HRnetGroup FY22 Results Announcement Webinar

Good afternoon everyone, we'll be starting in just a few minutes, but as we wait for more people to stream in, we'll be sharing with you a brand new introduction video that we have which will give you a good overview of HRNetGroup.

Hey there, we've got a great CV for you to check out and it's from HRNetGroup. Our story began in Singapore in 1992 where our founder started with a guiding principle to make the lives of those who cross our path better. Today, with that cornerstone in place, we are far bigger, faster, and stronger, with over 1,200 consultants in 15 cities across the region. Singapore, Kuala Lumpur, Bangkok, Jakarta, Hong Kong, Taipei, Kaohsiung, Shenzhen, Guangzhou, Chengdu, Suzhou, Shanghai, Beijing, Seoul, and Tokyo. Our twin engines of growth are professional recruitment and flexible staffing. So, be it executive search or temporary and contract placements, we find exceptional talents that will make a difference to our clients. Our professional recruitment brands are HRnetOne, PeopleCycle, PeopleFirst, SearchAsia, RecruitLegal, HRNet Rimbone, and Reforce. As for flexible staffing, our brands are RecruitExpress, RecruitFirst, Centrepoint Personnel, and RecruitFast. The other brands we have include our payroll services brand YesPay and a SaaS payment solution brand Octomy. We are the first recruitment company to be listed on the main board of the Singapore Exchange. And we continue to move towards global expansion through ceaseless innovation and evolution. What we do is truly life-changing work that is made possible through the clients and candidates that have crossed our paths. So, are you ready to partner with us?

Yes!

Okay, great.

It's obvious we've answered our own question. We hope everyone will answer yes also. So I think we've got a lot of people in the room already.

Okay, yeah, great.

We've got everyone here. Okay, so once again, a very good afternoon to everyone who's just joined us. Welcome to our FY22 results announcement webinar. We're thankful that you took some time out of your busy schedule to join us this afternoon. My name is Fazlin, and with us today, we've got our Group CFO, Jennifer.

Hi!

And our Executive Director and Chief Corporate Officer, Adeline.

Hello!

Okay, and as an extra special treat, we've also got our special guest for today, our Independent Director Albert, to share some of his insights and perspectives as well.

Morning from Europe!

Yes, yes.

I think we should let everyone know that Albert actually was up at 2:30 AM to do an earlier call with us. And he's back here again, so cheers for Albert.

Thanks, Albert. Okay, so to kick things off, we'll have Jennifer speak to you about the financials part of our results announcement. Over to you, Jennifer.

Good morning. It's good morning to London, and it's good morning to Singapore, wherever you are. Today I'm presenting the financial performance of HRNetGroup. 2022, we had a few waves of challenges for our people throughout the year. Shanghai had the Omicron infection wave in February and then a 2-month lockdown in April. The zero-COVID policy that came along with persistent testing every day went on and on in major cities that we operated in. In mainland China, we have 4 brands operating in 6 cities Shanghai, Beijing, Guangzhou, Shenzhen, Chengdu, Suzhou, employing 323 people. US-China tensions over Taiwan was the other challenge that we had. The threat of a war lurked around our business with 5 brands operating in Taipei and Kaohsiung, employing 192 people. And the third challenge we had was the Western world had the Ukraine war that erupted in February. And what followed were the energy crisis, inflation, interest rate hikes, and the threat of global recession. Singapore, our home base, which is an open economy with lots of investments from global MNCs, had no chance of being spared the uncertainty that came from this headwind. And this is where all our brands have a deep presence, employing 403 people. Now, against this backdrop, here is our story of not just survival, but of proven resilience, agility, and a deep desire to do well, regardless of the circumstances. Let's begin with the delivery of shareholders' happiness. In 2022, we paid out a total of $61.3 million of cash dividends. $40 million of that was for 2021 profits, and $21.3 million was a maiden interim dividend for our 2022 first half profits. We are now declaring a final dividend of 1.87 cents, totaling $18.5 million for 2022 profits, making it another sustainable 4 cents total dividends. In line with our dividend practice of at least 50% dividend payout, this year's payout is equivalent to 55% of our NPAT and 5.1% yield against the last closing price of 2022. After our shareholders' approval at our 26 April AGM, shareholders will receive the final dividends on 12 May. On 13 June 2022, we started a $30 million share buyback program. To date, we have returned $12.3 million to shareholders. So far, we have cumulatively gathered 23.1 million Treasury shares, which are very attractive for M&A, employee shares, and acquisition of minority interests, and we will continue to use them for these purposes. There is a balance of $17.7 million to be utilized under the share buyback program, which we will resume as long as share price is undervalued outside the blackout period. 2022, in total, we received a total of $52.3 million to shareholders compared to $40 million in the previous year. Now, to go into the financials, 2022 was yet another record year for HRNetGroup. We achieved record high of underlying NPAT, which grew 18.6% to $78.1 million. This is derived after adjusting the profit or loss impact of investments in mainly HR marketable securities. Revenue of $611.8 million was also a record high, up 3.6%, with both business segments breaking revenue records— flexible staffing at $510.1 million and professional recruitment at $97 million. Whilst both segments' revenue remained in similar proportions of 83% and 16% for flexible staffing and professional recruitment, the GP mix shifted towards more contribution coming from professional recruitment, 56% from PR and 42% from FS. Why did revenue grow at 3.6% but GP down 0.4%? And that was mainly due to the scale back of COVID-related flexible staffing business in Singapore, which carried higher than average GP margins. Partially made good by professional recruitment business GP contributions. Indeed, our Singapore flexible staffing business benefited strongly from COVID-related healthcare businesses in 2021. But with the closure of vaccination centres in first half 2022, we had to quickly switch gear to serve stronger needs coming from non-healthcare sectors and outside Singapore in the second half. Professional recruitment business in China did very well in the first half 2022 because of our semi-con specialisation that caught the tailwind. But in second half, China was impacted by the severe lockdowns and disruptions under the Zero COVID policy. Singapore and the rest of North Asia were also affected by uncertainties in global hiring sentiments. In short, first half was strong, second half was challenging, but on the whole, we balanced off fairly well with good underlying profits and growth in top lines. Our revenue model is a very simple one. Flexible staffing (FS) is recurring, volume-driven, and cash-intensive, while PR (professional recruitment) is quality-focused, premised upon deep expertise in a sector or in a function. The strong margins and profit conversion ratios that we have is an outcome of the rigorous work rhythms and work processes, and of course simplicity in sales versus cost management. And here is how our revenue dollar flows. For every $100 of revenue, we derive a GP margin of 28 and 28.5% as the GP margin is a blend of the Professional Recruitment's nearly 100% GP margin and the Flexible Staffing's 14.4%. GP is the common denominator for our measurement of productivity for both businesses. Every consultant or team has to deliver GP in excess of 3 times their payroll cost. That would ensure profitability for every single fee earner, every team, every business unit, and the whole group. We do not pay commission. Instead, we pay a profit-sharing incentive which we set aside after deducting expenses. So the higher the profits, the more our people will be rewarded through this performance-based mechanism. And this is how HRNetGroup is able to ensure enviable profitability year after year for 29 out of 30 years. Business dynamics of the professional recruitment, which contributed 56% of our GP. HRNetOne is our alpha brand launched at the inception in 1992. And People Search, People First, SearchAsia, Recruit Legal. These are brands that have evolved with market conditions, clients' needs, and the changing talent landscape over time. Reforce and Rimboot were additions by acquisitions. Our brands represent various specializations and different modes of operations by different groups of people, giving our clients variety and choice. Here's a recap of our business model. We source talents for our clients to hire as their own employees, and we charge a typical 18-25%, and in certain places like Japan or certain special situations, 30-40% of the successful candidate's first year remuneration as our service fee. There are two levers in our business. Volume and pricing. Placement volume dipped in 2022 but well compensated by pricing. With wage inflation on our side, we channeled our resources to assignments that fetched better returns. We saw the average billing per paid placement went up 13% to 24% for mid to senior level positions and 9% to 12% for junior to mid-level positions. Do we foresee this continuing in 2023? Volume-wise, as has been widely reported, demand for permanent hires has moderated since the second half of 2022, and this trend has continued into 2023. China's lockdown and zero-COVID policy has been reversed. Looking forward, while the transition from a COVID-dominated world to a more normal normalised environment will continue for the first half of 2023, we do expect the second half to reflect a broader recovery. Pricing-wise, GP per placement has come off from first half's 20.1% to the full year 12.2%. Candidates are still expecting a salary increase to make that job switch, but that has become more realistic. Particularly in the wake of retrenchments coming from tech giants in recent months. As for business dynamics of flexible staffing that contributed 42% of our GP, in terms of our brands, we have RecruitExpress that operates in Singapore, KL, Taipei, and Hong Kong. RecruitFirst operates in Singapore, KL, Taipei, Kaohsiung, Hong Kong, and Shanghai. Centrepoint Personnel is a government contracts business that we acquired in Hong Kong some years back. And here's the business model. We help clients source for contractors and hire them on our payroll while they work on, while they work on-site with our clients. We take care of the payroll and employee benefits and send a bill to our clients for the payroll dispersed together with a markup for our service. After taking away the contractors' direct cost, our GP margin was 14.4%. We served clients through nearly 56,000 contractors last year. The gig economy has been propelling our flexible staffing business. 2021 and Q1 of 2022 were augmented by the COVID-related business needs of our clients in Singapore. Had we excluded the COVID businesses from 2021 and 2022, our flexible starting numbers would have risen by 14.2% in revenue and 11.4% GP. We did benefit from COVID and that has fallen off, but overall, our volumes have risen above pre-COVID times. The demand is clearly there, and that's why you see that our contractor numbers, be it average monthly numbers or full-year unique contractor numbers, have been rising year on year. The scaled-back COVID-related business carried a higher GP margin, which was not fully matched in absolute GP dollars by the increases in flexible staffing volumes, particularly in Taiwan and Indonesia. However, with these two markets picking up strongly in momentum, we do expect GP margins to get better in the future. And looking forward, we believe the flexible staffing run rates of last year's second half could roll into this first half, but volumes should start building from Q2 onwards, heading towards those first half 2022 levels in the second half of this year. Geography mix by revenue and GP shifted from Singapore to North Asia and the rest of Asia as our Singapore flexible staffing business moderated from Q2 to Q4 because of the COVID phase-out. Greater China, that includes mainland China, Taiwan, and Hong Kong, Indonesia, South Korea, and Malaysia had growth in both revenue and GP. In terms of sector dynamics, our top 3 revenue sectors remain healthcare, life science, IT and tech, financial and insurance, which in aggregate contributed the same 56% of the total revenue as last year. Within these three sectors, there were shifts from healthcare life science contribution from 26% down to 19%, while IT and tech was up 4 percentage points to 19%, and financial and insurance services up 3 percentage points to 18%. All the other sector proportions were fairly similar to last year's. Our brands at the respective geographies would specialise in those sectors that have growth, and the relative weightage will shift according to market demand on the ground. And that's how we pivot. 2023, Singapore could see demand going up for information and communications financial insurance, professional services, and advanced manufacturing such as those related to Industry 4.0 technologies. China would expect all-round labor demands in manufacturing, retail, F&B, travel-related, and hospitality sectors. Our Taiwan strength in tech will continue to flourish, especially in the chip foundries and general domestic demand coming out of transportation, hospitality, recreation, and entertainment. Our top 5 clients contributed 13.7% of our revenue and top 10 clients 21.6%. No one single client contributed more than 5% of our revenue. As such, we are not dependent on any single client. Our cash position has always been our edge and strength. Other than the IPO proceeds, which we now have a balance of $44 million, we stand by our dividend practice of 50% payout, which leaves us with ample reserves for working capital, especially contractors' payroll that soaks up nearly $100 million a quarter. And operating expenses another $26 million a quarter. We keep reserves for flexible staffing expansion needs as well as for opportunistic acquisitions and investments. We bill our clients in local currencies, which upon collection, utilize them for local operating expenses. We keep minimum cash at the operating units, converting excess cash into Singapore dollars our reporting currency, to maximize returns through our group treasury function that generally invests in principal-protected and low-risk financial instruments. 2022 saw good coupon rates from short-term Singapore Treasury bills and DBS credit-linked notes, and we allocated $26 million of that towards these instruments. These, together with fixed deposit rates that have been rising alongside Fed rate hikes, gave us the nice outcome of doubling in interest income while the cash is pending deployment in M&A investments and startup as well as expansion capital of our organic units. On the use of our IPO proceeds, During the year, we injected further share capital totaling $1 million into RecruitFirst Indonesia and RecruitFirst Taiwan to provide for additional capital for the expanding businesses. You would have heard about the good momentum that we had in the volumes coming from these two geographies, and we made further investments in Staffline as the share price hit an attractive level despite the trading updates on the turnaround of this company. Optimate, a workforce management solution, was an acquisition of an HR fintech business which we believe to have great potential in terms of synergy with our flexible staffing business and also for meeting a booming need for earned wage access for companies who want to retain the gig workers. We have further earmarked $2.7 million for RecruitPlus Korea, which we just announced this month, and also for RecruitFast, which is a new brand for flexible staffing and RPO business that we've been incubating for a year now. We will make further announcements soon. On the outlook, Singapore, Taiwan, and China contribute a total of 86% in revenue and GP. 2023 is expected to be tough, with Singapore's GDP halving to 1.8%, Taiwan's modest uptick from 2.4% to 2.8%, and China to bounce back from the second or third quarter onwards. All geographies are expected to be in positive zone as far as GDP growth is concerned, an inflation rate might have peaked already. Now, what really matters for us is to do well regardless of the external environment. We will continue to shift within key sectors for organic growth. We will continue to be rigorous in our pursuit of profit-accretive M&A opportunities that come along with co-owners who are passionate about the recruitment business. As a final note, I'd like to update on our 2022 capital markets engagement. In 2017, our IPO year, we had 1,491 shareholders, including, including nearly 300 of our employees. Thank you for believing in us. And believing in our potential. As of 2022 year-end, we had 2,161 shareholders, some of whom we have spoken to during the year—retail, corporate, and institutional investors—through various platforms including CRs, webinars, conferences, non-deal roadshows. We listened, and we know our investors care about visibility and liquidity. We stepped up the news flow and visibility to help the market better appreciate our business, to value us according to our strong fundamentals and our potential. We made 29 non-routine announcements on contract wins, key people movements, new co-owners, and awards, including winning the Best Managed Company Southeast Asia organized by Deloitte and the Business Eminence Award Singapore organized by Dun Bradstreet. The Singapore Ministry of Manpower's recognition of our subsidiary RecruitFirst as a human capital partner. Taipei City Government conferring Grade A accreditation to all our 4 brands in Taiwan. The Shanghai Government conferring the Talent Scout Award to 2 of our brands in Shanghai. HRnetOne and Reforce respectively. Adeline also stepped up to serve as the Chairman of Lifelong Learning Institute under the Ministry of Education and as a member of the SkillsFuture Board as well as the Jobs and Skills Committee under the Singapore Business Federation. Doing our part in contributing to the wider conversation regarding jobs and skills in our home market Singapore. We are blessed with strong and wide analyst research coverage by 5 respected houses in Singapore. CGS CIMB, Maybank, Phillip Capital, RHB have been with us for the past few years. We were delighted with DBS re-initiating coverage later part in 2022. All analysts have issued a buy call with target price north of a dollar. To reach out to more investors outside this region, we engaged Storm Research, a UK-based research house, to initiate coverage as well as to provide continuing investor support for more institutional investors in the US, Europe, and the UK. While we are doing our level best in optimizing our free float, investors are very welcome to have a conversation with us. Just give us a call or WhatsApp or an email. Coffee is on us. Thank you very much for listening in. Next, we shall have Adeline to give us an update on the people, technology, and corporate development.

Adeline. Thank you, Jennifer, and good afternoon again to all our shareholders and stakeholders who have called in this Friday afternoon. So right up, I would like to, you know, introduce our new and improved board. And we have with us today Albert, I think the newest, our newest board member to join us. Welcome, Albert. And for those of you who have been with us since 2017 when we first went public, I think you'll see we have a very, very different board today. It's become much more international. There's a lot of depth of talent in the labour market, and there's a strong reason for that. So this is again something which you can attribute to COVID. One of the things that has happened which is very evident is that the labour markets have become very inward-looking and have nationalised largely. So what you need are market champions in city, and we invited Wallace, Hank, and Albert to actually be our in-city experts, to come and join our board. And it's really made our board meetings really very interesting and very rich. And we're sure that we're going to do, you know, only much better with the three of them joining us. So welcome, Albert, one more time. So the other thing that we've been making use of as a listed company is our co-ownership operating model. I'm just finalising the letter to shareholders that will come out in our annual report. And one thing that struck me, which I really want to share with you today, is that how often do you get to co-invest alongside 37 co-owners who literally, you know, put in their days and nights and all their skin in the game? I think one of the questions that we already have in the Q&A is how do we compete and stand out amongst competitors? And this is a very critical feature, right? So we, as co-owners, it's a very different mentality from being an employee. And I must say, I suspect Albert must have already purchased shares in us. And as a co-owner, you know, he got up at 2 AM in the morning to join meetings. And that's exactly what our co-owners are like. And because we are listed, we have this platform where we can offer people to be owners of our operating subsidiaries. And then they later on can get to flip up to become shareholders at the LISCO level. And we have made use of this mechanism and offered it to 15 more people over the last few years, and we now have 37 co-owners in total. And that's a very strong differentiating factor, which I can say nobody else, as far as recruitment companies are concerned, has. So that's one of the reasons how we stand out, right? I will next show you the portraits of some of our co-owners. The ones, the portraits that are appearing, are those who joined us this year, right? The very last one is actually Zoe from Octimate, who I believe is on the call. So welcome back, Zoe. Zoe started off as an intern with us nearly 10 years ago, and then after going to Deloitte and starting up her own company, is now back as a co-owner. So we're really happy to have returnees like that return really strongly and, you know, give us that very strong bench strength And in line with our idea of having in-city experts, we also brought on board Miranda in Taipei as a co-owner, Karen in Hong Kong, Mei Chin in KL, and more, right? So you really see that we have solidified our strategy of having local experts while riding on the regional business that we have with our clients. Next, we will see the sales capacity, the expansion of our sales capacity. As a professional services company, at the end of the day, what we have to offer are the services of our people. So with nearly 1,200 people across 15 cities, it's a very strong team, and we have 78% of them who are sales generating, profit generating, and you can see the numbers here. 63% of them are productive headcount, which in our language simply means they bring in sales of at least 3 times of their payroll cost. And you can also see the GP per headcount that we have, which is, you know, I would say really excellent across the industry. So when you see all these numbers, what does it mean? It really is a different game to play when you have 3 recruiters, 5 recruiters, even 30 recruiters versus 1,200 recruiters, right? And just now when Jennifer talked about being able to pivot, to move to growth areas, to be able to offer clients flexi-staffing services when they don't want to use professional recruitment, we are the people who can do that simply because we are structured and have the systems and processes in place to do that. And of course the people to do so. So that's how HRNetGroup is really, I would say, very different from any of the other recruitment companies that you see in town. And if you would like to satisfy yourself, you can actually run Accra searches in Singapore. In particular, it is very transparent, and you can see very clearly that we are many times more, many, many more times profitable than any of the other recruitment companies. So this is to give you a little bit of glimpse into what we expect for 2023. I think we did have some questions from our analysts as well. If you look here, you'll find that, um, our percentage of productive hard count actually slipped in 2022, and Jennifer explained why. So the main contributing factor for the slip was actually in North Asia, and it's really due to, you know, the COVID reinfections in and the infections in China in the second half of 2022. We totally expect this number to change. It will not be 54% in 2023, and therefore the overall number of productive hard count must go up, right? So this actually gives you a clue as to, you know, the upside that's coming up in 2023. We also want to highlight that for Singapore, it's done exceptionally well, actually at 84%. Productive heart count. Our gold standard is 80%, so Singapore actually went past that standard and outperformed. And for the rest of Asia, you can see them making very good progress as well. So with North Asia picking up the pace in 2023, I think you should see, you know, all our numbers looking even better. So one of the things I think, you know, which also make us compete and stand out. Nikki, I'm just using your question to present my slides. It's the fact that we are able to move very quickly. So, you know, where previously we used to have scheduled physical meetings with our clients, we recognize that the world of work has changed irrevocably and that a lot of content has to be available on mobile, in bite-sized formats, accessible 24/7. And therefore, we have put our market intelligence reports in content libraries on our websites and basically even in our name cards. So our name cards today basically come with our thought leadership content as links to our name cards, which are all in the video format. And you can find that whether clients or candidate, they can access the business intelligence that we have much more readily and easily. So that's a new feature that has come out as a result of COVID as well. For those of you who are into live shows, and here I suspect, you know, we're really talking about a much younger demographic. My children are the ones who would be, you know, watching these shows and commenting on them. We have been doing Insta Live shows, WeChat Live shows, and they're incredibly popular, right? So you have 500-600 people attending these 1-hour-long shows and asking all kinds of questions. It's very interactive, very fun. Please join us in your city the next show that we have. Internally as well, for our own employees, you'll find that we have also moved on to micro-learning platforms, and we are covering topics like projecting professionalism online. It's amazing. We were just discussing it before the call started, how for many people, they don't switch on their videos when they're on a Zoom call. But you'll find across the board, all HRNet group, they have their videos on, and they'll make sure that the light is shining on them so that you can see the whole of their faces. And it makes a huge difference. And that's why we find that the whole training regime and programme has really moved a lot in the past 2 years. Even our Leadership Masterclasses have taken on a new form. So UEP actually stands for Unique and Extraordinary People, and these would actually be our emerging leaders, and they're identified every 2 years. And in 2022, we had 49 of our emerging leaders attend UEP. So this took place from May to October, and every alternate Saturday, more or less, They came together as a cohort, and we had subject matter experts come in to talk to them and share with them. And actually, it was amazing because you find people really coming together across our 15 cities and learning and growing together. So, you know, we will be continuing with UEP in this format, and it's been very well received as well. We have also thankfully had more in-person events. Oh, the first The first image you see actually is not about in-person events. It's really about the lockdown support that we're able to offer our colleagues in Shanghai. And I'm really grateful for our leaders, some of whom are on the call today, who responded so quickly when there was a real need for support during the Shanghai lockdown. So we had 49 colleagues actually reach out to us to say they were unable to access groceries. And thanks to our leaders, we were able to send all the care packs that you see here. Milk, and meat, and vegetables. And, you know, I'm really grateful how our HR lead and other leaders were able to respond so quickly. Over in Tokyo, there's a far happier situation. There's a beach cleanup that we were able to do together as a team. And then you'll see next that, you know, in Taipei, there was a blood donation drive. And in Singapore and 5 other cities, there was a walkathon. At the end of the year, For those of us who are unable to go on the Rhine cruise for the German Christmas markets, there was a sustainable Christmas market at One Tampines Hub in Singapore, and that was run by the RecruitExpress Group and exceptionally well received. Okay, we also look after our stakeholders in other ways, including our key accounts who received mahjong sets for Chinese New Year this year, you know, in celebration of finally being able to celebrate together as family. And there's quite an interesting story behind this, because how this mascot of RecruitFirst came about— and her name is Ruby, that beautiful lady there is Ruby— was when Marina, one of our colleagues, actually was creating an island on Animal Crossing for RecruitFirst contractors in Shanghai to kind of interact with us. And ask questions about jobs and all. So this was on a Nintendo Switch game, and she said, hey, we need a host for the island. And then we brainstormed and we said, yeah, why not call the host Ruby? And the idea evolved, and what you see here today basically came about when, you know, somewhere along 2022, we also did an NFT series for CSR where people were able to bid on it, and whatever proceeds that we received went towards beneficiaries that was selected beforehand. And then by the time it came to Chinese New Year, we had a whole Ang Pow series and the mahjong sets with Ruby on them as well. So I think you can see quite clearly how, you know, we are able to look after all stakeholders and evolve and grow at the same time. At the end of today's webinar, Fuzz will actually be playing the song for you, or you can scan to watch it now. And this is a song that was composed, written, and performed totally in-house by HRNetGroup Talent, and it was to celebrate our 30th anniversary. So it's, it's really quite nice, and we'll hear a little bit more about it later. But before, you know, we go into that, I think I did want to share with you a little bit about our growth engines. We get this question often, and we have 3 engines, right? So the organic growth which is what we've been doing since day one for 30 years now, is where we start new business units when there's market readiness and when we have people readiness, people who are willing to invest personally in these business units that they're going to run, right? The attitude is really very different. We know that for a fact. And I'm very grateful that, you know, coming up we have RecruitFirst Seoul, Zhengzhou, and Penang, and we can only do so because we have exceptional co-owners. Who really have an interest to build and grow together. Then we have our inorganic growth engine, and in 2022, that was the acquisition of a majority stake in Optimate. And this is where we meet people who we really enjoy the company of and get really excited with, and we grow and do good work together with them. And that gives rise to our third growth engine, which is the combo engine. And this is the most fascinating one actually, because these are ventures that are formed with our inorganic acquisitions. So first, the logo that you see here is for RecruitFast. You're getting a preview because this is a new brand that we'll be launching. And RecruitFast is actually a joint venture with Reforce, an acquisition that we made in 2018. And over the past few years, we know we have good chemistry We understand each other a lot better and we know and we're energized by each other. So we're creating a new brand together, Recruitfast. The other combo venture that actually was started in the middle of the pandemic and has done really well is Recruitfirst Indonesia, and that's a joint venture with HRNet Rimbun, which we acquired in 2018 as well. So you can see we have, you know, 3 growth engines and it's really exciting. Finally, to wrap up before I hand over to Albert, would be our key investment propositions. Why put your money with HRNetGroup? Why invest in us? And I think, you know, the strong financials speak for themselves, right? Unlike many evaporating unicorns today, we have zero borrowings. We have a very strong cash position. I think one of the questions is, why do you retain so much cash? And the answer to that really is that we want to be able to capitalize on opportunities that come our way, right? Last year when we needed another $40 million overnight, literally overnight, in a matter of months to ramp up our flexible staffing business, we were able to do so, you know, just because we have that cash hoard. When we are looking at companies for acquisition as well, that's an option open to us. So I think it's a very attractive proposition to intelligent investors because there's a lot of security and stability in a company that pays 5.1% returns, right? So it's a really attractive option. I mentioned the co-ownership model previously, and that's really a feature which sets us apart. I have quite a few co-owners on the call. I think you agree that we live and breathe PageOutNet Group. Quite literally. And, you know, to be invested in a company where 80% of the company is owned by people who run it and are very deeply interested in it makes for a very different proposition. And I think just two more points to reiterate: we are scalable for repeated success. Having that 1,200 people means we have systems and processes and digital infrastructure already in place, right? So for us to say, come, let's start up another new BU in a new city, it's not too difficult. It's something that we're able to roll out with ease, I would say. And, and that's a pun on a play on the name of our app, Ease, which I advise you to check out as well. And finally, in terms of shareholder returns, I think, you know, you have already seen the analysts announcements that have come out. And overall, I think there has been very positive, um, the fact that, you know, we are paying 61.5 million dividends in 2022, uh, with 18.5 million payable in May of this year. So I think with that, I shall hand you over to Albert.

Good afternoon, and hopefully you can hear me. Um, thank you, Adeline, and thank you, Jennifer. I won't say too much because the, you know, between Adeline and Jennifer, they've covered all the main topics in detail, but I'd just like to draw out a number of points which for me, as someone who's been in the industry for over 30 years now, I really feel quite passionate about HRNet. I have a huge respect for the business, and it's a little-known business beyond its heartland in Southeast Asia, which is where the opportunity is, I think, for investors. First of all, That question, and was the very first question I think, about cash, which Adeline and Jennifer have been talking about. They've given you lots of strategies and, and reasons for why a cash pile is a good thing. But let me tell you that in terms of the global market in recruitment businesses and the recruitment sector, which is a very attractive sector to invest in if you invest in the right companies, is cash is not not very, very prevalent. In some of the businesses where they don't have debt, they only have cash, it's only up to 10% of the market cap. So if you look at Hayes, if you look at Page, if you look at Walters Manpower, Randstad, these businesses do not have significant buffers of cash. They generate cash and some of them have debt. But when we had COVID, that's when investors looked very, very keenly at all of the investors, and the main concern they had was balance sheet strength. How does a company deal with a crisis? How does a company deal with a lockdown in China, for example, or the lockdown in Western Europe or in the US? How does a company deal with inflation? How does a company deal with a war? And all of these macroeconomic instability factors, which I think you'd agree feels at the moment to be at a very high level, overwhelming almost every day, whether it's earthquakes, whether it's natural challenges, or whether it's, whether it's macroeconomic challenges. Companies more and more need that, first of all, that buffer of security. And Warren Buffett called it a margin of safety, possibly the world's greatest investor. But also, as Adeline said, allows, when the, when the markets are volatile, it allows HRNet to take advantage of opportunities when others are weak. So that's for me the most exciting part of having cash. We at Staffline have also been given opportunities where our balance sheet has been able to take on the payroll demands when others cannot do that, and that immediately gives you an advantage. So there's many reasons why you would want to retain a significant amount of cash. And my only comments and summary on that point is HNet, for its market cap, is the most cash that I'm aware of in the, in the sector globally. So that gives everybody stability. And most importantly, I'm going to come on to the next big point now, is these businesses, recruitment businesses, there's relatively low barriers to entry in a private market. You know, our biggest challenge as a recruitment sector is that we have talented people who want to go and start their own companies. Our biggest challenge isn't trying to attract new business, that we can do. Our biggest challenge isn't opening new offices or finding new markets, it's literally competing with entrepreneurs who want to go and start their own businesses because professional recruiters are entrepreneurial in their character. So the co-ownership is something quite extraordinary and let me Clarify this. There have been models in the Western Hemisphere of some co-ownership, but they've never actually gone as hard and as committed as HRNet. For example, there will still be an element of commission or an element of bonus or an element of sort of what I would call corporate reward, whereas in HRNet, it's all profit. So co-owners are 100% aligned with shareholders. That's quite extraordinary and very, very unique. Getting back to the stability point, share prices have been terrible, particularly for recruitment. They always go down in the trough of the cycle and they rise as you are geared into the recovery. And anybody that's made any money in recruitment, and I'm thankfully and gratefully one of those people, simply you just have to follow the cycle and stay with a safe strong and highly attractive player. In this case, HRNet has got the stability to take you through the downturn, and it's got geared to the upside with all of its new markets, its services, its attractive proposition, and its ability to compete and attract entrepreneurs into its, into its business so that it can start up in, in new areas, those areas that both Adeline and Jennifer have described. So, you know, those are my thoughts. We look at HRNet very longingly from London. It's a highly flexible business. And here in Europe, there's a lot of labor laws, and those laws are quite restrictive. What I see about HRNet is they've been able to flex and be agile to adapt to different environments very, very different environments. If you look at Southeast Asia, North Asia, Singapore, these are very, very different environments with economies and markets that are at different stages of development. And in fact, many of the new markets that HRNet are in have got very immature recruitment markets. So plenty of growth there. Those markets in, in recruitment terms could double. So that's very exciting, and that gives HRNet a real angle., and their flexibility and their agility is something really to respect. So I'm just going to end on a couple of thoughts here which encapsulate my view as an independent non-executive director, and I'm absolutely delighted and very honoured to be an independent non-executive director for HONIT. But as Adeline said, I invest all my fees, my director fees in HRNet stock. I mean, I can't see a better return for myself. The only time that the stock price has actually fallen down, declined, was during the first 3 months of COVID when there was total panic. Otherwise, the stock price has been rock solid, which is— and that's a real testament to the business. But essentially HRNet, in conclusion, is a leading recruitment business. Recruitment businesses generate cash. You've got to retain and lock in your people. HRNet have a unique co-ownership model that actually aligns those co-owners 100% with shareholders. The agility that HRNet demonstrated completely caught out the market, because during COVID whilst the market marked the share price down to half of what it was today, the market did not appreciate how much in terms of vaccine, healthcare, life sciences, and also the booming technology, how much HRnet would be able to benefit from those crises. So that shows you the extent of the agility and the flexibility. And then finally, you know, the stock offers stability and security in a day, in an age when, particularly in the UK, I mean, I look at those inflation numbers and that Jennifer put up there in Southeast Asia, they're actually quite— they look horrific compared to the past, but they're actually quite low compared to what we have in Europe. In Europe, in Germany, in the UK, and in France, we're talking about double those inflation numbers. So in a, in a time of real uncertainty, inflation is a real challenge for us. This is an island of stability. And of course, another reason to have that cash Paul, is that you don't have rising interest rates if you've got debt. So debt is not only a threat when there's volatility of earnings, the rising interest rates become unaffordable for companies. In terms of HRNet, you flip it on its head and actually it becomes a source of additional financial returns. So stability, security, financial returns, and all of this comes with a promise of the gearing of a recruitment stock in the upturn, which we know is coming in the next year or two. So with that, thank you for the privilege of being able to say a few words. I hope you appreciated them. I hope that you learned something. I'm very happy to answer any questions. Back to you, Adeline and Jennifer.

Thank you, Albert. Thanks, Albert. While Adeline and Albert were talking, I took the opportunity to use my fast fingers to answer many questions.. And if you have the chance, take a look at the answers. But I just left the first question that was raised by an anonymous attendee at 4:07 PM before I even started speaking. And the question is important, and I just want to address it live. The question is, why do you retain so much cash in the company? Now, I've explained that, and many of us have talked about the benefits of having a strong cash position. Now, the question that was asked was, why not pay a higher dividend, which probably would have the same price impact as a share buyback? So I take this opportunity to present to you the two things that we're talking about. There's dividend and there's share buyback. Number one, the target beneficiaries of a dividend is for all shareholders at a particular point in time. When we declare a dividend. Now, the target beneficiary for a share buyback is for shareholders who want to exit from the particular stock, and then maybe at a later time, you'll come back again. And then number 2, the purpose of dividend is a direct reward to shareholders. And this, we have been pursuing a progressive trend over the last 6 years You would have seen from my first slide that it has always been above 50%. In fact, we went up to as high as 55% and 57%, and then 2022 we landed at 55% of NPAT. Share buyback, however, is quite a different tool from the dividends. Share buyback is a useful currency for the company to give money back to shareholders and at the same time acquire this currency that is very useful for M&A, for employee shares, and the acquisition of minority interests. So all in, if we look at these two instruments, we've got $40 million that was paid out in terms of that's going to be declared for dividends, and we've got $12.3 million that was already utilized to return to shareholders by a share buyback. We are looking at $52.3 million that was returned to shareholders. There is something for everyone at different points in time, and dividends and share buyback definitely do not have the same impact. I hope I answer your question. I read a second question regarding dividends. I think everybody is so excited about dividends. Why is there no dividends reinvestment for shareholders? Thank you, Nikki. We'll bear that in mind. There is a question from Darryl Wong. Could you highlight some key KPIs Set for your sales staff, could you highlight the terms set on expected number of placements to be achieved? Does the hurdle in terms of number of placements to fill increase every year? Adeline will be able to give you a very good insight on that one.

I think something that, you know, it's the holy grail for us is that every single person must bring in sales of at least 3 times of their payroll cost. It's the holy grail, right? So if you want to participate in any profit sharing, in any recognition scheme, in any leadership training, you have to cross this threshold. And it ensures that you are a contributor, you are a profit contributor. It's such a simple yardstick, but it really sifts out who is a contributor and who is not. And we're quite clear about that. So we also have process targets to help— process and activity targets to help people kind of achieve their goals. And actually, this process is very important because we break it down into how many people you should be talking to every day, how many profiles you send out. And generally, the minimum number of placements would be one a month, a minimum for the professional recruitment space. At any one point in time, people will be working on 15 different assignments, right? So we have all these KPIs set out, and do we expect the number of placements to increase every year? Then yes, we would hope so, but that's not the most important thing to us. It's much more important that it's a profitable placement rather than just pure volume that doesn't translate to better financials.

There is a question on Staffline and Bamboozle. The question is, please share some insight about UK Staffline and Hong Kong Bamboo's company investment. How are HRNAPs being able to synergize these companies, or are they being staked merely as investment companies? I think the first question, the first part of the question on Staffline, I would also invite Albert to comment on our common synergies. Um, as a company, we are constantly looking for synergies and in very regular dialogues with the management of companies that we invest in. Albert, yes, would you like to comment on our relationship with Staffline?

Yes, I mean, the first of all, obviously, the, um, we had a lot of interaction over the years in terms of helping Staffline to take its business model from what I would call an old-school method of recruitment and start introducing the sort of winning competitive advantages that HRNet have done. And so that's been a tremendous asset. And I think the learnings is what Staffline gets most from HRNet, but also HRNet give us a huge amount of advice and counsel. And as active shareholders, they don't just simply invest in the company and then are silent or passive. The board is very, very active in advising and helping and supporting the management team and staff, and is a source of great mentorship for us.

Thank you, Albert. We'll answer the last question. That was a question on the main revenue being Singapore. How do you ensure things don't get saturated? This is from Nikki. Nikki, the main revenue stream is from Singapore, but the real crux of the matter is the GP. So we've got not just Singapore, but also the rest of Asia, including North Asia and rest of Asia, that is sharing the pie quite evenly for the GP. So we're talking about 42% and 45%, 52% and 45% split in the GP. I think we will take one last question.

Adeline, are you asking me to pick? This feels like Lucky draw. Who's the lucky one? Okay, I'll just answer Daryl's question because I think, you know, it's something that is fundamentally about our business, and it's asking for flexible staffing, is our service fee a percentage markup, or whether it varies. So I think it really depends on each deal that comes in. You can imagine, you know, During the COVID season, when overnight we had to come up with all these vaccinators, then the margins were higher. And Jennifer alluded to it as well. When it's talent that's very much in demand, similarly, that's the case. So there is variation between margins. So one of the other more unique things about us is that when it's not worth our time, we'll just not do a deal, right? So we're always very conscious about profitability. And we break it down. So we actually ask the consultant to work out, given your payroll cost, does it make sense to do this deal? If it doesn't, please walk away. And being disciplined about that means that we ensure that every deal that we do must be a meaningful and contributing one to us.

Yeah. All right, we hope we have answered the questions in most people's minds. There will always be one or two that have got some special angle, and I would like to invite you to come directly to us, and we can have a conversation on that. And with that, we would like to close today's webinar. Thank you very much for taking the time to listen in, and we look forward to catching you again on our 26th April AGM. That will be virtual as well.

Thanks, Jennifer. So we'll leave you today with our 30th anniversary song that Patrick mentioned earlier, and if you like that song, you can also find it on on YouTube, Apple Music, and also Spotify just by looking up HRNet Group. And that's all from us. We wish you a very good afternoon and a great weekend ahead.

Thank you. Bye. Starting off with just a clothes on my bed and a dream to make a difference. They all say that we would one day regret, but not once have I looked back. With you by my side, I can turn The world is out for the taking. Though the road we're on might be rough and long, I'm glad that I'm walking it with you.

Now we've grown across the years, and we will grow for many more.

The skies above are wide and clear. We are stronger than before. Started off with just a little dream. Look how far we've come together. Now they say that We are one of the best, and no one's ever looked back. With you by my side, I can turn any tide. The world is ours for the taking.

Dodo, we all might be wrong and in love.

I'm glad That I'm walking with you as we sail the seven seas, looking out far towards the horizon. There is so much we have done and so much more we will do together. And So much more we will do together.