17 Oct 2012 10:05am

RSM board upbeat despite £100m loss

RSM Tenon is hoping to draw a line under a "totally unsatisfactory" year after posting a pre-tax loss of £101.8m for the year ended 30 June 2012



   Chris Merry talks to economia about today's results


The listed mid-tier firm blamed the dramatic loss – compared to a loss of £1.49m in the previous year – on cost and debt spiralling out of control, but said that the underlying business remained resilient.

Revenue was down by 8.8% to £208.2m and the overall loss was £88.6m (against a profit of £0.97m in 2011), including a £63.7m impairment of goodwill.

Net debt rose from £68.2m to £78.3m over the year.

“To say that the year was a disappointment would be an understatement,” said chairman Tim Ingram.

"This year has been totally unsatisfactory for shareholders and other stakeholders. The results spoke for themselves."

Publication of results is the end of a chapter

Chris Merry

"It was unacceptable to have allowed a situation where costs had grown to be in excess of revenues, and bank indebtedness had become a multiple of the company’s market capitalisation," he added.

“Although the external economic environment has not been helpful, the main reason for this state of affairs is that the business had in the past simply not been managed in the way it should have been.

“Of critical importance are the changes that have been, and are being, made to enable the business to provide the profitable returns that it should – and can – provide for shareholders."

In January the group issued a profits warning and lost its chairman, Bob Morton, and CEO, Andrew Raynor. In February it was forced to restate its annual accounts after discovering after a review of past disclosures revealed "a limited number of significant errors and areas where accounting policies had not been applied consistently". The prior-year pre-tax profit was reduced by £12.1m.

The firm also announced a first half pre-tax loss of £83.7m.

However, the firm is keen to look to the future, with a new set of senior managers in place and new banking facilities agreed with Lloyds until 31 December 2014. Speaking to economia, chief executive Chris Merry also said the firm intended to remained listed on the London Stock Exchange, and that changing senior management titles to "partner" was to reflect the structure and feel of a partnership rather than preparing for a de-listing.

He said the firm was also looking to recruit people in certain key areas as it restructured its service lines and continued to rebuild confidence int he company. Watch the full interview above.

Merry said, “We are making the right changes to bring the firm together as One RSM Tenon. We are in a stable financial position with bank facilities in place for the next two years.

“Publication of results is the end of a chapter: we are now looking forward with confidence.”

In August, the Accountancy and Actuarial Discipline Board announced that it would be investigating the role of ICAEW members and RSM Tenon auditors PwC in the preparation, approval and audit of RSM’s financial statements for the years ended 30 June 2010 and 2011.

It was also looking into the preparation of financial information in connection with the group’s admission to the London Stock Exchange and the acquisition of fellow accountancy firm, RSM Bentley Jennison.


Julia Irvine


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