Good morning and welcome everyone. My name is Timo Lehne, and I'm very happy to be here today. Thank you for joining us today for our interim results presentation. Andrew Beach, our CFO, is here with me today, and together we will be walking you through the half year numbers, our strategic progress, and taking a little on outlook. Welcome, Andy.
Hi, Timo. Good morning, everyone.
Before we get into the main body of the deck, I first just wanted to remind you of SThree's position in the market, a position which is unique. We are purely focused on STEM talent, meaning those people with skills in science, technology, engineering or mathematics, and have been for over 36 years. We place people into STEM roles every day, and in the first half alone, we placed over 10,400 specialists into new positions. We are the only global STEM specialist talent provider. Many of you will be familiar with this chart from previous announcements. It shows the shape of our business with our two core areas of focusing being STEM and flexible talent.
We have chosen to become experts in these two areas, specifically because there are a number of global long-term mega trends driving demand, and we expect that demand to further increase while supply remains limited. The Boston Consulting Group has estimated there will be a shortfall of 5.9 million workers in computer-based occupations compared to how many are needed in the U.S. by 2030, and we're seeing similar trends internally. Similarly, demand for flexible talent models, in particular contract roles, is on the up with a survey by Ceridian showing that 62% of polled executives think that freelance or contract workers will substantially replace full-time employees within the next five years. This is at the heart of our strategy, and we have grown our internal focus on flexible talent with contract net fees up to 77% of the total group from 74% last year.
You will see here today that this is unique about our business and what differentiates us. It is important to note that the fact supply is constrained in these areas plays directly into our hands. It makes the work that we do for our candidates and our clients even more important and valuable. This has been our strategy for some time now, and we're pleased to have seen it again delivering record results in H1. The strengths of these twin focuses have been proven time and time again in recent years and has again delivered quality growth over the last six months. In addition to financial progress, we're making significant operational steps forward, which we will explore in more detail later. We truly believe, notwithstanding any further crisis, that continued growth going forward is entirely achievable thanks to structural increases in demand we see underpinned by global trends.
Without stealing too much of Andy's thunder, I'm delighted to report significant double-digit growth in net fees, operating profit and our contractor order book, as well as a very healthy cash position. We are pleased to have surpassed a new milestone, exceeding GBP 200 million of net fees in the half year. This reflects an excellent performance across the group with growth driven by all regions and all sectors. It's also a result of the course of our work of all of our people, and I would like to thank everyone for their hard work and commitment. As you have heard me reference a few times already in this presentation in the past, our business is underpinned by a number of mega trends. These are powerful transformative forces that change the global economy, business and society unfolding over decades.
Digitization, as we all know, is absolutely key and remains our priority across our markets. In the U.K., for example, the government announced a new digital strategy just a few weeks ago, which stated that increasing the supply of digital and tech-enabled workers at all levels will be crucial for the long-term economic prosperity. On top of that, the decarbonization of the world will require dramatic increase in green jobs. The aging population in most of the countries we operate in creates a constraint on countries' working-age workforce, making our work for our clients and candidates even more important. One of which is an increased focus on our health and well-being, which comes with a fundamental shift in the approach to the pharmaceutical and healthcare industries.
Last but not least, we're seeing a relentless shift in how people approach working with many no longer constrained by traditional working models. SThree's purpose, the strategy, and the position ensures we're not just ready for these changes in the market, we are perfectly positioned to facilitate these major shifts in the provision of core talent and skills desperately needed to tackle the challenges. I will now pass over to Andy to talk us through the financials.
Thank you very much, Timo. I thought I'd start by taking a quick look back over the last three years. FY 2019 was, at the time, our record ever performance. While FY 2020 was hit by the pandemic, the impact on our top-line performance was relatively shallow. We bounced back quickly in FY 2021, helped by the market recovery, and returned to year-on-year growth from Q2 in that year. Since then, we have delivered five consecutive quarters at more than 20% growth. The latest quarter's performance is particularly pleasing since it represents a true like-for-like performance, growth that is not flattered by a pandemic hit comparator. We have indexed our calendar quarter net fee performance since 2019, the last full year before the pandemic, to show more clearly our performance compared to other staffing businesses who focus more on the permanent market.
As the chart shows, we are much less cyclical, which we believe is due to our strategic focus on flexible talent and on STEM. Through the pandemic, our quarterly net fees fell by no more than 14% compared to our record 2019 performance. We've also recovered quickly and are now 33% above that pre-pandemic performance. This shows that we are less volatile through periods of market disruption, but also that we recover strongly and quickly as we come out of tough economic periods. That confirms that we have the right strategy and that our business is high quality throughout the cycle. Looking in more detail now at the half year 2022 performance, we've delivered a year-on-year net fee growth of 25% on a like-for-like basis, while operating profit has increased 62% compared to HY 2021.
Our conversion ratio, the ratio of operating profit to net fees, is an exceptional 22% in the first half. That's up five percentage points year-on-year. As previously signaled, we expect this to decrease in the second half, where we'll incur the majority of this year's investment costs together with further investments in our people and talent acquisition. Current consensus for the full year is around 17.5%. However, in the medium term, the investments will drive a sustainable margin improvement. Profit before tax is GBP 44.3 million, up 64% year-on-year. Our effective tax rate has reduced to 28%, down from 31% last year, and this gives a profit after tax of GBP 32 million, up 73% year-on-year. I'm now going to talk about some of the key drivers behind this strong performance.
We've seen very strong demand in the STEM sectors that we exclusively focus on. Of course, we're also benefiting from the broader improvements in the recruitment market. Contract, which now represents 77% of net fees, saw growth of 30% year-on-year. Permanent represents just 23% of our net fees and was up 11% year-on-year. Turning to net fee margins on the right of the chart, you can see that we've broadly maintained or improved net fee margins over the last couple of years. Contract margin, expressed as a percentage of revenue, is 21.7%, up 0.4 percentage points compared to last year and up 1.8 percentage points from FY 2019.
Our permanent margin, which is expressed as a percentage of the candidate's starting salary, is broadly flat year-on-year at 25.1%, but up 0.6 percentage points compared to FY 2019. We've also benefited from an increase in the average salary of the roles that we placed. The average salary of contract placements increased by 6% and permanent by 3%. We continue to benefit from the ongoing trend towards flexible working. Although permanent led the recovery out of the pandemic, we are now entering a period of greater economic uncertainty. Our focus on contract business delivers a more sustainable revenue stream and a higher value across the length of the engagement, and that's why it's at the center of our strategy. This slide looks at the analysis of net fees by product type. Our contract business can be split between independent contractors and employed contractors.
The most notable shift over the last few years has been the trend towards the employed contractor model or ECM, which has grown from 22% of net fees in 2019 to 33% of net fees in 2022. Under the ECM model, contractors are directly employed by SThree for the duration of the contract, and we're able to offer this more complex service in a compliant way. It continues to be the predominant model in the U.S. and is fast growing across Europe. We'd expect the shift to contract to continue and for growth in ECM to be strong. Turning now to the regional and sector split for the period. We have a well-balanced business, both geographically and by sector. On the two charts you see here, the outer ring represents half year 2022, and the inner ring represents half year 2021.
The first chart shows that 97% of our net fees come from our top three regions. EMEIA excluding DACH represents 37% of the group. DACH, 35%, and the US, 25%. The second chart shows our strong and unique position in providing STEM skills. Technology is our largest sector, and it represents 47% of net fees. It's worth noting that when we talk about technology, we're referring to placing people with skills in technology across multiple industries. Life sciences represents 23%, and engineering represents 21%. Looking to the right, you can see that our year-on-year performance is driven by considerable growth across all regions, including the US, despite a very strong prior year comparator in that region.
You can also see that most of this growth is driven by the technology and engineering sectors with year-on-year growth of 30% and 27% respectively. Life sciences grew 16% on a very strong prior year comparator as we provided key skills throughout the pandemic and recovery. We continue to see exceptional levels of productivity, and this is driven by unprecedented levels of demand delivered with a lower rate of consultant headcount increase. We've also benefited from the shift towards ECM, as well as new tools and processes that we've introduced to more carefully manage shrinkage. This means that despite previous expectations that productivity would decline, we've actually seen a further 14% improvement year-on-year. We still maintain that these levels of productivity are not sustainable, and we expect them to revert to some extent.
However, we do plan to deliver more sustainable levels of productivity as we make our strategic investments in digital infrastructure. Turning to the year-over-year operating profit bridge. You can see strong increase in permanent and contract fees, just under GBP 39 million in total. People costs are up year-over-year. This is largely driven by increased commissions to reflect the strong performance together with increase in average headcount, up 10% year-over-year. Taking into account a small movement in other costs, we see a drop-through of over 40%. Looking at our net cash position, we've seen a 16% decline in net cash since the year end, primarily due to the additional working capital required to fund our growth. In line with the significant growth of our business, especially ECM, we've seen an increase in trade debtors and accrued income of nearly GBP 38 million.
A key contributor to this is an increase in our active number of contractors to record levels, having added over 700 during the half. This is partly offset by an increase in trade creditors and accruals of just over GBP 10 million. We've also made larger than usual purchases of shares to ensure that our EBT holds sufficient capacity to deliver on long-term incentive plans for our top talent. These account for a further GBP 10 million of the cash reduction, including a GBP 5 million prepayment for shares that were purchased at the start of June. These working capital movements and other outflows, including tax and dividends, are largely offset by the strong operating profit performance for the period. Moving on to look at dividends. I'm very pleased to announce our interim dividend of GBP 0.05 per share, up 67% on the interim dividend announced last year.
We plan to remain in line with our stated dividend policy for the full year being cover of 2.5x-3x . Looking now at the future visibility of our contract business, which constitutes 77% of our net fees. The contract order book represents the value of contracts written up to the contractual end date, assuming that all contracted hours are worked. We've seen further growth in the order book, up 35% versus the same time last year, with strong growth across both ECM and independent contractors. We have an order book of this size due to our high exposure to contract business, and this gives us excellent forward visibility compared to permanent focused staffing businesses. To sum up, we're reporting a record trading performance for the half year.
We delivered strong growth in net fees across all regions, together with an exceptional operating profit performance. The contract order book continues to grow, giving us increased visibility of future net fees, and we have a strong balance sheet, which will fund an increased dividend and our strategic investments. Thank you. I'll now hand back to Timo.
Thank you, Andy. We will now turn to look at what we have achieved strategically over the first half. As you know, we set out four strategic pillars in 2019 so that we can consistently comment on our progress relative to our position, platform, market, and people. We've continued to successfully leverage our position in the last six months, launching an exciting new brand identity which better reflects who we are as a STEM specialist company. We've improved our overall interaction with our candidates and clients and have reached thousands of people through our career support program, community presentations, and career development opportunities. For example, our Breaking the Glass program in the U.S. is a community of 2,500 professional women in technology, which we deliver networking events, workshops, and seminars to.
In regard to our platform, as previously announced, we're moving forward with planned strategic investments in systems including CRM, ERP, and HRIS. We believe these investments will underpin our long-term success as they increase efficiencies and support sustainable margin improvement. We will share more information on our investment plans in due course. We are already operating as a leader in STEM in many of our markets and are now focusing more than ever before on making sure we are in exactly the right niches and specific skill areas to achieve success market by market. This is an area where we invested considerably in Germany when I was managing the operations there, and we're taking that best practice and others, and are sharing it across the entire group. Of course, as a people-driven business, we are continuously reflecting on and enhancing our approach to attract and retain great people.
Recently, improving our value proposition has been a focus. We substantially improved our talent acquisition capability, made quite large changes to some areas of our reward scheme, and improved our training programs. This area is always of importance to us, obviously, but given global wage inflation has been even more in focus over the last six months, we are pleased to have seen the positive impact already through changes we have made. Connected to our purpose and strategy is a strong emphasis on our ESG commitments. We believe in empowering a sustainable future through STEM skills, promoting green jobs, encouraging diversity in STEM, and contributing to the renewable space. We're also very pleased to have some good results in line with these ambitions. Particularly pleasing is having positively impacted over 72,000 lives, meaning we're nearly half towards our goal of 150,000 lives by 2024.
We have also made great strides in our ambition to help tackle climate change and are continuing to have a strong focus on increasing gender representation in the business through multiple initiatives. For example, launching our Women in Leadership development program called Identify+. Our latest impact report, which relates to the 2021 financial year and which includes a full breakdown of our progress over the period, is available on our website if you would like to find out more about what we have been doing in this area. I would like to take now a moment to discuss the 2024 ambitions that were initially set in 2019 at our Capital Markets Day. Over the last six months, Andy and I, alongside the wider board and senior management team, have been reflecting on our ambitions to 2024, given the developing market backdrop and our business priorities.
First and foremost, it's important, very important, to say we are not changing direction of travel in any way. Our level of ambition will stay the same. We're remaining committed to the overall plan to build a substantially larger and more efficient organization while making a positive impact on the world. However, given how much has changed over the last two years and our midterm plans, we want to set out our evolved ambitions today, as well as the progress we have achieved to date. In regard to market share, our previously stated ambition was to grow market share by 50% on a revenue basis, which we have made good progress against, having gained market share in our top five countries. We are now moving to report it on a net fee basis and against a selected peer group in each region.
This makes this ambition much more measurable, specific, and crucially, it reflects more accurately to what extent we really are taking market share in each of our region. Importantly, this ambition should be evaluated within the context of all of our ambitions, as the spirit of the ambition is not to achieve growth for the sake of growth, but high quality growth. This is an important ambition to us, and we want to make sure we're showing you our real progress. Our second previously stated ambition was to deliver an operating profit conversion ratio of between 21%-24%. We're very pleased to confirm our commitment to this ambition, targeting a 21% margin or more by financial year 2024, despite all of the changes that has taken place since 2019.
We appreciate that in some ways it could look strange to be targeting a 21% ratio when we have achieved a 22% in the half just gone. As Andy already explained, this ratio is currently exceptional. We're dedicated to building a business that can sustain margins at this high level, improving our quality for the long term. Having said this, we're delighted to have demonstrated the business' ability to generate margins at this level. Our third original ambition was to drive a free cash flow conversion ratio of at least 75%. We no longer plan to report against this metric because as an ambitious company planning to grow quickly, particularly when much of that growth is likely to come from our contract business, which is working capital consumptive. We believe this measure is not appropriate.
Our people and society goals were to maintain a learning and development spend of at least 5% of operating profit to grow productivity per head over the period by 1%-2% per annum, and to reduce our absolute CO2 emissions by 20%. We are very pleased to say we have achieved each of these in the last half. However, moving forward, we wanted to set more challenging, more outcome-based targets. We are therefore now aiming towards upper quartile eNPS scores and a 25% carbon footprint reduction. To sum up, we are very pleased with the continued momentum in the business. Sales remains robust with good new placement activities. Our strong contractor order book gives us the confidence going forward, and lead indicators remain positive.
While mindful of the changing macroeconomic situation, we are confident in the resilience of our business and that the market trends that underpin our continued growth. We are perfectly positioned to help source and place the STEM talent the world needs. Thank you very much for being here today, listening to our excellent set of results. We hope we were able to give you a little bit more of background. We're looking forward to see you on the 19th of September for our Q3 update. Thank you very much. Thank you.