HEAVY investment in staff recruitment held back profits growth at accountancy firm Johnston Carmichael last year, despite the firm enjoying a double-digit rise in turnover.
The Aberdeen-based practice, Scotland’s largest independent player with more than 620 staff across its 12 offices, today said revenues rose by 10 per cent to £36.8 million in the year to 31 May. Net profit before members’ remuneration edged up to £10.75m from £10.57m.
Although chief executive Sandy Manson said he believed there were opportunities for Johnston Carmichael – which merged with Ritson Smith in 2012 – to benefit from further consolidation in the accountancy sector, he said there were no imminent deals in the pipeline.
He said: “We are always willing to talk to like-minded firms with a similar ethos but we still have a lot of unfinished businesses and opportunities for growth right across our offices.”
Manson said it had been a year of record investment, mainly in people but also in infrastructure with around £1.5m spent on office premises and technology.
“While this investment has impacted our short-term profitability, we now have an ever stronger platform from which to serve the expanding needs of our clients both at home and abroad. This will enable us to continue to pursue our ambitious vision of being the accounting and advisory firm of choice in all our markets.”
Manson said he believed there were more opportunities than ever for large, independent accountancy firms.
“The ‘Big Four’ still dominate the FTSE 100 but that isn’t our market. Scotland’s private businesses are looking for firms with the technical expertise and also the understanding of their business we can offer.”
During the year the firm joined the global accountancy network PKF International, which Manson said would enhance Johnston Carmichael’s ability to help clients expanding abroad and play an important role in supporting inward investment in Scotland.
“We see tremendous opportunities in the years ahead for a firm like ourselves in Scotland with the additional global reach we can offer through our affiliation with PKF.”
Manson said the corporate finance team in particular had seen strong revenue growth during the year, while its wealth advisory arm broke the £3m revenue barrier for the first time.
He added he was keeping a “wary eye” on the firm’s north-east heartland given the recent fall in oil prices.
“There’s no doubt this is a significant market correction, but there has been no immediate impact on us and we will look to help our clients in the sector as they go through a period of change.”
The average number of partners during the year was 53, up from 51. Founded in 1936, Johnston Carmichael is now one of the top 20 accountancy firms in the UK.
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