Good morning, everyone, and welcome to SThree trading update of FY25. I'm joined by our CFO, Andrew Beach, and today he'll be giving you an overview of the performance of Q3 before moving on to outlook and the guidance we have published. And then we will then take your questions. So guys, looking at Q3 FY25, it will come as no surprise to you when I say that the market conditions in which we operate remain challenging. However, across certain segments and markets, our Q3 performance demonstrates a continuation of the positive momentum that we highlighted at our half-year results, with growth delivered in our U.S. and Middle East and Asia markets. These regions, together with consistently strong extension rates, have contributed to modest sequential improvement in Group net fees performance.
What is key for us and is currently offsetting this growth is the challenges within our two largest markets in Continental Europe, Germany, and the Netherlands, and we are fully focused on ensuring we are well placed for when these markets turn. Turning now to TIP, our Technology Improvement Programme is nearing completion. During the quarter, two additional markets went live on the new platform, bringing the total to 10 out of 11 markets now onboarded globally. In Q4, we plan to complete the rollout of this program across our whole organization. This journey has been challenging, but it's also both strategic, and it has seen us transform our position into a digital-first STEM workforce consultancy. This new digital backbone is already helping to unlock early signs of scalability with efficiencies realized to date.
It is also enhancing productivity, including improved placement levels among our most junior cohorts and a reduction in time to first interviews in our early adopter markets. So while we're seeing pockets of positive momentum, overall levels of new business activity remain subdued. We have also taken proactive action to invest into our future. I will explain the impact of this later and talk more about how we see the landscape evolving. But first, I'll hand over to Andy, who will take us through the numbers for Q3. Andy, over to you.
Thank you very much, Timo. Good morning, everyone. Now, despite ongoing sector-wide headwinds, we've seen modest improvement in the pace of decline compared to Q2, with net fees down 12% year-on-year on a constant currency basis. Our Contract business, which represents 83% of group net fees, declined by 13%, with continued softness in new placements, partially offset by resilient extensions. Notably, Contract in the U.S. returned to growth this quarter, helping to partially mitigate softer performance in both Germany and the Netherlands. Our Permanent net fees were down only 5%, a strong sequential improvement in the rate of decline compared to Q2, reflecting growth in both the U.S. and the Middle East and Asia regions. So let's take a closer look at what's driven the performance in the year, starting with the skill mix.
Engineering, our second-largest skill, was down `only 1%, supported by strong demand in our U.S. Energy segment. Life Sciences declined 12%, reflecting continued global market pressures in the sector. However, the pace of decline moderated versus Q2, led by the U.S., our largest country in the segment, where demand for roles fell at a slower rate. And Technology, our largest discipline, declined by 22%, reflecting the ongoing market uncertainty across most end markets. I'll now go through our top five countries in turn and call out some of the key trends that we're seeing. In Germany, the overall performance reflects a tough prior-year comparative, with Q3 last year being the strongest quarter of FY24. Contract was down 18%, primarily reflecting lower demand for Technology skills, with similar trends observed in the Permanent business. In the Netherlands, the market remains challenging.
Contract, which accounts for 94% of net fees, declined by 34%, reflecting continued reduction in contractor numbers. This trend was particularly pronounced across our Technology and our Engineering verticals. In the UK, Contract, which represents nearly all of the net fees, was down 27%, primarily reflecting lower demand for Technology roles. In the U.S., Contract net fees, which account for 86% of the total, returned to growth for the first time in over two years, up 13%, which is underpinned by strong demand for skills in Energy. This U.S. performance was complemented by their third consecutive quarter of growth in Permanent, driven by demand for roles across Life Sciences, Engineering, as well as Finance roles, and finally, Japan, which delivered its second consecutive quarter of growth, reflecting strong demand for Technology roles.
Turning to headcount, group headcount at the end of August was down 16% compared to the end of FY24. This reflects careful management of natural churn, a highly selective approach to hiring, and the continued delivery of operating efficiencies. On the latter, we have made good progress this quarter and remain on track to deliver the GBP 6 million in-year net savings target for FY25. As you may recall, around GBP 2 million was realized in the first half of the year. And with the majority of costs to deliver incurred in that period, we will present an uplift in savings in the second half. The Contract order book of GBP 156 million is down 6% year-on-year, reflecting the protracted soft new placement activity, but partially offset by our resilient Contract extensions.
This represents a modest improvement in the pace of decline compared to the end of Q2 and continues to offer sector-leading visibility. When the FY25 portion of the Contract order book is combined with the net fees delivered year to date, we have visibility of over 90% of full-year market consensus net fees. This, combined with our careful cost management, underpins our reiterated guidance for FY25. And finally, we have a robust balance sheet with net cash of GBP 42 million. With that, I'll hand back to Timo to take us through the outlook.
Thank you, Andy. To summarize Q3, we have seen a modest improvement in our net fee performance. Importantly, four out of our 11 markets are back in growth, including our U.S. market, which we signaled would be the first of our top five to rebound. Our focus for the short term is on driving improvement in continental Europe, fully leveraging the rollout of our TIP and ensuring that we're well positioned to meet the requirements of a changing world. This performance, coupled with a disciplined cost base reinforced by operational efficiency, means we remain confident in our ability to deliver on our FY25 PBT guidance. Looking beyond the current year, we remain encouraged by pockets of improving momentum. However, we have not seen a broader market recovery, and prudently, we don't think this will start to materialize in the near term, but not worsen.
At the same time, we have committed to make certain investments into our future, which will be fully funded through careful cost management and are enabled by our TIP. This includes investments in the use of agentic AI, following our initial evaluation to capitalize on new opportunities emerging in our industry and build on the foundations we now have in place through TIP. We will also invest in further optimization programs to deliver future benefits, again enabled through our TIP rollout. As a result, persistent softness in new business activity is expected to impact FY26 PBT consensus by roughly GBP 20 million due to the group's operational gearing. This, alongside investment initiatives, is expected to result in a reduction in FY26 PBT consensus from GBP 30 million- GBP 10 million.
At the same time, in line with our commitment to return to shareholders, the board is announcing today its approval to commence a further share purchase program in early FY26. While the prolonged market environment is obviously frustrating, we are focused on making sure that we're building a business that can win in a changing market. This means building a business that is efficient, scalable, and is technology-first. This will enhance our position as the global STEM workforce consultancy. As we explained at our TIP briefing in January 2023, we have, for a while, believed that decoupling headcount from net fees is the way forward, alongside ensuring that client services are enhanced through digital tools. Our TIP, which will soon be rolled out across all 11 markets, was our first important step towards this. It provided us with a foundation to innovate at pace, allowing technological progress, moving rapidly.
Our platform allows us to integrate advanced functionalities such as agentic AI. We will be delighted to give you some more detail on our plans at the time of our full-year results. While the world around us is shifting rapidly, challenging the traditional recruitment model, we are well placed, not only because of our technology foundation, but because we specialize in high-value, complex, flexible talent at scale. An example of this is the early success of our global onboarding capability, where we can now engage candidates across 145 countries with full compliance oversight. There aren't many other staffing firms that can provide the range of solutions that we do, alongside our experience and regional knowledge. So, to summarize, while the prolonged market conditions are frustrating, we have been and continue to be laser-focused on pushing the boundaries and building a business with foundations to make us even better.
One that is at the forefront of technology adoption in the industry provides a range of complex workforce solutions is efficient and at.