Good morning, everyone, and welcome to SThree's Q3 Trading Update of FY23. And, yeah, thank you for joining us today. I'm here, as usual, with my colleague, Andy Beach, our CFO, who will take us through the numbers. As usual, also, we will give a brief overview of our performance before taking any questions. The group continues to deliver resilient performance underpinned by our contract business, which now represents 84% of group net fees.
Overall, movement in group net fees remained consistent with the previous quarter. Looking at our underlying performance, excluding the impact of our restructured businesses, the movement shows a slight quarter-on-quarter improvement. Andy will get into the numbers, but it is particularly pleasing as it validates our decision to focus on the biggest STEM markets, where we have the biggest opportunity, and illustrates that our market investment strategy has generated tangible benefits.
In short, we know where to play and play where we can win. As mentioned, our significant contract business continues to underpin performance. We saw a sequential improvement in new placement activity, coupled with continued robust extensions, demonstrating our clients' sustained demand for critical STEM skills. In light of persistent challenging macroeconomic conditions, our resilient performance delivered against a very strong comparative period gives us confidence in our strategy and market positioning.
In addition to the reported results, we are pleased with the progress we're making with our Technology Improvement Programme, which continues to be on track and on budget. By putting in place a unified Data-led global platform and layering on top our Digital SThree Blueprint, we will drive scale at sustainably higher margins over the mid to long term. As a reminder, we provided a detailed briefing of the program, which can be found on the SThree website.
As such, I'm delighted that the first phase of the rollout in Houston is now complete. This is a significant milestone for the program team and, of course, the group. We're incredibly excited about the progress that has been made so far and continue to believe that the program will enable and excite our people to perform at their best.
It is something that will clearly differentiate us from our peers and deliver a higher value proposition. Overall, we believe we are uniquely positioned to win in a changing world, with global mega trends supporting the long-term growth drivers. With that, I hand over to Andy, who will take us through the numbers.
Thanks, Timo, and good morning, everyone. The group delivered another quarter of resilient net fee performance, down 7% on a constant currency basis, in line with Q2, and also against another strong comparative period and ongoing global macroeconomic weakness. This performance includes the impact of markets that were restructured in Q4 last year: Ireland, Singapore, and Hong Kong.
As Timo mentioned, excluding these, our underlying net fees would have been down 5%, which is a slight improvement on the previous quarter, which was down 6%. Our contract business saw net fees flat year-over-year, which is a marginal improvement on the 1% decline recorded in the last quarter, and reflects sequentially improved new placement activity, together with continued robust extension performance in the quarter. On a like-for-like basis, excluding the restructured businesses, our contract net fees were up 1% year-over-year.
In line with our strategy, Contract now represents 84% of group Net Fees. Permanent Net Fees declined by 31%, resulting from both softer market conditions across all of our regions, and especially in Life Sciences, together with our targeted investment towards Contract, particularly in the US and the UK Average permanent headcount for the quarter was down 21% year-on-year.
Let's take a look at what's driving our performance in the quarter, starting with the regional perspective. DACH Net Fees declined 6% year-on-year. Germany, our largest country in the region, saw Contract down 3%, with overall Net Fees down 6%, driven by growth in Engineering, with increased demand for construction roles, offset by declines in Technology and Life Sciences due to weaker market conditions. In the Netherlands region, Net Fees were up 9%.
The Netherlands itself, our largest country in the region, saw contract up 7%, with overall net fee growth of 5%, driven by engineering due to increased demand for roles within project management, process engineering, and electrical engineering, and technology, with higher demand for project managers and data-related roles. Spain, although currently a small part of the group, saw strong year-on-year growth of 107% in the quarter, driven by technology.
Rest of Europe net fees were down 5%. Contract, which represents 97% of net fees for the region, grew by 4%. The UK, our largest country in the region, saw contract growth of 1%, while overall net fees were down 4%, with growth in engineering offset by declines in both Technology and Life Sciences. In the US, we saw net fees decline by 19%.
Contract net fees, which now account for over 90% of the total, were down 7%, driven by Life Sciences, which was down 18%, in line with market conditions for the sector. This was partly offset by Engineering, which was up 16%, with increased demand for roles within construction management and electrical engineering. Finally, in the Middle East and Asia, net fees for the region were down 14%.
However, this performance includes the impact of the restructured markets, and excluding these, our net fees for the region would have been up 5%....with Japan, which represents 48% of the region's net fees, down 4%, driven by Technology, while the UAE had a solid performance in the quarter, with net fees growing 18%, driven by Engineering. From a skills perspective, Technology, our largest discipline, declined by 6% year-on-year.
Now, as a reminder, when we talk about Technology, we're referring to placing people with skills in technology across multiple industries. Engineering grew by 20%, with continued strong demand across all regions, driven by energy and particularly renewables, which was up 28%, while Life Sciences declined 24%, primarily driven by the global market conditions in that sector, together with tough comps, but it's worth noting that we are still trading above pre-COVID levels.
Average headcount for the quarter was down 6% year-on-year, while average headcount on a year-to-date basis remains up 2%. Period-end headcount declined by 14% from the end of FY22, in part through careful management of natural churn. This also includes reductions related to the restructured regions, and on a like-for-like basis, excluding these countries, our period end headcount declined by 12%.
In line with our strategy, while closely monitoring and taking the evolving market conditions into account, we are maintaining our disciplined and focused headcount investment towards contract in the markets and skill verticals that provide the best growth opportunities and where we can generate the strongest returns as markets recover.
Q3 productivity was down only 1% year-on-year, with the impact of a strong prior year comparator, offset by the 6% reduction in average headcount. Productivity was 38% above pre-pandemic levels achieved in Q3 FY19. The contractor order book remains flat year-on-year for a second consecutive quarter, and together with the net fees already recognized year-to-date, gives good visibility of over 90% of the full year consensus net fees.
And finally, we have a strong balance sheet with net cash of 83 million at the end of the quarter, as we continue to benefit from the anti-cyclical nature of our working capital model. With that, I'll hand back to Timo.
Thanks, Andy. As you have heard, the quarter has seen a resilient net fee performance driven by our contract business. Our teams have continued to execute well, and we've made good progress against our clear strategy. While the wider environment remains uncertain in the short term, we're reassured that our sequentially improving new placement performance and strong contract extensions demonstrates our clients' sustained demand for critical STEM skills.
Supported by a resilient business model and a strong financial position, we are trading in line with market expectations for the full year. We are relentlessly focused on ensuring we build the right platform and the right structures to capture the opportunity for long-term sustainable growth. The recruitment space is largely an analog industry that has seen little innovation and is just at the start of being digitized.
We're at the forefront of this change with our Technology Improvement Programme already being rolled out. I truly believe that the introduction of Technology will fundamentally change the way in which our industry works, and I am truly excited about where it can take us as a company. Thank you all once again, obviously, for joining us this morning. You will hear from us again when we publish our Q4 trading update, which is the 14th of December.