Preliminary Results

PENNA CONSULTING PLC

("Penna", the "Company" or "the Group")

Preliminary Results for the year ended 31 March 2011

7 June 2011

Penna Consulting Plc (PNA:AIM), the international human resources consulting group, today announces its preliminary unaudited results for the year ended 31 March 2011.

FINANCIAL HIGHLIGHTS

·; Revenue £80.2m (2010: £108.5m)

·; Net revenues £40.4m (2010: £50.9m)

·; Pre tax profits before non-recurring exceptional items £0.3m (2010: £7.3m)

·; Pre tax loss post non-recurring exceptional items £4.2m (2010: profit £3.6m)

·; Cash at year end £3.4m (31 March 2010: £5.3m)

·; Final dividend 1p (2010: 4p); total dividend for the year 4p (2010: 7p)

·; Diluted earnings per share (before non-recurring exceptional items) 0.95p (2010: 19.3p)

OPERATIONAL HIGHLIGHTS

·; New streamlined organisation under two divisions, Human Resource Consulting and Recruitment Solutions

·; Appointment of a new Managing Director for the Recruitment Solutions service group

·; Headcount reduced by 132 (27%) from 497 to 365

·; Space costs reduced by £0.9m (18%)

·; Growing pipeline of public sector revenues for outplacement and related restructuring services

·; Continuing low level of demand for recruitment services in the UK

Commenting on the results and outlook, Stephen Rowlinson, Chairman, said:

"Following the important changes in our organisation and cost structure we are confident that the company will remain profitable even if the current low level of demand continues in 2011/12.

We are not expecting significant growth for our recruitment services during the coming year but the prospects for Human Resource Consulting and, in particular our outplacement services, are more encouraging. We are seeing a steadily rising trend in demand from the public sector for outplacement and we are clearly well positioned as the market leader in the UK for these services. We have won a majority of the contracts tendered by central and local government bodies to handle their downsizing programmes but it has proved difficult to forecast the rate at which these projects will be implemented and we are therefore planning with caution."

ENDS

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Penna Consulting Plc

Chairman's Review

Following three previous years of profit growth 2010/11 was an exceptionally difficult year. The Government's recruitment freeze impacted our recruitment businesses adversely yet it is only now that our outplacement business is seeing increasing volumes as we implement public sector downsizing programmes.

Revenue for the year ended 31 March 2011 was £80.2m (2010: £108.5m) and net revenues £40.4m (2010: £50.9m). Profit before tax (before non-recurring exceptional items) was £0.3m (2010: £7.3m).

We believe we have maintained our market share in each sector and in particular our long term contracts to supply recruitment services to major private and public sector organisations remain in place. However, the expenditure per client has been - and remains - at a very low level and will not recover entirely until the reconstruction phase of the economy has been completed.

During the year we have implemented a wide ranging reorganisation and cost reduction programme to ensure that our cost base is in line with current market realities. We have organised the company into two major divisions - Human Resource Consulting and Recruitment Solutions - each led by a Managing Director. This will ensure that our marketing and operational strategies reflect the specific needs of these two sectors of the market. We will continue, however, to operate as a closely integrated company as the Penna brand and reputation are among our most important assets.

Headcount has reduced during the year by 132 (27%) from 497 to 365 and our space costs have been reduced by £0.9m (18%) by withdrawing from three properties. Redundancy costs of £1.9m and residual property costs of the vacated properties to end of leases of £1.5m have been provided for as non-recurring exceptional items in the accounts for the year.

Dividends

An interim dividend of 3p per share (2010: 3p) was paid on 10 March 2011. The Board is recommending a final dividend of 1p per share (2010: 4p) making a total dividend for the year of 4p (2010: 7p). The proposed final dividend will be payable on 27 October 2011 to shareholders on the register on 30 September 2011.

Outlook

Following the important changes in our organisation and cost structure we are confident that the company will remain profitable even if the current low level of demand continues in 2011/12.

We are not expecting significant growth for our recruitment services during the coming year but the prospects for Human Resource Consulting and, in particular our outplacement services, are more encouraging. We are seeing a steadily rising trend in demand from the public sector for outplacement and we are clearly well positioned as the market leader in the UK for these services. We have won a majority of the contracts tendered by central and local government bodies to handle their downsizing programmes but it has proved difficult to forecast the rate at which these projects will be implemented and we are therefore planning with caution.

Stephen Rowlinson

Chairman

7 June 2011

Operational and Financial Review

*Operating profit before non-recurring exceptional items

Human Resource Consulting, includes our market leading outplacement business (officially number one in the UK : ACF statistics), a board and executive coaching business, executive assessment practice, a new management training and development team, and an organisational and change consulting team.

The year reported on was challenging for our outplacement and other transition consulting businesses as the major restructuring within the banking sector largely completed in the previous year and the rest of the commercial sector was not engaging in any major restructures, mergers or acquisition activities, as they all struggle back to moderate recovery. In light of this stagnation of corporate activity a 10% return on net revenues was an acceptable result.

Historically our HR Consulting business has focused on the commercial sector (82% of net revenues) with the public sector having less need for such services as outplacement and assessment. This focus is changing as the public sector starts to implement the Government's downsizing plans and we are pleased with the progress in securing new contracts and framework positions. Over the last year we have secured 142 new contracts across the public sector. As phase two of the Government cutbacks commences, it is clear that natural attrition and a recruitment freeze will not achieve the large number (600,000) of job reductions required and therefore public sector organisations will need to take more proactive action. This will translate into the need for organisational design to reshape the departments, assessment services to objectively select people for redundancy, and outplacement to support those going through redundancy. Our outplacement and assessment services in this area place us in prime position to be the leading provider of career transition services across the public sector and we expect to see this come to fruition over the coming year.

In the commercial sector, we continue to provide outplacement across all sectors although at reduced levels compared with prior years and the business has won a number of significant contracts to provide a broad range of HR services including managed coaching, assessment and consulting projects.

Recruitment Solutions combines our service capabilities in recruitment advertising and communications, managed recruitment and assessment, executive search and executive interim. This broad range of recruitment activities enables us to offer clients in both the commercial and public sector innovative solutions to their recruitment needs. With 52% of net revenues deriving from clients in the public sector this has been a challenging year with vastly reduced recruitment opportunities following the Government's announcement in 2010 to freeze recruitment across the public sector. Whilst we are seeing some relaxation in local government recruitment and other areas, it is logical that the government will want to achieve the target headcount reductions through as much attrition and natural loss as possible. It is therefore likely that this sector will remain subdued throughout 2011.

Our client list across the public sector remains strong with ongoing contracts and relationships across a broad range of Government organisations, which when activity returns will put us in a strong position. Revenues (gross billings) reduced 26% on the previous year in line with the market contraction and net revenues fell by 13%, holding up slightly better with a more robust search and interim fee business.

With the advancement in digital routes to market for candidates (online attraction, the use of social media in recruitment, and virtual reality in assessment) it is clear that clients are looking for greater innovation and lower cost solutions to their recruitment needs. It is our plan to continue progress in this area.

Restructuring and non-recurring exceptional items

During the year we took the decision to consolidate our services into two core groups, Human Resource Consulting and Recruitment Solutions. By bringing together our advertising and attraction, managed recruitment and assessment, search and interim businesses as one service group, Recruitment Solutions, we are able to offer a more holistic solution to clients needs at a lower cost. To run this business, which represents 37% of the Group's net fee income, we recruited a new Managing Director.

This reorganisation enabled us to reduce the number of people in the respective teams and in particular the number of senior managers in the business. During the year we reduced headcount by 132 or 27% representing approximately £6.6m of annualised savings at a total cost of £1.9m which has been charged as a non-recurring exceptional item in the consolidated statement of comprehensive income.

We were able to further rationalise the property portfolio by consolidating our teams into one office in Leeds and in Edinburgh and reducing our exposure to one of the largest of our four London offices by moving all our London based recruitment staff into one office. The cost of these vacant properties has been provided in full to the end of their respective leases and a charge of £1.5m is included as a non-recurring exceptional item.

The remaining balance of the non-recurring exceptional items is made up of a provision against a trade receivable (£0.6m) and the write down of an intangible asset (£0.5m) relating to contracts acquired as part of the Barkers Group acquisition in 2009. The provision against the trade receivable has been made as it relates to invoices raised in 2009 and, whilst the Directors believe it is fully recoverable, they believe that, due to its age, it is now appropriate to make a full provision.

Taxation

Taxation has been provided at 28% and the tax loss incurred is available for carrying back which will result in a refund of circa £0.65m in the year. A deferred tax asset has been established as the tax losses carried forward are expected to be recoverable in future years.

Dividends

An interim dividend of 3p per share (2010: 3p) was paid on 10 March 2011. Your Board is recommending a final dividend of 1p per share (2010: 4p) making a total dividend for the year of 4p (2010: 7p). The proposed final dividend will be payable on 27 October 2011 to shareholders on the register on 30 September 2011.

Earnings per share

Basic adjusted earnings per share is 0.97p before exceptional costs (2010: 20.8p) and adjusted diluted earnings per share, taking into account the potential dilution of existing options, is 0.95p (2010: 19.3p).

Balance sheet

The Group's net assets at 31 March 2011 were £18.3m (2010: £22.8m) a reduction of £4.5m reflecting the net loss for the year of £2.9m and the payment of £1.8m in dividends. The remaining movements relates to share issues and buy-backs details of which are below.

The Group had a cash balance of £3.4m at 31 March 2011 (2010: £5.3m) and has outstanding finance leases of £1.3m repayable in equal monthly instalments by July 2013. The Group has working capital facilities with Barclays through a secured invoice discounting facility of up to £3.0m available until June 2012 which was unutilised throughout the year.

Cashflow

After working capital movements, £0.3m of cash was absorbed by operations in the year. Tax and dividends paid amounted to £0.3m and £1.8m respectively. Capital expenditure of £0.9m was offset by the drawdown of £1.7m of asset financing, of which £0.4m has been repaid during the year.

The Company received £0.3m from employees exercising options over 276,912 shares in the year at an exercise price of 100p. The Company acquired 133,000 of its own shares at a cost of £0.2m in July 2010 and these shares are held in treasury to meet future share option obligations.

Consolidated statement of comprehensive income

for the year ended 31 March 2011 (unaudited)

Penna Consulting Plc

Consolidated statement of changes in equity

at 31 March 2011 (unaudited)

Penna Consulting Plc

Consolidated statement of cash flow

for the year ended 31 March 2011 (unaudited)

Penna Consulting Plc

Notes to the preliminary announcement

for the year ended 31 March 2011 (unaudited)