Core Insights - The company reported a decline in group net fee income of 14% year-on-year in Q4 2025, reflecting mixed market conditions across its geographic portfolio [4][5][7] - Productivity measures have shown improvement, with perm placements per fee earner rising 2% to 0.84, supported by growth in the U.K. and Southern Europe [2][5] - The company anticipates that group net fee income for 2026 will be slightly below 2025, with a gradual recovery expected on a market-by-market basis [6][20] Financial Performance - Group net fee income declined 14% year-on-year in Q4 2025, consistent with trends observed in the first three quarters [4][7] - The U.K. market showed strong performance with Q4 fees up 25%, while Europe and APAC faced challenges with fees down approximately 23% and 11% respectively [6][14] - Monthly run-rate costs decreased to below £24 million, down from £25 million to £26 million a year earlier, with a target of at least £10 million in annualized structural savings by 2027 [9][10] Regional Performance - The U.K. experienced a notable increase in fees, while Europe faced significant declines, particularly in France, the Netherlands, and Belgium [13][14] - In Asia-Pacific, net fee income fell 11% year-on-year in Q4, with Japan down 10% and Australia declining 20% [11][12] - Southern Europe showed signs of improvement, particularly in Spain, while Northern Europe remained challenging due to various uncertainties [13] Service Line Performance - Specialist recruitment accounted for 82% of group fees in Q4, while recruitment outsourcing made up 18% [3][7] - Recruitment outsourcing fees declined 12% year-on-year, attributed to the annualization of contracts not renewed in 2025 [15] - Talent advisory services nearly doubled in net fee income compared to 2024, indicating strong growth potential in this area [17] Strategic Focus - The company is focused on reallocating resources based on strategic opportunities and activity levels across markets [8] - Management emphasized the importance of maintaining a strong balance sheet for capital allocation decisions [10] - The company plans to continue cost reduction and showcase a full range of solutions to drive productivity in 2026 [20]

Merger Highlights - The proposed merger aims to create a larger multi-sector holding company, targeting inclusion in the Russell 2000 index[11] - The combined company, NewCo, projects $40 million in Adjusted EBITDA by 2030, a significant increase from the pro forma $6.4 million in 2024[11] - NewCo anticipates at least $2 million in annualized cost savings within 12 months, potentially generating approximately $0.57 in incremental pro-forma EPS[11] - NewCo expects to better utilize Hudson's Net Operating Losses (NOLs), with a potential value of $14.45 per pro-forma share[11] Strategic Rationale - The merger diversifies revenues for both Hudson and Star, creating pro-forma annualized revenues of $210 million, compared to $140.1 million and $53.4 million respectively in FY 2024[19] - The combined entity anticipates approximately $2 million in annualized savings from corporate overhead and public company costs[19] - Hudson has $240 million in usable US Federal NOLs, which NewCo can better utilize to shield more US taxable income[19] - The combined cash position of the companies was $23.3 million as of December 31, 2024, with Hudson holding $17.7 million and Star holding $5.6 million[19] Transaction Details - Hudson will acquire all outstanding common shares of Star, issuing 0.23 common shares of HSON for each common share of STRR[25] - Upon completion of the merger, Hudson shareholders will own approximately 79% stake in NewCo, and Star shareholders will own approximately 21%[25]