SThree Aktie

Good morning, everyone, and welcome to SThree's Q1 Trading Update of FY '26. I'm joined by our CFO, Andy Beach. And today, we will give you an overview of our Q1 performance. And as you may have seen, we have also made an announcement regarding Andy's position at SThree, which we will cover shortly. After our update, we will be happy to take questions.

FY '26 has started in line with our expectations with Q1 consistent with the outlook we shared at our full year results. We're seeing continued stabilization across the business with ongoing momentum in U.S.A. and Japan and a significant improvement in the year-on-year rate of decline in group net fees. This reflects the conclusion of an important contract renewal period for us alongside encouraging new business performance that is broadly consistent year-on-year.

Significantly, this performance highlights much higher productivity and improved operational efficiency. We have delivered this output with a much lower headcount. What we see is that our teams are both busier with higher activity, both -- but importantly, much more effective, delivering more placements per head. We've talked for 3 years about the importance of productivity alongside the implementation of our TIP, and it is encouraging to see this coming through with our strongest Q1 since FY 2022.

Our performance as well has been achieved against the backdrop of ongoing macroeconomic volatility, including geopolitical uncertainty and rapid technological change, which continues to influence business priorities and investment decisions in our end markets. However, what we are seeing is that as workforce needs evolve in response to these factors, more organizations are turning to partners who can help manage increasing complexity, a trend that's only accelerating with the growth of AI. That plays directly to our strength and is reflected in the resilience of the employed contractor model as organizations shift away from purely transactional hiring towards a more scalable end-to-end workforce solution.

We have a clear view of what our operating model needs to be, and we are well underway in evolving it, ready for the new world of workforce consulting. At the same time, our chip has created a highly scalable operating platform built on a unified digital and data backbone with modern tech-ready workflows already deployed across the business. This platform enables us to integrate the latest advanced technologies, including generative AI, and we expect this to enhance candidate quality, increase delivery velocity and improve overall efficiency, strengthening the value proposition we offer to clients.

Taken together, this means we are uniquely positioned for the new world of work. In Europe alone, [ use at ] data shows that just other half of enterprises have yet to migrate to cloud infrastructure, creating a significant barrier to scale and a clear opportunity for us to support clients through the digital transformation journeys with our workforce solutions.

Before I hand over to Andy, after 5 years and a lot of hard work, we have announced this morning that he is stepping down. I would really like to take a moment to thank Andy for his contribution and significant commitment setting up an exceptional finance function, delivering things on time and on budget and leaving us at a point where our performance has stabilized, and we're confident of delivering our full year expectations. We're looking forward to Andy's continued support over the coming months to ensure a smooth transition as we carry out a thorough process to identify his successor.

With that, I will hand over to Andy.

Well, thanks for the kind words, Timo. The past 5 years have been incredibly rewarding for me. And although we faced a prolonged challenging backdrop, I think we definitely use this period wisely to strengthen the business and lay the foundations for the future. So after an orderly handover, I will be leaving SThree confident that the company is stable, well positioned and ready to seize the opportunities that lie ahead.

But now let's get on with the Q1 numbers. Group net fees were down 8% year-on-year on a constant currency basis, reflecting continued stabilization and trading conditions remaining largely consistent with the prior quarter. Our contract business, which represents 83% of group net fees, declined by 10%. New placement activity was broadly stable year-on-year and in line with our expectations. And as Timo mentioned, in the context of a mid-teens percentage reduction in sales headcount, this underlines the meaningful improvement in productivity that we are seeing, supported by our new technology platform.

Additionally, the first quarter included our key contract renewal period, and I'm pleased to say that extensions continue to demonstrate resilience and also delivered in line with our expectations. Notably, Contract net fees in the U.S. were up 13%, its third consecutive quarter of growth, partially offsetting a weaker performance in the Netherlands. Our permanent net fees were flat, marking our strongest quarterly year-on-year performance in over 3 years, supported by particularly strong trading from Japan, our second largest permanent business in the group.

So let's take a closer look at what's driven trading in the quarter, starting with the skill mix. Engineering, our second largest skill, declined by 5%, although the Energy segment continues to grow, reflecting strong demand for roles in the U.S.

Life Sciences, our third largest skill, was down 10% as strong growth in Japan only partially offset reduced demand across our other major markets. And technology, our largest discipline, declined by 14%, reflecting soft demand for roles, particularly in the Netherlands and Germany, which contributes around 60% of net fees.

I'll now go through our top 5 countries in turn and call out some of the key trends that we're seeing. In Germany, the moderation in the rate of decline year-on-year relative to Q4, was supported by a smaller year-on-year decline in Life Sciences and stronger demand for banking and finance roles.

For the period, Contract was down 11%, primarily reflecting lower demand for tech skills with a similar trend observed in permanent. In the U.S., Contract, which accounts for nearly 90% of net fees, delivered another strong performance, supported by demand across all of the skill verticals, but especially for energy and technology roles. This performance was partially offset by softer trading in permanent as demand moderated across most skill verticals with the exception of our other category where we've seen robust demand for banking and finance roles.

In the Netherlands, the market remains challenging with trading marginally softer than in Q4 due to the modest impact of new regulation introduced in January. In addition, the performance also reflects the fact that the Netherlands sustained growth for longer than our other larger markets, resulting in a continuation of strong prior year comparatives.

Contract, which accounts for over 90% of net fees, declined 29%, reflecting reduced demand for technology and engineering roles. In the U.K., we saw a 9 percentage point moderation in the rate of decline year-on-year relative to Q4, supported by smaller year-on-year declines across most skills.

Contract, which represents the majority of net fees, was down 21% in the period, primarily driven by lower demand for technology roles. And finally, Japan, which delivered its fourth consecutive quarter of growth and saw strong demand across all of the skill verticals, but especially for technology roles.

Turning to head count. At the end of February, group headcount was down 4% compared to the end of FY '25. This reflects careful management of natural churn, a highly selective approach to hiring and the realization of early cost optimization actions. On the [ latter, ] our FY '26 program is progressing as planned. As previously announced, we expect the costs to deliver the program to be weighted to the first half of the year with savings weighted to the second half.

The contract order book of GBP 152 million is down 7% year-on-year and continues to represent sector-leading visibility with the equivalent of around 5 months of net fees. When the FY '26 portion of the contractor order book is combined with the net fees delivered year-to-date, we have visibility of around 60% of full year market consensus net fees. This, combined with our cost optimization program, extensions and new placement activity tracking in line with expectations, underpins our guidance for FY '26. And finally, we have a robust balance sheet with net cash of GBP 51 million. We launched our share buyback program of up to GBP 20 million in February with GBP 1.6 million purchased as of yesterday's close.

With that, I'll hand back to Timo.

Thanks, Andy. To summarize, we've seen a continued stabilization with the first quarter being in line with expectations. While it's too early to call a broad-based sustained recovery, we remain cautiously optimistic with the consistent new business performance versus the prior year delivered despite a much lower sales headcount, demonstrating improved productivity and operational efficiency.

We are also mindful that recent events in the Middle East, which contributed around 2% of net fees have heightened geopolitical uncertainty. However, it's too soon to determine the potential impact on the global economy and our wider markets. Our immediate priority is the well-being of our teams in the regions and ensuring that they're fully supported.

Over the medium term, I believe our opportunity is clear. By putting clients at the center of everything we do, creating an agile organization and continuing to invest into our people proposition and innovation. We will stay at the forefront of industry dynamics and outpace change.

Overall, I want to again thank Andy. I think the 4.5 years have been really great also from my side, great partnership, learned a lot and sad to see him leave. I totally appreciate that. Overall, I think we're in a great shape as an organization. Our strategy is in place for multiple years, and we're just going to continue to further execute on that.

And with that, we're always open for any questions, if anyone has them, reach out to us. But thank you all once again for joining us this morning, and we're speaking with you again at the half time -- at the time of our half year results on the 25th of July. Thank you all, and have a great week.

Good morning, and welcome, everyone. Thank you for joining us today for our full year results briefing. I'm joined by Andy Beach, our CFO. Andy, how's it going?

Really good. Thanks, Timo. Looking forward to sharing our results this morning.

Excellent. Thank you. So together, we will be walking you through the full year numbers, our strategic progress and discussing the outlook.

This year, SThree celebrates its 40th anniversary, a significant milestone that speaks to our heritage, our resilience and the deep expertise we have built across our focus areas of STEM and flexible talent. That history has shaped who we are today. SThree is more than a transactional staffing business. We partner with our clients to design, deliver and manage workforce solutions from compliance and project delivery to workforce structuring, supporting around 9,000 contractors across 11 countries. In short, we are the global STEM workforce consultancy.

As most of you know, the charts on this page illustrate how our well-established strategy sits at the heart of 2 long-term growth trends, STEM and flexible talent. Looking at STEM skills scales on the left-hand side, whilst our end markets are experiencing ongoing change as the nature of work evolves and the specific roads we place, particularly in technology, are adapting, the core skills and disciplines underpinning those roles remain constant and aligned to long-term demand. Our focus on those skills is as relevant today as ever.

Independent research reinforces this. For example McKinsey estimates that demand for stem professionals could grow by strong double digits in Europe and the United States through 2030, even as after 30% of work hours could be automated in these regions. Anecdotally, when I speak with CEOs, 3 priorities come through very clearly.

First, how do I get my technology in place to be future-ready. Second, how do I get my organization moving faster and third, how do I think more strategically about workforce planning.

All of these priorities at the same conclusion. Long-term demand for STEM capabilities remain strong, and we're well positioned to support clients through this transition. This is our opportunity. We support organizations as their workforces evolve, placing the STEM skills, they need to stay competitive. And because this work is often project-based, fast-moving and flexible, it naturally aligns with contract.

Today, contract accounts for 84% of the group. It gives us a more resilient, more profitable revenue stream with better visibility and is a real point of differentiation for us. If I was to summarize the year in just a few key words, they would be resilience, improvement and disciplined execution. I don't need to remind anyone of the persistently challenging global talent markets.

But despite this, we delivered on the expectations we set at the start of the year and we have delivered growth in 2 of our top 5 countries, U.S.A. and Japan. The standard success for us this year is the conclusion of our TIP rollout across all 11 of our countries. This marks a pivotal milestone in our journey. The organizations can point to a program of this scale completing on time within budget and importantly, delivering to an enhanced scope. I can't overstate how proud I am of what we have achieved together over the past 3 years.

We now have a fully integrated end-to-end digital backbone that drives innovation, accelerates upgrades and importantly, elevates the experience for clients and candidates. It's a game-changing advantage, companies that haven't invested yet risk falling behind as the pace accelerates. We sit here today faster, smarter and more adaptable.

From a macro perspective, a broader recovery is yet to materialize, particularly in Europe. However, we closed the year with stronger new business momentum, particularly in key markets like U.S. a clear signal of the opportunities ahead. In addition, we start FY '26 currently seeing our contract renewal period being on track, underpinning our rebased expectations for the new year.

With the global rollout of TIP complete, I want to take a moment to reflect on our journey and how SThree has become a stronger, more focused business than the one I took over in 2022. One of the many benefits of TIP is its capability that has driven us to scrutinize every aspect of our business, from our proposition and strategy to our people and processes, helping us drive real improvements right across the organization.

Looking at each of our strategic pillars. Within places, since early 2023, we have been intentionally rebalancing towards a more focused footprint guided by our market investment model to identify where our capabilities and the market opportunities are most aligned. This disciplined approach has enabled us to deploy resources more effectively, strengthen our competitive position and ensure that we are investing in the right markets with the greatest potential.

Within customers, we have been focused on driving deeper client engagement and stronger Canada relationships becoming more client-centric. We're increasing our focus on large enterprise accounts and refining our account management approach to enable deeper penetration of our strategic accounts with early positive results.

Within People, TIP is enabling us to run our global operations more cohesively and consistently on one unified system. By consolidating multiple legacy systems, our leaders now have access to clean, reliable data to inform decision-making and workforce planning. And we now have harmonized people processes right across the group, making the business more efficient and better able to scale.

Within Proposition, as we now also looks and sees a lot different, bringing our go-to-market brands together under the strength and endorsement of the SThree parent brand is sharpening our position as a trusted global partner and enables our people and business to be more closely aligned. And today, we have an evolving and broad portfolio of STEM workforce solutions, including the capability launched this year to place both contract and permanent roles with full compliance in up to 145 countries.

And finally, on Platform, I will leave Nick to deep dive in more detail on this later, but TIP has not only modernized SThree's technology foundations. It has also redefined how the organization competes by rebuilding our core infrastructure on a unified cloud-based architecture. It has created the platform for complementary next-generation technology, including agentic AI, which could further enable our people to truly innovative tools and processes.

Looking at our progress through this lens has challenged us to reflect and to question what truly changed. It's clear we haven't stood still. Even in a macro environment that might have encouraged caution, we have made bold changes that would benefit us for years to come. Today, we have the technology, the foundations of the operating model and the financial profile to grow at scale. I will now pass over to Andy to talk us through the financials.

Thank you very much, Timo. Let's start with a summary of the full year performance.

Net fees are down 12% year-on-year on a constant currency basis. Pleasingly, the rate of decline improved sequentially quarter-on-quarter through the year supported by the U.S., our second largest country returning to growth after 2 years of decline.

Contract, which represents 84% of net fees, declined 12%, as softness in new business activity earlier in the year outweighed the benefits of the recent improvement and consistently resilient contract extensions. Contract performance in the U.S. was a notable highlight returning to growth this year and helping to partially mitigate softer performances in both Germany and the Netherlands. Permanent, which is a smaller part of our business, declined 9%, reflecting challenging market conditions across most of our regions. This was still a marked improvement on the rate of decline in the prior year, supported by strong growth in the U.S. and Japan this year.

Operating profit for the year was GBP 26.1 million, which is down 60% on a constant currency basis. This primarily reflects the effect of our operational gearing on lower net fees across key markets, partially offset by disciplined management of operating costs and the realization of operational efficiencies. This has resulted in a conversion ratio, the ratio of operating profit to net fees of 8.1%.

Profit before tax is GBP 25.5 million, down 62% year-on-year, reflecting the lower operating profit and higher net finance costs, driven by lower interest income earned on the group's bank deposits. We continue to index 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.

As the chart shows, we are less cyclical, which we believe is due to our strategic focus on flexible talent and STEM. We clearly outperformed the market through COVID. And over the last 3 years, we have sustained that outperformance. This shows that we are less volatile through a period of market disruption with our contract order book, providing a runway of contract net fees due to be recognized as they are earned on a month-by-month basis over the life of a contract.

As we have seen historically, when markets recover and new placement activity increases, the recovery in net fees tends to be smoother and from a higher overall level, resulting in a more even through-the-cycle net fee profile compared to permanent dominant businesses where net fees are recognized almost immediately. Overall, this demonstrates that we have the right strategy and that our business is high quality through the cycle.

Looking at the regional and skill mix for the period. We have critical mass and a well-diversified business across key STEM markets and skill verticals. The first ring chart shows the split by region with DACH remaining the largest region in the group, representing 33% of net fees. Looking to the far right, you can see net fees were lower in 3 of our 5 regions with a partial offset from growth delivered in the U.S. and the Middle East and Asia.

The second ring chart shows our strong and unique position in providing STEM skills. Technology continues to be our largest skill, and it represents 45% of net fees. Engineering, our second largest scale, declined 6% year-on-year against a strong prior year performance. Encouragingly, within this vertical, our energy business continues to perform strongly, growing 5% year-on-year and now accounting for 19% of group net fees.

We've also delivered growth of 7% year-on-year in our Other segment, which reflects increased demand for banking and finance roles, particularly in the U.S. and Belgium. This was offset by softer demand for skills in Technology and Life Sciences, reflecting the ongoing challenging trading environment throughout the year. We continue to benefit from the ongoing trend towards flexible working.

This slide looks at our net fees by service. 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 23% of net fees in FY '19 to 41% of net fees in FY '25.

This is significant because our ECM segment generates net fee margins around 30% to 40% higher than those generated by independent contractors as our clients are willing to pay for the risk and complexity that we assume on their behalf. With the rollout of our new future-ready digital infrastructure, there will naturally be fewer manual touch points, eliminating the need to constantly increase head count to service our contractors thereby helping us to achieve higher profit margins and scale more efficiently.

Additionally, although acting as the employer record, which is what we do with our ECM offering, is not a service unique to it remains out of reach for most subscale recruiters due to the high barriers to entry, driven by the complexity of compliance, operational infrastructure and the balance sheet strength required to support it. Where SThree stands apart from larger industry peers is in our comparatively higher net fee exposure to ECM, further reinforced by our focus on STEM disciplines.

Looking now at the future visibility of our contract business. The contractor order book represents the value of contracts written up to the contractual end date, assuming that all contracted hours are worked. The book was down only 2% year-on-year, reflecting the recently improved new placement activity and our consistently resilient extensions performance. Even with the decline, the order book continues to provide us with sector-leading forward visibility compared to permanent focused staffing businesses with equivalent around 5 months' worth of future net fees already booked.

The resilience of the contract order book demonstrates that whilst new placement activity continues to be soft overall this year, all other underlying metrics around our contract business are strong. We've seen excellent extension rates over the last year, and this has resulted in average contract length increasing by 10% compared to the prior year to 60 weeks. To sustain contract margins at 21.7%, we've maintained tight pricing control, especially on extensions and the average salary of the contract roles that we placed is up 2% year-on-year, now reaching GBP 107,000.

The group's historic measure of productivity was moderately lower year-on-year, reflecting a slightly faster decline in net fees than the reduction in average headcount. However, it's important to note that productivity improved sequentially each quarter with second half productivity up 5%, demonstrating clear momentum through the year.

Looking ahead, we continue to expect to deliver sustainable productivity gains over the midterm as the benefits of our strategic investments in digital infrastructure begin to come through as anticipated. We are already seeing early indicators of the benefits from TIP, which gives us confidence in the future uplift in productivity, which Nick will expand on later in this presentation. The successful delivery of the TIP rollout on time, on budget and to an enhanced scope demonstrates strong cost discipline and project governance.

By the end of FY '25, we have spent a total of GBP 32 million which is below the middle of the expected range for the program. OpEx this year of around GBP 3 million was at the lower end of the expected range for the year, taking the total OpEx incurred for the program up to GBP 13 million. We also incurred around GBP 6 million of CapEx in the period, also at the lower end of the expected range for the year, taking total CapEx incurred up to GBP 19 million.

The delivery of the TIP provides the technological foundation for our digital first approach and for achieving sustainably higher profit margins. The platform will continue to be enhanced with functionality evolving over time. Investment will continue, but at more moderate levels focused on maintenance and targeted developments. Whilst trading conditions have remained challenging and operating profit is lower this year, we are confident that the investments we have made through TIP position us to deliver higher margins over the mid to long term as conditions normalize.

Turning to the year-on-year operating profit bridge. You can see the decrease in both contract and permanent net fees is partially offset by people costs being down year-on-year. This is primarily due to the 10% average decrease in head count compared to last year, which is partly reflective of the operational efficiencies coming through and lower commissions.

Additionally, we made good progress on cost savings this year with the FY '25 efficiencies program, delivering net savings of circa GBP 7 million, marginally ahead of plan. You can then see the GBP 4.6 million year-on-year increase in IT costs. This reflects the additional cost of the new systems as well as the absence of the R&D claims that in prior years offset a portion of the TIP expenditure. Without those claims this year, the underlying OpEx charge increases.

Lastly, there is a GBP 2.3 million increase in other operating costs, driven by higher professional fees, advertising and bad debt provisions. This leaves profit for the year at GBP 26.1 million. Looking at our net cash position. Excluding the impact of the GBP 20 million share buyback program, we would have been significantly above our FY '24 year-end position.

After the uplift for operating profit and noncash items, we recorded a net increase in working capital as movements in receivables materially offset the movements in payables. This results from a strong final quarter of cash collection recovering aged debts that followed from the transition of a certain number of clients onto the new billing platform.

We then see our usual outflows, including tax, lease principal payments and CapEx of which around GBP 6 million was incurred on the TIP, a share purchase for the employee benefit trust and payments of dividends. Then after the purchase of nearly 8 million shares under the share buyback program, we end the year with a strong cash balance.

Now turning to EPS. Our profit after tax is down 64% year-on-year on a constant currency basis, reflecting the lower profit before tax and a higher ETR, partially offset by the decrease in the number of shares relating to the share buyback, resulting in an earnings per share decrease of 63% to 13.7p. Notwithstanding the reduction in our profitability, we continue to have strong confidence in the future of the business and a strong balance sheet.

So I'm pleased to confirm that despite the drop in profits, we'll be paying a final dividend of 9.2p per share, which brings the full year dividend in line with last year at 14.3p per share. Additionally, in line with our capital allocation policy, we are also initiating a further share buyback program of up to GBP 20 million. The Board's decision to declare a dividend beyond our typical range and commence a further buyback reflects a considered assessment of the group's trading performance, future outlook and strong track record of cash generation. It also underscores the Board's commitment to returning surplus capital to shareholders where appropriate.

So to sum up, we're reporting an in-line performance with the rate of net fee decline improving sequentially quarter-on-quarter through the year. Operating profit that reflects the lower net fees, partially offset by disciplined cost control. A robust balance sheet, which provides the flexibility to fund shareholder returns and positions us well to fund our future ambitions.

Looking to the current year, the weighting of our profitability will look different to historic phasing, reflecting the impact of our first half weighted costs to deliver our FY '26 efficiency program. We remain confident in delivering our full year expectations. Thank you. I'll now hand back to Timo.

Thank you, Andy. We will now turn to look at what we have achieved strategically throughout the year in more detail. Starting with our places as we strive to lead in the markets we choose to serve. We have increased our emphasis on the U.S.A. and Japan where scale of STEM demand and structural growth trends present significant opportunity.

We were pleased to have delivered growth in both during the year, reinforcing our approach and the early initiatives we put in place to improve our market positioning. We have also been aligning ourselves to industries, undergoing long-term transformations. For example, our U.S. Energy segment continues to expand as the sector response to rising electricity demand and the need to modernize grid infrastructure.

Likewise in Germany, our largest market, while trading conditions have been challenging, we have been proactive. We have analyzed the government stimulus plans and identified the sectors where investments are most likely to materialize. These are all sectors in which we already operate, and we have used this time to ensure our teams are properly sized and positioned to capture opportunities as they emerge.

Turning to our platform. Nick will talk us through the details in a moment. But from my perspective, I would like to say again that the completion of the TIP rollout is a huge achievement. In implementing a program of this scale across our global operations, our teams have consistently demonstrated the expertise and commitment needed to navigate challenges presented by a country-by-country rollout.

I would like to thank everyone for their commitment, persistence and resilience. Now over to Nick to cover what we have achieved to date and why it positions the business for success ahead.

Good morning, ladies and gentlemen. I'm Nick Folkes, Chief Operating Officer at SThree, and I oversee the group's technology improvement program, or TIP. Today, I want to take a step back and talk about what the TIP has delivered so far. And importantly, why those outcomes matter for the business going forward.

While the rollout of TIP was only completed at the end of FY '25, we are already seeing the early evidence of clear structural benefits coming through. These proof points include an uplift consultant productivity, improved sales engine quality and greater operational velocity alongside recurring efficiency gains.

Before we get into the detail of these improvement gains, let us first look at what it set out to achieve. When we launched TIP, our technology estate had evolved organically over many years. While it's supported growth, it also introduced fragmentation, manual workarounds and limited visibility. That constrains scalability and slowed execution, particularly more complex, compliance-heavy contract markets, precisely where workflow accuracy and data integrity are most critical.

TIP was therefore not an upgrade around the edges. It was a full reengineering of our operating backbone, replacing all the core systems while the business continued to run at scale. Now with the rollout of TIP successfully delivered across all 11 markets on time and on budget, we now operate on a single unified global platform.

We have transformed data integrity, replacing fragmented records with a validated governed data foundation. This serves as a single source of truth across clients, candidates and assignments and fees automation and insight. And we've embedded standardized workflows end-to-end from front office through order to cash. with compliance built in by design.

So why does this matter? What I want to do now is focus on the early outcomes we are seeing from TIP and walk through them in a logical way. Firstly, let's examine cost efficiency. Through automation, system consolidation and simple operating processes, the program is generating structural recurring cost efficiencies. These efficiencies come from a simplified, standardized ordered cash operating model and automation of core transactional activity, reducing duplication and rework rather than relying on one-off measures.

On a pure cost-out basis, the investment has been financially compelling to date, with more cost efficiencies to come in FY '26. As of today, this equates to GBP 6.5 million of annualized cost efficiencies already delivered. That matters because it means the program stands up financially on its own, providing a baseline return on investment case before considering the wider value outcomes.

Before turning to those, it's worth noting that for several of the KPIs I'm about to reference we've used FY '23 as a baseline. That was the point at which our first market went live on TIP in Q4 and it provides a sensible reference period for the changes we're seeing today. As with any transformation of this scale, it's impossible to fully disentangle market effects or attribute performance with precision. However, the indicators are walk-through represents some of the strongest evidence we have. And the final example is as close to a control comparison as we are likely to get.

Next, let's review pipeline quality, not just volume. One of the clearest operational signals is the improvement in what we call A and B-grade jobs per consultant across the group. A and B jobs are higher quality, more committed vacancies, roles where clients have engaged meaningfully and conversion probability is structurally higher. Since FY '23, we've seen a 38% increase in A and B grade jobs per consultant across the group.

This improvement is a direct consequence of cleaner CRM data, stronger pipeline hygiene a more disciplined sequencing of sales activity through the CRM. This ensures opportunities progress in a consistent structured order from job creation to placement, meaning consultants are spending more time on the right opportunities earlier in the cycle. The sales engine is therefore becoming stronger in composition, simply busier.

At this point, we'll look at operational velocity. We've seen a meaningful reduction in time to placement across the group, improving 9% since FY '23. This reflects faster placement execution and more effective use of data and workflows. Our U.S. contract business where the platform has been embedded for longer, provides a mature proof point of this cycle time improvement. This means the results are more pronounced, improving 22% over the same time period.

Most importantly, though, is consultant productivity, some of the strongest evidence of productivity uplift comes from our U.S. contract business. This was the first market to roll out TIP in FY '23 and therefore, has the longest live operating history on the platform. FY '24 was the first full year of TIP deployed at scale and should be viewed as a stabilization period as new workflows and operating routines bedded in.

When we compare a 12-month prep period being FY '23, with the post-TIP position in FY '25, we see a material improvement in placements per head for contract consultants, up 18%. This demonstrates that in the U.S., TIP supported stabilization and recovery at scale following an initial bedding-in period rather than an immediate step change uplift.

However, one of the clearest causal proof points for TIP output comes from our German contract business, where it's a unique business combination allows us to show that TIP is the primary driver of resilience and performance improvement. In Germany, the 2 contract divisions, independent contractor and employed contractor model or IC and ECM, operate under the same leadership to serve the same clients and face the same macro conditions.

Historically, they moved in line with each other. The only structural difference that has been introduced was the timing of the TIP deployment. When a performance diversion started to emerge only after the IC business transition onto the platform in early 2024.

What we saw after this point was that despite a deeper reduction in sales consultants in IC, the TIP-enabled division preserved relatively stronger throughput than ECM under the same leadership and client base, with the divergence emerging only after TIP deployment. In concrete terms, I see new placement weekly net fees outperformed ECM by 10 percentage points when we compare Q3 year-to-date FY '25, the period of time prior to ECM going live on the platform this year with the same time period in FY '23.

That matters because it isolates the effect of the operating model. It shows that fewer consultants can generate relatively stronger throughput that productivity improvements persist even as head count contracts and that the divergence is explained by the platform, not leadership, client mix or market timing. This strikes at the heart of what TIP was designed to do, make the organization more resilient, more efficient and less dependent on linear head count growth.

So what do these positive indicators mean in aggregate? What we have now is a truly new global way of operating. Tech has put the foundations and tools in place to drive efficiency, scalability and more consistent execution across the group. This has enabled a fundamental shift in how we run the business globally. We have moved from reactive retrospected performance reviews to proactive real-time operational control using live performance and behavior dashboards such as build your business and build our network, managers can now see leading indicators as the week unfolds, not just lighting outcomes after the fact.

That creates a new operating rhythm, enabling earlier intervention in cycle, tighter coaching on the right behaviors and faster course correction while deals still matter. In short, we have supercharged the SThree way. Unified data and standardized workflows reinforced by visible and coachable behavior frameworks, which are driving improvements in pipeline quality, speed operational velocity and ultimately consultant productivity.

Together, these effects create a durable operating engine that improves economic efficiency over time. Achieving this level of change inevitably came with complexity, data migration challenges, drill running systems, adoption challenges local disruption during go-lives, and an expected learning period for teams as they adapted to new ways of working. It's important to acknowledge that reality.

The program tested the organization, but working through that complexity was the price of achieving a positive and lasting structural outcome rather than a temporary fix. The price has been meaningful. TIP raised our productivity floor and improved resilience through the downturn. With clear evidence and robust economics, it has given us a very strong foundation to develop and iterate the platform at pace. The emphasis now shifts from building the platform to executing and scaling the benefits already in place.

Next, we'll compound the foundation through targeted intelligent automation and next-generation technologies, including agentic AI, further enabling our people through truly innovative tools and processes. The work ahead is about optimization, refining, scaling and compounding what is already in place. While there is more to do, particularly around consultant retention. We now have the data, visibility and insight to focus our efforts far more precisely in the areas that matter most.

Tip has moved our technology from being a constraint to being a durable enabler of execution with the ability and scale efficiency to support long-term growth. The heavy lifting of TIP is over but the overall technology journey continues. Thank you.

Thank you, Nick. Now looking at our customers. Our increased focus on becoming more client-centric and evolving our services to meet the changing needs of our clients is already delivering results. We have seen double-digit growth across our top client cohort demonstrating the benefit of our sharpened focus on our enterprise clients. The value of our services is further evidenced by resilient contract extensions, robust and sustained pricing and an increase in average contract length over the year.

Our long-term valuable client relationships underpinned by a suite of workforce solutions is exemplified by 2 case studies shown here. The left-hand side demonstrates how we typically deepen and grow a relationship over time, resulting in repeat and expanding services. In this case, our relationship has evolved over an 11-year engagement from placing niche specialists initially to expanding into a managed service agreement underpinned by our governance expertise. The result was a fourfold increase in the contractor footprint.

The right-hand side shows our ability to move SThree delivering AI scales needed in the fast-paced U.S. market. In this case, the clients need to identify STEM expertise intensified as they prepare to launch a major AI-driven initiative at scale. We streamlined the process enabling rapid mobilization, selling relevant candidates within 48 hours and delivering a wide range of critical hires in under 3 weeks.

Moving on to our people pillar. As expected, with the transformation of the scale of TIP, the rollout has brought both opportunities and challenges with change management, a major area of focus. Engagement levels have understandably been affected by the pace of change internally and compounded by the wider market backdrop. Our global E&PS score was 21, still placing the group within the middle range of the professional services sector.

We have learned a great deal through this journey. And with this infrastructure now embedded, our teams are adapting quickly, giving us the ability to tailor the platform to better support them going forward. This year was marked by the launch of our unified HR platform alongside the rollout of our performance framework and a refreshed global sales onboarding program.

Together, these initiatives created a strong foundation designed to empower our people, strengthen our sales culture and enable faster productivity for new hires over time. And finally, our proposition pillar. We have talked about how we see ourselves as a workforce consultancy, having long provided more than just transactional staffing to our customers.

This slide shows the broad range of solutions we deliver, addressing challenges ranging from unpredictable workforce demand to the need to hire quickly and at scale without compromising on quality through to partnering with customers and advising them on risk, compliance and regulatory requirements. This combination results in positive outcomes for our clients. We provide them with predictable access critical capability, enable them to reduce risks across regulation, compliance and delivery and importantly, have one account with partner for workforce performance.

To sum up, New business activity has been encouraging in key markets such as U.S., while wider recovery, especially in Europe, is still unfolding. Strategically, I believe we're in a great position. We now have the technology and data foundations in place with modern tech ready workflows already deployed across the business. We have a clear view on what our operating model needs to be, and we are well underway in evolving it, ready for the new world of staffing and workforce consulting.

We understand where technology can remove nonvalue-added activity and where human expertise delivers the greatest impact. We have been proactive in our planning and as a result, we're well positioned as the advantage for forward-thinking firms continues to grow. And ultimately, by putting clients at the center of everything we do, creating an agile organization and continuing to invest into our people, proposition and innovation, we will stay at the forefront of industry dynamics and outpace change.

Yes. Good morning, everyone, and welcome to SThree's Q3 Trading Update of FY '25. I'm joined by our CFO, Andy Beach, and today, we're giving you an overview of the performance in 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 FY '25, 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 a modest sequential improvement in group net fee performance. What is key for us and is currently offsetting this growth is the challenges within our 2 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 TIP technology improvement program is nearing completion. During the quarter, 2 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 also bold and 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 amongst our most junior cohorts and a reduction in time to first interviews in our early adopter markets.

So whilst we're seeing pockets of positive momentum, overall levels of new business activity remains 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 will hand over to Andy, who will take us through the numbers for Q3. Andy, over to you.

Thank you very much, Timo, and good morning, everyone. Now despite ongoing sector-wide headwinds, we saw a 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 5 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 FY '24. Contract was down 18%, primarily reflecting lower demand for technology skills with a similar trend 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 U.K., 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 2 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 FY '24. 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 FY '25. 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 FY '25 portion of the contracted 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 FY '25. 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, 4 out of our 11 markets are back in growth, including our U.S. market, which we signaled would be the first of our top 5 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 FY '25 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 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 the 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 program to deliver future benefits, again, enabled through our TIP rollout. As a result, persistent softness in new business activity is expected to impact FY '26 PBT consensus by roughly GBP 20 million due to the group's operational gearing. This, alongside the investment initiatives is expected to result in a reduction in FY '26 PBT consensus from GBP 30 million to GBP 10 million. At the same time, in line with our commitment to shareholder returns, the Board is announcing today its intention to commence a further share purchase program in early FY '26.

Whilst 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 why we believe 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 the foundation to innovate at pace and now with 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. Whilst 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, whilst 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 scale.

Good morning, everyone, and welcome. Thank you for joining us today for our half year results briefing. I'm joined by Andy Beach, our CFO.

Good morning, everyone.

And as usual, together, we will be walking you through the half year numbers, our strategic progress and discussing the outlook. Let's go.

During the period, we marked a really important milestone in our evolution with the launch of our refined branding and value statement, which we believe is a more accurate reflection of who we are, what we offer and what sets us apart. We are the global STEM workforce consultancy. Let us show you what that looks like.

[Presentation]

We have provided more than transactional staffing to our customers. We are workforce consultancy with a suite of resourcing solutions from compliance services, project solutions and workforce structuring to the management of more than 9,000 contractors from 11 countries on behalf of our clients. We specialize in high-value, complex flexible talent where our consultative approach adds the most value and where human expertise supported by digital tools remains essential to the delivery of quality at pace. There aren't many other staffing firms that can provide the range of solutions that we do alongside our experience and regional know-how.

As many of you know, the charts on this page show how our well-established strategy is positioned at the center of 2 long-term growth trends, STEM and flexible talent. This remains as relevant today as it has ever been, and it is here where we see our opportunity, fulfilling the structural demand for STEM skills, which is underpinned by megatrends and is particularly well aligned to the contractor model. As a result of this focus, our contract business represents 84% of group total. Our bias towards contract provides us with resilience, a more profitable revenue stream with better visibility and is a powerful differentiator in the market.

We have delivered a steady performance in the first half of the year against the persistently challenging market environment. We have made significant progress in preparing our business for when market conditions improve and to align with structural opportunities. As a result of the TIP rollout, over 80% of our business is now transacting through our future-ready end-to-end integrated technology infrastructure. This is driving operational efficiencies and significantly enhancing our ability to scale. We are now able to innovate at pace with the foundations to unlock rich data insights and layer in new functionality. We are building an organization fit for purpose, which combined with our industry experience, deep networks and strong commercial footing means we are ready for the future.

We are often asked whether current industry trends are structural or cyclical. We believe they are both. Let's explore further. Regarding our end markets, this is clearly an extended cycle, lasting longer than expected due to persistently low business confidence. However, we do expect this extended cycle to eventually subside and investment to resume. To stay ahead, organizations will need to invest in their future. We anticipate that once pent-up demand is released, the demand for flexible STEM roles will be especially acute. Beyond the usual economic cycles, a deeper transformation is underway. Emerging technologies like machine learning and generative AI are reshaping markets and sectors. These trends aren't short-term trends. They signal lasting structural change, and we are well positioned to respond.

From a client perspective, organizations of all sizes are reimagining their business models and workforces. They are now faced with making smart and strategic decisions to ensure they have the skills and expertise needed to compete in an AI-enabled future. Every industry will be significantly impacted by technology investment. We have long recognized that structural megatrends, including technological advances will shape the workforce of the future, and we have deliberately placed our focus at the heart of this opportunity.

We help clients build a workforce infrastructure that supports AI innovation across all roles and across all industries. Our tech focus connects businesses with the core skills needed to prepare their data and processes for effective AI adoption. From an industry perspective, our ability to offer workforce solutions means that compared to more transactional and blue-collar staffing businesses, we are less at risk of disintimidation from digital platforms. Our clients need experts that can advise them and that is our specialism. Digital transformation including advancement in AI is reshaping staffing creating opportunities to deliver enhanced client and candidate services and drive efficiencies. The world is moving fast and the work we have done in the last 3 years allows us to capitalize on these trends as we have the right foundations in place with our focus, scale and one of the most modern technology stacks in our industry.

Whilst the landscape around us is evolving rapidly, it is clear that there is pent-up demand for the skills we are focused on and we're extremely well positioned to not only keep pace with this evolving landscape but lead the future of this industry. I will cover each of these differentiators in more detail later in the presentation. I will now pass over to Andy to talk us through the financials.

Thank you very much, Timo. Let's start with a summary of the half year performance. Net fees are down 14% year-on-year on a constant currency basis. Contract, which represents 84% of net fees, declined 14% as continued softness in new business activity was partially offset by strong contract extensions. Pleasingly, we also saw a modest sequential quarter-on-quarter improvement in the rate of decline during Q2, reflecting an improved U.S. performance where initiatives aimed at strengthening market positioning are beginning to gain traction. Permanent, which is a smaller part of our business, declined 13% and continues to be impacted by challenging market conditions across most of our regions despite a softening in comparatives. Notably, our permanent businesses in the U.S. and Japan recorded growth in the first half of the year.

Operating profit for the half was GBP 10 million, which is down 72% on a constant currency basis. This primarily reflects the effect of our operational gearing on lower net fees across key markets, partially offset by disciplined management of operating costs and the early realization of further operational efficiencies. This has resulted in a conversion ratio, the ratio of operating profit to net fees, of 6.3%.

Profit before tax is GBP 10.1 million, down 72% year-on-year, reflecting the lower operating profit and lower net interest income on our cash. And we do expect profits and margins to increase in the second half of the year, in part due to the benefits of our first half efficiency actions being weighted to the second half.

We continue to index 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. As the chart shows, we are less cyclical, which we believe is due to our strategic focus on flexible talent and STEM.

We clearly outperformed the market through COVID. And over the last 3 years, we have sustained that outperformance. This shows that we are less volatile through periods of market disruption with our contractor order book providing a runway of contract net fees due to be recognized as they are earned on a month-by-month basis over the life of the contract.

As we have seen historically, when markets recover and new placement activity increases, the recovery in net fees tends to be smoother and from a higher overall level, resulting in a more even through-the-cycle net fee profile compared to permanent dominant businesses where net fees are recognized almost immediately. Overall, this demonstrates that we have the right strategy and that our business is high quality through the cycle.

Looking at the regional and skill mix for the period. We have critical mass and a well-diversified business across key STEM markets and skill verticals. The first ring chart shows the split by region with DACH remaining the largest region in the group, representing 33% of net fees. Looking to the far right, you can see net fees were lower across all regions in the first half. The second ring chart shows our strong and unique position in providing STEM skills. Technology continues to be our largest skill, and it represents 45% of net fees. Engineering, our second largest skill, declined by 9% year-on-year following last year's record performance. Encouragingly, within this vertical, our clean energy business continues to perform strongly, growing 6% year-on-year and now accounting for 14% of group net fees. At the same time, we saw continued softness in demand for skills across both technology and life sciences, reflecting the persistently challenging trading environment throughout the first half.

We continue to benefit from the ongoing trend towards flexible working. This slide looks at our net fees by service. 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 H1 of FY '19 to 40% of net fees in the first half of FY '25. Although acting as the employer of record is not a service unique to SThree, it remains out of reach for most subscale recruiters due to the high barriers to entry, driven by the complexity of compliance, operational infrastructure and the balance sheet strength required to support it. Where SThree stands apart from larger industry peers is in our comparatively higher net fee exposure to ECM, further reinforced by our focus on STEM disciplines.

Additionally, our ECM segment generates net fee margins around 30% to 40% higher than those generated by independent contractors as our clients are willing to pay for the risk and complexity that we assume on their behalf. With the rollout of our new future-ready digital infrastructure, there will naturally be fewer manual touch points, eliminating the need to constantly increase headcount to service our contractors, thereby helping us to achieve higher profit margins and scale more efficiently.

Looking now at the future visibility of our contract business. The contractor order book represents the value of contracts written up to the contractual end date, assuming that all contracted hours are worked. The book was down 8% year-on-year as a continued strong extensions performance was only able to partially offset the slowdown in new placements from the prolonged market uncertainty. However, even with the decline, the order book continues to provide us with sector-leading forward visibility compared to permanent focused staffing businesses with the equivalent of around 5 months' worth of future net fees already booked.

The resilience of the contractor order book demonstrates that whilst new placement activity continues to be soft, all other underlying metrics around our contract business are strong. We've seen excellent extension rates in the half, and this has resulted in average contract length increasing by 18% compared to the prior year to 64 weeks. To sustain contract margins at around 21.5%, we've maintained tight pricing control, especially on extensions and the average salary of the contract roles that we placed is up 1% year-on-year, now reaching GBP 103,000.

Productivity was 10% lower year-on-year as the rate of net fee decline was faster than the reduction in average headcount. The movement in headcount reflects careful management of natural churn, being highly selective about where we choose to hire and the realization of operational efficiencies. Near term, we expect productivity to continue to moderate until market conditions improve. But over the midterm, we do expect to deliver sustainable increased levels of productivity as our strategic investments in digital infrastructure deliver the expected benefits.

TIP remains on budget and the overall time line remains on track to complete by the end of FY '25. Out of our 11 markets, 8 are now actively using the platform, representing over 80% of group net fees. We expect total OpEx for the year to be in the range of GBP 3 million to GBP 4 million. This is weighted to the second half of this year based on the phasing of rollout activities with around GBP 1 million incurred in H1. Total CapEx is expected to be around GBP 6 million to GBP 7 million, with just under GBP 3 million spent in the period.

As we approach the final stages of the program, we have further refined our delivery forecast. We are pleased to confirm that projected spend remains comfortably within the original GBP 30 million to GBP 35 million budget and is now expected to come in towards the mid to upper end of that range.

Turning to the year-on-year operating profit bridge. You can see the decrease in both contract and permanent net fees is partially offset by people costs being down year-on-year, and this is primarily due to the 5% average decrease in headcount compared to last year, which is partly reflective of the further operational efficiencies coming through.

To date, we have made good progress and remain on track to deliver the GBP 6 million in-year net saving target for FY '25. Of this, around GBP 2 million has already been achieved. Since most of the costs to deliver were incurred in the first half of the year, we expect a natural uplift in savings in the second half.

You can also see the GBP 0.3 million year-on-year increase of OpEx costs for the TIP and GBP 2.1 million year-on-year increase of other operating costs. This includes additional expenditure related to the commencement of TIP amortization and license fees as well as property and marketing expenditure, which is partially offset by disciplined management of other operating costs. And this leaves profit for the half at GBP 10 million.

Looking at our net cash position. Excluding the impact of the GBP 20 million share buyback program, we are broadly in line with the FY '24 year-end position. We see our usual outflows, including a share purchase for the employee benefit trust, payment of the final FY '24 dividend, lease principal payments and CapEx, including around GBP 3 million incurred on the TIP. We recorded only a modest net increase in working capital as movements in receivables and payables broadly offset each other. Including the purchase of nearly 8 million shares under the share buyback program, our half year cash balance is around GBP 48 million.

Before moving on to look at dividends, I wanted to share with you a brief reminder of our capital allocation policy. Our overarching intention is to always maximize value for our shareholders. We look to maintain a strong balance sheet to provide flexibility at all times while also providing shareholders with a sustainable through-the-cycle dividend with long-term earnings growth. We then prioritize our deployment of capital in the order shown.

Now turning to dividends. Notwithstanding the reduction in our near-term profitability, we continue to have strong confidence in the future of the business. So I'm pleased to confirm that we will be paying an interim dividend of 5.1p per share. The Board's decision to maintain the dividend in line with last year reflects a considered assessment of the group's future outlook, underpinned by a robust balance sheet and a strong track record of cash generation. It also underscores the Board's commitment to returning surplus capital to shareholders where appropriate.

So to sum up, we're reporting a steady trading performance with the rate of decline in net fees improving sequentially through the half, operating profit reflecting the lower net fees, partially offset by disciplined cost control, a contract order book that continues to provide good visibility of future net fees and a robust balance sheet, which positions us well to fund our future ambitions. Thank you. I'll now hand back to Timo.

Thank you, Andy. We will now turn to look at what we have achieved strategically throughout the half. As part of our ongoing evolution, we took the decision to reassess the alignment of our growth pillars to our business strategy. We have renamed our position pillar to proposition and we've introduced a fifth strategic pillar to support our execution. Our customers are at the heart of everything we do, so it felt appropriate to dedicate a specific pillar towards them given their importance. I will now touch on each pillar in turn.

Our market reach remains strategically aligned with 11 of the strongest STEM markets globally. We regularly review our position in these regions. And since early 2023, we have been deliberately rebalancing our portfolio, ensuring all our markets are well positioned to take advantage of significant growth opportunities when they arise. A great example of this strategy in action is what we have done in the U.S. Over the past few years, we rolled out several internal and go-to-market initiatives anticipating that U.S. market would rebound earlier than others. These initiatives included targeted investments in our core skills verticals to better balance our portfolio, strengthening our permanent offering and sharpening our overall market approach in the region. And we're already seeing the benefits of our efforts with Q2 performance in U.S. rebounding driven in large part by strong performance from our engineering vertical.

Turning to our platform. Nick is going to explain the progress we have made in detail in a second. But from my perspective, H1 marked another positive chapter in our TIP journey. This has been a journey that has been challenging, but one that was bold and has seen us transform our position for when the markets recover. It is no mean feat to deliver a program of this nature and size on track and on budget. We should be incredibly proud. We have started to show that the TIP is not just delivering functional improvements, but is also beginning to unlock commercial and operational upside, particularly where maturity, adoption and leadership alignment are strong. Now over to Nick.

Good morning, ladies and gentlemen. I'm Nick Folkes, Chief Operating Officer at SThree, and I oversee the group's Technology Improvement Program, or TIP. Three years ago, we set out on an ambitious journey to transform the operational core of SThree. At the time, we recognized that our legacy technology, while serviceable, was limiting our scalability and capacity to innovate. What we needed was not a service level upgrade, but a complete reengineering of our digital infrastructure. So we made a bold decision not to optimize around the edges, but to fundamentally reinvent. Rather than settle for tactical fixes or short-term gains, we chose to take on the harder, more ambitious challenge to replace every core system and build a fully integrated cloud-native platform from the ground up, an end-to-end integrated platform capable of supporting our ambitions for growth, efficiency and competitive differentiation.

It was a long-term investment, one that demanded persistence and deep alignment across the business, but it was the only way to unlock the agility and intelligence we knew we needed to lead in the years ahead. And today, that decision is proving itself in faster innovation and smarter decision-making and measurable improvements in performance across the business. That decision wasn't just about technology. It was about reimagining how we operate as a business. We set out to elevate every aspect of the business to deliver a step change in service quality, unlock richer real-time insights and dramatically boost productivity at scale. Delivering on that ambition required more than new systems. It meant standardizing our ways of working across the business and fully digitalizing SThree's operations from front to back.

Fast forward to today, and I'm pleased to report that we're delivering on that vision. As of now, over 80% of group net fees are processed through the new platform. We are live in 8 out of our 11 global geographies, having recently completed deployments in the Netherlands, France, Spain, Switzerland and Austria. We've onboarded over 13,000 internal and external users, all of whom now operate on a single global platform. The feedback from our users has been clear. This isn't just better, it's transformational, and it's enabling outcomes that until recently weren't possible. In just the last 6 months, we've delivered 60 new product enhancements and continue to develop 5 key features powered by AI, a testament to the maturity of our platform and the pace at which we can now innovate. We're no longer constrained by fragmented systems or manual workflows.

Let me share a few examples. In the front office, our AI-driven shortlist generator is already speeding up placement cycles and enhancing candidate matching precision. It provides consultants with richer, more relevant profiles and helps clients make faster, more confident hiring decisions. In the back office, we've automated time-consuming repetitive tasks such as time sheet validation and document checks through AI models that significantly reduce human intervention. And we're just getting started. Next, we're deploying tools to help consultants identify and nurture warm leads, expand active networks and surface opportunities that once required hours of manual effort. And these capabilities are already delivering real measurable returns.

We've now achieved a total of GBP 6.5 million in annualized cost savings from our automation in our middle and back-office operations and sales management layers, thanks to enhanced data and reporting capabilities that drive faster, more impactful decision-making. This comfortably exceeds our original expectations. Across the U.S. and Germany, we've seen a 34% reduction in time to first interview, enabling our consultants to move faster and more efficiently for both clients and candidates. But perhaps the most compelling proof point is the performance of our most junior consultants, those with 0 to 24 months of experience who have historically shown consistent productivity regardless of trading conditions.

In the U.S. and Germany, those cohorts have delivered a year-on-year productivity improvements of 32% and 5%, respectively, outperforming the overall market cohorts in those countries by significant margins. That level of uplift speaks to the system's ability to reduce ramp time and empower early career talent faster than ever before.

This success has only been possible, thanks to the commitment of our global teams and the agile iterative delivery model we've adopted. I want to take this opportunity to extend my personal thanks to everyone involved in our transformation.

We're now entering the final phase of the program with ECM delivery for Germany and 3 remaining markets scheduled for rollout. As we close the formal program at the end of this financial year, I want to highlight that we are delivering our technology improvement program to an enhanced scope, on time and on budget.

But while TIP formally concludes, our momentum does not. We currently have over 20 additional enhancements in development, and we'll continue investing in this platform in line with our capital allocation priorities. However, the most powerful impact of TIP may not lie in what it delivers today, but in what it makes possible tomorrow. With a clean, standardized and fully integrated data and systems landscape now in place, we've built more than a technology platform. We've established the foundation for a fundamentally more adaptive and insight-led business, one capable of evolving rapidly and scaling confidently in a changing world.

This positions us uniquely within the sector. We can now drive recruitment technology innovation at a pace once out of reach, unlocking next-generation AI capabilities that point towards entirely new ways of working. We're actively exploring opportunities to extend far beyond the limits of traditional platforms, possibilities enabled by real-time data, intelligent workflows and a unified architecture driving every decision and interaction.

These are the kinds of capabilities that will shape the next era of recruitment, and we're well positioned to lead it. We're confident that this foundation will continue to deliver superior performance and sustained value over the long term. Thank you for your continued support and interest. I look forward to sharing more in the months ahead.

Aligned with our refreshed go-to-market branding, we have taken another important step forward by introducing a new strategic pillar, one that sharpens our focus on driving revenue through deeper client engagement and stronger candidate relationships. Backed by our TIP program, our evolved brand positioning and continued investment in team development, we are now more joined up as an organization than ever before. That unity is helping us enhance our service proposition and cement our place as a true strategic partner in the STEM workforce space.

We are working to rebalance our client mix by pushing further into the enterprise space, which we see as a real opportunity for us. Our global client strategy is a key part of this, creating a more consistent, standardized approach to growing and partnering with our most strategic accounts. And we're seeing encouraging results. Despite the macro environment we have been experiencing, we have seen year-on-year growth across our top 20 clients.

For our candidates, our focus is on long-term relationships. We are committed to connecting skilled STEM professionals with the right opportunities, dynamic organizations that align with their ambitions. This is made possible by network we've built over decades, nurtured through a mix of digital marketing, thought leadership, industry events and other multichannel engagement.

Now turning to our people pillar. The full potential of the exciting changes we are making lies in the hands of our people. From the outset of the TIP, we have paired our technology implementation with investment in people, fostering a culture of inclusion and continuous learning. We continue to roll out global training across our systems and new ways of working, and we are pleased to see continuous increase in engagement and adoption. As part of our commitment to thinking big, we brought our sales efforts more to the forefront of what we do with a strategic shift towards driving a high-performance culture. A natural next evolution in this journey was the launch of 2 new performance frameworks across our sales function. These frameworks, which are integrated with our technology and systems, are designed to build more processes that are scalable and will guide our employees to increase success rates.

As highlighted earlier, it's been a busy and productive first half of the year as we focus on strengthening our brand positioning, reinforcing our position as a trusted strategic partner for workforce solutions. As part of this, we brought all 7 of our go-to-market brands closer together under the SThree umbrella. We believe this will unlock real value, allowing us to harness the collective strength of our global STEM expertise, while still maintaining the specialist focus that makes each brand unique, which customers are looking for. The early response from our customers and partners has been really encouraging, and we are confident this will continue to support our ambition to become the authority in the STEM world of work.

We also launched our very first STEM skills index, a data-driven ranking of countries based on their ability to develop, retain and apply STEM talent. It's already become a cornerstone of our thought leadership and it's proving to be a powerful tool for our consultants, helping them advise and lead more meaningful data-led conversations with clients about workforce capability, STEM talent strategy and long-term planning.

So, to bring everything I've discussed together and highlighting what makes SThree unique and well placed to deliver. Our focus on contract provides resilience and sector-leading visibility. Our STEM focus sets us apart. Our conviction continues to be that STEM skills will build the future across all industries, and these skills remain particularly well aligned to our contractor model. We're at the forefront of our industry with our technology investments. Not only will we be a digitally enabled scalable business with high barriers to entry, but we will also be able to drive significant efficiencies and innovate at pace. As Nick said, the most powerful impact of TIP may not be what it enables today, but what it makes possible tomorrow. We're in a unique position in the sector to drive further innovation, leveraging the very latest technologies, including agentic AI to maintain our first-mover advantage in the market.

And finally, in line with our repositioning, as we have highlighted it, we are not just a traditional recruiter. We are a workforce consultancy. This enables us to become a strategic partner for our clients. We service businesses around workforce compliance globally, build expert teams and deliver project solutions to outpace tomorrow together. These services help us increase account penetration through deeper engagements with our clients.

So to sum up, we delivered a steady performance in the first half of the year against a persistently challenging market environment, and we entered the second half of the year in line with guidance. The TIP rollout is entering the final stages. We are maintaining strong momentum with over 20 new platform enhancements already in the development, including next-generation AI tools designed to support consultants in opening new opportunities and maximizing their networks, another key step in embedding intelligence in the workflow.

As we continue to scale globally, we remain confident that the TIP will be a key driver of high-margin growth, structural efficiency and sustained competitive advantage. And finally, we are building an organization fit for purpose, which combined with our industry experience, deep networks and strong commercial footing means we are structurally positioned to benefit as markets recover and evolve.