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Mergers on accountancy firm agenda

Accountancy firm Johnston Carmichael will consider further mergers, although it hopes to continue the organic growth that has helped it post a rise in income and profit.

expansion: Chief executive Sandy Manson hasn't ruled out opening in England. Picture: Zsofia Molnar
expansion: Chief executive Sandy Manson hasn't ruled out opening in England. Picture: Zsofia Molnar

The largest independent firm in Scotland, with 12 offices across the country, reported a 6% rise in fee income from £27.9 million to £29.6m in the 12 months to May 31 this year.

Net profit before members' remuneration was up 8% from £9.13m to £9.87m.

The firm announced in October it was merging with Aberdeen-focused Ritson Smith in one of the biggest all-Scottish tie-ups seen in recent years.

Sandy Manson, Johnston Carmichael chief executive, told The Herald further deals were a possibility and refused to rule out the possibility of opening in England.

He said: "We are very open to linking up with like-minded firms – especially those with similar values and professional ethos.

"However, our independence is very important to us and our key strategic focus will be on organic growth.

"We have no organic growth plans beyond Scotland but I would rule nothing out if it was in the interests of our clients and our people.

"There is lots of unfinished business here and the Scottish market provides lots of opportunities for a firm like us."

Mr Manson believes further consolidation in the wider market is likely following on from the BDO-PKF merger.

He said: "With the dominance [of Ernst & Young, KPMG, Deloitte and PwC] I would be most surprised if there were not other discussions going on.

"There will be some fairly major changes in the landscape of our profession over the next few years."

Mr Manson added that Johnston Carmichael had performed well in corporate finance, particularly through its Aberdeen office which was buoyed by the strong-performing oil and gas sector.

Edinburgh and Glasgow grew around 9% in the year, while areas including renewables and tax had further helped the financial performance.

A Stirling office, which opened in March, was said to be making "encouraging" progress and the firm has taken on additional space at its Elgin, Inverurie and Perth sites.

Mr Manson said: "We are making very steady progress with the brand and the whole market awareness of the extent and depth of our offering, particularly in Edinburgh and Glasgow where we have great scope to grow.

"We are investing in the business but it comes back to able and enthusiastic individuals and getting the right people on the bus."

Mr Manson believes the economic outlook remains "patchy" but is hopeful things are starting to improve.

He said: "Gradually the background music is improving and I am more encouraged by the actions from policy makers.

"The ten-fold increase in capital allowances announced in the autumn statement was a step to get businesses investing and I think Funding for Lending will start to have an impact next year.

"It will be some time yet before we are out of the woods but we are gradually moving in the right direction.

"We don't pretend that there will be any quick fix to the wider challenges for our economy, however, we are encouraged by the many examples of entrepreneurial companies continuing to invest and innovate."

Johnston Carmichael is now among the top 20 UK accountancy firms and has 54 partners and more than 470 staff.

The Ritson Smith merger should push income above £30m in the current trading year.

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