Despite 7% rise in turnover, profit drops 15% at consultant after fee freefall in late 2008
Consultant Gardiner & Theobald has suffered the most challenging 12 months of its 169-year history, according to a statement in the group’s accounts for the year ending April 2009.
Managing partner Simon Jones said the “reasonable” headline figures do not represent the difficulties the business has faced since May this year. He said: “We entered summer with little idea of just how soon the effects of financial disasters on the other side of the Atlantic were to hit us, and hit us hard.”
Despite a 7% rise in turnover to £143m thanks to strong performance overseas, pre-tax profit dropped 15% to £21m.
In the UK, turnover only rose 1% to £109m, while there was 31% growth overseas to £34m during the same period. The North America business performed particularly well, with turnover climbing from £7.4m to £11.3m, and the figure in Europe rose from £12.9m to £15.6m.
After a record monthly fee billing of £9m in May 2008, the figure fell by 25% over the last 12 weeks of the year. Jones said: “With turnover falling in the second half of the year, profits naturally came under pressure. Redundancies were very upsetting and very expensive.”
The effects of financial disasters on the other side of the Atlantic hit us, and hit us hard
Simon Jones, managing partner
In July, Building revealed the firm had cut the number of partners from 179 to 155 and shed an undisclosed number of staff.
Tony Burton, a partner, said the hope was that there would be no need to downsize further, but admitted that, depending on the economic situation in 2010, “it could go either way”.
The company predicts a stable 2010/11, with turnover set to remain at about £6m per month for the next few months. It added: “A number of countries appear to be heading towards a recovery, but we have yet to see this translate into direct fee income.”
The group’s profits are being retained within the business “as a measure to provide protection against what could transpire to be a more prolonged downturn than expected”.