Shares of RSM Tenon Group Plc (TNO.L) dropped more than 29 percent Monday morning, after the company said it expects to record a pre-tax loss in the first half. The professional and business advisory services provider also announced the resignation of its Chairman Bob Morton and Chief Executive Officer Andy Raynor with immediate effect.
Adrian Martin, currently the company's deputy chairman and senior independent non-executive director, has been appointed executive chairman.
Following the completion of a review of its financial reporting, the company expects some non-cash restatements to its accounts for the year ended 30 June 2011 as a prior year adjustment. It also anticipates incurring certain additional non-recurring, non-cash charges in the six months to December 31, 2011, that were outside of its earlier expectations.
The U.K.-based company said it expects to record a loss before tax and before amortization of acquired intangibles, deferred consideration interest and exceptional items.
The magnitude of this loss will be quantified after completion of interim accounts and associated auditor's review, it noted.
In a trading update ahead of the company's interim results, Adrian Martin said, "The Company's performance is clearly disappointing and my immediate priority is to instigate and execute the necessary actions to improve profitability and cash generation....The Board remains confident of the future prospects for the Company and that a successful turnaround can be delivered."
First-half revenues are expected to be nearly 10 percent lower than last year. According to the company, pricing and similar underlying trading effects account for nearly half of the revenue decline with the balance arising from updated accounting estimates.
The Group currently projects second-half revenue to be comparable to that generated in the second half of the fiscal ended June 30, 2011. The company added that pressure on pricing and transaction-based activities remain behind its expectations.
The Nomination Committee will commence a search process for a new chief executive, involving both internal and external candidates, the company said.
RSM Tenon will announce its interim results on February 29.
TNO.L is currently trading at 5.84 pence, down 2.4 pence or 29.19 percent, on a volume of 7.35 million shares, against a three-month average volume of 869 thousand shares on the LSE.
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