Penna Consulting (LON:PNA), the recruitment and international human resources consulting group, saw its shares slide by 16% to 152.5p per share today despite news that revenues in the year to March had risen by 72% to £108.5m with pre-tax profits before exceptionals up 22% to £7.3m. However, investors were spooked by indications that the business was expecting to be impacted by plans by the Coalition Government to freeze recruitment in the public sector. Penna ended the year with cash of £5.4m, down from £8.9m, along with no bank debt and announced that its final dividend would be maintained at 4p.

During the year, Penna reorganised its business into four service groups: recruitment & marketing communications, resourcing, executive recruitment & interim and HR consulting. The first three of these service groups provide recruitment and related services and together account for two thirds of group revenues of which approximately half is in the public sector. During the election period a number of government recruitment projects were put on hold and this was followed by an announcement from the Coalition Government of its intention to freeze recruitment across central government. As a consequence, Penna said it was expecting a significant reduction of revenue from these service groups during the new company year. As a result, it said it was making “significant adjustments” to its cost base to ensure its cost structure reflects the anticipated levels of business activity during this time.

Meanwhile the majority of Penna’s profits are expected to continue to come from its Career Transition business within the HR Consulting service group. Penna is the UK's leading supplier of Career Transition services to organisations and their employees, helping them to effectively manage the process of change in the workplace. It is currently working with a large number of organisations as they plan the implementation of the Coalition Government's policy to restructure the whole of the UK's Public Sector.

Overall, the company said the changes being implemented by the new government would lead to only minimal profits in the first half of the new financial year. However, it is expecting a much stronger performance in the second half as downsizing projects in the public sector are implemented and recruitment in the private sector continues to recover.

Commenting on the results and outlook, Penna’s chairman, Stephen Rowlinson, said: “We have completed a very successful year with strong…

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