International human resources consulting group Penna Consulting says it expects an upturn in its outplacement business but anticipates “nominal” profits, according to a trading update for the year ending 31 March 2011.

The update says: “During the year we have won 57 major new outplacement contracts and we are in advanced negotiations with a further 55 organisations.  These organisations include central and local government bodies, non-departmental public bodies, police authorities, universities and the health service. We have been awarded significant contracts by 33 London boroughs, 11 county and city councils, 5 police authorities and 3 health authorities. However, public sector bodies are carefully planning the complex process of restructuring and seeking to handle implementation of each phase of redundancy with sensitivity.As a result we are finding that the effective commencement of each project is later than anticipated.

“Outplacement accounts for around half of Penna’s net fee income and the remainder comes from recruitment-related services. In our Interim statement in November 2010 we stated that we expected recruitment demand to remain subdued during the balance of the year and that we had taken action to align our cost base accordingly. Headcount was 497 at the beginning of the company year and is now 375 and as a result personnel costs have been reduced by £5.2m on an annualised basis. Over the same period annualised fixed costs have been reduced by £0.6m.

“Cash at 31 December 2010 was £2.1 million and our only debt is a finance lease of £1.5m. Committed bank facilities of £3.0 million remain undrawn.

“In summary, we had expected that the increase of outplacement revenue from the public sector would offset some of the inevitable downturn in recruitment. However, because of the delayed timing of a significant proportion of outplacement revenue we now believe that profits in the year ended 31 March 2011 will be nominal.”