RSM Tenon's torrid year has been underlined by its latest results - showing £101.8m in pre-tax losses compared to the previous year's £1.4m loss.
But the firm's chief executive, Chris Merry highlighted the firm's renegotiated banking facilities as a sign that things were on the up, despite the results.
RSM Tenon's lenders, Lloyds, has confirmed facilities of £93m up to the end of December 2014.
'This is really important news, that the bank has renewed our facilities. It means that we're on very firm financial footing with strong support from Lloyds. And the slight increase in the facilities - up from £88m - is a mark of confidence that the bank has in the business. I think we have got the right level of headroom within which to operate going forward - and there's been absolutely no challenge from the bank as to whether this continues to be a viable business,' said Merry.
The mid-tier firm saw its revenue down 8.8% to £208m - the decrease was due to the lower levels of activity since headcount in the year was down 5.8%. In addition there were lower volumes of transaction-based services.
Tenon's chief financial officer, Adrian Gardner, said that there were reductions in revenue in each of the firm's service lines. Audit, tax and advisory, and turnaround and corporate recovery showed only low single digit percentage reductions - consistent with their markets. The core part of Tenon's risk management offering was substantially unchanged on the prior year while there were lower activity levels more evident in transaction-based services and financial management.
The firm's operating loss was £8.9m. Gardner explained that the result of this was that the group recorded an underlying loss for the year: 'As the headcount reduction programme was only initiated in the second half of the year, its positive impact (in the form of a lower employee benefit expense) was not fully evident in the year.
'Adding back depreciation and non-acquisition related amortisation of £5.2m (2011: £3.8m) gives an underlying EBITDA loss for the year of £3.7m (2011: profit of £22.3m) or an EBITDA margin of - 1.8% (2011: 9.8%). The substantially fixed nature of the cost base has meant that any decline in revenue has a direct and significant adverse impact on profit margins; the changes in management estimate referred to above have also had a negative impact on margins,' said Gardner.
The losses were also partially explained by a £73.1m exceptional cost of which £63.7m was attributed to a goodwill writedown. In addition the firm booked a £4.3m cost resulting from a settlement with the FSA after it was fined in 2010 for failings concerning its advice and sales processes for Lehman-backed structured products and for failing to prevent inappropriate advice for structured products and pension switching.
