GT reported profit before tax of £82m, up marginally from £81.2m year on year. Distributable profit per partner rose by 3.4% to £398,000, up from £385,000 the year before.

Both the firm’s audit and tax lines of service turned in improved performances from the previous year. The audit service line saw an increase of 5% to £142m (2014: £135.2m), compared to a 4% increase in 2014, while tax revenue was up 5.5% to £96.3m (2014: £91.3m), having remained broadly flat last year.

While tax and audit lines both reported growth around the 5% mark, the overall results were pulled down by a sharp decline in the restructuring business, reported under advisory.

The general downturn in restructuring business has been reflected across the results of all accounting firms this year and underlines the recovery in the UK economy which saw the number of cases of corporate failures decline.

Advisory reported a -1.3% decline to £282.3m (2014: £285.9m), driven by a 24% drop in the firm’s recovery and reorganisation business. Recovery and restructuring revenue was down £27.84m year on year with reported revenues of £88.96m in 2015, against £116.8m in 2014.  When recovery is extracted from the results, the remainder of the firm’s advisory business unit grew by 13% in the year.

Simon Jones, partner and member of the strategic leadership team at Grant Thornton, said: ‘The decline in restructuring is partly a reflection of the market – the recovery in the UK economy – and some one-off specific pieces of work which by their nature were not repeated. But it is a tougher market.’

Corporate finance bucked the trend in advisory, reporting a 40% rise in revenue to £50.12m (2014: £35.8m).

‘Within corporate finance we did quite a lot of investment in 2013-14, so we have seen strong growth from that investment. That was a big growth area for us,’ added Jones.

Part of the investment included the recruitment of over 300 trainees in 2015 and the firm’s decision to revamp its real estate and IT systems.

Audit market trends

In terms of potential to grow the audit business, the impact of changes to competition rules as an outcome of the Competition & Market Authority (CMA) investigation into audit firms has produced limited results. However, Jones sees the clampdown on the percentage of non-audit services statutory auditors provide as a major opportunity for firms outside the Big Four.  

 ‘There is more upside than downside in terms of creating opportunities,’ said Jones. ‘We already work with 40% of FTSE companies and there are more opportunities to work with those firms, not necessarily as auditors but providing other services.

‘Most of the tenders have just rotated around the Big Four. We are mindful of that but competition and choice is not just about audit, it is also about non-audit services. We are seeing more opportunities to tender but we need to have honest, realistic conversations about whether it makes sense to tender. There might be other areas where we are better suited to provide services and create strong relationships with clients.’

Strategic plan

The firm is planning to announce a strategic plan in December following discussions with partners and staff, as part of the employee engagement scheme, so there is little detail on future growth strategy at this stage.

Sacha Romanovitch, who took over as CEO during the year, said the results reflected a year when the firm had achieved ‘stable turnover and profit over the course of a period of significant investment and a time when big-ticket, non-repeat projects have concluded’.

In terms of long-term strategy and growth plans for the firm, the rollout of the employee engagement programme earlier this year is helping to shape future development by involving the entire 4,500 staff, including partners, in the growth plan.

Romanovitch said: ‘One of the commitments we made to the team was that in about a month’s time we will release the growth plan and then make detailed announcements in December.’

The long-term plan will outline growth areas and will build on the early positive reaction to the employee engagement scheme which is a cornerstone of the firm’s ambitions to create ‘the vibrant firm of growth’, she added.

‘In the shorter term, we expect to see growth in the same areas – the transactions market is still strong and this is shown by the amount of advisory work we do on mergers and acquisitions. Restructuring has been a quieter area, but you can look at that as a positive,’ said Jones.

On the recruitment and hiring side, the squeeze on specialised and qualified staff is inevitably affecting the firm, but Romanovitch feels that there is a major difference between GT and its competitors. ‘Interestingly we are seeing a lot of people approaching us about opportunities at the firm. We’ve chosen to be the type of organisation where people can put their forward their ideas and do their best work for our clients. When we approach the market when making senior hires, we promote the idea that ‘Here we can’. That is a very strong message at the firm.’

Jones added: ‘It is not very difficult to set ourselves apart; where there is a big difference between Grant Thornton and our main competitors, it is our culture. More and more people are coming to us directly saying they are hearing exciting things about the firm from people who are working here’.

Shared enterprise model

In the UK, the firm subsequently voted for and rolled out a shared enterprise model in the UK with the aim to involve all employees from partner to professional staff in the development of the firm. 

Romanov said: 'We've been going live over the summer, the programme is all about sharing ideas, sharing responsibilities and sharing rewards. We've been experimenting with different ways to get everyone involved from social media to workshops and live events. We've had over 100,000 interactions on the intranet about the scheme.'

For GT, it is vital to get buy-in from all levels of the firm. 'We've had a large level of engagement - we are trying to use different ways to cover as many as people as possible. There is still a lot of engagement with the partners too and we are adding in a lot of collaboration. There is always an insatiable appetite to engage with the partners - they are absolutely key to the business.'

Global

The firm is also working closely with the global Grant Thornton International (GTI) network and last October was involved in a GTI global jam with 15,000 staff to discuss future plans and closer collaborative working. 

On the international tax front, the UK has also been instrumental in helping to set up a new Singapore office for the GTI network, and setting up a strong tax team specialising in cross-jurisdictional tax compliance, particularly for multinational clients. It has also provided advisory services to the tax authorities in Malaysia.

‘Over the course of the year, we've also invested significantly in capabilities and infrastructure to set us up for the next stage of growth, in both the UK and globally,’ added Romanovich. ‘For instance, a focus on our audit tools and methodology saw us build on the firm's track record of collaborating globally to deliver an audit system that is used across all 130 Grant Thornton member firms.’

she said.

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