RSM Tenon has reported an improved half-year performance, the result of a drive to slash costs and reduce headcount, but warned there was a “significant risk” it would breach its banking covenants.
In its results for the six months ended 31 December 2012 Tenon said it would continue to focus on cost efficiency as it reported an underlying operating loss of £0.6m and a £9.8m drop in revenues to £88.4m. The firm said its revenue plummeted due to a Retail Distribution Review (RDR) and professional indemnity (PI) insurance costs.
News that Tenon has reduced losses comes as a major turnaround for the financial services firm, which this time last year reported Andy Raynor had quit the group along with chairman Bob Morton after it was forced to restate its accounts.
However, the group also warned in its half year results that it was in danger of breaching its banking covenants within the next year if it cannot renegotiate with its sole lender Lloyds Banking Group.
“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 results reveal.