The Big Interview: Johnston Carmichael chief executive Andrew Walker
“I’ve managed to move all of 16 miles so far,” the Inverurie native says wryly. “But it’s been because the quality of work and the people I’ve come across have been fantastic.”
Since August of last year, Aberdeen-based Walker has been chief executive of the organisation, which is headquartered in the city, and he states that it is Scotland’s largest independent firm of chartered accountants and business advisers.
Declaring when his appointment was announced that the firm needed to keep “evolving, improving and investing” to harness opportunities, he replaced Sandy Manson, who had been in the post for 12 years and is now chairman.
The firm in the year ending 31 May, 2019, saw revenue grow to £49.3 million from £45.5m in 2018, while profit available for members also rose – from £11.8m to £12.2m. “We’ve seen that level of growth in revenue continuing in the year to date, which is always encouraging,” says Walker.
Johnston Carmichael came into being in rural Moray via a partnership formed by Bill Johnston and John Carmichael in 1936.
It has been increasingly stepping into the limelight with starring sponsorship roles last year with the Edinburgh International Film Festival and Edinburgh International Book Festival as well the charity event Kiltwalk – and describes itself as one of the UK’s top ten accountancy businesses.
The business has about 850 staff, 63 partners, and more than 16,000 clients including Holyrood Distillery, with Johnston Carmichael leading the initial funding round that raised £5.8m from 65 investors. Also on the books are law firm Ledingham Chalmers, the National Farmers Union Scotland, and healthtech firm Current Health, formerly Snap40.
The latter was chosen to have one of its monitoring devices on display at the V&A Dundee, and Johnston Carmichael in September hosted an “evening of discovery” at the landmark museum to launch its office in the city.
Walker addressed guests, as did Sir Pete Downes, former principal and vice-chancellor of the University of Dundee. Downes, a pharmaceutical expert, is also a senior adviser to Johnston Carmichael and is credited with being key to the establishment of its Dundee office, tapping into the city’s growing sectors including technology and life sciences.
Dundee had been a “glaring gap” in the firm’s footprint, which is now unmatched in Scotland, Walker believes.
Johnston Carmichael has 12 offices north of the Border, stretching up to Fraserburgh and down to the Central Belt – with its large site in Edinburgh’s Melville Street treated to a major overhaul providing space for growth, and its Glasgow presence expanding.
September 2019 also saw the bean-counter open its first premises outside Scotland, with the London base near the Bank of England’s Threadneedle Street, part of a strategic expansion of the firm’s financial services offering.
The move was led by financial services partner Ewen Fleming, a high-profile hire who arrived in March of last year after senior roles at Grant Thornton, Santander UK and Royal Bank of Scotland. Regarding the skillset and offering Fleming brings for clients, Walker says: “I think there is an appetite for maybe looking at alternatives to traditional firms in terms of wanting a more productive, bespoke service.”
Walker said when the London office opened that it was “central to achieving our ambitious aims”, with the business also implementing changes to its top brass overall with a string of hires and promotions to support its succession plans.
He notes the need to balance the role of a traditional on-the-ground presence with the rapidly increasing digitalisation of the profession. “The change we’ve seen in the last two years, and will see in the next three years, is more than we’ve probably seen in the last 30. And this change is coming whether people like it or not – so it’s a case of ‘let’s embrace it and move it forward’.”
The business has its own digital team amid new regulatory requirements such as Making Tax Digital – which Johnston Carmichael has called “the most fundamental change to the administration of the tax system for two decades”.
Walker also highlights the UK government-backed Brydon Review, which recently said the UK’s audit industry is in need of “urgent reform”. It also called for the creation of a “standalone and transparent” audit profession independent of the broader accounting trade.
The findings follow a series of corporate failures where questions have been asked over the role of auditors. Britain’s “Big Four” accountants – KPMG, PwC, Deloitte and EY – were accused of “feasting on the carcass” of construction giant Carillion and collectively pocketing tens of millions of pounds in fees in the decade preceding its collapse, for example.
But such stormclouds are providing a rich opportunity for smaller, nimbler accountancy firms with a cleaner copybook to step into the sunlight – and secure contracts.
Walker says: “In the past, it was probably an easy, a safe decision to go with the big brand name. And I think people are now questioning whether it does actually give you what you’re looking for. People are looking for, quite rightly, value for money, what’s the quality of service, have you got the capabilities? And that’s where we’re now being thought of as somebody to get on the tender list, and at least having a chance of getting work.”
The firm’s offering is bearing fruit – last month confirming a series of new business wins for its audit and assurance team, which grew revenues by more than 20 per cent in the year to date.
The unit added £400,000 in new business in the first four months of the 2019-20 financial year, and among the best performing regions were Glasgow and Aberdeen, which saw increases of 52 per cent and 28 per cent respectively.
Walker at the time expressed hope that the team would add headcount on the back of continued growth.
The CEO in fact originally trained with Johnston Carmichael in Inverurie. But with no jobs at the business available to him at the end of his traineeship he signed up with KPMG. He now says it was a pivotal moment in his career, the kind of situation that “forced you to do something that was a bit different”.
He spent about a decade there, and also had a short stint working in industry. But he was approached to rejoin his current employer 17 years ago next month. “I decided that it was the right time in my career to go back. I’d obviously kept tabs on the firm… seeing the growth, I was quite impressed with it.”
It had also recently moved into offices in Albyn Place, Aberdeen, which was “a statement of its ambition at the time” – and he saw strong potential.
He joined the board about 11 years ago, and this involvement in the firm’s strategic direction has helped enable a smooth transition into his current role, he believes.
A key focus has been travelling around its various offices to talk to staff, albeit as a hostage to Scotland’s rail services. He also singles out a targeted approach, flagging up Johnston Carmichael’s in-depth knowledge in sectors such as food and drink, tech, and agriculture.
“How do we actually take that to the next level? How do we actually become the go-to people in certain sectors. That’s what I’d like to work on and focus on in the year ahead.”
As for the biggest hurdle for the business, this is “people – and being able to get the right people”. But he says that the fact the firm is having “growth pains, just like everybody else” is a strength when speaking to clients. “We can actually tell them more about the war stories and what we’ve actually done, as opposed to the theoretical piece some others might put forward."
He also highlights Johnston Carmichael’s work saving 88 jobs in its role as joint administrator of Aberdeenshire-headquartered MSIS, a supplier of environmental services and equipment, which was bought out of administration.
The accountancy firm is doing work internationally as Scottish firms broaden their horizons, and is also the PKF member firm in Scotland, part of a family of legally independent firms with 400-plus offices, operating in 150 countries.
Walker’s remit and ambitions are evidently reaching far further than the 16-mile journey from the first step on his career path. “We should never be satisfied with what we’re doing, we should always be continuously looking to improve… one of my core values is remaining relevant – and you remain relevant by making sure that you consider the changes that are going around – and anticipate them.”