Arbitration result could see RSM Tenon post £2.8m profit

A DECISION regarding RSM Tenon’s dispute with its insurers could see the firm post an exceptional profit for the next financial year, according to an interim management statement.

As reported by Accountancy Age in February, a dispute between the firm and its insurers was heard through an arbitration process.

The arbitrator has awarded RSM Tenon £5.5m in cash which wll result in the firm posting an exceptional profit of £2.8m in its 2013 accounts. RSM also anticipates it will be reimbursed for costs associated with the arbitration in due course although no indication of that figure has been given – the statement covering the period 1 January to 3 May shows.

The firm announced in its first half results it was engaged in an argument with its insurer over sharing the cost of remedial action against the Financial Services Authority. The FSA slapped the firm with a £700,000 fine for “significant failings” in its advice to collapsed bank Lehman Brothers.

However, although there was success with the arbitration there is still no news on agreeing new covenants on the firm’s credit facilities.

RSM Tenon was unable to reveal a new agreement with its sole lenders Lloyds Bank to “reset” the terms of the lending facility, however discussions remain ongoing.

In February’s interim results RSM Tenon said the covenants on its credit facilities were set and based on a larger firm than it now operates. Unless a reset was achieved it was likely to breach its covenants in the forthcoming 12 months.

Although no deal is yet published, the management remain positive an agreement will be reached, the latest interim management statement said.

RSM Tenon is continuing to suffer challenging market conditions. Revenues remain under pressure due to general market conditions and the ongoing difficult marketplace for professional services.

Chief executive Chris Merry (pictured) 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.”