Accountant’s profits up
Aberdeen-based firm Johnston Carmichael puts more cash back into the business
JOHNSTON Carmichael, Scotland’s largest independent accountant, grew turnover by 10 per cent last year and says a slight fall in average partner profit to £203,000 reflects record levels of investment in growing the business.
The Aberdeen-based firm, which now has around 30 per cent of its business in the central belt, increased net profit from £10.57m to £10.75m before dividing it up between 52 members, one more than the previous year.
Sandy Manson, chief executive, said: “The last financial year was one of record investment in our business, at a time when probably many have been pulling back. We hired more people than ever before taking our total headcount to beyond 600 as we increased the capability of every part of our business. While this investment has impacted our short-term profitability, we now have an everstronger platform from which to serve the expanding needs of our clients both at home and abroad.”
Mr Manson said st aff had increased by 30 per cent in two years, including its acquisition of Ritson Smith, or around 8 per cent in the core business.
Johnston Carmichael, winner of Scotland’s accountancy firm of the year award for the sixth time in eight years, was last month also named British Accountancy Firm of the Year.
Mr Manson said the firm was well placed to resist the giants, after two of the ‘big four’ accountants PwC and KPMG recently launched new Scottish divisions targeting smaller corporate clients. He added that the cutting of costs by Aberdeen-based firms in response to the oil price fall would bring opportunities to Johnston Carmichael.
“What we see typically in times of recession is the big four change their strategy and come into the mid-corporate market. We welcome competition, we see our offering as being very different with a much more competitive cost base.”
Mr Manson said the firm’s new membership of the PKF International network was enabling it to offer a UK-wide and international service to existing clients, making it “less vulnerable to the big four”, and to pick up business from network clients in Scotland, with its strengths in oil and gas particularly helpful.
He went on: “At this stage we are focusing all our investment in Scotland, we have no short-term plans to go South of the Border, there is lots of unfinished business in our main markets.
“We have seen real benefits from the merger in 2012 with Ritson Smith and we remain open minded about exploring further mergers with like-minded firms who share our professional ethos.”
Johnston Carmichael said its corporate finance team had seen strong revenue growth throughout Scotland, advising on deals worth £350m led by the energy and food and drink sectors, compared with the previous year’s £208m. Its wealth division had broken through the £3m revenue barrier for the first time.
In July the firm unveiled a £700,000 investment in its Aberdeen property to upgrade its offices, part of a £1.5m property spend during the year. It said a rebranding a year ago had been well received by clients.
Mr Manson said new powers for Scotland would create a need to “navigate and assist businesses through the new climate”, adding: “It took a remarkable man (Lord Smith) to do a remarkable job and it is time for the country to bind together. At a time when the economic recovery is gaining traction, it’s more important than ever that we are able to efficiently and effectively guide our clients through the fiscal and other changes which will follow.
“We see tremendous opportunities in the years ahead for a large independent firm like ourselves in Scotland with the additional global reach we can offer through our affiliation with PKF. That’s why we will continue to invest in all aspects of our firm’s capability in the years ahead.”