Specialist IT staffing firm InterQuest Group (ITQ: LSE) reported revenue for the six months ending 30 June 2017 of £69.1 million, down 6% compared to the previous year.

InterQuest reported that NFI from permanent placements increased 34% to £5.1 million (2016: £3.8 million) while NFI from temporary contract placements decreased 15% to £6.0 million (2016: £7.1 million).

Adjusted Profit Before Tax (adjusted for share-based payment charge, amortisation, impairment and non-recurring items) was down 23% to £1.0 million (2016: £1.3 million).

In its trading update last month, the group reported that it was facing challenges in the political and trading environment resulting from Brexit, the result of the UK election and the subsequent hung Parliament. Furthermore,  InterQuest added that it rebuffed several takeover bids from Chisbridge Limited in recent months and said that it incurred costs of £0.5 million in the process. InterQuest also temporarily suspended share trading as it was unable to appoint a nominated advisor in time for it to comply with Alternative Investment Market rules.

“The financial services, analytics, networks and public sector have seen a decline in demand compared to the prior period which has impacted our results for the year,” Chris Eldridge, CEO said. “We have added a further client to our Solutions business and we continue to develop our business geographically focusing on higher margin opportunities as evidenced by the fact that our contract recruitment margins and average permanent placement fees have increased during the period.”

Gary Ashworth, Chairman, commented: "The group's results for the first half of 2017 continue to reflect the challenging nature of the UK staffing business during the ongoing Brexit uncertainty and are below our expectations. Rees Draper Wright has given the group a platform to expand into the US market and we have invested in that market by expanding the InterQuest offering into our New York office. A structural change in the senior management at the end of 2016 and early 2017 has meant a further restructuring of certain divisions which will take some time to develop but which we estimate will contribute to profits in the medium and long-term.”

The group added that its contractor numbers were affected in 2016 and continued into 2017 by a reduction in demand for financial services post-Brexit and also in the public sector. InterQuest stated that action had been taken to refocus these businesses and gradual signs of recovery are already being seen in the public sector business. In 2017 the group has engaged new senior management in additional areas affected by the lower contractor levels, namely analytics, telecommunications and other niche sectors.

“The trading performance in the first half of 2017 was disappointing but masks further operational progress made across a number of our key developmental objectives including growing our managed service business, enhancing the group's learning and development capability, improving retention, enabling increased levels of cross-selling and preparing for international expansion,” Eldridge said. “However, the group is conscious of the continued economic uncertainty in the UK and continues to progress its plans keeping them sufficiently responsive to further changes in market conditions.

Trading has been suspended for the InterQuest Group since August.