UK staffing firm Impellam Group plc (IPEL:LSE) reported revenue for the full year ending 31 December 2017 of £2.17 billion, an increase of 1.5% compared to the previous year.

Impellam reported that gross profit was impacted by challenging conditions in the group’s UK Specialist Staffing and Healthcare businesses. The group’s pretax profit fell to £37.9 million pounds from £39.8 million in 2016. While revenue rose to £2.17 billion, the group added that this increase was more than offset by a rising cost of sales.

“I am pleased to report that Impellam Group made excellent progress with key strategic initiatives during 2017, delivering £37.9 million (2016 £39.8 million) of profit before tax despite challenging trading conditions in the UK; in particular, in the healthcare and education markets. In addition, we reduced our net debt by 20.4% and managed our costs tightly enabling us to deliver dividends to shareholders in line with 2016,” Julia Robertson, Group Chief Executive Officer, said.

“Our year-on-year decline in adjusted EBITDA from a relatively flat margin performance is explained by a contraction in gross profit from our UK Specialist Staffing businesses post-Brexit; austerity measures in the NHS and the UK's education sector; strategic investment in IT and digital and higher than anticipated one-off costs in integrating our North America back offices,” Robertson said.

“The NHS pay and margin rate caps imposed in 2016, coupled with the impact of IR35 introduced in April 2017, have reduced the availability of locum doctors and nurses willing to work for the NHS,” Robertson said. “As a consequence, the NHS's spend with staffing agencies has reduced significantly. Our response has been to embrace this market shift, recognise it as the new normal, and accelerate investment in Managed Services technology and healthcare knowledge to support government cost-saving targets. This bold investment, coupled with leveraging our Group capability has made a positive impact. We have won seven Managed Services contracts and gained market share versus a market contraction of 35%. This has been achieved while also rapidly growing our healthcare business outside the UK.”

The company said its specialist staffing and managed services businesses continued to diversify geographically to reduce exposure to the difficult UK market, especially in the education and healthcare sectors.

Revenue by segment was broken down as follows.

As of last trade, Impellam Group traded at £582.50, up 0.87% on the day. Based on its current share price the company has a market value of £290.58 million.