Julia Irvine 9 Jan 2018 12:18pm

Income down but profits up at Grant Thornton

After a year of turning its business “inside-out”, Grant Thornton has reported post tax profits for 2017 up 10.3% to £75m and average distributable profit per partner up nearly 7% to £407,000

However, overall revenue is down by 6.4% from £534m to £500m as the UK’s fifth largest firm has reshaped its client portfolio. It says it has replaced 20% of profits by exiting certain streams of business and investing in others that meet its business strategy’s objectives of shaping a vibrant economy.

A large part of the fall in revenue is due to the ending of the government-funded Business Growth Service (BGS) contract in 2016, which resulted in a £46m reduction. The figure is large, the firm says, because as consortium leader, its accounts reflected the income for the whole consortium.

Overall income was also affected by the disposal of six small portfolios of work where the firm felt “there were better owners elsewhere”.

If the BGS contract is excluded, like for like revenue growth over the year was 2.5%.

Grant Thornton chief executive Sacha Romanovitch says that the firm is now on course to reap the benefits of its reshaping and investment. “Our ability to gain and sustain market shares, as well as our increased brand awareness, clearly demonstrates that our purpose-led strategy is resonating with the market.

“This positions us well for future growth as we turn increased awareness into valuable commercial outcomes for our clients and our business.”

Audit saw revenue rise by 2.7% from £144m to £148m while tax and financial planning income went up by 1.9% from £102m to £104m. Income from advisory suffered across the board.

The firm invested heavily in its strategic account programme which covers those service lines where it believes its skills sets are strongest. As a result, it says, income grew by 24% during the year. Additional investment in financial services and forensics (including 30% of all partner appointments) led to a combined hike in annual profits of 24%.

Grant Thornton also reveals that it is now adviser to more than 51% of the FTSE 100, it audits more public sector organisations than its rivals and more than half of its revenue comes from clients trading internationally. Brand awareness is at an all time high of 94%.

Romanovitch describes 2017 as “a year of excellent progress”. And she predicts that during 2018 the firm will “deliver exceptional client value and sustainable growth, enabled by exceptional quality and living our shared enterprise culture to deliver an exceptional experience for our people and out clients”.

According to the reports and accounts, greater efficiencies during 2017 resulted in the £7m improvement in Grant Thornton’s profitability. This triggered the shared award element of the firm’s shared enterprise model for the first time, with an additional provision of around £1m for the shared reward pool.

If all goes according to plan, the pool will be on track to pay out in 2018/19.