UK recruitment firm Impellam Group (IPEL: LSE) reported revenue for the six months ended 30 June 2017 of £1.07 billion, an increase of 2.4% compared with £1.05 billion during the first half of 2016.

Revenues and gross profit were impacted by challenging conditions in the group’s UK Specialist Staffing and Healthcare businesses. Gross profit for H1 2017 was down 3.7% on a like-for-like basis. Like-for-like changes for the first half were not announced for revenue or operating profit.

The sharp decline in operating profit was attributed to challenging conditions in the UK Specialist markets, the impact of off-payroll working legislation (IR35) in the UK Doctors and Nursing market, increased investment in both IT and the integrating and upgrading of US finance operations. The company stated that actions have been taken to reduce cost to best protect financial performance and significantly improve the conversion of gross profit to adjusted operating profit in the second half of the year.

Revenue broken down by segment was as follows:

Impellam stated that the Managed services businesses in the UK, US, Australia and the Middle East performed in line with expectations, with spend under management increasing by 4.7% to £2.07 billion and 16 new business wins under implementation in H1.  The group added that Healthcare Managed Services continued to perform well in the UK and Australia amid a “turbulent market.”

For the group’s Managed Services UK, Europe and Australasia, gross profit increased by 0.7% to £29.8 million (2016: £29.6 million). In Specialist Staffing UK, Europe and Australasia, gross profit decreased by 4.3% to £69.4 million (2016: £72.5 million).

US Managed Services gross profit increased by £2.1 million to £24.3 million (2016: £22.2 million). Meanwhile, US Specialist Staffing gross profit increased by £1.9 million to £16.6 million (2016: £14.7 million).

"During the first half of 2017 we have seen our Managed Services businesses across the world, aimed largely at the contingent workforce, continue to perform in line with expectations; with customer retention at 94% (based on our largest 50 customers), a record number of new programmes in implementation and a strong sales pipeline,” Julia Robertson, Chief Executive Officer of Impellam, said.

“In particular Guidant, Comensura and Lorien in the UK have all delivered strong H1 performances. We continue to win new business in the competitive Healthcare managed services market in the UK as we work with the NHS to provide them with visibility, control and cost savings, and likewise in Australia,” Robertson said.

“Our Specialist Staffing businesses, particularly in the UK, have proved less resilient to the unpredictable climate and economy we are experiencing,” Robertson said. “Outside the UK, market conditions are more favourable.”

“Whilst we continue to invest in our growing Specialist Staffing markets, actions are in place to reduce headcount and other areas of the cost base to protect the financial performance of this segment,” Robertson said.

“In North America our Managed Services and Onsite programmes continue to perform well with a higher than planned win ratio, although H1 was impacted by the timing of wins over losses.  Investment in Managed Services continues in line with increased demand from our customers who recognise the benefits of a high retention proposition, where the focus on controlled talent acquisition is paramount to commercial success,” Robertson said.

Looking forward, Robertson commented, “While trading conditions remain challenging, particularly in the UK Specialist Staffing and UK Healthcare Markets, our Managed Services businesses are continuing to perform well across all our geographies. The remainder of the year will see the benefit of our cost reduction actions, our implementations of new Managed Service programmes and our strong sales pipeline. These, combined with the normal uplift in H2 due to the seasonal nature in some of our businesses, means that we expect to see a significantly improved performance in the second half of the year.”

In trading today, Impellam Group traded at £647.00, down 7.44% on the day and 7.76% above its 52-week low of £600.40, set on 4 August 2016. Based on its current share price the company has a market value of £351.60 million.