everybody. Thanks for your time, and look forward to speaking to you in April. All the best.

Good morning, and welcome to Robert Walters' Q4 Trading Update Call. We are joined this morning by Toby Fowlston, Chief Executive Officer; and David Bower, Chief Financial Officer. [Operator Instructions]

I would now like to hand the call over to David. Please go ahead.

Thank you very much. Good morning, everyone, and thank you for joining our Q4 2025 trading update conference call. I'm David Bower, Chief Financial Officer. And with me this morning is Toby Fowlston, Chief Executive.

We'll follow our usual format for this morning's call with me making a few remarks regarding performance at the group level before Toby touches on trading in our service line, the wider market backdrop and our early thoughts on 2026. As ever, we'll then be happy to take any questions you may have. And as usual, and unless otherwise stated, all percentage movements in net fee income are in constant currency terms.

So turning first then to group trading during the fourth quarter. Net fee income was down 14% year-on-year, largely mirroring the cumulative position across the first 3 quarters. We saw broadly consistent trends to those in the third quarter, with the headline performance again being a composite of markets moving at different speeds across our geographic portfolio, perhaps to an even greater extent than we saw in Q3.

Some examples of this and just looking at the specialist recruitment business. The U.K., whilst lapping an easier comparative, delivered a good step-up in the rate of year-on-year net fee income growth. Spain also saw sequential improvement. And in New Zealand, temp volumes were at their highest level in Q4 since the second quarter of 2024.

Counterbalancing this though, and again, a continuation of the trends seen in Q3, Northern Europe continues to remain very challenging, albeit it is sequentially stable. I'm sure you have noticed the refinement to the presentational format of the tables in our statement this morning. Specifically, we have more clearly separated the performance of specialist recruitment, which accounted for 82% of group fees in Q4 from that of recruitment outsourcing, which was 18% of group fees.

We hope that you find that useful in more quickly seeing how the different parts of our business are trending. Turning to consider productivity, headcount and costs. We again saw year-on-year progression in all the important metric -- in the all important metric of perm placements per perm fee earner in our specialist recruitment business, up 2% to 0.84, underpinned by double-digit growth in the U.K. and Southern Europe.

Careful management of fee earner headcount has to date been the primary driver of the volume productivity improvements we've made. But with fee earner headcount now broadly appropriate for the current market conditions, 2026 will be about continuing to drive further fee earner productivity for maximizing the sales funnel in specialist recruitment as well as ensuring we're getting in front of clients to highlight the full range of talent solutions we have to help them.

And you'll hear more from us on that at the prelims in March. Our overall measure of group productivity being net fee income per fee earner also grew and was up 3% year-on-year, driven by a favorable mix impact and continued strong fee rates, which are either stable or growing across our markets.

Turning to headcount. We closed the year with just under 2,900 staff, a reduction of 5% quarter-on-quarter and with fee earners and non-fee earners both falling by around this amount. We continue to believe that current fee earner levels are broadly appropriate for the current market conditions at a total level, but focus remains on reallocating between markets based on the strategic opportunity and our activity levels.

Turning to operating costs. We made progress here through 2025 and again saw further reductions in the fourth quarter, where we exited the year with a cost base run rate below GBP 24 million. This compares to our monthly cost base 12 months ago, which you may recall was in the GBP 25 million to GBP 26 million range at that time.

During the quarter, we also made further progress towards our goal of delivering at least GBP 10 million of annualized structural cost savings by 2027. Within this, we're particularly focused is now on moving transactional processes in our finance function out of local markets and into global business services hubs and activity really ramped up here during the quarter.

We continue to control our costs closely, which combined with the financial benefits of our transformation programs will deliver a further reduction of costs in 2026 versus 2025. And turning to the balance sheet. We closed the year with net cash of GBP 26 million, in line with the guidance issued at the H1 results.

The Board continues to view a strong balance sheet as a critical enabler of the group's strategic and operational priorities as we move through 2026. And this will remain the key consideration in our capital allocation decisions ahead. Let me now hand you over to Toby, who will take you through trading in our service lines, the wider market backdrop and our early thoughts on 2026.

Thanks, David. Good morning, everyone. I'll start by making a few remarks on our specialist recruitment business across each of our 4 geographic regions before turning to recruitment outsourcing. Asia Pacific specialist recruitment net fee income was down 11% year-on-year in quarter 4, a few points below the first 3 quarters in aggregate.

In Japan, which remains our single largest recruitment market, fees were down 10%. Here, whilst we saw continued good performance in temp with volumes closing the year strongly, our perm performance was weaker, and we have actions underway to drive the required improvement there.

I would say, though, that the underlying drivers in the bilingual candidate market that is our focus remains strong. Both Australia and New Zealand have seen sustained improvement in temp volumes through 2025, and this continued in the fourth quarter.

As David mentioned earlier, temp volumes were the highest they've been in 18 months in New Zealand and temp volumes in Australia also showed further momentum. Overall, quarter 4 fees were up 18% in New Zealand, whilst they declined 20% in Australia, with the progress in temp more than offset by the immediate impact of a weaker perm performance, albeit we are pleased to see a rebound in Australia in December.

Turning to Consider Europe. Specialist recruitment fee income was down 23% in the fourth quarter. You've heard already that our headline performance is a blend of markets moving at different speeds, and that is well exemplified in Europe.

While Southern Europe, anchored by Spain, continues to see year-on-year improvements in hiring leading indicators, notably job vacancies, the market backdrop in Northern Europe remains the most challenging of our key markets. A mix of regulatory, macro and political factors continue to drive considerable uncertainty here.

And hence, we saw fees down 27% in France, 28% in the Netherlands and 30% in Belgium. Whilst challenging, this performance was, however, sequentially stable in each of those markets. Moving across the U.K. This was the standout performer of our major markets in quarter 4 with fees up 25% year-on-year.

Though we did have a soft comparative, underlying momentum is building, and we were really pleased to see the sequential improvement, up from 6% growth in quarter 3. This is a testament to both the good work of our teams working their sales funnel in a more disciplined way as well as a wider backdrop for the U.K. that is, we think, more resilient than the news headlines perhaps suggest.

London was up 20% with broad-based growth in both perm and temp and across verticals. Whilst it was also a great confidence boost for our teams in the regions to post a quarter of growth for the first time since the end of 2022.

In Rest of World, whilst the Middle East had a slower end of the year with fees down 23%, our continuing operations in the Americas grew 11%. Turning then to our recruitment outsourcing business. Fees were down 12% year-on-year in the fourth quarter, a slight improvement on the cumulative position across the first 3 quarters.

The main driver continued to be the annualization impact of clients who were contracted with us in 2024, but were not renewed into 2025. It's important to note, however, that our retained client book performed more resiliently with fees in this portion of the book down just 5% year-on-year across 2025 as a whole.

In addition, and following the expansion of a perm volume hiring partnership with a very significant client as announced in the quarter 3 update, it was great to start to see supporting evidence that clients with their hiring needs were driving a greater contribution to group fees from the contract.

Our workforce consultancy offering in which we meet the flexible hiring needs of our clients, often in technology by deploying our own permanently employed skilled consultants into their organizations also finished the year well. We have established that business by selling into our existing recruitment outsourcing client base, but we see opportunities beyond that, and we'll take the opportunity at our full year results in March to share more.

Our newest service line of talent advisory, which offers market intelligence, future of work advice and talent development, continue to demonstrate the clear market opportunity it has as it closed 2025 with net fee income for the year, almost double the 2024 level.

We're testing and learning to refine the operating model in talent advisory. And again, we look forward to sharing more of our learnings with you in March. Turning then to consider the market backdrop and our early thoughts on 2026. With 2025 being the third year in which we've seen reduced hiring market volumes following the post-pandemic surge, we were encouraged to see some major markets stabilizing and returning to growth through the second half of the year.

At the country level, around 1/4 of our specialist recruitment business was in growth during quarter 4 with the same proportion also growing in quarter 3. And this was up from a single-digit percentage in H1.

Having said that, the uncertain global backdrop continues to mean overall client and candidate confidence levels remain fragile. Because no single event or global phenomenon took us into the constrained conditions of the last 3 years, it remains our view that no single event will trigger a sharp global snapback.

Rather, our view has been that recovery will be gradual and will unfold market by market, and we feel this last quarter continues to corroborate that view. In our business, we've begun 2026 acting with pace and purpose to position the group as strongly as possible as markets continue this gradual recovery.

Our capacity to execute our plans for the levels required is unquestionably better than it was a year ago. However, we are mindful that the timing of any top line inflection for the group as a whole remains somewhat dependent on the profile, location and timing of hiring market recovery.

As such, we start the year with the assumption that 2026 group net fee income will be slightly below 2025, whilst acknowledging that a modest range of outcomes remain possible. That said, we remain laser-focused on those factors within our control.

Firstly, our cost base, which we expect to further reduce in 2026 following good progress in 2025. Secondly, our specialist recruitment portfolio management actions at both the country and individual team level; and thirdly, ensuring we continue to showcase the full range of our solutions to clients to further drive fee earner productivity.

Our clients' talent challenges continue to be shaped by long-term structural drivers, and we have a full suite of solutions to help them. We, therefore, start the year with confidence and the opportunity that remains ahead of us. With that said, David and I would be very happy to take your questions.

[Operator Instructions] We will now take our first question from Tom Callan of Investec.

Two questions from me, please. So firstly, just on Japan. Could you provide a bit more color around sort of fee rates and underlying hiring dynamic that you're seeing there on the perm side, trying to understand dynamic there, whether or not underlying market conditions have shifted or if the softness in the statement -- the statement refers to in terms of perm is more of a function of increased competition in the areas that you play? I'm just trying to get a bit more understanding there.

And then secondly, on AI. So obviously, a lot of chatter in the market at the moment currently around the potential impact of that, both in the way in which consultants operate, but also with respect to demand for services more broadly. So I just wondered if you could give us a bit more insight in terms of what you're hearing seen from clients and also any impact on fee rates from that as well?

Thanks, Tom. I'll take both questions. It's Toby here. I think just on Japan, probably just a reminder, obviously, fee rates are still absolutely among the highest globally. That's very much a function of the demographics and the bilingual talent.

Candidate scarcity obviously continues to be the order of the day in Japan. Fee rates have been stable to probably slightly up actually in Japan. So as we said in the statement, all the underlying drivers remain attractive. We have seen a tick up in competitive intensity.

And I guess in that sense, the actions that we flag are to improve very much our perm performance and just sharpen again how we're doing the recruitment fundamentals of working the sales funnel, and I guess, critically, particularly given the candidate scarcity, influencing both clients and candidates and focusing on those relationships.

But just to be clear, absolutely remain excited by the runway for very profitable growth in Japan. AI, I think, look, there's lots of focus presently. We are intending to set out our thoughts more fully at the March prelims.

Probably a few things I'd just say at this point. As a banner point, clearly, AI will be transformative. But importantly, particularly in our industry, that transition will have to be affected by humans exhibiting fundamentally human skills.

We'll say more in March, but ultimately, we tend to take the view that the aggregate labor market disruption is net positive for our business. Because overall, our view is that there will end up being net job creation. I think World Bank certainly corroborated that.

Their view was probably approaching 80 million net new jobs created by 2030 because of AI. Secondly, I guess, in terms of what we're hearing from clients, we generally say that SMEs are much slower adoption than some of the larger enterprises.

And thirdly, in terms of how our consultants operate and what we've been, I believe, is thoughtful about what AI can and can't do as we are with any technology. For us, those somewhat repetitive administrative tasks, AI can take.

And that leaves our consultants with more time to build those trusted adviser relationships obviously with our clients and candidates. And 3 years in, clients are beginning to understand that at the mid- to senior level that we operate at, an AI automation tool scraping job boards for list of candidates is all well and good, but likely isn't going to be the difference in getting the high-quality passive candidates who maybe make a move every 5 years to leave where they are.

They really need influence from a trusted adviser who knows the market for that. And again, just to be clear, if we take the U.K. as an example, our average salary of placed perm candidates was a little over GBP 70,000 in 2025. And just looking at London, that rises to GBP 85,000.

So overall, absolutely recognize still in the early days. It will be transformative. And I think we're really happy as well in the recent announcement to have an addition to our Board, Andrew Rashbass, who has some very strong credentials in the AI space. But our conviction remains high being a total talent solutions provider, has even more relevance in the future of AI.

And we'll now take our next question from Sanjay of Panmure Liberum.

A couple of questions from me as well. First one, you mentioned increased competition in Japan. But more broadly, I guess, across markets, there's probably a fair amount of distress. So it kind of -- there's an opportunity as well as a threat, I guess, in terms of maybe some competition falling out of the market, particularly maybe on the outsourcing side.

So just interested in the dynamic in terms of increased pricing competition versus opportunity for market share gains? And then second question is just given your outlook for FY '26, how are your thoughts evolving in terms of specific sectors or countries that you may wish to exit during the year?

So I'll take the first question, and I'll hand to Dave to the second. I think on -- I mean, you're absolutely right, Sanjay. I think the U.K. is probably a good example of that. I think one of the reasons why we've seen that 25% uplift is that there's no question there's been some consolidation, probably perhaps at the recruit businesses who perhaps don't have as much debt in terms of cash, et cetera.

And of course, clients still have needs. So we're clearly picking up some of those clients, obviously, as a result. I think it's different in different markets. So I think, obviously, price points and fee rates have marginally increased. So obviously, we're seeing the net benefit of that.

Sanjay, it's David here. In regards to your second question, we continue to use the 4-box model that we talked about at the Capital Markets Day about 18 months ago, where really focus on what's in our control and the underlying dynamics. So as that was the methodology and the framework we applied in our decision to come out of the L.A. office earlier in the year, Canada at the back end of the year, Brazil during the year as well.

So that's the framework we use. We continue to use it through '26. Yes, we wrong to say that we are -- to name countries or whatever offices at this stage, but that's the framework we've got. It served us well through 2025, and that will continue through '26 as we see markets develop over the next 12, 24 months.

We now take our next question from Steve Woolf of Deutsche Bank.

A couple from me. Just on the RPO side. Just trying to get a sense there of how much in some of these markets might be just pure and simple customer volumes and what the impact might have been on contract losses. So if you could sort of detail where contract losses perhaps have been hardest hit in which markets to try and give an idea of churn there.

Secondly, when it comes to recruitment headcount attrition you've had, do you feel in part, you might have lost any sort of key earners from teams? Or has it all been largely those who've got less than sort of 2 years' experience?

And then thirdly, ex the regulatory stuff in the Netherlands, again, just sort of any thoughts on trends you're seeing? I appreciate we've got macro, we've got political, et cetera. But is this still job creation? Is it job conversion, the interviews there, but just we're not getting them over the line. Any thoughts around that basically?

Steve, it's David. I'll try and pick up those questions. In terms of the RPO business, there's no one particular market that has seen particular churn. We've got a broad range of clients. A lot of the clients we work with are international by nature, that's why they go to RPO, but they need a broad-based provider to help them with their global needs at scale.

I think what is also encouraging for us is that we've -- in the sense, we lost some through the early part of the year as we referenced in the statement, we've also had some good wins, some good extensions during the year as well, such that overall, we would see the RPO business overall being sort of broadly stable through 2026 versus 2025 with new wins and extensions offsetting the churn that we've seen.

Across -- from a fee earner perspective, I think it's been a combination. We have continued to see some of the lower tenured individuals leaving. Obviously, a lot of that was probably earlier in this current down cycle linked to the fact that the recruitment levels in '21, '22 were significant.

So a lot of people came into the sector and then quickly left the sector when times got tougher. But equally, we have been -- in terms of our overall focus on productivity and improvement, we have, for example, been much clearer with our -- all of our people that a fee earner is a fee earner and they need to be building those relationships and generating and building their own work as well as feeding their teams. And that's -- some people have not wanted to do that and have moved on accordingly.

So again, we've had a broad range of people leave predominantly at the less tenured, but where appropriate at the senior level, people have moved on as well. And then in terms of the final question on regulatory piece in Europe, I think there's 2 things to note.

The challenging conditions have kind of created certainly a step, I would say, a step down in activity levels. The regulatory change in the Netherlands has affected a particular group of individuals. But that we think has probably worked its way through now.

So hence, very encouraged by the stability that we're seeing across the Northern European market at this stage. So yes, it's come down, but now it's stable. And from here, by doing all the things we've talked about in the other markets about the focusing on the sales, the funnel, the productivity, that -- there's no reason why those markets even in the climate that we've got today can't grow from here, having stabilized at this lower level of activity following the regulatory changes or the political uncertainty in some markets.

Okay. And just in terms of your thinking that might a couple of months ago been 2026 perhaps of the modest growth, 1% to 2%, say, now, so thinking perhaps a planning at least for a slight decline. What would you say the key delta in that is? Is it the sustained downturn in Europe is the main factor? Or are there any other triggers that you thought we better bed into this?

Yes. Look, I think the 2 things -- those things here, we're planning to -- for what could be another very tough '26. There are, as we've talked about in the statement, certainly opportunities for growth. We're seeing growth in a number of markets that we called out individually. And even in those -- even in Europe, which, as you referenced, is challenging.

Equally, it does appear to have broadly stabilized as well. So we're planning for it to be lower so that we are ready in case that it is. But actually, there's plenty of opportunity for growth. And we've had around about 1/4 or so of our fee income in growth at the end of Q3, similarly now again at the end of Q4, albeit different markets in that group of people who are growing in Q3 versus Q4.

So we've got a number of markets that have seen stability and growth during the course of the year. So I think that's why it's a varied -- we've got a range of outcomes for 2026, but we plan for it being slightly down just so we're ready for it in case that happens.

[Operator Instructions] With no further questions on the line, I will now hand it back to Toby for closing remarks.

Toby here. Just to say thank you very much, everybody, and we look forward to seeing you at the March prelims. All the best.

Thank you. This concludes today's call. Thank you for your participation. You may now disconnect.

Good morning, and welcome to Robert Walters Q3 Trading Update Call. [Operator Instructions] I would now like to hand the call over to David Bower, CFO of Robert Walters. Please go ahead.

Thank you. Good morning, everyone, and thanks for joining our Q3 2025 trading update. I'm David Bower, Chief Financial Officer. And here with me is Toby Fowlston, Chief Executive. As we begin, I'll make a few remarks regarding performance at the group level before Toby touches on trading in our service lines and the wider market backdrop. As ever, we'll then be happy to take any questions you may have.

Unless otherwise stated, all net fee income percentage movements are in constant currency terms. Looking first at group trading during the third quarter. Net fee income was down 12% year-on-year, a slight sequential improvement compared to the second quarter and with fees in September down 9% year-on-year. As Toby will touch in more detail in a few moments, the overall group results continue to represent a blend of quite marked differences in performance across our geographic portfolio.

In particular, we saw a notably better year-on-year performance in Asia Pacific, our largest regional segment by net fee income and an improvement in the U.K., whilst Northern Europe remained challenging. Furthermore, it's worth highlighting a slight contrast between our 2 largest service lines. In specialist recruitment, fees were down 10% year-on-year, a sequential improvement on the second quarter and indeed the first half. Meanwhile fees declined 22% in recruitment outsourcing. Whilst this is a sequential slowdown from the first half, it reflects the nonrenewal of certain client contracts with fees from continuing clients being more stable year-on-year.

In terms of activity levels in specialist recruitment, interview volumes grew quarter-on-quarter, particularly in Asia Pacific and the U.K.

Turning to Consider Group costs, headcount and productivity. Here, we are taking the right actions to drive a return to profitability in 2026. Over the quarter, our cost base reduced compared to the first half run rate to now sit around GBP 24 million per month. And we made further progress towards delivering at least GBP 10 million of annualized structural cost savings by 2027, particularly through positive steps on our finance function transformation. Group headcount as of 30 September reduced by 3% versus the half year position, with this rate of reduction mirroring both our fee earner and non-fee earner populations.

Looking ahead, whilst we will continue to be highly selective in replacing natural attrition, we believe fee earner levels are broadly appropriate for the current market conditions. Meanwhile, work remains ongoing to relocate appropriate non-fee earner activities into our global business services hubs. We remain resolutely focused on the importance of fee earner productivity to our business model. And you will recall this is the most material of our 5 building blocks to our medium-term conversion rate target of 16% to 19%. As such, we were encouraged to see continued growth in overall productivity in terms of group net fee income per fee earner, which was up 7% year-on-year in the third quarter.

Within this, in our specialist recruitment service line, it was also pleasing to see volume productivity in terms of perm placements per perm fee earner up 8% year-on-year. Sustaining these improved productivity improvements is a key focus for our teams as we close out the year and look ahead to 2026.

Turning briefly to the balance sheet. We closed the third quarter with net cash of around GBP 27 million. As communicated at the half year results in July, the Board will review the potential to reinstate capital returns to shareholders at the time of our full year results in March 2026.

So with that said, I'll now hand you over to Toby to take you through trading in our segments and the wider market backdrop.

Thanks, David. Good morning, everyone. I'll make a few comments on our specialist recruitment service line in our 4 regions before more briefly turning to Recruitment Outsourcing and Talent Advisory. Looking first at Asia Pacific specialist recruitment, net fee income was flat year-on-year, a clear improvement versus quarter 2 in the first half. This better performance was broad-based. Japan was down 2% with continued good trading in temp, whilst we saw further stabilization in temp volumes in both Australia and New Zealand with total net fees down 4% and 8%, respectively, in those markets.

Meanwhile, Southeast Asia grew 1%, underpinned by Malaysia. Now turning to look at Europe. And as David mentioned a few moments ago, conditions here remain challenging. In France, where a new political uncertainty is, of course, well publicized, we saw a sequential slowdown compared to the first half with quarter fees down -- sorry, with quarter 3 fees down 24%.

We have recently put a new leader in our French business and are pleased with the early action that they've taken to drive an improvement in performance. The Netherlands continue to navigate short-term turbulence from the enforcement of self-employment legislation and Belgium remain challenging. Looking at external market indicators, Spain is a relative bright spot in Europe, and you will recall, we installed a new leader a year ago, and our actions to drive better performance in that business continue and the fees were up 1% year-on-year.

Turning to the U.K. Here, our specialist recruitment service line was up 6% on the prior year, the first quarter of year-on-year growth since the end of 2022. The good performance was led by London with fees up 23% year-on-year, and both perm and temp fees grew, and there were notably strong performances in our core specialisms of accounting and financial services. Conditions remain more muted in the regions. However, fees were broadly flat year-on-year, excluding the impact of office closures and the absolute level of quarterly fees has been stable through 2025 to date.

In Rest of the World, specialist recruitment fees were down 26% year-on-year or 18%, excluding the impact of office closures. Our largest market, the Middle East, was down 10% year-on-year. However, in absolute terms, fees were flat to slightly up for the fourth consecutive quarter. In the Americas, where fees were down 43% year-on-year, we continue with corrective actions to improve our performance. And just as a reminder, Rest of the World accounts for just 5% of our specialist recruitment net fee income.

Turning to Recruitment Outsourcing. Fees were down 22% year-on-year, behind where we tracked in quarter 2. And as David mentioned earlier, this was driven by the nonrenewal of certain clients, which in quarter 3 annualized, where we had fee contribution from those clients last year. Excluding the impact of this, fee income was more stable year-on-year, which is where the service line has been trending so far this year. We've made real progress in improving our customer proposition in outsourcing, and this was underlined by the launch of an expansion of a perm volume hiring partnership with an existing customer shortly after the quarter end. And I want to congratulate all of our colleagues involved for that significant win for our business.

In Talent Advisory, where we support organizations through the provision of market intelligence and talent development advisory services, we continue to be encouraged by the market opportunity as seen through our lead flow. This provides us with great momentum as we progress through the fourth quarter.

So as we conclude then, just a few words on how we see the market backdrop. As seen from our trading, there was clear improvement in a number of our Asia Pacific markets and a return to growth in U.K. recruitment. However, with the exception of Spain, the larger European markets remain challenging. There are signs of external hiring market indicators, which point to sustained improvement in a select number of hiring markets, though overall conditions globally remain fragile. And as such, our planning assumption continues to be that any recovery in hiring markets will develop very gradually. That being said, we continue to execute against our disciplined entrepreneurialism strategy and are highly focused on continuing to take the right actions to position the business strongly.

And on that note, we'd now be very happy to take your questions.

[Operator Instructions]

We will now take our first question from Tom Callan of Investec.

Just one for me, please. Clearly, good to see that improvement in perm placements per consultant per month year-on-year up 8%. I just wondered if you could give us a bit more color on what drove that improvement specifically and also what the Q-on-Q movement was and how you also see that metric potentially improving further from here with all the back-office improvements and stuff that you're currently undertaking, including making use of AI?

Tom, I'll take that. Yes, absolutely. I mean, we're pleased with the progress. I think fundamentally, it reflects the operational focus that we're insisting on from all of our teams. And that's been driven through all of the monthly reviews that myself and David are doing them. And notwithstanding a lot of our markets, we are anywhere between 1%, 2% or 3% of the overall market share. So the market share opportunity is significant.

Quarter-on-quarter, our net fee income per fee earner was up 7%. So we're seeing good sequential momentum there. In terms of, I guess, where we see it going, it's probably just worth reminding us that in terms of the 16% to 19% conversion rate, which we looked at as a medium-term target that we set, the midpoint of that range only assumes volume productivity of about 1 perm placement per fee per month. And that's mainly just in line with the historical average pre-COVID, and it's about 9% above the 0.92 that we're at in quarter 3.

So in terms of ambition beyond that, as you know, during the '21, '22 hiring boom, we were doing near 1.3 per placement per fee. But in a way, that probably wasn't sustainable. So I think medium term and when we're back in the mid-cycle from a point of view of end markets with our initiatives with Zenith and AI improvements, this should give us greater capacity to deliver that sort of productivity in a much more sustainable way.

And we'll now take our next question from Sanjay of Premier Liberum.

A couple of questions from me. First one on outsourcing, where you've seen a couple of losses, but what sounds like a good win. If we go back to the CMD and the kind of actions you were taking to improve the business operationally, can you just give us an idea of where you are on that track? And the second question on the threat of AI in terms of the jobs market. Can you give us any indications in terms of your exposure to entry-level jobs?

Sajay, I'll take the -- it's Toby. I'll take the outsourcing point and then David can touch on the AI question. But when I go back on outsourcing maybe 2 years ago and what we have progressed over that time, obviously, we've had a change in leadership, as you know. We really rightsized the various product offerings. There were more than 15 different product offerings. So we've dramatically reduced that. We've looked very closely at what we see as being long-term sustainable, profitable partnerships. So we feel like we have that business in much more better shape than perhaps previously. So the demand is still there from clients. We're very excited about the new win, and that's just been launched. So we'd start to expect to see some material gains from that during the course of 2026 and 2027.

Sanjay, It's David. Yes. So with regards to AI, I think it's probably worth distinguishing between sort of like when we talk to our clients, the SMEs and larger sort of global enterprises, the vast majority of hiring is done by SMEs. And they are currently because they haven't got such deep pockets and the technology necessarily within them, they're probably using it less than the global enterprises. So we hear a lot about it, but that's coming really from the global voices of the big enterprises. The book of hiring is done by SMEs.

That said, we're not complacent. There's clearly a lot going on. We're seeing AI enabling people to apply for a lot of jobs simultaneously often while they sleep. But equally, that means that our clients are inundated with applications. So we're seeing a significant requirement for us to help them navigate all those CVs and all those applications. And then specifically about sort of the entry-level jobs, our business is sort of core sort of white-collar professional qualified individuals. So we're not really operating at that sort of entry-level role. And therefore, to the extent that AI is taking those entry-level roles, that's not a significant impact on us at this stage. So we're not complacent, but for now, we're not seeing it as a big impact on our business. And certainly, where we are in the cycle, it feels much more of a confidence for clients and candidates in the macro cycle than a structural shift from AI at this point.

There are no further questions in queue. I will now hand it back to the management team for closing remarks.

Thank you. Well, thanks, everybody, for joining this morning and look forward to speaking to you in early January with our Q4 trading update. Have a good day.