Professional services firm RSM Tenon has reported pre-tax losses of £102m and revealed it has shed 400 staff in an attempt to cut costs.
The group’s final results for the year ended June 30 show pre-tax losses grew from £1.5m in 2011 to £102m this year.
The huge losses are partially explained by exceptional costs totalled £73.1m, £63.7m of which is attributed to a good-will write-down plus a £4.3m cost arising from an FSA settlement with the firm dating back to 2010. The FSA fined RSM Tenon Financial Services Limited £700,000 for failings in its advice and sales processes for Lehman-backed structured products and also for failing to prevent unsuitable advice on structured product and pension switching.
The job cuts, first revealed in February, amount to a 12.5 per cent reduction in staff numbers and led to one-off costs of £17m. The firm currently has around 2,800 staff.
Current chairman Tim Ingram describes the results as “totally unsatisfactory” for both shareholders and other stakeholders.
Ingram says: “To say that the year ended 30 June 2012 was a disappointment would be an understatement; this year has been totally unsatisfactory for shareholders and other stakeholders. The results speak for themselves and are commented on in more detail below, but 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.
“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.”
A senior management reshuffle saw Adrian Martin step down as chairman in May after just three months in the role.
RSM Tenon renewed its financing arrangements with Lloyds Bank to run until 31 December 2014. The bank will provide provision of debt facilities totalling £93m.
The Accountancy and Actuarial Discipline Board launched a regulatory investigation into both RSM Tenon and its auditor PricewaterhouseCoopers in August over possible accounting errors.