TIDMTNO
RNS Number : 6590Y
RSM Tenon Group PLC
26 February 2013
RSM Tenon Group PLC
Interim Results for the six months ended 31 December 2012
RSM Tenon Group PLC, the national professional services firm,
today announces its interim results for the six months ended 31
December 2012.
Key points
-- Underlying* EBITDA GBP1.5m (2011 EBITDA loss GBP8.2m)
-- Revenue of GBP88.4m down by GBP9.8m and operating costs at GBP86.9m down by GBP19.5m
-- Underlying operating loss of GBP0.6m (2011 underlying operating loss GBP10.9m)
-- Continued focus on cost efficiency
-- Loss on continuing operations of GBP8.9m (2011 GBP70.0m)
-- Adjusted loss from continuing operations per share 0.88p
(2011 restated: loss per share 2.79p)
-- Net borrowings of GBP80.4m compared to total facilities of
GBP93.0m at 31 December 2012 (2011 GBP76.5m)
-- We remain in close and regular contact with Lloyds, our sole
bankers, about the ongoing level of debt, given the reduced size of
the business
*Before amortisation of acquired intangibles, deferred
consideration interest and exceptional items
Tim Ingram, Chairman, commented:
"The significant progress in turning RSM Tenon around is
evidenced by these results. The business is now smaller, better
organised and properly managed. In a challenging market, we still
have much to do, but the direction has been clearly set."
Chris Merry, Chief Executive, commented:
"Markets for our services remain tough and I am grateful to our
clients and staff for their continued loyalty. We are delighted
that the business is returning to operating profitability and now
seek a period of stability to move into a growth phase for RSM
Tenon."
26 February 2013
Enquiries:
RSM Tenon 020 7535 1452
Chris Merry, CEO
Adrian Gardner, CFO
College Hill 020 7457 2020
Tony Friend
Antonia Coad
Introduction
RSM Tenon Group PLC and its subsidiaries ("RSM Tenon" or "the
Group") made huge progress in the calendar year of 2012. In the 12
months since our last interim results, we have taken significant
action to reduce costs, control cash and restructure the business.
The impact of our actions can clearly be seen in the results for
the 6 months to 31 December 2012. In particular, RSM Tenon has
returned to underlying EBITDA profitability, having been in a loss
making position for the same period in 2012. This has largely been
achieved by cutting costs, against the background of a competitive
market where revenue remains under pressure across the
industry.
The most significant costs for a business of our size and type
are people and property. In the short to medium term, material cost
savings can only be achieved from reducing headcount and this has
been done. We have plans to reduce our property costs, but by their
nature and the length of the property leases, these can only be
implemented over the medium to long term.
Our headcount has continued to reduce. On average we had 2,666
employees during the period to 31 December 2012 compared to 3,166
last year. Most of the reduction in the current financial year has
been through natural attrition rather than redundancy, as we
continue to shape the business to a more efficient structure.
Headcount reductions have had an impact on revenue and consequently
we approach any further reductions in staff with extreme care. Most
importantly, we continue to recruit in key areas, including at
Partner level, and have been delighted to welcome 247 new joiners
during the first six months of the financial year.
In our first quarter interim management statement issued on 19
November 2012, we noted that turnover had been at the lower end of
management's expectations and that careful cost management had
resulted in profitability being in line with our expectations. The
second quarter, although a period of higher activity, has been
similar, with revenue continuing under pressure and with further
cost efficiencies being delivered.
There is still a lot to do but significant improvements have
been made, on which we intend to build.
Financial overview of the results for the six months ended 31
December 2012
6 months to 6 months to Movement
31 December 31 December
2012 2011
Unaudited Unaudited
GBPm GBPm GBPm
------------------------------------ ------------- ------------- ---------
Revenue - continuing operations 88.4 98.2 (9.8)
Operating expenses excluding
depreciation and non-acquisition
related amortisation* (86.9) (106.4) 19.5
EBITDA* 1.5 (8.2) 9.7
Depreciation and non-acquisition
related amortisation (2.1) (2.7) 0.6
Underlying operating loss* (0.6) (10.9) 10.3
Finance costs, tax, exceptional
items, discontinued operations,
acquisition related amortisation,
deferred consideration interest (9.4) (59.7) 50.3
Loss for the period (10.0) (70.6) 60.6
Basic EPS (pence) (3.11) (21.90) 18.79
*Before amortisation of acquired intangibles, deferred
consideration interest and exceptional items
Against the background of a flat UK economy, the market for our
services remains challenging and highly competitive. We continue to
experience significant price pressure on our core services,
together with lower demand for discretionary and transaction based
services. As a result, revenue in the 6 months to 31 December 2012
declined by GBP9.8m or 10.0%. Approximately GBP4m of this reduction
was attributable to business disposals or cessation or
discontinuities of certain activities in various offices which are
not individually sufficiently material to be recognised as
"discontinued activities". The balance of the revenue reduction was
primarily as a result of market conditions in Audit, Tax and
Advisory (ATA), lower new business wins, in part due to the
introduction of the Retail Distribution Review (RDR), for Financial
Management and continued downward pressure on revenues in the
insolvency and restructuring market.
Notwithstanding the reduction in revenue, there have been
increases in productivity. Average headcount reduced by 16% from
the comparable period a year ago (and employee benefit expense was
lowered to a comparable extent, reducing by GBP11.3m or 15%).
Consequently, underlying revenue per client facing employee has
increased by 6% and underlying revenue per Partner by approximately
11%. Delivering such an improvement has been a key focus for the
Group.
As evidenced by the reduction in employee benefit cost noted
above, we have taken aggressive action to reduce costs. Total
operating costs (excluding exceptional items, depreciation and
non-acquisition related amortisation) were reduced by GBP19.5m or
18.3% from GBP106.4m to GBP86.9m. As a result, our underlying
operating loss reduced from GBP10.9m to GBP0.6m.
Operating exceptional charges for the period were GBP4.5m,
reduced from GBP66.5m in 2011. These costs in 2012 related to
professional indemnity expenses in our Financial Management
business of GBP1.9m and business reorganisation costs of GBP2.6m
(being redundancy costs and professional fees). After exceptional
costs, the loss for the period was GBP10.0m (2011 GBP70.6m).
On 1 February 2013, we announced the appointment of BDO as the
auditor for RSM Tenon Group and they will report on our full year
results.
Service line performance
Revenue Operating (loss)/profit*
6 months to 6 months to 6 months to 6 months to
31 December 31 December 31 December 31 December
2012 2011 2012 2011
Unaudited Unaudited Unaudited Unaudited
GBPm GBPm GBPm GBPm
---------------------- ------------- ------------- ------------- -------------
ATA 47.6 52.4 6.9 0.4
Recovery 15.9 20.2 1.8 -
Risk Management 13.9 12.9 1.4 0.7
Financial Management 11.0 13.1 (0.6) (0.9)
Unallocated
costs - (0.4) (10.1) (11.1)
Total 88.4 98.2 (0.6) (10.9)
---------------------- ------------- ------------- ------------- -------------
* Before amortisation of acquired intangibles, deferred
consideration interest and exceptional items
Our ATA service line comprised 54% of our business. Revenue
reduced by 9.2% compared to the same period in the prior year.
Approximately 40% of this reduction came from minor disposals and
the balance has arisen from the market remaining tough for our
services and as we continue to experience pricing pressure.
Transactional services continue at historically low levels. We
continue to benefit from our membership of the RSM International
network, with a year on year increase in revenue from clients
referred to us by member firms in other countries. We have reduced
headcount in ATA and have seen considerable efficiency gains.
Underlying revenue per client facing employee has increased by over
6% and underlying revenue per Partner by over 14%.
In our Turnaround and Corporate Recovery service line
(Recovery), recent trends in the industry have continued, whereby
fewer companies have entered into administration or receivership
than would otherwise be expected at this point in the economic
cycle. Coupled with some internal restructuring and changes in
senior personnel, this has resulted in revenue falling by 21%. We
have taken action to reposition the cost base and the benefit of
this should be seen in future periods. We have maintained our
market position as the UK's second largest corporate appointment
taker and largest bankruptcy appointment taker.
Our Risk Management service line increased turnover by GBP1.0m
to GBP13.9m, an increase of 7.8%. This has arisen from a solid
performance in our core internal audit service and some good
performances in the ancillary services included within this service
line.
In our Financial Management service line we have seen new
business being generated at levels lower than previously expected.
This is believed in part to be market reaction and uncertainty
ahead of RDR and partly due to caution on behalf of corporate
customers in implementing new schemes. We have focused on the costs
in this business and have restructured parts of it better to
address its markets. The benefit of this is likely to be seen in
future periods. The Financial Management business has been
reorganised into national lines on: corporate clients; individuals
who require a full face-to-face planning offering; and a team
servicing clients that do not need a face-to-face service with the
latter being branded as Link2Wealth. This will aid transparency
around the services we provide by differentiating our transaction
and investment management business from our financial planning
business, as required by RDR.
Funding and cash flow
Net debt at 31 December 2012 was GBP80.4m (2011 GBP76.5m). We
guarantee the overdraft of RSM Tenon Audit Limited (an associate of
the group - see note 21) which had borrowings at 31 December 2012
of GBP2.2m (2011 GBP2.5m). The net debt of the Group and the
overdraft of RSM Tenon Audit Limited are adequately covered by
current bank facilities of GBP93m.
The Group renegotiated its term loan facilities with Lloyds in
October 2012. In summary, the facilities of GBP93m were agreed as
follows: GBP50m term loan to December 2014; GBP20m term loan to
December 2014; GBP13.5m revolving credit facility; and GBP9.5m
overdraft.
As explained above, RSM Tenon made huge progress in 2012.
However, our cost and headcount reductions have resulted in a
smaller business than 6 months ago.
The covenants in relation to our banking arrangements were
tightly drawn, with only a relatively small amount of headroom
against potential reduction in revenue. The covenants and other
terms of the facility tighten over time, particularly in the second
half of the 2014 financial year, and were set on the basis of a
larger business than we have now. Accordingly, the Group has
entered into discussions with Lloyds to reset the terms of the
facility: without such a facility reset, there is significant risk
of a facility breach in the forthcoming 12 month period. Whilst to
date Lloyds has not agreed to this reset, we remain in positive
dialogue with the bank and Lloyds has confirmed that it continues
to be supportive of the continuation of the Group as a going
concern and the Directors of the Group have prepared the interim
accounts on this basis.
We continue to focus on the conversion of earnings into cash and
the efficient management of working capital. In the first half of
our financial year, as we pay certain liabilities accrued at the
year end, we expect less cash to be generated than operating
profits generated. This has also been the case this year where the
operating loss was GBP0.6m and cash outflow from operating
activities was GBP2.7m. However, adjusting for the payment of these
regular accrued liabilities, we continued the good performance
whereby we generated cash in excess of the recorded operating
result.
This position arose in part from the continued focus on working
capital. At 31 December 2012, "lock up days" (the number of days'
debtors and work in progress) and in the prior year figure was 92
compared to 93 (excluding the impact of Premier Strategies) at 31
December 2011. Debt over 90 days approximately halved on a like-for
like basis and stood at GBP3.8m at 31 December 2012.
As with the six months to 31 December 2011, no interim dividend
is proposed in relation to the six months to 31 December 2012. The
Directors do not anticipate recommending a dividend for the full
year to 30 June 2013 (2012: Nil).
Further actions to improve profitability and cash generation
In our Annual Accounts, published on 17 October 2012, we
committed to achieving further operating efficiencies, refining our
structure, and continuing our efforts to return the business to an
acceptable level of profitability.
Operating efficiencies amongst other things come from improved
use of technology for efficient working, increased sharing of
resources between offices, better knowledge sharing and enhanced
use of our national purchasing power to reduce costs.
We have revised our organisation structure and this came into
effect on 1 January 2013. It is a matrix and has 2 elements:
service lines and markets. The service lines are Audit, Accounts
and Outsourcing (AAO); Tax; Transactions and Restructuring
(including Corporate Finance); Risk Advisory (RA); and Financial
Management. The markets are: SMEs; Private Clients; Public Sector;
Large Corporates; Financial Services; Private Equity; and
International. The main change to service lines is to separate ATA
into 2 service lines: AAO, and Tax.
As part of delivering further operating efficiencies, we have
introduced the Retain staff planning software nationally across
AAO, Tax and RA to improve resource planning and staff sharing. We
have rolled out Citrix nationally in AAO and Tax to facilitate
remote working. We continue to focus on improved communication
(helped by our new structure) and better organisation of data to
improve knowledge sharing. We have used our national purchasing
power to contribute to our reduction in overhead costs.
The new structure is an important part of our future success. It
makes it easier for our clients to identify, understand and access
our services and supports growth through market focused service
lines. The structure better aligns our resources to our areas of
expertise and opportunity. It creates a more even split of our
business, which increases resilience and is easier to manage.
In addition to achieving additional cost savings through
headcount reduction and operating efficiencies, a key project over
the past six months has been to gain a better understanding of
profitability, including on a client and assignment basis. This has
resulted in further improvements to management information,
including the ability to analyse and price projects on a full
absorption cost basis.
As noted above, our headcount has continued to reduce and the
reduction has had an impact on revenue. We approach any further
staff reductions with extreme care and are focused on staff
efficiencies, quality and growth initiatives through the service
lines in the new structure.
Current trading
Since the period end, trading has continued to be subject to the
themes outlined above and we have continued to pursue appropriate
cost efficiencies.
Board changes
David Jeffcoat was appointed as Non-Executive Director and
Chairman of the audit committee on 4 July 2012. Nicholas Page was
appointed as Non-Executive Director and Chairman of the
Remuneration Committee with effect from 18 October 2012. Bob Morton
retired from the Board at the Annual General Meeting on 6 December
2012. Chris Crouch retired as Company Secretary on 13 February 2013
and Joanne Jolly was appointed as Group General Counsel and Company
Secretary on the same date.
Risks and uncertainties
The principal risks and uncertainties facing the Group are
unchanged from those set out on pages 13 and 14 of the Annual
Report and Accounts, a copy of which is available on the Group's
website. Those risks and uncertainties can be summarised as
follows:
External Funding The Group has substantial levels of borrowings,
and is reliant on being able to access
these on an ongoing basis.
---------------------------- --------------------------------------------------
Quality Significant quality failure in any of
our service lines due either to taking
on inappropriate clients or to delivering
inadequate services may lead to litigation,
regulatory action or reputational damage.
---------------------------- --------------------------------------------------
People The Group's ability to provide quality
services to its clients depends on its
ability to attract, retain and develop
talented people.
---------------------------- --------------------------------------------------
Economic Environment The Group operates in a highly competitive
environment, with significant price pressure
on all service lines. Some of our services,
including corporate finance and corporate
recovery, are transactional in nature
and dependent on economic and market conditions.
---------------------------- --------------------------------------------------
Independence and Regulatory Failure to comply with relevant independence,
Requirements legal, ethical, regulatory, or professional
requirements.
---------------------------- --------------------------------------------------
Infrastructure The Group's ability to provide quality
services to its clients depends on availability
of IT and knowledge systems both in our
offices and at client's premises.
---------------------------- --------------------------------------------------
The risks and mitigating activities are unchanged from those set
out in the Annual Report and Accounts 2012. These risks should not
be regarded as a comprehensive list of all the risks and
uncertainties the Group may face which could adversely affect its
performance.
Statement of Director's responsibilities
The Directors confirm that, to the best of their knowledge, the
consolidated interim financial report has been prepared in
accordance with IAS 34 as adopted by the European Union. The
interim management report includes a fair review of the information
required by DTR 4.2.7R and DTR 4.2.8R, namely:
-- an indication of important events that have occurred during
the first six months of the financial year and their impact on the
consolidated interim financial report, and a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and
-- material related-party transactions in the first six months
of the financial year and any material changes in the related party
transactions described in the last Annual Report.
The Directors of RSM Tenon Group PLC and their functions are as
listed below:
Tim Ingram, Chairman
Chris Merry, Chief Executive Officer
Adrian Gardner, Chief Financial Officer
Nicholas Page, Non-Executive Director
David Jeffcoat, Non-Executive Director
John Newman, Non-Executive Director
The Directors are responsible for the maintenance and integrity
of the Group's website. Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
By order of the Board
Chris Merry Tim Ingram
Chief Executive Officer Chairman
26 February 2013
Disclaimer
Statements that look forward in time or that express RSM Tenon's
beliefs, expectations or estimates about future prospects and
strategy of the Group are forward looking statements. By their
nature, forward looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that will
occur in the future. 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. Many of these risks and
uncertainties relate to factors either beyond RSM Tenon's control
or which cannot be estimated precisely, such as future market
conditions and the behaviour of the market participants. Actual
outcomes and results may therefore differ materially from any
outcomes or results expressed or implied by any such forward
looking statements.
Any forward looking statements speak only as of the date they
are made and RSM Tenon gives no undertaking to update forward
looking statements to reflect any changes in its expectations with
regard thereto or any changes to events, conditions or
circumstances on which any such statement is based.
Consolidated income statement
for the 6 months to 31 December 2012
6 months 6 months to Year ended
to 31 December 30 June
31 December 2011 2012
2012 Unaudited Audited
Notes Unaudited GBP000 GBP000
GBP000
Revenue - continuing operations 2 88,425 98,179 202,859
External charges: direct expenses (5,115) (5,995) (12,001)
Employee benefit expense 3 (63,228) (74,545) (153,683)
Employee share scheme costs 3 (396) (375) (743)
Depreciation of tangible assets (1,659) (2,180) (3,919)
Amortisation of intangible
assets 8 (3,152) (3,945) (7,411)
Other operating charges (22,742) (91,907) (118,198)
------------------------------------- -------- ------------- ------------- -----------
Operating loss (7,867) (80,768) (93,095)
------------------------------------- -------- ------------- ------------- -----------
Underlying operating loss (615) (10,863) (9,742)
Amortisation of acquired intangible
assets 5 (2,742) (3,446) (6,172)
Exceptional items 5 (4,510) (66,459) (77,181)
------------------------------------- -------- ------------- ------------- -----------
Finance income 4 286 7 21
Finance costs 4 (3,253) (2,297) (9,734)
Underlying finance cost (3,041) (1,797) (6,590)
Exceptional items 5 (212) (500) (3,144)
------------------------------------- -------- ------------- ------------- -----------
Profit on sale of subsidiaries
and business undertakings 12 3,324 - -
Share of net profit of joint
ventures 40 35 126
------------------------------------- -------- ------------- ------------- -----------
Loss on ordinary activities
before taxation (7,470) (83,023) (102,682)
Tax on loss on ordinary activities 6 (1,465) 13,012 13,546
------------------------------------- -------- ------------- ------------- -----------
Loss on continuing operations (8,935) (70,011) (89,136)
------------------------------------- -------- ------------- ------------- -----------
Discontinued operations
(Loss)/profit for the period
from discontinued operations 12 (1,099) (635) 442
------------------------------------- -------- ------------- ------------- -----------
Loss for the period (10,034) (70,646) (88,694)
------------------------------------- -------- ------------- ------------- -----------
Loss attributable to:
Equity holders of the parent (10,034) (70,501) (88,500)
Non-controlling interest - (145) (194)
------------------------------------- -------- ------------- ------------- -----------
Loss for the period (10,034) (70,646) (88,694)
------------------------------------- -------- ------------- ------------- -----------
Basic loss per 1p share
From continuing operations 7 (2.77) (21.70) (27.64)
From discontinued operations 7 (0.34) (0.20) 0.14
------------------------------------- -------- ------------- ------------- -----------
From loss for the period (3.11) (21.90) (27.50)
------------------------------------- -------- ------------- ------------- -----------
Diluted loss per 1p share
From continuing operations 7 (2.77) (21.70) (27.64)
From discontinued operations 7 (0.34) (0.20) 0.14
------------------------------------- -------- ------------- ------------- -----------
From loss for the period (3.11) (21.90) (27.50)
------------------------------------- -------- ------------- ------------- -----------
Adjusted loss per 1p share
From continuing operations 7 (0.88) (2.79) (3.83)
From discontinued operations 7 (0.34) (0.20) 0.37
------------------------------------- -------- ------------- ------------- -----------
From loss for the period (1.22) (2.99) (3.46)
------------------------------------- -------- ------------- ------------- -----------
Consolidated statement of comprehensive income
for the 6 months to 31 December 2012
6 months 6 months to Year ended
to 31 December 30 June
31 December 2011 2012
2012 Unaudited Audited
Unaudited GBP000 GBP000
GBP000
Loss for the period (10,034) (70,646) (88,694)
Other comprehensive income:
Cash flow hedges (567) (4,113) -
Actuarial losses in defined
benefit pension plans - - (34)
-------------------------------------- ------------- ------------- -----------
Other comprehensive income
for the period, net of tax (567) (4,113) (34)
-------------------------------------- ------------- ------------- -----------
Total comprehensive income
for the period (10,601) (74,759) (88,728)
-------------------------------------- ------------- ------------- -----------
Attributable to:
Equity holders of the parent (10,601) (74,614) (88,534)
Non-controlling interest - (145) (194)
-------------------------------------- ------------- ------------- -----------
Total comprehensive income
for the period (10,601) (74,759) (88,728)
-------------------------------------- ------------- ------------- -----------
Total comprehensive income
attributable to equity shareholders
arises from:
Continuing operations (9,502) (74,124) (89,170)
Discontinued operations (1,099) (635) 442
-------------------------------------- ------------- ------------- -----------
Total comprehensive income
for the period (10,601) (74,759) (88,728)
-------------------------------------- ------------- ------------- -----------
Discontinued operations includes the non-controlling
interest.
Consolidated balance sheet
at 31 December 2012
31 December 31 December 30 June
2012 2011 2012
Unaudited Unaudited Audited
Notes GBP000 GBP000 GBP000
Assets
Non-current assets
Goodwill 8 71,106 75,573 72,603
Other intangible assets 8 33,433 39,829 36,585
------------------------------------- -------- ------------ ------------ ---------
Intangible assets 104,539 115,402 109,188
Property, plant and equipment 5,099 6,769 6,445
Investment in joint ventures 279 91 239
Available-for-sale financial
assets - 115 19
Deferred income tax assets 11 12,443 13,017 13,648
------------------------------------- -------- ------------ ------------ ---------
Total non-current assets 122,360 135,394 129,539
------------------------------------- -------- ------------ ------------ ---------
Current assets
Trade and other receivables 10 73,378 81,158 73,738
Cash 1,211 - -
Total current assets 74,589 81,158 73,738
Assets of disposal group classified
as held-for-sale - - 673
------------------------------------- -------- ------------ ------------ ---------
Total assets 196,949 216,552 203,950
------------------------------------- -------- ------------ ------------ ---------
Liabilities
Non-current liabilities
Borrowings 13 69,516 1,485 1,456
Trade and other payables 15 4,403 - -
Deferred income tax liabilities 11 4,180 3,648 3,921
Provisions for liabilities 14 4,009 9,843 8,850
------------------------------------- -------- ------------ ------------ ---------
Total non-current liabilities 82,108 14,976 14,227
------------------------------------- -------- ------------ ------------ ---------
Current liabilities
Trade and other payables 15 38,492 48,659 47,600
Derivative financial liabilities 7,344 6,288 6,901
Corporation tax liabilities 1,900 1,442 1,900
Borrowings 13 12,076 74,987 76,816
Provisions for liabilities 14 14,542 5,412 6,358
------------------------------------- -------- ------------ ------------ ---------
Total current liabilities 74,354 136,788 139,575
Liabilities of disposal group
classified as held-for-sale - - 453
Total liabilities 156,462 151,764 154,255
------------------------------------- -------- ------------ ------------ ---------
Equity
Equity attributable to owners
of the parent
Ordinary shares 16 3,225 32,252 32,252
Share premium 16 70,948 70,948 70,948
Capital redemption reserve 16 29,027 - -
Merger reserve 26,879 26,879 26,879
Investment revaluation reserve - 4 -
Share warrant reserve 17 996 - -
Accumulated losses (90,588) (65,147) (80,187)
------------------------------------- -------- ------------ ------------ ---------
Equity attributable to owners
of the parent 40,487 64,936 49,892
Non-controlling interest - (148) (197)
------------------------------------- -------- ------------ ------------ ---------
Total equity 40,487 64,788 49,695
Total liabilities and equity 196,949 216,552 203,950
------------------------------------- -------- ------------ ------------ ---------
Consolidated statement of changes in equity
for the 6 months to 31 December 2012
(Accumulated losses)/
Share Capital Investment Share retained earnings Non-controlling Total
Share premium Redemption Merger revaluation warrant GBP000 interest GBP000 shareholders'
capital account Reserve reserve reserve reserve equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1
July 2011 32,252 70,948 - 26,879 4 - 9,118 (3) 139,198
----------------- ------------ --------- ------------ --------- ------------- --------- ---------------------- ----------------- ---------------
Comprehensive
income
Loss for the
period - - - - - - (70,501) (145) (70,646)
Other comprehensive income
Cash flow hedges - - - - - - (4,113) - (4,113)
Total
comprehensive
income for the
period - - - - - - (74,614) (145) (74,759)
----------------- ------------ --------- ------------ --------- ------------- --------- ---------------------- ----------------- ---------------
Transactions
with owners
Employee share
option scheme:
- value of
employee
services - - - - - - 375 - 375
- deferred tax
on share
option scheme - - - - - - (26) - (26)
- - - - - - 349 - 349
----------------- ------------ --------- ------------ --------- ------------- --------- ---------------------- ----------------- ---------------
Balance at 31
December 2011 32,252 70,948 - 26,879 4 - (65,147) (148) 64,788
----------------- ------------ --------- ------------ --------- ------------- --------- ---------------------- ----------------- ---------------
Comprehensive
income
Loss for the
period - - - - - - (13,603) (49) (13,652)
Other
comprehensive
income
Actuarial loss
recognised on
pension schemes - - - - - - (34) - (34)
Total
comprehensive
income for the
period - - - - - - (13,637) (49) (13,686)
----------------- ------------ --------- ------------ --------- ------------- --------- ---------------------- ----------------- ---------------
Transactions
with owners
Employee share option scheme:
- value of
employee
services - - - - - - 368 - 368
- deferred tax
on share
option scheme - - - - - - (1) - (1)
Maturity of
investments - - - - (4) - 4 - -
Dividends
relating to
June 2011 - - - - - - (1,774) - (1,774)
- - - - (4) - (1,403) - (1,407)
----------------- ------------ --------- ------------ --------- ------------- --------- ---------------------- ----------------- ---------------
Balance at 30
June 2012 32,252 70,948 - 26,879 - - (80,187) (197) 49,695
----------------- ------------ --------- ------------ --------- ------------- --------- ---------------------- ----------------- ---------------
Comprehensive
income
Loss for the
period - - - - - - (10,034) - (10,034)
Disposal of
non-controlling
interest - - - - - - (197) 197 -
----------------- ------------ --------- ------------ --------- ------------- --------- ---------------------- ----------------- ---------------
(10,231) 197 (10,034)
Other comprehensive income
Cash flow hedges - - - - - (567) - (567)
----------------- ------------ --------- ------------ --------- ------------- --------- ---------------------- ----------------- ---------------
Total
comprehensive
income for the
period - - - - - (10,798) 197 (10,601)
----------------- ------------ --------- ------------ --------- ------------- --------- ---------------------- ----------------- ---------------
Transactions
with owners
Employee share option scheme:
- value of
employee
services - - - - - - 396 - 396
- deferred tax
on share option
scheme - - - - - - 1 - 1
Cancellation of
deferred shares (29,027) - 29,027 - - - - - -
Fair value of
warrants
granted - - - - - 996 - - 996
----------------- ------------ --------- ------------ --------- ------------- --------- ---------------------- ----------------- ---------------
(29,027) - 29,027 - - 996 397 - 1,393
----------------- ------------ --------- ------------ --------- ------------- --------- ---------------------- ----------------- ---------------
Balance at 31
December 2012 3,225 70,948 29,027 26,879 - 996 (90,588) - 40,487
----------------- ------------ --------- ------------ --------- ------------- --------- ---------------------- ----------------- ---------------
Consolidated statement of cash flows
for the 6 months to 31 December 2012
31 December 31 December 30 June
2012 2011 2012
Unaudited Unaudited Audited
Note GBP000 GBP000 GBP000
Cash flows from operating activities
Loss before taxation (7,470) (83,023) (102,683)
Exceptional items 5 4,510 66,459 77,181
Net finance costs 4 2,967 2,290 9,713
Employee share scheme costs 3 396 375 743
Depreciation of property, plant
and equipment 1,659 2,180 3,919
Loss on disposal of property,
plant and equipment 6 3 3
Amortisation of intangible assets 8 3,152 3,945 7,411
Profit on disposal of subsidiary (3,324) - -
undertakings and businesses
Share of profit on joint venture (40) (35) (126)
(Increase)/decrease in trade
and other receivables (3,603) (2,073) 1,633
(Decrease)/increase in trade
and other payables (3,782) 7,203 7,800
Increase in provisions for liabilities
and charges 2,807 3,472 3,468
---------------------------------------- ------- ------------ ------------ ----------
Cash flow from operating activities,
before exceptional items (2,722) 796 9,062
Cash flow from exceptional items (7,718) (3,051) (8,826)
---------------------------------------- ------- ------------ ------------ ----------
Cash flows from operating activities (10,440) (2,255) 236
Interest paid (1,553) (2,160) (2,175)
Net cash flows from operating
activities of continuing operations (11,993) (4,415) (1,939)
---------------------------------------- ------- ------------ ------------ ----------
Net cash flows from operating
activities of discontinued operations (229) (28) (65)
---------------------------------------- ------- ------------ ------------ ----------
Net cash flows from operating
activities (12,222) (4,443) (2,004)
---------------------------------------- ------- ------------ ------------ ----------
Cash flows from investing activities
Net cash disposed with subsidiary
undertakings and (124) - -
businesses
Deferred consideration on purchase
of subsidiary
undertakings and businesses (1,314) (3,470) (4,270)
Net consideration on disposal
of subsidiary undertakings and 9,433 - -
businesses
Investment in joint ventures - 192 135
Purchase of property, plant and
equipment (326) (554) (2,008)
Proceeds of maturity of financial
assets 19 - 119
Interest received 4 18 7 21
Interest paid on finance leases 4 (100) (194) (302)
---------------------------------------- ------- ------------ ------------ ----------
Net cash flows from investing
activities of continuing activities 7,606 (4,019) (6,305)
---------------------------------------- ------- ------------ ------------ ----------
Net cash flows from investing
activities of discontinued activities - - (18)
---------------------------------------- ------- ------------ ------------ ----------
Net cash flows from investing
activities 7,606 (4,019) (6,323)
---------------------------------------- ------- ------------ ------------ ----------
Cash flows from financing activities
Dividends paid to shareholders - - (1,774)
Loans received 25,715 2,353 2,643
Repayment of loans (3,814) (1,754) (2,471)
Capital element of finance lease
repayments (984) (1,166) (2,303)
New finance lease on existing
assets - 25 1,183
---------------------------------------- ------- ------------ ------------ ----------
Net cash flows from financing
activities of continuing activities 20,917 (542) (2,722)
---------------------------------------- ------- ------------ ------------ ----------
Cash flows from financing activities 20,917 (542) (2,722)
---------------------------------------- ------- ------------ ------------ ----------
Increase/(decrease) in cash in
the period 16,301 (9,004) (11,049)
Overdraft at start of period (15,090) (4,041) (4,041)
---------------------------------------- ------- ------------ ------------ ----------
Cash/(overdraft) at end of period 1,211 (13,045) (15,090)
---------------------------------------- ------- ------------ ------------ ----------
Notes to the interim results for the 6 months to 31 December
2012
1 Basis of preparation and key accounting policies
The interim financial information has been prepared in
accordance with IFRS (as adopted by the EU), in accordance with the
accounting policies as set out in the financial statements for the
year ended 30 June 2012. The report has been prepared in accordance
with the Disclosure and Transparency Rules (DTR) of the Financial
Services Authority and in accordance with IAS 34. The interim
financial information should be read in conjunction with the annual
financial statements for the year ended 30 June 2012, which have
been prepared in accordance with IFRS as adopted by the EU. The
accounting policies are consistent with those of the annual
financial statements for the year ended 30 June 2012.
These interim results for the period ended 31 December 2012,
which have neither been subject to an audit nor a review in
accordance with the International Standard on Review Engagements
2410, have been prepared in accordance with IFRS and do not
comprise statutory accounts within the meaning of section 434 of
the Companies Act 2006.
The comparative financial information for the year ended 30 June
2012 has been extracted from the full audited accounts of the Group
in respect of that financial period. Those accounts received an
unqualified audit opinion and did not contain a statement under
section 498 of the Companies Act 2006 and have been delivered to
the Registrar of Companies.
The Directors have reviewed and approved Group cash flow
forecasts for a period of at least 12 months from the date of this
report. These forecasts include prospective calculations of the
Group's compliance with a number of financial covenants set out in
its borrowing agreement with its sole banker, Lloyds TSB Bank
PLC.
The Directors have examined all available evidence and have
concluded that, if the terms of the facility are not reset, the
business forecasts indicate that there is a significant risk that
the covenants contained in the terms of the current bank facility
will be breached during the forthcoming twelve month period. In the
event of a breach of covenants or other terms of the facility, the
bank would have the right of repayment of all amounts due to it.
The covenants in relation to our banking arrangements were tightly
drawn, with only a relatively small amount of headroom against
potential reduction in revenue. The covenants and other terms of
the facility tighten over time, particularly in the second half of
the 2014 financial year and were set on the basis of a larger
business than we have now. Accordingly, the company has entered
into discussions with Lloyds to reset the terms of the facility.
Without such a facility reset, there is significant risk of a
facility breach in the forthcoming 12 month period. Whilst to date
Lloyds has not agreed to this reset, we remain in positive dialogue
with the bank and Lloyds has confirmed that it continues to be
supportive of the continuation of the Group as a going concern.
Having considered all of the above, the Directors continue to
consider it appropriate to prepare the Group financial statements
on a going concern basis. The financial statements do not include
the adjustments that would result if the Group were unable to
continue as a going concern.
Significant accounting policies, judgements, estimates and
assumptions
The key assumptions concerning the future and other key sources
of estimation uncertainty at the balance sheet date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are discussed below.
Revenue
Revenue is recognised:
-- in respect of continuing engagements, when the group is
entitled to consideration having performed its obligations and
where there is reasonable certainty as to the recoverability
-- in respect of certain insolvency assignments, to the extent
the revenues for work performed have been accepted by members,
creditors or the court
-- in respect of contracts where there is reasonable certainty
of the outcome and therefore revenue earned
-- in respect of contingent assignments, on completion of a transaction
-- in respect of financial management commission income, when the policy is written.
At each reporting date management carry out a detailed review of
the estimates made in relation to revenue recognition in accordance
with IAS 18.
Payments on account of assignments are deducted from amounts
recoverable on contracts to which they relate and, if greater, the
excess is included in creditors.
To the extent that the obligation in respect of amounts invoiced
has not been fulfilled at the balance sheet date revenue is
deferred to match the anticipated future costs.
Revenue excludes value added tax but includes disbursements
incurred on behalf of clients.
Revenue is stated gross of amounts payable to third parties to
the extent that the group bears the risks and rewards of these
contracts.
Discontinued operations
The Group has several discontinued operations as disclosed in
note 12. The prior period income statements have therefore been
restated in accordance with IFRS5 to show comparable information.
The impact of this restatement from previously published accounts
is a decrease in revenue of GBP9,640,000 for the 6 months to 31
December 2011 and a decrease of GBP5,371,000 in revenue for the
year ended 30 June 2012. The impact on loss after tax is a decrease
in the reported loss of GBP635,000 for the 6 months to 31 December
2011 and an increase in the reported loss of GBP860,000 for the 6
months to 30 June 2012.
Professional indemnity claims
The Group makes provision for any known professional indemnity
claims based on an estimate of the likely economic outflow arising
for each claim. In accordance with IAS37, the full liability of a
claim is recognised in the professional indemnity provision and the
amount expected to be reimbursed or settled directly by an insurer
is recognised in other receivables. This is a change of
presentation in the balance sheet as at 31 December 2012 and has no
impact on the consolidated income statement. In addition, provision
has been made for the estimated future costs arising from the FSA
Settlement Agreement.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and impairment. The cost of property, plant and
equipment is their purchase price, together with any directly
attributable costs of acquisition. Depreciation is calculated to
write off the cost of property, plant and equipment, less their
estimated residual values, on a straight-line basis over their
expected useful economic lives to the relevant residual value. The
principal annual rates used for this purpose are:-
Over the remaining period of the
Leasehold improvements lease
Motor vehicles 25%
Furniture and fixtures 10%-25%
Office equipment 25%
Computer equipment and software 20%-33%
The residual values and useful economic lives of fixed assets
are reviewed by management on an annual basis and revised to the
extent required.
For assets acquired on the purchase of a business and included
at fair value, the fair value is depreciated over the remaining
estimated life.
Intangible assets - goodwill
In respect of business acquisitions that have occurred since 1
July 2006, goodwill represents the difference between the cost of
the acquisition and the fair value of the identifiable net assets
acquired. Prior to that date goodwill represents the difference
between the cost of the acquisition and the fair value of the
identifiable net assets acquired. The cost of acquisition
represents the fair value of all consideration given in return for
the assets acquired.
Intangible assets - other
For acquisitions after 1 July 2006 the fair value of customer
contractual relationships, brands and non-compete agreements was
determined by the net present value of the future cash flow
benefits anticipated to arise from the intangible assets less
accumulated amortisation and impairment losses. Computer software
is included at cost less accumulated amortisation.
Amortisation of other intangibles
Amortisation is charged to the income statement on a
straight-line basis over the estimated useful lives of intangible
assets unless such lives are indefinite. Goodwill and intangible
assets with an indefinite useful life are tested systematically for
impairment at each annual balance sheet date. Other intangible
assets are amortised from the date that they are available for use.
The estimated useful lives are as follows:-
The period over which the attributable
Customer contracts fees are billed
Client relationships 5-10 years
Recurring income 5-10 years
Impairment of non-financial assets
The entity assesses at each reporting date whether an asset may
be impaired. If any such indicator exists, the entity tests for
impairment by estimating the recoverable amount. If the recoverable
amount is less than the carrying value of an asset an impairment
loss is recognised in the income statement.
Receivables
Debts are recognised to the extent that they are judged
recoverable. Management reviews are performed to estimate the level
of provision required for irrecoverable debt. Provisions are made
specifically against invoices where recoverability is
uncertain.
Amounts recoverable on contracts
Amounts recoverable on contracts are recorded at their
recoverable amount on a percentage completion basis, less any
payments on account, where there is reasonable certainty of the
outcome, making provision for any expected losses. Where the
outcome is uncertain, amounts recoverable on contracts are stated
at the lower of cost and recoverable amount.
Deferred tax assets
Deferred tax assets are recognised for all unused tax losses to
the extent that it is more likely than not that taxable profit will
be available against which the losses can be utilised. Significant
management judgement is required to determine the amount of
deferred tax assets that can be recognised, based on the likely
timing and level of future taxable profits together with future tax
planning strategies.
Impairment of goodwill and intangible assets
The Group determines whether goodwill is impaired at least on an
annual basis. This requires an estimation of the 'value in use' of
the cash-generating units to which the goodwill is allocated.
Estimating a value in use amount requires management to make an
estimate of the expected future cash flows from the cash-generating
unit and also to choose a suitable discount rate in order to
calculate the present value of those cash flows.
2 Segmental analysis
For management purposes, the Group is organised into separate
service lines and it is on these operating segments that the Group
is providing disclosure. As noted above, the service lines have
been reorganised with effect from 1 January 2013 and this new
segmentation will be used for the full year results.
The chief operating decision maker is the Board of Directors who
assess performance of the segments using the following key
performance indicators: revenue, gross profit and underlying
operating profit.
The information provided to the Board of Directors with respect
to assets and liabilities is provided in a manner consistent with
that of the financial statements. These assets and liabilities are
allocated based on the operations of the segment and physical
location.
The Group's activities are undertaken substantially in the
United Kingdom.
The segment results for the 6 months to 31 December 2012 are as
follows:-
Turnaround Central
Audit, and and regional
tax and corporate Risk Specialist Financial services Total
advisory recovery management taxation management GBP000 Unaudited
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 47,605 15,940 13,918 - 10,962 - 88,425
Direct cost (32,757) (11,667) (10,745) - (8,291) - (63,460)
--------------- ----------- ------------- ------------- ------------- ------------- -------------- ------------
Gross profit 14,848 4,273 3,173 - 2,671 - 24,965
Allocated
costs (7,975) (2,507) (1,740) - (3,244) - (15,466)
Unallocated
costs - - - - - (10,114) (10,114)
Underlying
operating
profit/(loss) 6,873 1,766 1,433 - (573) (10,114) (615)
--------------- ----------- ------------- ------------- ------------- ------------- -------------- ------------
Amortisation
of
acquired
intangibles
and
exceptional
items (7,252)
--------------- ----------- ------------- ------------- ------------- ------------- -------------- ------------
Operating loss (7,867)
Finance income 286
Finance costs (3,253)
Profit on sale
of
businesses 3,324
Share of net
profit
of joint
ventures 40
--------------- ----------- ------------- ------------- ------------- ------------- -------------- ------------
Loss on
ordinary
activities
before
income tax (7,470)
Tax on loss on
ordinary
activities (1,465)
Loss for the
financial
period (8,935)
--------------- ----------- ------------- ------------- ------------- ------------- -------------- ------------
The specialist taxation service line is now a discontinued
operation as shown in note 12.
Segmental assets - as at 31 December 2012
Turnaround
Audit, and corporate
tax and recovery Risk Specialist Financial Central Total
advisory GBP000 management taxation management assets Unaudited
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Assets:
Goodwill 38,315 13,276 8,322 - 11,193 - 71,106
Other
intangible
assets 18,133 1,485 7,306 - 6,168 341 33,433
Amounts
recoverable
on
contracts 6,608 19,619 (281) - - 25,946
Investment
in joint
ventures - - 279 - - - 279
Property,
plant and
equipment 2,510 645 727 17 522 678 5,099
Deferred
income
tax
assets - - - - - 12,443 12,443
Trade and
other
receivables 18,331 4,103 6,869 - 16,782 1,347 47,432
Cash - - - - - 1,211 1,211
--------------- ----------- --------------- -------------- ------------- ------------- ----------- ------------
83,897 39,128 23,222 17 34,665 16,020 196,949
--------------- ----------- --------------- -------------- ------------- ------------- ----------- ------------
Liabilities:
Trade and
other
payables (16,872) (5,098) (4,084) (2,875) (3,710) (10,256) (42,895)
Derivative
financial
liabilities - - - - - (7,344) (7,344)
Corporation
tax
liabilities - - - - - (1,900) (1,900)
Borrowings - - - - - (81,592) (81,592)
Provisions
for
liabilities
and charges - - - - (10,637) (7,914) (18,551)
Deferred
income
tax
liabilities - - - - - (4,180) (4,180)
--------------- ----------- --------------- -------------- ------------- ------------- ----------- ------------
(16,872) (5,098) (4,084) (2,875) (14,347) (113,186) (156,462)
--------------- ----------- --------------- -------------- ------------- ------------- ----------- ------------
Total net
assets 40,487
--------------- ----------- --------------- -------------- ------------- ------------- ----------- ------------
The segment results for the 6 months to 31 December 2011
Turnaround Central
Audit, and and regional
tax and corporate Risk Specialist Financial services Total
advisory recovery management taxation management GBP000 Unaudited
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 52,444 20,219 12,943 - 13,073 (500) 98,179
Direct cost (38,140) (14,950) (9,737) - (9,587) - (72,414)
--------------- ----------- ------------- ------------- ------------- ------------- -------------- ------------
Gross profit 14,304 5,269 3,206 - 3,486 (500) 25,765
Allocated
costs (13,858) (5,233) (2,501) - (4,380) - (25,972)
Unallocated
costs - - - - - (10,656) (10,656)
--------------- ----------- ------------- ------------- ------------- ------------- -------------- ------------
Underlying
operating
profit/(loss) 446 36 705 - (894) (11,156) (10,863)
--------------- ----------- ------------- ------------- ------------- ------------- -------------- ------------
Amortisation
of
acquired
intangibles
and
exceptional
items (69,905)
--------------- ----------- ------------- ------------- ------------- ------------- -------------- ------------
Operating loss (80,768)
Finance income 7
Finance costs (2,297)
Share of net
profit
of joint
ventures 35
--------------- ----------- ------------- ------------- ------------- ------------- -------------- ------------
Loss on
ordinary
activities
before
income tax (83,023)
Tax on loss on
ordinary
activities 13,012
Loss for the
financial
period (70,011)
--------------- ----------- ------------- ------------- ------------- ------------- -------------- ------------
Segmental assets - as at 31 December 2011
Turnaround
Audit, and
tax and corporate Risk Specialist Financial Central Total
advisory recovery management taxation management assets Unaudited
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Assets:
Goodwill 38,316 14,772 8,321 2,970 11,194 - 75,573
Other intangible
assets 21,855 2,040 8,574 32 7,328 - 39,829
Property,
plant and
equipment 3,887 1,294 646 130 812 - 6,769
Investment
in joint
ventures - - 91 - - - 91
Available-for-sale
financial
assets - - - - - 115 115
Deferred income
tax
assets - - - - - 13,017 13,017
Trade and
other
receivables 29,875 31,862 7,561 4,354 7,506 - 81,158
---------------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
93,933 49,968 25,193 7,486 26,840 13,132 216,552
---------------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Liabilities:
Trade and
other
payables (20,772) (12,003) (5,761) (5,282) (4,548) (293) (48,659)
Derivative
financial
liabilities - - - - - (6,288) (6,288)
Corporation
tax
liabilities - - - -- - (1,442) (1,442)
Borrowings - - - - - (76,472) (76,472)
Deferred income
tax
liabilities - - - - - (3,648) (3,648)
Provisions
for liabilities
and charges - - - - - (15,255) (15,255)
---------------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
(20,772) (12,003) (5,761) (5,282) (4,548) (103,398) (151,764)
Total net assets 64,788
---------------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
3 Employees
The average number of persons (including executive directors)
employed by the Group was as follows:-
6 months 6 months to Year ended
to 31 December 30 June
31 December 2011 2012
2012 Unaudited Audited
Unaudited Number Number
Number
Management and professional
staff 2,229 2,602 2,518
Support and administrative
staff 437 564 508
----------------------------- ------------- ------------- -----------
2,666 3,166 3,026
----------------------------- ------------- ------------- -----------
6 months 6 months to Year ended
to 31 December 30 June
31 December 2011 2012
2012 Unaudited Audited
Unaudited GBP000 GBP000
GBP000
Wages and salaries 55,914 65,765 136,118
Social security costs 6,176 7,521 14,981
Pension costs 1,138 1,259 2,584
Employee share scheme costs 396 375 743
----------------------------- ------------- ------------- -----------
63,624 74,920 154,426
----------------------------- ------------- ------------- -----------
4 Finance income and costs
Finance income 6 months 6 months to Year ended
to 31 December 30 June
31 December 2011 2012
2012 Unaudited Audited
Unaudited GBP000 GBP000
GBP000
Interest on investments 1 - 16
Other interest 17 7 5
Fair value movement on derivatives 268 - -
286 7 21
------------------------------------ ------------- ------------- -----------
Finance costs
6 months 6 months to Year ended
to 31 December 30 June
31 December 2011 2012
2012 Unaudited Audited
Unaudited GBP000 GBP000
GBP000
Fair value movement on derivatives - - 2,350
Amortisation of issue and
arrangement costs 544 892 1,272
Fair value movement on interest
rate hedge 143 - 2,376
Interest on interest rate
hedge 214 86 138
Bank interest 1,967 721 2,453
Interest on finance leases 100 194 302
Interest on pension schemes'
liabilities - - 25
Other interest and charges 73 - 146
------------------------------------ -------------- -------------- -------------
3,041 1,893 9,062
Deferred consideration interest 212 404 672
------------------------------------ -------------- -------------- -------------
Total finance costs 3,253 2,297 9,734
------------------------------------ -------------- -------------- -------------
Exceptional finance costs are disclosed in note 5.
5 Exceptional items, amortisation of acquired intangibles,
impairment charges and deferred consideration interest
Exceptional costs in the period can be analysed as follows:-
6 months 6 months to Year ended
to 31 December 30 June
31 December 2011 2012
2012 Unaudited Audited
Unaudited GBP000 GBP000
GBP000
Impairment losses - 60,714 63,684
Financial management service
line costs 1,885 4,328 4,310
Contingent consideration adjustments - 1,258 1,441
Operational review 2,625 159 7,746
-------------------------------------- -------------- -------------- -------------
Total - operating exceptional
items 4,510 66,459 77,181
-------------------------------------- -------------- -------------- -------------
Amortisation of acquired intangibles 2,742 3,446 6,172
Fair value movement on interest
rate hedge - - 2,376
Deferred consideration interest 212 404 672
Bank arrangement fees - 96 96
Tax on exceptional items (1,364) (9,387) (9,727)
-------------------------------------- -------- -------- --------
Total 6,100 61,018 76,770
-------------------------------------- -------- -------- --------
Impairment losses - in the previous financial year to June 2012,
an impairment loss of GBP63.7m was recognised.
Financial management service line costs - as part of the FSA
agreement in 2010, certain obligations were imposed on the
Financial management service line. This cost represents incurred
expenditure arising from this obligation and any adjustments
arising from management's latest expectation of programme cost
recoverability.
Contingent consideration adjustments - the charge in the
previous financial year represents the impact of a change in the
basis for calculating contingent consideration payable for the
acquisition of the share capital of RSM Group (UK) Limited
(formerly RSM BJ FM Group Limited) and the trade and assets of RSM
Bentley Jennison.
Operational review - projects have continued into the current
financial year to reduce headcount and to reorganise the internal
business structure with costs arising for employee payments,
project management and professional fees. In the financial year to
30 June 2012, costs were incurred for headcount reduction, property
exits, professional fees for project management and for the
re-negotiation of the terms of the bank borrowings.
Amortisation of acquired intangible assets - the costs in the
current and prior year relate to the amortisation of Customer
contracts, Client relationships and Recurring income, which have
been acquired via previous acquisitions.
Fair value movement on interest rate hedge - the ineffective
part of the fair value movement of the interest rate hedge has been
recognised as an exceptional cost with the effective charge
recognised in reserves, in accordance with IAS39. In the previous
financial year to June 2012, the fair value movement was judged to
be wholly ineffective and the charge was recognised fully in the
income statement.
Deferred consideration interest - the contingent consideration
has been redesignated as deferred consideration in the period (note
14) and has been discounted in compliance with IFRS3 and recognised
as a finance cost in the income statement.
6 Income tax
The charge for taxation has been provided at management's best
estimate of the effective tax rate for the year to 30 June 2013 of
nil, based on available tax losses (30 June 2012: 13.2%).
6 months 6 months to Year ended
to 31 December 30 June
31 December 2011 2012
2012 Unaudited Audited
Unaudited GBP000 GBP000
GBP000
UK corporation tax:
Current tax charge on profit - - -
for the period
Prior period overprovision - - (469)
----------------------------------- ------------- ------------- -----------
Total current tax - - (469)
Deferred taxation
Deferred taxation charge/(credit)
on loss for the period 1,465 (13,012) (13,895)
Prior year underprovision - - 818
----------------------------------- ------------- ------------- -----------
1,465 (13,012) (13,546)
----------------------------------- ------------- ------------- -----------
6 months 6 months to Year ended
to 31 December 30 June
31 December 2011 2012
2012 Unaudited Audited
Unaudited GBP000 GBP000
GBP000
Loss on ordinary activities before
tax (7,470) (83,023) (102,682)
-------------------------------------------- ------------- ------------- -----------
Loss on ordinary activities at
standard rate of UK corporation
tax at 23.75% (December 2011:
25.75%,
June 2012: 25.5%) (1,774) (21,378) (26,184)
Effects of:
Prior period corporation tax overprovision - - (469)
Prior year deferred tax underprovision - - 818
Amortisation of intangible assets 259 (135) (1,837)
Expenses not deductible for tax
purposes 136 145 909
Adjustment in respect of overseas
tax rates - - 62
Permanent differences on non-qualifying
tangible assets (13) 280 232
Excess schedule 23 cost 78 172 259
Impairment of intangible assets - 7,817 10,288
Changes in deferred tax rate in
the period - (128) 311
Tax losses carried forward/(utilised) 2,779 215 2,065
-------------------------------------------- ------------- ------------- -----------
1,465 (13,012) (13,546)
-------------------------------------------- ------------- ------------- -----------
7 Loss per share
6 months 6 months Year
to to to
Weighted 31 Weighted 31 Weighted 30 June
average December (Loss)/ average December average 2012
(Loss)/ number 2012 earnings number 2011 (Loss)/ number
earnings of shares (Restated) of shares earnings of Audited
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Audited shares (Loss)/
GBP000 000 (Loss)/ GBP000 000 (Loss)/ GBP000 Audited Earnings
earnings earnings 000 per
per share per share share
(p) (p) (p)
Basic loss
per share (10,034) 322,525 (3.11) (70,646) 322,524 (21.90) (88,694) 322,524 (27.50)
Dilutive share
options - 623 - - 1,654 - - 2,118 -
--------------- ----------- ----------- ---------- ------------ ----------- ---------- ----------- ---------- ---------
Diluted loss
per share (10,034) 323,148 (3.11) (70,646) 324,178 (21.90) (88,694) 324,642 (27.50)
--------------- ----------- ----------- ---------- ------------ ----------- ---------- ----------- ---------- ---------
Basic loss
per share (10,034) 322,525 (3.11) (70,646) 322,524 (21.90) (88,694) 322,524 (27.50)
Amortisation
of
intangibles,
deferred
consideration
interest and
other
exceptional
items net of
tax effect 6,100 - 1.89 61,018 - 18.91 76,770 - 23.80
--------------- ----------- ----------- ---------- ------------ ----------- ---------- ----------- ---------- ---------
Adjusted loss
per share (3,934) 322,525 (1.22) (9,628) 322,524 (2.99) (11,924) 322,524 (3.70)
Dilutive share
options - 623 - - 1,654 - - 2,118 -
--------------- ----------- ----------- ---------- ------------ ----------- ---------- ----------- ---------- ---------
Adjusted
diluted
loss per
share (3,934) 323,148 (1.22) (9,628) 324,178 (2.99) (11,924) 324,642 (3.70)
--------------- ----------- ----------- ---------- ------------ ----------- ---------- ----------- ---------- ---------
Loss per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the six month period. The
weighted average number of shares in issue during the six months to
31 December 2012 was 322,525,000 (6 months to 31 December 2011:
322,524,000; year to 30 June 2012: 322,524,000).
The weighted average number of shares used to calculate the
diluted loss per share during the six months to 31 December 2012 is
323,148,000 (6 months to 31 December 2011: 324,178,000; year to 30
June 2012: 324,642,000).
There are 623,000 share options and warrants that give rise to a
dilution during the 6 months to 31 December 2012 (share options and
warrants 6 months to 31 December 2011: 1,654,000; year to 30 June
2012: 2,118,000). There are 22,501,000 options and warrants in
issue that do not give rise to dilution during the 6 months to 31
December 2011 (share options and warrants 6 months to 31 December
2011: 17,476,000; year to 30 June 2011: 21,503,000).
The adjusted loss per share is calculated and shown in order to
demonstrate loss per share before amortisation of acquired
intangibles, deferred consideration interest and exceptional items,
as the directors believe this figure more accurately reflects the
performance of the Group.
8 Intangible assets
Customer Client relationships Recurring Computer Total
Goodwill contracts GBP000 income Software Unaudited
GBP000 GBP000 GBP000 GBP000 GBP000
Cost or valuation
At 30 June 2011 229,821 5,827 44,799 5,448 4,972 290,867
Disposals - - - - (553) (553)
At 30 June 2012 229,821 5,827 44,799 5,448 4,419 290,314
Disposals (1,497) - - - - (1,497)
At 31 December 2012 228,324 5,827 44,799 5,448 4,419 288,817
--------------------- ----------- ----------- --------------------- ---------- ---------- -----------
Amortisation and
impairment charges
At 30 June 2011 93,534 5,111 7,225 1,857 2,304 110,031
Amortisation charge - 716 4,827 546 1,322 7,411
Impairment charge 63,684 - - - - 63,684
At 30 June 2012 157,218 5,827 12,052 2,403 3,626 181,126
Amortisation charge - - 2,426 275 451 3,152
At 31 December 2012 157,218 5,827 14,478 2,678 4,077 184,278
--------------------- ----------- ----------- --------------------- ---------- ---------- -----------
Net book amount
At 30 June 2011 136,287 716 37,574 3,591 2,668 180,836
At 30 June 2012 72,603 - 32,747 3,045 793 109,188
At 31 December 2012 71,106 - 30,321 2,770 342 104,539
--------------------- ----------- ----------- --------------------- ---------- ---------- -----------
Recoverable Amount of Cash Generating Units (CGUs)
The Group's CGUs are as set out in note 3 Segmental
Analysis.
The recoverable amount of each CGU has been assessed as their
value in use, using a discounted cashflow methodology. The
assessment compares the net present value of cashflows associated
with the relevant CGU against the assets used to generate those
cashflows. Cash flow projections for a 5 year period are based on
expectations of future performance, beyond which they are inflated
by a constant long term growth factor.
The discount rate is based on the Group's pre-tax discount rate
based on nominal weighted average cost of capital.
The pre-tax discount rate used was 11.01% (2011: 11.88%) per
annum for all CGUs as they are deemed to have a similar risk
profile.
Audit, tax and advisory
We have applied a growth rate on revenue of between 0.5% and
1.0% in years 1 to 5 and a long term growth rate of 1.0% to the
CGU's cashflows, with overhead cost growth at a consistent 1.0%
growth rate, discounted at the pre-tax average cost of capital.
Turnaround and corporate recovery
We have applied a growth rate on revenue of between 1.0% and
1.5% in year 1 to 5 and a long term growth rate of 2%, with
overhead cost growth at a consistent 1.0% growth rate, discounted
at the pre-tax average cost of capital.
Risk management
We have applied a consistent revenue growth rate of 2.0%, with
overhead cost growth at a consistent 1.0% growth rate, discounted
at the pre-tax average cost of capital.
Financial management
We have applied a growth rate on revenue of between 1.0% and
2.0% in years 1 to 5 and a long term growth rate of 2.0% to the
CGU's cashflows, with overhead cost growth at a consistent 1.0%
growth rate, discounted at the pre-tax average cost of capital.
9 Financial instruments
31 December 31 December 30 June
2012 2011 2012
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Assets as per balance sheet
Other available-for-sale financial
assets - 115 19
Loans and receivables
Trade receivables 22,704 39,556 32,200
Cash and cash equivalents 1,211 - -
Total 23,915 39,671 32,219
------------------------------------------ ------------ ------------ ---------
Liabilities as per the balance sheet
Derivatives used for hedging
Derivative financial liabilities 7,344 6,288 6,901
Other financial liabilities at amortised
cost
Bank overdrafts - 13,045 15,090
Bank borrowings 78,367 59,714 59,875
Obligations under finance leases 2,123 3,114 3,107
Trade payables 5,521 6,122 10,031
Provisions 18,551 15,255 15,208
Deferred consideration 6,877 - -
------------------------------------------ ------------ ------------ ---------
Total 118,783 103,538 110,212
------------------------------------------ ------------ ------------ ---------
10 Trade and other receivables
31 December 31 December 30 June
2012 2011 2012
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Trade receivables 25,478 44,365 36,045
Less: Provision for impairment of
trade receivables (2,774) (4,809) (3,845)
----------------------------------- ------------ ------------ ---------
Trade receivables - net 22,704 39,556 32,200
Prepayments 7,922 8,474 9,605
Amounts receivable on contracts 25,946 27,081 25,141
Other receivables 16,806 6,047 6,792
----------------------------------- ------------ ------------ ---------
73,378 81,158 73,738
----------------------------------- ------------ ------------ ---------
11 Deferred taxation
31 December 31 December 30 June
2012 2011 2012
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Deferred tax assets recoverable after
more than 12 months
* Depreciation in excess of capital allowances 727 316 562
* Pensions and other provisions 58 60 66
* Share options 23 - 7
* Tax losses 11,635 12,641 13,013
---------------------------------------------------------- ------------ ------------ ---------
12,443 13,017 13,648
---------------------------------------------------------- ------------ ------------ ---------
Deferred tax liabilities payable after
more than 12 months
* Business combinations (4,180) (3,648) (3,921)
Net deferred tax assets 8,263 9,369 9,727
---------------------------------------------------------- ------------ ------------ ---------
12 Discontinued operations
Premier Strategies Limited
Premier Strategies Limited (part of the specialist tax segment)
is disclosed as a discontinued operation as it has been closed to
new business since March 2012. The assets and liabilities are not
held-for-sale since the business activity is discontinued but not
for sale.
Disposals of subsidiaries and business undertakings
The profit on disposal of subsidiaries and business undertakings
relates to the sale of a number of businesses including Optimus
Fiduciaries Limited, The Finance and Management Business School and
IVA business. The total consideration, net of professional fees,
was GBP9,433,000 of which the sale of IVA contributed GBP7,962,000
net proceeds. Total assets disposed of amounted to GBP6,109,000
resulting in a profit on the sales of GBP3,324,000.
Optimus Fiduciaries Limited
In August 2012, the Group sold its 100% owned subsidiary,
Optimus Fiduciaries Limited, for GBP1 to its management team.
The Finance and Management Business School Limited
In August 2012, the Group sold its 75% shareholding interest in
The Finance and Management Business School for GBP1 to ICCA
Holdings Limited.
IVA Business
In October 2012, the Group sold the IVA business of RSM Tenon
Limited's Recovery Service line to Grant Thornton UK LLP for net
proceeds of GBP7,962,000.
The results of discontinued operating are as follows:
31 December 31 December 30 June
2012 2011 2012
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Revenue 1,295 9,640 19,862
Expenses (2,394) (10,275) (19,420)
------------------------------------------ -------------- -------------- ----------
(Loss)/profit before tax on discontinued
operations (1,099) (635) 442
Tax - - -
(Loss)/profit after tax of discontinued
operations (1,099) (635) 442
------------------------------------------ -------------- -------------- ----------
13 Borrowings
31 December 31 December 30 June
2012 2011 2012
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Non-current:
Bank borrowings 68,703 - -
Finance leases 813 1,485 1,456
------------------ ------------ ------------ ---------
69,516 1,485 1,456
------------------ ------------ ------------ ---------
Current:
Bank overdrafts - 13,045 15,090
Bank borrowings 9,664 59,714 59,875
Other borrowings 1,102 599 200
Finance leases 1,310 1,629 1,651
------------------ ------------ ------------ ---------
12,076 74,987 76,816
------------------ ------------ ------------ ---------
Total borrowings 81,592 76,472 78,272
------------------ ------------ ------------ ---------
The maturity profile of the borrowings is as follows:-
31 December 31 December 30 June
2012 2011 2012
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Within one year or on demand 12,076 74,987 76,816
Between one and two years 69,330 1,074 1,198
Between two and five years 186 411 258
81,592 76,472 78,272
-------------------------------- ------------ ------------ ---------
14 Provisions for liabilities and charges
Contingent Onerous Leasehold Professional Total
consideration leases dilapidation Pensions Indemnity Unaudited
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 July 2012 7,979 2,462 1,723 279 2,765 15,208
Transferred to trade
and other payables (7,979) - - - - (7,979)
Utilised in period - (455) (190) - (639) (1,284)
Charged to the income
statement - - (120) - 776 656
Classification adjustment - - - - 11,984 11,984
Employer contributions - - - (34) - (34)
At 31 December 2012 - 2,007 1,413 245 14,886 18,551
--------------------------- --------------- -------- -------------- ----------- ------------- -----------
June 2012
Non-current 5,521 1,111 1,134 234 850 8,850
Current 2,458 1,351 589 45 1,915 6,358
--------------- -------- -------------- ----------- ------------- -----------
7,979 2,462 1,723 279 2,765 15,208
--------------- -------- -------------- ----------- ------------- -----------
December 2012
Non-current - 953 1,089 177 1,790 4,009
Current - 1,054 324 68 13,096 14,542
--------------- -------- -------------- ----------- ------------- -----------
- 2,007 1,413 245 14,886 18,551
--------------- -------- -------------- ----------- ------------- -----------
During the period, a deed of amendment to the Share and business
and asset purchase agreement was signed, with the former partners
of RSM Bentley Jennison. The amendment formalised the amount and
timing of the remaining consideration payable and accordingly, the
balance of consideration has been transferred to trade and other
payables (note 15).
In respect of the onerous lease and dilapidation provisions, the
expected future lease and dilapidation costs of properties
previously vacated or under closure plan prior to 31 December 2012,
have been provided for through to the expiry date of the lease.
The professional indemnity provision covers professional fees
and redress costs expected to be incurred over future periods, to
settle legal claims outstanding at 31 December 2012. The
classification adjustment of GBP11,984,000 relates to a change in
presentation to show the gross receivable and the gross liability
relating to professional indemnity claims, in accordance with
IAS37.
15 Trade and other payables
Due less than 1 year 31 December 31 December 30 June
2012 2011 2012
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Trade payables 5,521 6,122 10,031
Social security and other taxes 7,491 19,787 10,145
Accrued expenses 23,006 22,750 27,424
Deferred consideration 2,474 - -
38,492 48,659 47,600
--------------------------------- ------------ ------------ ---------
Due greater than 1 year 31 December 31 December 30 June
2012 2011 2012
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Deferred consideration 4,403 - -
4,403 - -
------------------------ ------------ ------------ ---------
16 Share capital and premium
Capital
Number Ordinary Share Redemption Total
of shares Shares Premium Reserve GBP000
'000 GBP000 GBP000 GBP000
Group
At 1 July 2012 322,524 32,252 70,948 - 103,200
Cancellation of deferred
shares - (29,027) - 29,027 -
-------------------------- ------------ ----------- ---------- ------------ ---------
31 December 2012 322,524 3,225 70,948 29,027 103,200
-------------------------- ------------ ----------- ---------- ------------ ---------
At the Annual General Meeting of RSM Tenon Group PLC on 6
December 2012 a resolution was passed that each existing ordinary
share of 10 pence each in nominal value in the capital (the
"Existing Ordinary Shares") of the Company in issue at the close of
business on 6 December 2012 be subdivided and redesignated as
(i) one ordinary share of 1 pence in nominal value (the "New
Ordinary Shares") having the same rights and ranking pari passu in
all respects with the Existing Ordinary Shares (save as to nominal
value) and
(ii) nine deferred shares of 1 pence in nominal value (the
"Deferred Shares") having the rights and restrictions set out
below
The purpose in creating the Deferred Shares was to ensure that
the reduction in the nominal value of the Existing Ordinary Shares
did not result in a reduction in the capital of the Company.
A deferred share, amongst other things, did not entitle its
holder to receive any dividend or distribution declared, made or
paid or any return of capital and did not entitle its holder to any
further or other right of participation in the assets of the
Company.
The Company had the irrevocable authority to cancel any Deferred
Share without making any payment to the holder and such
cancellation was not to be deemed a variation or abrogation of the
rights attaching to such deferred shares.
The Company cancelled all Deferred Shares on 6 December
2012.
On cancellation and in accordance with section 729(4) of the
Companies Act 2006, the nominal value of the Deferred Shares has
been transferred to the capital redemption reserve.
17 Share warrant reserve
Share warrant
reserve
Group
GBP000
At 1 July 2012 -
Fair value of warrants granted 996
-------------------------------- --------------
At 31 December 2012 996
-------------------------------- --------------
At the Annual General Meeting held on 6 December 2012 the
shareholders approved the grant of a warrant over 9.98% of the
share capital of the Company to Lloyds Banking Group.
These warrants are exercisable at the bank's discretion until 5
December 2017 at a price of 5.36p per share.
The fair value attached to these warrants, valued using the
Black-Scholes option pricing model was GBP996,000.
18 Analysis and reconciliation of movement in net debt
30 June 31 December
2012 Non-cash 2012
Audited Cash flow items Unaudited
GBP000 GBP000 GBP000 GBP000
Cash balances
Cash at bank and in hand - 1,211 - 1,211
Debt
Overdrafts (15,090) 15,090 - -
Bank loans due within one
year (59,875) (11,000) 61,211 (9,664)
Bank loans due after one
year - (10,000) (58,703) (68,703)
Other borrowings (200) (902) - (1,102)
Finance leases due within
one year (1,651) 984 (643) (1,310)
Finance leases due after
one year (1,456) - 643 (813)
--------------------------- --------- ------------ ----------- ------------
(78,272) (5,828) 2,508 (81,592)
--------------------------- --------- ------------ ----------- ------------
Net debt (78,272) (4,617) 2,508 (80,381)
--------------------------- --------- ------------ ----------- ------------
19 Contingencies
The Group has guaranteed a GBP5,000,000 overdraft facility
(December 2011 and June 2012: GBP5,000,000) for RSM Tenon Audit
Limited. These arrangements are described more fully in note 21. At
31 December 2012 GBP2,241,000 (December 2011: GBP2,493,000, June
2012: GBP1,462,000) of the facility had been utilised.
Certain of the costs of undertaking the remedial actions arising
from the FSA Settlement Agreement are indemnifiable under the
professional indemnity insurance policy and there has been a
dispute between the insurers on the programme as to how they should
share the indemnity costs.
The Group has sought to recover some of the costs incurred in
undertaking the remedial actions required by the FSA Settlement
Agreement, including the whole of the redress payments required to
be made to investors from insurers subscribing to its professional
indemnity programme. A dispute arose between the Group and its
insurers in the previous financial year as to the extent to which
the sums claimed are covered under the programme, and insurers
disagree between themselves as to how their liability for those
sums should be shared. These disputes were referred to arbitration
and the case was heard between 28 January and 1 February 2013 with
the arbitration considering all the costs which have been claimed
by the Group under the professional indemnity programme. The
decision of the arbitrator had not been delivered at the date of
this announcement.
The Group balance sheet includes costs considered to be
recoverable under the terms of the insurance cover within Other
Receivables.
The Directors have taken advice from legal advisors and consider
that the Group has good prospects of making a substantial recovery.
Since the outcome of the arbitration remains uncertain, the group
has a contingent liability for additional costs, currently
unrecognised in the financial statements. Should the arbitration
determine that some or all of the amounts claimed by the Group are
not indemnifiable under the insurance programme, then the expected
amount of additional costs above the amounts already incurred would
not be considered to have a significant impact on the group's
financial position.
20 Related party transactions
Other than the remuneration of executive and non-executive
directors, transactions with RSM Tenon Audit Limited as detailed in
note 21 and the following transactions with the joint venture Tenon
Education, Training and Skills Limited, there were no material
related party transactions during the period.
During the period the Group bought services amounting to
GBP54,000 (December 2011: GBP78,000) and sold services of GBP28,000
(December 2011: GBP55,000) to Tenon Education, Training and Skills
Limited, a joint venture of Marylebone Lane Investments Limited a
wholly owned subsidiary of RSM Tenon Group PLC. At 31 December 2012
the balance owed to the Group by Tenon Education, Training and
Skills Limited was GBP8,000 (December 2011: GBP18,000).
21 RSM Tenon Audit Limited
RSM Tenon Audit Limited ('RSM Tenon Audit') is an independent
company and registered auditor owned and controlled by certain
directors and employees of RSM Tenon Audit who are themselves
registered with the Institute of Chartered Accountants in England
and Wales ("ICAEW"). It is registered to carry out audit work by
the ICAEW. Certain undertakings as to the conduct of its business
were required by the Audit Registration Committee. There are
extensive and detailed arrangements in place to maintain the
independence of RSM Tenon Audit.
RSM Tenon Audit is considered to be an associate of the Group
under the provisions of IAS 28, 'Investments in Associates', given
that a number of staff have dual contracts of employment and
material transactions occur between the group and RSM Tenon Audit.
The group does not, however, control the activities of RSM Tenon
Audit, as it does not have an ownership interest, representation on
the board, or the power to govern in key policy-making processes or
decisions. These circumstances are not inconsistent with the
arrangements referred to above which ensure the independence of RSM
Tenon Audit. As the Group has no equity interest in RSM Tenon
Audit, there are no amounts to be included in the group's
consolidated financial statements through the equity method of
accounting.
The Group provides certain services (including the use of
facilities, personnel, office services, etc) to RSM Tenon Audit,
which the directors consider to be on an arm's length basis. The
amount charged to RSM Tenon Audit for such services in the 6 months
to 31 December 2012 amounted to GBP11,216,000 (31 December 2011:
GBP12,280,000) and the amount due from RSM Tenon Audit as at 31
December 2012 totalled GBP2,692,000 (31 December 2011:
GBP4,002,000). No interest is charged on outstanding short term
balances with RSM Tenon Audit.
In addition the Company has guaranteed the bank overdraft
facility of RSM Tenon Audit, which amounted to GBP5,000,000 as at
31 December 2012 (31 December 2011: GBP5,000,000). The overdrawn
amount at 31 December 2012 was 2,241,000 (31 December 2011:
GBP2,493,000). The Company charged RSM Tenon Audit GBP40,000 for
the period ended 31 December 2012 (31 December 2011: GBP40,000) for
the provision of the guarantee.
Summarised financial information for RSM Tenon Audit is
reproduced below:-
6 months to 6 months
31 December to
2012 31 December
GBP000 2011
GBP000
Revenue 11,378 12,379
Profit before tax 52 36
-------------------- ------------- -------------
Intangible assets 674 1,017
Current assets 4,390 5,965
-------------------- ------------- -------------
Total assets 5,064 6,982
Total liabilities (6,191) (8,210)
Net liabilities (1,127) (1,228)
-------------------- ------------- -------------
22 Events after the balance sheet date
In the opinion of the Directors there are no events after the
balance sheet date which require disclosure in accordance with
IAS10.
23 Copies of the interim report
Copies of the interim report will be available for inspection at
the company's registered office at 66 Chiltern Street, London, W1U
4GB, and on the Group's website, www.rsmtenon.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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