Hays plc

Good morning and welcome everyone. I'm Mark Durnley and I'm excited to present my first set of results as the new CEO of Hayes. Our agenda today is slightly different from the usual format because we are announcing our new momentum strategy. We'll focus on this initially and then I will hand over to James to run through our financials. This is my first opportunity to meet you after my appointment as CEO. So please allow me a moment to share a few initial thoughts as we introduce our new momentum strategy to you today. Hayes has a tremendous heritage, an excellent client portfolio and deeply expert consultants. I have travelled extensively over the last few months to meet colleagues across the globe and many of our clients. I would like to thank our colleagues, candidates and clients for openly sharing their views, from which I draw two main conclusions. Firstly, a consultant-led approach enabled by advanced technology is an important element that clients wish to retain. And secondly, my colleagues at Hayes are genuinely excited by our new momentum strategy. I have four key messages for you to take away from our presentation today. To deliver improved market share and profitability, we will become a more focused specialist recruitment business. And we have already been taking decisive action to achieve this. We and our clients believe the consultant is key. A human in the loop, supported by great technology, is critical to the best hiring outcomes. Thirdly, momentum is first and foremost a growth strategy. We have already made a good start returning to year-on-year profit growth in the second half of FY26. And finally, over time, we will increase consultant net fee productivity by more than 50%, return Hays to a 25% plus conversion rate, and deliver superior returns for shareholders. Before we examine momentum in more detail, Let's initially examine why clients use recruitment agencies. Our clients need to secure the best talent to build successful businesses. Candidates need the best roles to build successful careers. And in both instances, the cost of making a wrong decision is significant. The impact of exiting unsuccessful hires increases exponentially with seniority due to exit packages, organizational disruption, and the direct cost of finding a replacement. As a percentage of the salary, our data indicates that these costs for a director-level role can be more than twice as high as for an associate. PAYS helps candidates and clients to improve the probability of success. Our fee is a modest insurance premium. virtually versus the potentially high cost of failure i mentioned earlier that our strategy has been shaped by what clients have told us the feedback from a recent survey is clear they universally want access to the highest quality candidates they also want haze consultants at the center of the process a strong technology platform is necessary but our clients are clear that our consultant-led approach is the critical element they wish to retain. So keeping the human in the loop remains key. Why is this? As you can see from the charts on this slide, price ranks well below the top two purchasing considerations for perm and temp and contracting recruitment processes. Instead, once baseline technical skill requirements have been achieved, then interpersonal skills are the key candidate attributes. HAYS consultants have deep domain knowledge of their clients, of their candidates and of their specialisms which they use to provide essential human insight when assessing these interpersonal skills such as leadership, communication and motivation. This presents HAYS with an opportunity to differentiate and grow in our markets. By leveraging our database of more than 10 million candidates and over 440,000 weekly interactions between our consultants and their clients and candidates, and by applying proprietary search and match algorithms that assess both hard and interpersonal skills. Through this, we can swiftly identify the highest quality candidates. And if we move to the next slide, clients tell us that these interpersonal skills will be increasingly important over the next five years for managers and directors, which represent the sweet spot of our business. So how do we at Hayes help clients and candidates improve the probability of success? We do it through our sources of competitive advantage with Hayes expert consultants at the centre. Our advantages include proprietary data and technology, our people, our brand and our reputation, how we go to market and our operational excellence. For example, Hayes has proprietary data and tools which our consultants use to swiftly and precisely match candidates and client demand and supply. The Hayes consultant sits at the centre of this flywheel and is key. they have deep domain expertise. They provide essential human insight when assessing values and behavioral alignment. Momentum places Hays Consultants at the center of a self-reinforcing flywheel and enables them with the best tools through investments in technology. It forges sustainable long-term relationships with our clients and candidates. Clients benefit by our speed of assessing the best candidates, reducing their recruitment costs and the risk of an unsuccessful hire. Candidates offered the best roles, successful placement outcomes and regular feedback. Our internal data confirms a strong link between financial returns and the rotational speed of this flywheel. Roles for which CVs have been sent on the same day achieve materially higher fill rates than responses over the next one or two days single cv submissions perform even better clearly demonstrating that candidate quality and judge and the judgment applied by hayes consultants are vital aspects of the matching process by building an unbeatable matching engine we will deliver faster and better matching allowing consultants to fill even more vacancies and generating a self-reinforcing flywheel. This results in higher market share, productivity and profitability for Hayes and improved outcomes for both clients and candidates. Five forces amplify this flywheel. Growth to specialism leadership, being experts in all we do, building an unbeatable matching engine powering productivity and delivering this through the Hayes way. Let's explore some of these over the next few slides. Firstly, specialism leadership. We will grow to specialism leadership through five dimensions of focus. Firstly, by concentrating on 16 countries with a 100 billion and growing addressable market where we can build or extend leadership positions. Secondly, focusing on six global specialisms where Hayes has the strongest opportunity to extend or become a market leader, plus local specialisms where we already have profitable market leadership and expect continued growth. Thirdly, a focus on higher value roles where the cost of failure is higher and the potential impact from AI on these roles is lower. Fourthly, by targeting end market industries where demand for our products is greatest. And finally, we will operate across three products, recruitment, solutions and services. We have already taken important action to sharpen our focus in FY26, including decisive steps to reshape our country portfolio and define core specialisms. focus and market leadership allow our consultants to provide deep domain expertise to clients focus and market leadership also drive superior returns with data in the chart indicating that regional specialists with a top two share of clearly defined markets consistently deliver stronger growth higher margins and more resilient performance as our market share increases we will secure these economic benefits to higher productivity to achieve this we will invest to grow and build leadership in six global specialisms technology finance construction and property engineering life sciences and human resources countries may offer an additional one or two existing specialisms beyond this for example office support or resources and mining to reflect the composition of their local markets but only where there is an attractive opportunity and a clear path to leadership we are experts in specialist recruitment across a wide range of products recruitment is our existing temp and perm activity including spot placements and preferred supplier lists solutions combines our existing msp and rpo activities and finally services addresses the growing statement of work market although this may be a new terminology for many of you services primarily includes our existing german contracting business which has successfully provided project-based services to clients for many years we are also experts in compliance and need to be because our clients care deeply about it around the world regulations largely designed to avoid mock employment are becoming more complicated particularly for non-perm recruitment services and solutions as i mentioned earlier after decades in specialist recruitment pays benefits from more than 10 million candidates in our database and over 40 000 weekly interactions between our consultants and their clients and candidates. These are proprietary inputs and are very difficult to recreate. To leverage this competitive position, we are developing a next generation Hayes digital platform, including AI agents, which provide our consultants with best in class tools and powerful personalized data and insights for our customers. One example is our SmarterMeetings AI agent. With permission, this analyzes client and candidate conversations and captures structured actions, key CRM data, and actionable insights in real time. It is already materially improving the quality and depth of our candidate records, supporting better matching, analytics, and lead generation. We have a further pipeline of enterprise-level AI agent initiatives and are focused on generating returns from them at scale. In my previous position as Chief Technology Officer at Hayes, I was delighted to discover that we own our own core proprietary systems, including our CRM, client and candidate databases, and vendor management systems. These provide a powerful cost and flexibility advantage versus the off-the-shelf solutions and support the rapid training and development of the proprietary AI and analytics, which are essential to optimize staffing processes. To augment this technology, we are also establishing a people advantage. A Hays Academy will become our global center for learning, performance, reward, and career development bringing together onboarding leadership development and career progression into one connected experience we have also introduced a potential one-off share award for all our colleagues satisfied by existing shares which recognizes their contribution and reinforces alignment with shareholders the scale of this award will be determined by pre-exceptional operating profit in fy27 through broader share employee ownership and top quarter our reward we will strengthen engagement foster a long-term ownership mindset and incentivize select successful delivery of our momentum strategy i would like to thank our colleagues across the group for their professionalism resilience and commitment during the year their continued focus on supporting clients and candidates while simultaneously helping to reshape the business has been instrumental to our progress. As mentioned earlier, momentum will deliver a positive structural shift in our profitability, net free growth, cash flow and return on capital employed. Through sharper focus, market leadership, radically improved search and match capability and lower cost to serve, we can increase

consultant net fee productivity by more than 50 percent return haze to a 25 plus conversion rate and deliver superior return for shareholders i will now hand over to james to run through our financials in more detail thank you mark and good morning everyone today i'll cover the financial and divisional operational reviews along with current trading before handing back to mark for closing comments Summarizing our financial performance, on a like-for-like basis, net fees decreased by 8% to $906 million, with pre-exceptional operating profit up 3% to $48.6 million. Our strong cash conversions drove cash from operations of $92 million, and we finished the year in a $20.1 million net cash position. Turnover decreased by 4%, with fees down 8%. the higher declining fees relative to turnover was due to the more resilient performances in temp and contracting versus firm and in our solutions businesses pre-exceptional earnings per share was 1.21 pence an eight percent decrease versus prior year driven by a higher effective tax rate partially offset by higher operating profit over the next few slides we have summarized our fy26 actions and performances for each region In Germany, significant actions were taken to restructure our operations, reduce non-consultant headcount, and secure further structural cost savings, which drove a sequentially stable pre-exceptional operating profits in the second half. Temp and contracting fees were resilient, while perm remained challenging due to lower demand and slower client decision-making. However, there were bright spots. Construction and property performed strongly again, with fees up 44%, driven by our focus on infrastructure and the energy sector. The UK and I recovered from losses in the prior year to deliver a 4 million operating profit. We delivered further improvements in consultant productivity of 14%, including actively managing our consultants to focus on higher value placements and stronger margins. We secured structural savings, which included 30 office closures, And we also invested in growth with the launch of a statement of work services business in the second half. In ANZ, we saw stable temporary and contracting volumes through the year, but PERM became slightly more challenging through our fourth quarter. ANZ more than doubled its operating profit to 8.5 million, driven by consultant productivity growth as we focused on higher skilled roles. and delivered structural cost savings including the closure of 11 offices and finally in rest of world although the division reported a slightly larger 5.1 million operating loss for the year it returned to profitability in the second half following significant cost and country portfolio actions in june we disposed of our operations in six european countries and announced that we are exploring options relating to a further seven countries emir x germany remain mixed overall france remains tough but our actions here to address productivity and cost drove improved profit performance in our fourth quarter and we reported all-time fee and record profit performances in spain and portugal as previously disclosed the us was impacted by the loss of a material contract although trading improved through our second half and net fees in asia grew by three percent with Japan up 10% driven by strong growth in contracting where we see huge long-term potential. Temp and contracting fees were resilient and decreased by 5%. Volumes declined by 4% with a further 1% or 6 million fee impact from lower average hours worked in Germany. Temp and contracting remained sequentially stable through the second half in our major markets of Germany, UK and ANZ. and included strong performances in Spain, Japan and in our services businesses. Perm fees decreased by 12% as weaker client and candidate confidence drove slower conversion of activity to placement, volumes declined 14% and our average fee was up 2% as we continued to target higher value roles. Over the next few slides we have set out the decisive actions we have taken to manage costs and increase profitability and structurally improve our cost base for the long term. As explained, we saw a significant reduction in net fees and our pay rises in July 25 increased payroll costs by circa 8 million. Our response has been decisive with our operating costs reduced by 8% or 70 million. Payroll costs were reduced by 68 million by actions taken to reduce consultant and non-fee earning headcount down 12% and 13% respectively. commission payments decreased in line with fees and profits partially offset by higher bonus payments versus prior year we delivered property property savings of 4.5 million although the majority of exits were in june 26 and therefore we expect a more significant cost saving in fy27 and finally we secured 3.5 million overhead savings from close control of third-party spend The next slide looks at our annualized cost savings delivered in the year. We delivered 25 million from our finance and technology transformation programs and our restructurings of our back office functions in several regions. We delivered 15 million through restructuring our sales operations in Germany, UK and Ireland, France and Asia. And we delivered 10 million through the closure or consolidation of 74 offices globally. Given the weighting of cost save activities to Q4, the in-year FY26 P&L benefit was around 20 million, with the remaining 30 million of P&L benefit to be realised in FY27. And as Mark has set out, our investment in technology and people will further improve our efficiency in our back office and middle office functions, and we target a further 50 million per annum saving in FY27. in addition our actions to better align consultant capacity to market opportunities and improve productivity together with the commission savings on lower fees delivered a further 33 million per annum of cost benefits our improved allocation of consultants resulted in seven percent productivity growth including the uk and i up a notable 14 percent and adjusting for our seasonally quieter second quarter productivity has now increased by 11 consecutive quarters we have worked hard to balance cost reduction with maintaining consultant capacity and we continue to carefully allocate consultants for business lines targeting higher skilled candidate roles and in investing in the best tools for our consultants we secured 50 million annualized savings in fy26 three years ahead of schedule and have now delivered 115 million of savings since the start of fy24 And with our clear ambition for further savings in FY27, this will take us to over 160 million per annum cumulative structural savings. The combined impact of our actions to improve productivity and structurally reduce costs for over return to year on year profit growth in H2. Our exceptional cost of 89.6 million comprise three parts. we incurred 45.1 million costs related to sales and back office restructuring which drove 40 million in annualized savings in addition we incurred 26.6 million charge from our global consolidation or exit of 74 offices and which drove a 10 million annualized saving the sale of our operations in czech republic denmark hungary luxembourg rumania and sweden resulted in an 8 million loss on disposal including associated transaction costs we also incurred a charge of 6.9 million from the partial impairment of goodwill in belgium and netherlands and 3 million from the net impairments of intangible assets from the acceleration of our digital program due to the ongoing and multi-year nature of our restructuring and transformation programs which are strategically reshaping our business in line with our momentum strategy we expect to incur significant further exceptional restructuring costs in fy 27 as we drive towards our 50 million annualized cost saving target the board is committed to materially reducing exceptional costs thereafter our net finance charge for the year was 13.5 million broadly unchanged and we expect the net finance charge for fy 27 to be to be around 12 million due to a lower non-cash lease interest charge consistent with our half-year results our pre-exceptional tax rate increased by 10 percentage points to 45 percent driven by the concentration of profits in higher tax rates countries coupled with the impact of losses arising in countries where no tax benefit has been recognized and the impact of disallowable items we expect the group's tax rate to be slightly lower in fy27 the tax rate remains highly sensitive to both the geographical mix of profits and losses and we would expect to reduce materially to more normal levels as profits rebuild over time we delivered a strong cash performance in the year with cash from operations of 92 million and this represented a 189 cash conversion our working capital inflow was 24.9 million driven by the reduction in temp fees and a one-day improvement in our dso we paid tax of 19.8 million and net interest of 8.2 million the cash impact of exceptional restructuring charges was 42 million overall this led to free cash flow of 22 million and our uses of free cash flow were the payment of 7 million of dividends the purchase of our own share for employee incentive awards at 11.7 million and capex of 24.1 million the cash flow benefited significantly following the full pension buy-in in fy25 that previously required annual deficit funding contributions of 18 million per annum we expect capex in the 30 to 35 million range in fy27 to support our ongoing investments in technology and at a similar run rate to our h2 capex of 14 million We ended the year with net cash of 20.1 million. The SOs improved by one day, driven by good collection performance, and our aged debt profile remained strong. Bad debt write-offs were minimal and remained at historically low levels. The group continues to maintain a strong balance sheet. Provisions increased due to restructuring activity, including staff and property closures across through the year. net cash decreased after paying 7 million of dividends in the year 11.7 million in respect to share purchases for employee share awards and the 42 million cash exceptional charges our business model remains highly cash generative with a strong balance sheet and the group maintains a clear capital allocation framework our priorities for the use of free cash flow are to group to fund the group's investment and development requirements to maintain a strong balance sheet fund a dividend that is affordable and appropriate and return surface cash to shareholders through a combination of special dividends and share buybacks the final dividend of 0.29 pence per share is consistent with the revised capsule allocation framework and dividend policy we announced at the fy25 results and brings the full year dividend to 0.44 pence representing a dividend cover of 2.8 times we remain committed to maintaining balance sheet strength and a two to three times dividend cover while investing in the business. In summary, fees declined by 8% but excellent progress with structural cost savings together with 7% productivity growth drove 3% increase in our operating profits. Volumes declined in both TEMP and PERM, although TEMP remains significantly more resilient saw improving trading conditions in several markets with around 30 percent of our business in year-on-year growth in q4 we remain resolutely focused on repositioning the business in line with our momentum strategy and delivering further significant structural cost savings of 50 million pounds in fy27 this will drive another material exceptional charge next year we maintain the strong balance sheet underpinned by strong levels of cash conversion and this will fund our transformation and long-term growth initiatives generating attractive returns to our shareholders as our profitability rebuilds over time. Turning to current trading, July and August to date have been in line with our expectations with no significant change to activity levels from Q4 in either contracting, temp or perm. September is our largest trading month of the quarter and it is currently too early to assess trends. at a group level there are no material working day effects in q1 and given our ongoing focus on driving consultant productivity we expect overall group consultant headcount will remain broadly stable in q1 we'll also continue to deliver on our structural efficiency programs which will further reduce our cost base for a period through fy27 i'd now like to hand back to mark thank you james so to recap

momentum is our strategy to accelerate profit growth and improve market share in our chosen markets by helping haze solve specialist talent selection processes better than anyone else in the market in addition when market conditions allow we will return to net free growth our strategy anticipates changes in the world of work shaped by our 60 years of experience and client feedback about what they need, responding to increasingly complex workforce challenges and the greater pressures they face to make the right hiring decisions. Getting it wrong can be costly. It also leverages our 40,000 weekly interactions between expert Hays consultants and their clients and candidates to provide deep insights into specialist recruitment markets. This is a powerful combination, a key point of differentiation, and one where we've only just started to capture its potential. Momentum is a compelling strategy because it is shaped by colleagues, candidates and clients. Compelling because it is a growth strategy delivered through superior and sharper focus and market leadership. And compelling because it will deliver significant increase in profitability, cash flow and shareholder returns. Over time, we will increase consultant net fee productivity by more than 50%, return Hays to a 25% plus conversion rate and deliver superior returns for shareholders. As you have heard, we are already delivering momentum at pace after taking decisive action and executing strongly over the last few months. FY27 will be an exciting year. We will accelerate our execution and start to unlock Hay's full potential. I will now hand you back to the administrator and we're very happy to take your questions.

Thank you. As a reminder to ask a question on the phone, please press star 1 1 and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Once again, it's star 1 1 to register a question. To withdraw the question, please press star 1 1 again. If you wish to ask a question via the webcast, please type them in the question box and click submit. We are now going to proceed with our first question. And the questions come from the line of Andy Grobler from BNP Paribas. Please answer your question.

uh hi good morning um three from me if i may um firstly just on the savings target for uh for this fiscal year so fiscal 2027 could you just talk about maybe the the potential over a slightly longer period of time and you know this project has been going on for for a while now i i kind of assume it doesn't come to an end in this fiscal year so just you know what your expectations are over two three years um secondly after the trading kind of shorter term and the trading statement back in july you talked a little bit about slower term um particularly in uh a and z and northern europe uh is that still the case into july august i know it's summer and difficult to call but have you seen any change in trends from that perspective and then thirdly you've talked about 50 productivity gains in the medium term when you think about where those are going to come from what are the key drivers between technology uh increased focus a market recovery uh and moving up the the wage scales thank you very much uh thanks andy uh i think i'm going to give james the first two and then i'll come back on the third one yeah thanks mark and thanks andy the

clearly the savings target we set out for fy 27 is for another 50 million of structural savings which is similar to what we've just done this financial year um we're looking hard across our back office and mid-office functions primarily there and a combination of operating model and technology actually underpinning quite a lot of that um regarding the the longer duration i guess with the first of the question out beyond next financial year is there more well we want to do a lot next year um and we we've been clear that we we want to materially lower exceptional costs in the longer term um so we do expect a significant exceptional charge next year as we work towards that cost objective but to materially reduce thereafter so that you know the lion's share of the big repositioning and structural savings will come through next financial year andy just i'll try to pick up the second question mark yeah around current trading and and clearly in the key four ims i talked about a a resilient tempered contracting business through the second half of the year but we did see some modest slowing in in activity in in some markets in in our fourth quarter and really Andy just to reiterate what we put in the statement and really we've only had six weeks trading since then and it's all summer months as well we've seen no change in the momentum or the shift in direction there at all so activity levels through July and into August so far have been consistent with what we saw through Q4 not seen any change in that both in the temp and contracting and from a perm perspective and on the region by regional level as we put in the statement and as always some of the difficult time of the year to really understand where we are September's a key month for us it's about 40% of our quarterly fees and you know that will be an important indication about where we've come out of the summer and if there's been any significant shift in activity levels in that period of time so we'll talk about that more in October and Mark shall I hand back for you?

Yeah it's a great question Andy on productivity it isn't a single answer because actually as I've been going around the world meeting all the different markets you know everyone is in a slightly different place of what's driving their current productivity and so actually it's a very forensic exercise we're going through to technology underpins everything and will help everywhere and that's where getting the feedback from the early AI agents that we're putting out there and what difference they're making to the consultants things like co-pilot that we've given them you know that they're making a difference But then it gets down to what is the specialism, what are the roles, which of our products are we selling into, and making sure we're forensic on all of those different lenses in, I mean, almost down to the desk level in each market. So I would say, yes, technology will help us all across, but everywhere else it is just going through every single dimension and making sure we're doing it in the best way possible. And that's why, you know, it'll be a journey over time, but it's a journey that never ends.

Okay, thank you.

Thank you. We are now going to proceed with our next question. And the questions come from the line of Rory McKenzie from UBS. Please ask your question.

I'm Rory here. First question, again, was on about the 50% productivity uplift target. Is it right to take the FY26 net fees and average headcount as the starting point? I think that's around £160,000 a head. And then as you're in the middle of exiting a set of countries and you'll be exiting some specialisms, can you help us think through the exit rate, I guess, or the run rate of net fees and headcount once you've completed that repositioning? And then my second question is about the new model you're building to drive that, so the digital platform, the next level search and match functions, for example. When do you think we'll see signs of that landing in the market, hopefully driving market share and so positive volume growth? I guess we've heard some peers talk about contract wins or fill rate improvements when these things land in some markets. So what stage are you at with your rollouts across the different markets you have today? Thank you.

Yeah, lovely. Thanks, Rory. I'm going to let James do the first one and I'll come back on the second.

Yeah, thanks, Rory. If I pick up the first question on effectively, what's the baseline of that productivity improvement? And clearly, we're just going through the disposal process of countries we've just edited and obviously the options on the other regions as well. but they don't materially shift the dynamic in terms of where the costs the fees per consultant currently sit within the business so I think we're already taking that as the baseline is the right approach to move forward from there so the number you quoted is the correct one there's not a much of a distortion effect from the countries we're disposing just so that you're aware that's about 70 million of net fees per annum around 530 consultants in those seven

countries so if you do the maths on that there's not much of a distortion effect for the underlying productivity of the business i'll hand back to mark for the yeah on the technology one um so actually we're making good progress already so if you take our core crm platform uh which many of you will know over the years as one touch the modernization of that and this is a key point we're on a modernization agenda here because of the assets we already have rather than the sort of a replacement agenda So the one-touch modernization has already rolled out now across our APAC region. And we're just in the final testing stages of going into Southern Europe. And then we will continue that around the rest of the world from there. So really good, strong progress there. But it makes it much easier to use for the consultants. And then again, many of you will be aware of our VMS system, which is known as 3SS. And that, again, is already in... you know wide scale adoption in some of our largest msp clients um and and again in all markets uh we've already got a use of that what we need to do there is is accelerate the level of adoption um and then i'll talk about search and match and come back to the hayes digital platform so search and match this is the rebuild this is the one where we we we are step changing in the generations of technology we're using we're partnering with databricks on this to bring a really leading ai enabled search and match engine together um we have the first alpha of it and i deliberately say alpha because you know there's a real trial versions rather than in production or in full production that is out um in our australia business at the moment and we'll be going into a couple of other businesses this side of christmas we want to make sure we get that right before we do a large scale rollout but we're talking months here not years in terms of scaling that and and the lovely thing with this technology is that you know the beauty of ai is it does all the parsing for you so that when we know we've got it right we can start to scale quite quickly um so then i bring it back to the to sort of the overall picture of what we want to create is the haze digital platform which joins all of that up as a core underlying platform for our candidates our clients and our consultants um that is a big integration exercise because that is joining up what we've got in the crm with what we've got in the vms with all the data across those and that program is underway as well um we we have picked a couple of markets where we're going to trial it i won't use today to tell you those markets because i want to make sure they're working um but again we're talking months to actually get these trials underway not not super long term you know sort of typical ite implementation plans we're well underway on doing these things and some of the testing has already started so we're we're kind of really pleased because we've inherited such great assets into here that we can take those forward and really leverage them great i think that's really interesting i mean it sounds like the haze momentum strategy has already been you know they're definitely at least soft launched internally given the things you're rolling out

Can you just talk about some of the reception from your internal colleagues and how that's gone down and what you plan to do next now it's kind of live and public?

Yeah, no, great question. And we've had a fabulous reaction from the colleagues, actually. So I and a few of my colleagues, James and other of the ELT members, we've been on the road meeting colleagues. So we've been to North America. We've been all around the UK. We've been all around APAC. We've just got Europe to go after they come back from holiday. And I guess it's three things that have really worked. One is the sort of the clarity it's giving people. It's very, you know, when you explain which markets, which specialisms, which roles, which industries, everybody goes, oh, I get it. Let's go for it. The second, and this one might all make you smile, is they love the fact we've given them co-pilot. So as part of all the work we've been doing to upgrade the technology, I think we're the first in our industry to do what's known as the E7 deal with Microsoft. And so they love the fact that every single one of our consultants all around the world has full copilot to use, and it's making their jobs easier on a day-to-day basis, and they feel they've got modern technology. And then the third one is they love the share scheme. The engagement we've had from having an all-colleague share scheme has been phenomenal. But it's slightly nice that at the same time the share price went up a little bit, but it's gone down really well, and they're all really engaged in the targets they've got to hit and the way we want that to work. So those would be the big three. I'm sure we'll get some more when we go around Europe, but it's been really encouraging to get their feedback. Great. Thank you very much.

we are now going to proceed with our next question and the questions come from the line of carl green from rbc capital markets please answer your question yeah thanks very much good morning three questions from me uh firstly just uh in terms of the the net fee medium-term ambition clearly north of one billion net fees is a very open-ended number um but it's clearly not a huge amount more at the bottom end versus what you delivered last year so is the interpretation of that, given that you could have picked any number, you could have picked 1.2, 1.3, whatever, that actually you don't need to see a material step-up in fees to drive that level of conversion ratio improvement? Am I interpreting that correctly is the first question. The second question, just on slide 13, where you've helpfully kind of recast the group B by five new categories from spot through to SOW, clearly there's going to be market forces that drive the relative proportions over the next few years but could you just talk about you know which of those five areas you're going to be really trying to intentionally drive as a greater proportion of the group you know msp more price sensitive stroke commoditized is that something you prefer to see diminishes the proportion of the group so a little bit of color there would be helpful and then the final question just on slide 12 above that you know the regional specialist profitability jumps off the page just kind of any thoughts from your end as to why there's such an exceptional gap between them and you know yourselves and lots of your your more global peers i mean one would guess that there's you know different cost structures different gross margin profiles maybe less investment in technology but but anything you can have there would be helpful thank you

Okay, so maybe James, you pick the first one. I'll do the number two and three.

Yeah, Carl, I'll pick that first one up. So in terms of what does the net fee ambition mean versus where we are currently today, we've just done a fraction over 900 million of fees. And then if you put against that, the countries that we have exited was around 15 million of net fees. And then a further 70 million of net fees will exit from the remaining seven countries. I think then the next thing, so clearly that takes the overall number closer down to 800 million on a life-to-life basis. The other area which we, you know, obviously we're mindful of is that there are a number of our smaller specialisms which aren't within the global specialisms, so which, whilst we're not exiting those markets on day one, they are not investment markets either, and we may see some net fee um decline over a period of time um there because you know we will be investing heavily in in the global specialisms that we've outlined today rather than some of the legacy specialisms and and that as it stands today is about 60 million of fees carl and whilst you know we'll retain a good proportion of that for a period of time i will expect that to drift down as well so if i rebase the business at sort of 800 million or slightly lower clearly then we have to grow back up to a billion plus over a period of time which is you know our inward organic investment into our focus markets within the countries and without within the specialisms that we've outlined so but clearly as mark set out momentum is a growth strategy but we have to go a little bit down from the 900 million today with the rationalizations we set out in order to grow back up north of a billion over a period of time

Yes, super. So, Carl, to the slide on products, and of course, there's another layer below all of this, the more detailed breakdown of the products that underpin these. But the way I think I would look at it is, I think if you looked at one that we think will shrink over time, it's the RPO one. But RPO is two products under there. One is the full outsourcing of company's entire recruitment processes we think that's probably a shrinking market but we think there's a very interesting segment in rpo about where we're helping project rpo so someone who wants to build a global capability center in india we are a great partner to work with them to hire the first two or three hundred people they need to get them going whilst they're building their scale but overall i wouldn't expect growth in rpo i think i would expect some growth in msp But the thing that's exciting for us in MSP is where we are also supplying into the MSP. Just the pure managed service, your right is not the highest margin business, but what we want to be able to offer is get across a range of recruitment partners, provide an overall service, but we want to be in the middle of that as a key provider, almost using our recruitment services on the left-hand side. These kind of interrelate some of these things. Spot is always nice. If the market picks up a bit there, we'll see business in spot. And PSL, what we just need to make sure as we do the PSL bit is that we're maintaining the right margin structure in the roles we're doing in a PSL and not being driven too far down on those. So that's where I see that. But the really interesting one is the services one. And our German business has done some amazing work in this space, almost defining that industry in Europe. And that, I think, is what we want to look at, how we leverage much more globally and how we're able to grow in a controlled way where we're not taking risk in the statements of work, but we want to see how we can grow that business now in the UK and in Australia and then see where we can take that more globally over time as well. So I think that's probably how the proportions move there. To the regional specialists, yeah, this was a great piece of analysis and this really, really made us think about what the momentum strategy should be. This is one of the key bits we looked at. And I think there's a couple of dimensions to it. Your comment on cost base is spot on. And that's clearly the work we're doing. We need to be able to match their cost base. But cost base alone and being generalist we worked out wasn't going to work. it's the specialism and the focus and therefore the reputation they get that means you know to the flywheel diagram by being known to be the specialist in those areas they attract the best candidates and the best clients and therefore the best roles and that's how you can create higher margins and that that's the analysis we've done and that's what showed us the direction we need to move in now we then need to be able to do that in each defined market at scale globally and hopefully our global scale will give us an even better cost advantage there. That's very clear. Thank you very much.

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and the questions come from the line of james rowland clark from barclays please answer your question hi good morning um my first one's just to follow up on that answer you've just provided is there a pricing difference with regional specialists either the sort of fee rate or take rate um secondly just on your um exceptional items you're saying will be significant in 2027 should we expect that figure to be kind of similar to what we saw in 2026 as a 90 million i know there's a bunch of things in there but is that the right ballpark and is it all cash and then also finally on your financial uh ambitions in the medium term you sort of upgraded the conversion ratios of 25 plus i think previously it was 22 to 25 Should we also be thinking that the old 250 million operating profit that you haven't provided a specific number today, but you just said significant growth, should that be up from that old target, given the cost savings for an extra 50 million today and a bunch of productivity gains in the medium term as well? Thank you.

Thanks, James. So let me do the first one, and then James will pick up the second two. So undoubtedly they're pricing different, and that's what we've really got to go after. So our pricing optimization in the whole of the momentum strategy is a key area we're looking at. But, yeah, different roles, slightly different ways of doing it. We'll be looking at all those dimensions as well.

Mark, if I pick up on the exceptional, James, so I haven't specifically given guidance, FY27 exceptional, largely because there's a likely wide range on that. clearly we've given the structural cost saving target for 50 million for next year which will drive an exceptional cost now if i looked at fy26 james we had a 45 million restructuring charge in this year which drove a 40 million annualized costs so you know we we've talked previously at sort of 80 to 90p in the pound on on the operational restructures from the annual cost savings into exceptional charges i'd expect that to be broadly similar going forward clearly there's a range around that depending on exactly where it takes place clearly some parts of the world are a lot more expensive than others in order to do restructuring but that is um that should follow a similar principle now and that would be the cash side of things I guess on the other hand clearly we're going through the processes on the remaining seven countries and there will be the financial effects of those transactions to to consider similar to what we had this financial year and you know that is quite hard for me to gauge at this stage looking at potential impacts of goodwill and impairment on their assets and so on and so forth so likely that there will be an exceptional cost coming through from those and but they sit outside of those core restructuring activities so it's quite hard for me to give guidance at this stage think what i would say james that as always we'll be giving you very clear updates through the year on exactly where we are on on the safe plan and where we are on that exceptional cost as we go through the year and obviously that will become uh become fuller over time as i have more clear clarity on that but um you're going to have to bear with me slightly because it's a slightly tricky one for me to try and pull together at this stage if i just pick up the final question which is around the financial ambitions and you talked about the 22 to 25% and the conversion rate guidance that we've done in the past. Clearly now we set our stall out slightly differently. We've given a medium term net fee ambition of 1 billion plus and a 25% plus conversion rate. So, you know, if I put the math together on that, that's a 250 million plus target for us to get to from a profitability perspective over over the medium term now if i put that against where we have been historically that would put us into new space actually um i don't think we ever quite hit 250 million in the past and so that should put us into into blue blue water beyond that so you know look it's a fair ambition for us it's um but we think it's absolutely a credible one if i think about that 25 conversion rate from a technical perspective we're we're in sort of mid single digits presently I look at the annualization of the cost saves we've already delivered next year plus the new target objectives. There's about a 10% conversion rate improvement to come through from the structural cost saves that we set out, either we delivered or we set out to deliver. And then clearly we've talked extensively today around the opportunity to drive our productivity forward over time and Mark's been very clear on our ambitions for that. That too will be an accelerator of our conversion rate over time.

okay thank you very much thank you we have no further questions at this time so i'll now hand back to mark denley chief executive officer for closing remarks thank you and james and i would like to thank you again for joining us this morning we look forward to speaking you speaking to you at our next q1 results on the 12th of october should anyone have any follow-up questions james kian and prash will be available for the rest of today And we look forward to seeing investors over the next couple of weeks.