This is according to audited results for the year ended 31 December 2016, published this morning.

The results reveal operating profit before exceptional items fell to £3.2m from £4.9m in 2015, while NFI and revenue were down 9% to £21.7m and £143.6m respectively over the same period.

Across the group, InterQuest’s digital technology brand ECOM’s London business saw NFI fall 41% on the previous year due to demand from digital agencies decreasing as larger clients sought to build in-house teams. InterQuest’s public sector brand IQPS did not see the same volumes of work it had seen in 2015, with NFI falling 28% on the previous year.

A reduction in contractor numbers adversely affected the group’s IQ Financial Markets business, while trading for the group’s niche brands include IQ Analytics, IQ InfoSec, IQ Technology and IQ Telecom (now IQ Networks) had been slower than management's expectations.

However, August 2016 acquisition Rees Draper Wright added £900k of NFI by year-end 31 December 2016.

Commenting on the results, chairman Gary Ashworth called 2016 a “challenging” year of transformation for group but one in which results had been in line with market expectations.

“Following a change in executive management at the beginning of the year, an operational review of activities was undertaken and the future vision for the company outlined. All of our service offerings are now clearly focused on assisting our clients overcome the challenges of digital transformation and being able to support them at each stage of that process.

“Financial performance in 2016 reflects the changing nature of how our clients seek to address their staffing challenges. The leadership team have taken action to address underperformance and ensure that the group's specialist staffing brands now address markets that are growing.”

Ashworth added that the last year has seen the group “significantly” develop its recruitment process outsourcing business IQ Solutions, as well as acquiring senior and board level recruiter Rees Draper Wright, which will broaden the group group’s geographical reach within the US.

InterQuest results at a glance:

• Group operating profit before exceptional items decreased 35% to £3.2m (2015: £4.9m). 
• Adjusted profit before tax (PBT) decreased 34% to £3.3m (2015: £5m). 
• Statutory loss after tax of £1.2m loss (2015: £3.1m profit).
• NFI decreased 9% to £21.7m (2015: £23.8m).
• Revenue decreased 9% to £143.6m (2015: £158.6m). 
• Basic earnings per share decreased to a loss of 3.4p (2015 earnings: 8.5p).
• Group net debt improved significantly since the interim from £9.9m to £5.6m.