TNO Rsm Tenon

TIDMTNO

RNS Number : 9734D

RSM Tenon Group PLC

03 May 2013

RSM Tenon Group PLC

Interim Management Statement

RSM Tenon Group PLC - Q3 Interim Management Statement

RSM Tenon Group PLC ("RSM Tenon" or "the Group"), today issues its interim management statement, covering 1 January 2013 to 3 May 2013, in accordance with the Disclosure and Transparency Rules of the UK Listing Authority.

Trading overview

Trading in the period under review has been similar to the first half of our financial year with revenue continuing under pressure due to general market conditions. Whilst we continue to achieve further cost efficiencies, the market for professional services remains challenging. Our close attention to cost reduction has meant that we have mitigated much of the pressure on revenue and we therefore expect underlying EBITDA to be towards the lower end of management expectations, but significantly ahead of the same period in 2012.

We have made substantial progress in a number of areas with some good business wins and improvements in the internal operating structure of the company. We have launched our new service line structure, as indicated in our interim results, and we are starting to see the benefits of this re-organisation. We recognise that there remains a long way to go, but are pleased with the progress that has been made.

Audit, Accounts and Outsourcing (AAO) and Tax have continued to show some variation by region and sub service line, consistent with the challenging market. Although they are now separate service lines, AAO and Tax continue to work closely together on shared clients, as well as seeking growth opportunities presented by their increased focus on their specialisms.

Transactions and Restructuring has seen a number of segments of its business trade in line with management expectations although the more transaction-based parts have been disappointing in an economy where there continues to be limited activity. We believe that this is consistent with the market generally.

Risk Advisory has continued to trade solidly and in line with expectations. The core internal audit segment has been resilient in competitive conditions whilst other segments covering risk advisory services and other consulting services have been more mixed although overall in line with our expectations.

Financial Management has continued to experience challenging and changing markets. New business is being generated at levels lower than previously expected as the retail market continues to adapt to the changes arising from RDR.

Financial position

We continue to manage our cash position carefully and have utilised less of our debt facilities over the period than we had forecast, meaning that we have maintained satisfactory levels of headroom within our debt facilities at all times.

As noted in our interim results, the covenants in relation to our banking arrangements were set on the basis of a larger business than we have now, with only a relatively small amount of headroom against potential reduction in revenue. The Group continues discussions with Lloyds Bank Commercial Banking Group about how best to reset the terms of the facility. Although we have yet to conclude those discussions, we remain in positive dialogue and Lloyds Bank has confirmed that it continues to be supportive of the continuation of the Group as a going concern.

Financial Management service line - FSA settlement agreement costs

As part of the FSA agreement in 2010, certain obligations were imposed on the Financial Management service line. As reported in the Company's half-yearly results for the six months ended 31 December 2012, a dispute arose between the Company and its insurers as to the extent and the manner to which the Company's professional indemnity insurance would respond to the costs resulting from these obligations. The dispute was referred for resolution by confidential arbitration. The Company has in the past expensed as exceptional items certain of these costs which whilst retaining others on the balance sheet as recoverable pending the outcome of arbitration on this matter. The arbitrator has now made an award as to how the costs should be borne. Now that the arbitration has substantially concluded the Company anticipates being reimbursed approximately GBP5.5 million in cash which will result in an exceptional profit in the 2013 accounts of approximately GBP2.8 million. The Company also anticipates that it will in due course be reimbursed for its costs associated with the arbitration.

Commenting on today's announcement Chief Executive, Chris Merry, said:

"We continue to make good progress in restoring RSM Tenon to operating profitability and to consolidate the business turnaround. The market for our services remains highly competitive and I am grateful to our clients and staff for their continued support."

3 May 2013

Disclaimer

Statements that look forward in time or that express RSM Tenon's beliefs, expectations or estimates about future prospects of the Group are subject to a number of risks and uncertainties that could change. These risks include, but are not limited to, general economic and market conditions as well as risks associated with the financial and professional services sector and those connected to financial and equity markets.

Enquiries:

 
 RSM Tenon              020 7535 1452 
 Chris Merry, CEO 
 Adrian Gardner, CFO 
 
 
 College Hill           020 7457 2020 
 Tony Friend 
 Antonia Coad 
 

This information is provided by RNS

The company news service from the London Stock Exchange

END

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