Robert Walters plc

Good morning and welcome to Robert Walters' full year results 2025 presentation. The presentation will be followed by Q&A session. And if you'd like to ask a question over the conference call, please signal by pressing star 1 on your telephone keypad. And I'd like to hand over to Toby Folsom. Please go ahead.

Morning everyone and welcome to our full year results presentation webcast. I'm Toby Folsom, 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 David 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'll 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 a 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. In terms of the agenda today, I'll hand over to David shortly for a 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 of 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 two years in particular to serve these markets as well as possible. Secondly, markets have of course been challenging for much of the last three years. We therefore continue to enact self-help measures on our cost base and apply 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 operation stronger over the last two years We are organized into four 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 we'll 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 view of our 2025 financial performance and then update on balance sheet actions.

Thanks, Toby, and good morning, everyone. I'll turn first to a summary of our 2025 financial performance. With a turbulent backdrop for global trade policy, particularly at the start of Q2, with geopolitical tensions and still relatively tight monetary policy some two plus years since rates peaked at the top of the previous tightening 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 £47 million. The continual focus we have applied to all elements of our cost base, as well as progress on our initiatives to achieve material, annualised 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 £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 £14.9 million, and a loss before tax of 19.6 million pounds. The board was unanimously of the view not to propose a final dividend, further to its decision earlier in the year not to declare an interim dividend. Ensuring a stronger balance sheet is 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, three quarters of our operating cost base related to people in 2025, and efficiencies here drove the majority of the £27 million reduction in operating costs. The average group headcount reduced by 15% year on year. This mostly drove the £21 million reduction in fixed staff costs. However, 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 were pleased to still appropriately reward those of our fee-earning teams that met, or indeed exceeded, their team-based targets for the year. We continued to control non-staff costs tightly through 2025, with this portion of the cost base falling by £4 million. In the early months of 2026, we have 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 £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 £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. Though well below the £50 million target of our capital allocation policy, I would note the following. Firstly, our £50 million target was chosen with the top of the cycle in mind, With a downturn that has now been three 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 to fund the temp books 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 real focus throughout the business on further optimising 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 UK compared to our overseas markets, which retain positive cash reserves. Some of the key drives of this UK position are brought out in the two charts on the bottom row of the slide. Firstly, with the UK status as our corporate centre contributing to losses in recent years, as shown on the left-hand chart, and secondly, the fact that the Group Invoice Discount Facility could only be accessed by the UK businesses and has therefore never been more than 50% utilised at the year and 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've 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 UK to provide funding across the whole group. In addition, we're also stepping up our internal measures to optimise 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 opportunities that we have ahead of us remain significant. So I'll now hand you back to Toby to update you on how we view these.