Lockdown caused by the pandemic “significantly impacted” what would otherwise have delivered “encouraging growth” for the year, according to the latest annual figures for accountants and business advisers Johnston Carmichael.
The annual report for the limited liability partnership (LLP) to the year ended 31 May 2020 included a quarter of disruption caused as the UK economy was thrown into chaos by the spread of Covid-19.
The firm, which has 13 offices across the UK including Aberdeen, Dundee, and Inverness, said it was nevertheless “heartened” to have increased turnover in the full year although profit fell slightly. This resulted in a 10% decrease in the average profit per member paid out to partners – from £217,000 to £195,000.
Overall, turnover rose by 4.3% to £51.4million following growth in service lines including the firm’s audit function following the introduction of new technologies and investment in staff including a new head of audit.
Furlough scheme good for business
The firm said there was also increased demand for payroll support following the introduction of services to help businesses navigate the complexities of furlough claims.
The company said it took “immediate but proportionate measures” to reduce partner drawings by 40% and delay distributions. It added that this restraint continued beyond the year end as the effects of the pandemic continued. It added that this contributed to having “a more resilient financial footing” which allowed the group to “maintain client service and protect jobs”.
The accounts showed that client services and support staff rose from 721 to 768 in the year, while the number of partners also rose from 56 to 62 in the same period.
The amount paid out to partners fell from £6.8m to £6.7m, while the highest paid partner saw entitlement fall from £642,000 in the year to £485,000.
Chief executive Andrew Walker said: “Like many other businesses, we’ve faced considerable challenges throughout the pandemic. To stay agile and adaptable we have accelerated our ongoing digitisation and continued to invest in our people, processes and services across our business lines to provide our clients with as much support as practicable. In these most testing of times, our depth and breadth of skills and knowledge were critical to supporting our clients, including staying abreast of funding options available to supporting those hit the hardest by the pandemic, and rolling out a new service to support clients with their Job Retention Scheme claims.
“Making sure we have the right people and skills to drive the business forward continues to be a key focus for us in the period ahead, especially as we embrace flexible working patterns. Increased technology has introduced great change, but it does not replace human interaction and being trusted advisers to our clients; adding value to their businesses as they respond to the opportunities and challenges of the new economic climate.”
Retirees spent 39 years with the partnership
The firm also announced the retirement of two partners who a combined spent a total of 39 years’ service with the firm.
Niall Farquharson retires after nine years with Johnston Carmichael, having joined in 2012 as part of the merger with Ritson Smith where he had been a partner since 1988. He spent time as office head in Aberdeen until handing over to David Wilson in October 2020.
Euan McLeod retires having been with the firm since 1991 having joined from HMRC. Mr McLeod became a partner in 2004 when he moved to Perth to take up the role of office managing partner and was instrumental in developing Johnston Carmichael’s presence in the Perth market over that time. He handed over the reins to the role to Steven Menzies in June 2017.