EC Harris allays pension worries by doubling company contributions

EC Harris is set to double the contribution to its pension scheme for the next financial year to claw back an estimated £10.7m existing liability on its balance sheet.

Chief executive Philip Youell said the extra investment was needed to comply with new pension obligations brought in by the government, known as FRS17, which will come into force on 30 April.

Youell said the firm's additional contribution will jump to £1m for the year to 30 April 2007, which will affect both how much the firm could invest and profits during the period.

Youell stressed that the £10m deficit, similar to one declared by rival Gardiner & Theobald in its financial results, was theoretical and played down the affect of the liability on the firm's balance sheet. The firm's net assets would be just over £4m allowing for the liability.

Youell said: "The balance sheet is managed towards the type of organisation we are. Cash is managed very tightly in our business. We don't need a lot of capital, what we have got is a means to earn money as proven by our track record and the fact that 52% of our income is through framework and long-term relationships."

Youell added that the firm had been managing its pension liabilities for six to seven years. "The liability is no threat to our business because of the actions we have taken with the members of the pension and professional advisors over several years. We are not going to lose people over this. Partners should not be concerned about their houses."

We are not going to lose people over this. Partners should
not be concerned about their houses

Philip Youell, chief executive, EC Harris

Youell said the overall results for the firm for the year to 30 April 2005, which saw turnover up 13% to £164m and pre-tax profits jump by 50% to £25m, showed the firm was going "from strength to strength".

He attributed the growth in profits to an 11% increase in worldwide headcount, to 2,500, while the firm maintained a similar central overhead. He added that the firm was increasingly using IT and consistent processes and was seeing investment in areas such as the Middle East, Poland and Asia beginning to pay back.

Youell said the drop in profit share for equity partners, down 18%, was due to the increased numbers of partners. "We are getting younger people in earlier on development programmes, who tend to be on lower salaries.